The Telephone Booth Indian - Abbott Joseph Liebling [46]
As his clientele grew, Tim began to cover the smaller bets himself, instead of passing them on to the bookmakers. The mathematical background he had gained at P.S. 14, although simple, was adequate for his needs. Bookmaking is based on a kind of arithmetical shorthand called “percentage.” An evenmoney horse is said to be 50 per cent; a 2to1 horse, 33 per cent; a 3to1 horse, 25, and a 4to1 horse, 20. If there should be two horses in a race, both at even money, the book would be 100 per cent: if the bookmaker bet $1000 against each, he would break exactly even. If there should be three horses, and he laid $1000 at even money against each, he would stand to win $1000 no matter what happened. This would be a 150percent book. Generally, the makers of the books aim at an arrangement of odds that will work out to about 115 per cent. A typical book on an eighthorse race might be arranged in this manner, if the bookmaker planned to lay $1000 against each entry:
ENTRY ODDS PERCENTAGE RISK
Favorite 2-1 33 $1000 to win $500
Second choice 5-2 28 $1000 to win $400
Third choice 4-1 20 $1000 to win $250
Fourth choice 6-1 14 $1000 to win $167
Long shot A 10-1 9 $1000 to win $100
Long shot B 10-1 9 $1000 to win $100
Outsider A 30-1 3 $1000 to win $33
Outsider B 50-1 2 $1000 to win $20
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If the favorite should win, the book would have to pay out $1000 of the $1070 it took in from the bettors on the other horses. If the second choice should win, the profit would be $100 greater. A victory for the extreme outsider would mean a profit of $550 for the book.
The bookmaker's troubles come in filling the book. His customers always insist on betting more than he wants to cover on certain horses and on ignoring others, so his system of checks and balances is shattered. The bookmaker lowers the odds against the horses most in demand, but often this expedient does not suffice. He cannot afford to turn away trade, so he tries to place some of the money with other bookmakers. This form of hedging, also prevalent among insurance underwriters, is called laying off. Concomitantly, other bookmakers lay off with him. Bookmakers bet against bookmakers, like the people of the Hebrides who lived by taking in one another's washing. Odds sometimes change so radically in response to the market that by post time the book's percentage has been erased, and the bookmaker has become a bettor on a rather large scale.
From the beginning, Mara displayed an exceptional flair for this form of mathematical catchascatchcan. In 1921, he made up his mind to abandon city betting and go out to the track. It was like the decision of a stockcompany actor to invade the big time. Tim didn't begin at the bottom, by accepting the twoand fivedollar bets of the ordinary grandstand patrons. Optimistically, he set up business in the enclosure at Belmont, ground usually restricted to bookmakers of long experience. A ticket to the enclosure costs twice as much as one to the grandstand; it is assumed that enclosure patrons bet more heavily.
A bookmaker's success in the long run depends on the size of his clientele. If a man has a following, bookmakers believe he will eventually cash in on what is called the hidden percentage. Hidden percentage is a thing distinct from ordinary percentage. It is the tendency of bettors to be content with modest gains when they are winning but, when losing, to insist on betting more than they can afford in an effort to recoup. After a day of beaten favorites, Tim has great faith in this psychological ace in the hole.
A bookmaker on a New York track needed a considerable sum for overhead expenses, as well as his capital for betting. For the privilege of operating, he had to pay a daily fee averaging ninety dollars to the racing association that owns the track. He also paid a few dollars a day to John Cavanagh, a gentleman known as a “racing stationer,” who provided him daily with a few pencils, blank sheets