To surpass all competitors. The allusion is to a cake-walk. TAKE THE RAG (q.v.) is an earlier phrase.
1886. As a purveyor of light literature,… Mr. Norris takes the cake.—Pall Mall Gazette, Sept. 2. (N.E.D.)
[See Notes and Queries, 8 S. i. 69, 176, 364.]
