Saturday, May 7, 2011

Apple #522: The Two-Dollar Bet

My friend--call him Jeroboam--is going to the Kentucky Derby tomorrow.  I asked him to place a bet for me, and I gave him the standard minimum amount, $2.

Afterward I wondered, why is the standard minimum bet $2?  That seems to be true only in horse racing, so is there something about horse races or how betting on horses that just works well with $2 bets?  Did that practice come from some particular track or country?  Where does this whole $2 tradition come from?


How did this ↑ get so closely connected with that ↓?
(Photo from Horse Racing Tips)

 
(Image from Wikimedia Commons)

  • I looked and looked for the answer to this.  From what I could find online, nobody knows, it's just tradition. Most people really don't care why it's so.  It just is.

People placing their bets on horse races.  Are we locked into doing it this way because we've always done it this way?  But "always" had to have started at some point or other.
(Photo from the LA Times blog)

    • Apple Lady that I am, I did not want to accept this as an answer.  So I adjusted my question (sometimes when you can't find the answer you seek, it's because you're asking the wrong question).  I have it in my head that all things about modern horse racing come from Ireland.  So I wondered if they have a $2-minimum bet there, or a £2-pound minimum, or a 2-punt (Irish pound) minimum.

    What the Irish punt looks like.  Ah, apparently they don't use the punt there anymore.  Too bad.
    (Photo from sabsi at Virtual Tourist)

      • Nope.  Minimum bets in Ireland vary from track to track more than they do here in the U.S. Many tracks and turf accountants (Ireland's word for horse racing bookies) take £2 minimum bets, but some will take a £1 minimum, and others will accept a €1 minimum.  
      • Just because their standard minimum bet isn't some unit of 2 doesn't necessarily mean the Irish weren't the ones who started that, but since we're talking about betting and all, I'm going to bet that the practice didn't come from Ireland.  My theory is that if it did, they'd still be doing it that way pretty much across the country instead of scattered here and there.
      • So I went at my question yet another way.  I looked up the history of horse racing and betting in general, hoping I'd stumble across some little factoid or person's name that might lead me to the first $2 bet.
      • I didn't encounter anything like that, but I discover the origin of parimutuel betting.  What's that, you say?
      • Well (this is a side note, obviously), renditions of the story vary, but there was this French guy, Monsieur Joseph Oller. He was from Spain but he lived in France.  Lots of sources say his name was Pierre and he owned a perfume shop.  But actually his name was Joseph and he was into cockfighting.  He wanted to invent a way that the bookie could always make money on a bet, no matter what the odds or the payout.  Cleverly, he came up with a mathematical formula and a machine to go with it.

      Joseph Oller. He invented the parimutuel betting process, which is used at nearly all horse racing tracks today.
      (Photo from the Rutherford Journal)

        • Details of the machine are vague, but it sounds an awful lot like a specialized calculator.  Apparently his machine kept track of how much money people put down on a particular horse or a particular race. Once the race was over, the machine/his system tallied up the total money in the pool, took out a fixed percentage in taxes and fees to the bookie or the track (the percentage today may range from 14 to 25 percent), and then divided up the rest of the money equally among all the winning bettors.

        A descendant of Oller's machine, this is an early "totaliser" used in Auckland in 1906.
        (Photo by J. Chadwick, sourced from the Rutherford Journal)


        Today we call them tote boards and they look like this.
        (Photo from Saratoga.com)

          • People say the reason Oller's method is called "pari-mutuel" is because it became popular in Paris before coming to America.  These people have not looked at their French etymology.  The word literally means "to equalize a bet." The reason bettors liked this system is, for one thing, the machine made it harder for the bookies to cheat (something Oller got caught doing once). It also meant that people at the track got paid the same as people who couldn't go, and people who bet a little got the same percentage as the people who bet a lot.
          • Tracks and bookies like the system because it means they will always get paid no matter what.
          • Oller's system was developed in 1865.  People describing it don't mention anything about a 2-franc bet. If anything, they put all talk of money into US dollars and jump straight to the present day and get into trifectas and exotic bets and all sorts of other, more modern stuff.  So it's difficult to tell if the $2-bet or its French counterpart existed when Monsieur Oller cockfighter/inventor came up with his system.
          • One thing that was clear from what I read about the history of horse racing is that the Jockey Club formalized a lot of the rules of horse racing and breeding.  So I checked them out.
          • No mention of whether they had anything to do with establishing the $2 bet as the standard, or even whether they had much to do with rules about betting at all. But I thought there might be some other clues about their history that could help us out.
          • The first time the Jockey Club got together to hatch their horsey plans was in 1750.  Mainly they wrote down a bunch of rules. By 1814, they had established five races, now considered classics, for three year-old horses in England.  They are the three races that make up the English Triple Crown plus the 1,000 Guineas and the Epsom Oaks races, all of which are still run today.  Since these races were so seminal to the sport, it's possible that betting conventions started somewhere in this time period.

          A cartoon poking fun at the Jockey Club, circa 1790.
          (Engraving by Thomas Rowlandson, sourced from the Georgian Index)

            • But that's all taking place in England. People were racing horses in America, too, while all this was going on.  But horse racing wasn't really formalized here until after the Civil War.  
            • In 1868, the Jockey Club published its first copy of The American Stud Book. This is an alphabetical list of all the Thoroughbred horses in the United States, and it is still published each year. If you're a horse and you're not in this book, you're not anybody.  What gets you into this book is if you are an American descendant of horses that were listed in the General Stud Book which was first published by one of the Jockey Club's founders in 1791.
            • So these Jockey Club people are the ones who decide who's a Thoroughbred and who isn't.  They hold the reins to the whole enterprise.

            Volume II of the first American Stud Book.
            (Photo from the FullWiki)

              • To me, this American Stud Book looks like the watershed moment in the history of American horse racing.  This looks like the event that established horse racing as the breeding-conscious, uber-competitive animal that it is today.
              • So I thought, "I wonder what people got paid in 1868." Then I looked it up.
              • Daily wages varied quite a bit depending on whether you were male or female, whether you worked on a farm or in some type of factory.  But in 1868, a male factory worker took home, on average, roughly $2 a day.
              • Oooh, don't you love it when facts line up like serendipitously that?
              • OK, so maybe this is too serendipitous.  I've made a lot of guesses and assumptions along my researching journey to this point.  But even if the fact that a daily wage in 1868 was $2 is not the reason we maintain $2 as the standard minimum bet, it sure is interesting that, once upon a time, people loved horse racing so much that they were willing to bet an entire day's pay on one horse in one race.
              • As one horse racing enthusiast pointed out, in 1930, you could walk into any race track in America and place a $2 bet to win.  You can do exactly the same thing, for exactly the same amount, more than 60 years later, in 2011.  Where else, in what other casino or lottery or betting pool, has the minimum bet stayed the same for over 100 years? 
              • That's a rhetorical question. I don't intend to research that one.

              Let's hope tomorrow's is a good race.
              (Photo from the horse racing blog)


              P.S. The horse I picked didn't win.  Not even close.  But Animal Kingdom sure did put on a show, didn't he?

              For this specific race, a $2 bet on Animal Kingdom paid $43.80, $19.60 and $13 if you bet to win, place, or show, respectively. Nehro paid $8.80 and $6.40 to place or show. Mucho Macho Man paid $7 to show.

              If you want to understand how to calculate what a $2 bet might pay, this page is a good place to start for some basic information.


              Sources
              University of Massachusetts Lowell, Center for Lowell History, Weekly Wages, 1824-1868
              Matt Gardner, Handle, Inflation and the $2 Win Bet, and down the stretch they come, August 23, 2010
              Gambling in American History, Pari-mutuel Wagering Systems, March 19, 2010
              Bill Burton, About.com, The History of Parimutuel Betting
              Northlands Park, How to bet the horses?
              Webster's New World Dictionary, parimutuel definition

              1 comment:

              1. Nice. Now I want to bet on something.

                ReplyDelete

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