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In most racing games (Mario Kart, Sega Rally, F-Zero, etc.), racers typically make some number of laps in a closed circuit. The most notable exceptions that come to mind are all arcade games, or arguably not even a racing game (Trackmania, OutRun, the Cruis'n series). Why would a designer want to build tracks as closed loops, and why is it so commonplace?

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why are looped circuits such commonplace in real races? – Timelord64 7 hours ago
    
If you look at Burnout 2, one of its great advances in tech was live streaming of the level. It had 2.5 minute or longer point-to-point races. – Almo 7 hours ago
1  
Some people happen to enjoy racing in looped tracks! – congusbongus 5 hours ago

I'm not sure about your assertion of "most" - many games like GT, DriveClub, etc, have many point-to-point races...

But there are two reasons to this:

Firstly, many real-life races are lap-based on closed circuits (Formula 1, Nascar, etc), so gameplayers might expect this as a standard.

Secondly, and from a game design point of view, putting multiple laps on a closed circuit means you can multiply the game time for less game design (a 4 lap race on a 1 mile circuit means only 1 mile of track and environment design - a 4 mile point-to-point means 4 miles of track and environment design).

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Also racing games are skilled based, so a looping track allows for faster iterations. It also allows to even out the odds in case of mistakes, with races becoming a sort of "best out of x laps". – angarg12 43 mins ago

From a design point of view, it's advantageous for new players to learn the placement of powerups, dangers and other landmarks on the track in the first lap so they can focus more on gameplay for the remainder of the game.

The sooner the player can get through the learning phase of the game, the sooner they can start mastering the other aspects of the game.

As Bushnell's Law states: "All the best games are easy to learn and difficult to master."

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