What are mandatory-payout carryovers, and why are they valuable?
So, you’ve probably heard horseplayers buzzing every time a racetrack announces the mandatory payout of a jackpot carryover. Maybe you’re wondering, what’s all the excitement about?
Well, the excitement is warranted. Mandatory payouts of jackpot carryovers represent some of the best theoretical betting value in horse racing.
What is a mandatory payout?
Before we can define mandatory payouts, we need to recap the definition of a jackpot carryover.
A jackpot carryover is generated by jackpot-style wagers, which pay out their carryovers only on days when a single winning ticket is sold. If you construct a unique winning ticket, congratulations! You win the whole jackpot. But if multiple winning tickets are sold, consolation payoffs are paid out, and a portion of the day’s fresh money is added to the jackpot.
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A mandatory payout occurs when a racetrack hosting a jackpot-style wager decides to eliminate the jackpot provision for one day only and force a payout of the carryover. This typically happens on the final day of a race meet, but mandatory payouts can also occur during the middle of a meet, or on major racing days.
Let’s give an example. Suppose Gulfstream Park has a $560,000 Pick 6 jackpot scheduled for a mandatory payout. On the day of the mandatory payout, this $560,000 jackpot prize pool will be paid out alongside the day’s fresh betting money—no unique winning ticket required. All winning bettors will split the total pool equally. If no winning tickets are sold, players who select the highest number of winners will split the pool.
Non-jackpot wagers can also feature mandatory payouts. In these instances, there might not even be a carryover up for grabs—the mandatory payout simply means the day's betting pool (plus any carryover) will be dispersed regardless of whether anyone constructs a winning ticket. If no one assembles a perfect ticket, the bettors who come closest will split the pool.
Why are mandatory payouts valuable?
There are two reasons why mandatory payouts are so appealing for bettors. For starters, they tend to attract large pools (often totaling millions of dollars), and large pools have the potential to generate much higher payoffs than small pools. After all, a Pick 6 pool containing $2,000 can’t pay out more than $2,000, even if you hold a lone winning ticket stacked with 99-1 longshots.
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Takeout, in essence, is the price of betting on a sporting event...
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Secondly, the addition of the jackpot to the daily pool serves to offset the effects of takeout, which is the amount of money removed from the betting pool to pay taxes and fund racing operations. Suppose there’s a $200,000 Super High 5 jackpot slated for mandatory dispersal, which attracts $1 million in new wagers. If the Super High 5 takeout rate is 20%, that leaves only $800,000 of the $1 million to be dispersed among winning bettors. But once the $200,000 jackpot is added, the pool is back at $1 million, and the takeout is essentially eliminated.
So the next time you hear about the mandatory payout of a jackpot carryover, join in the excitement! It’s a great opportunity to play for excellent betting value.