Election Betting's Wild Ride & Notes

 Another year and another election is (almost) in the books. Like the previous two, I'll jot down a few of my thoughts for those interested (which this year seems more than usual).  As is custom, a disclaimer this is my opinion, and as we see with percentages changing two days later, opinion is all we have. 

I wrote in 2016 how confusing things are in modern U.S. election betting, and 2020 (as we'd expect 2020 to be) was even more so. It's vital for us - who are using the same data as a decision desk - to be able to portend what we're seeing in real time. That is, what happens in Viggo County IN or Jessamine KY, will likely tell us a lot, and we can extrapolate and model as other results come in. That, this year, was almost impossible; there were clues Trump was going to do better than estimated but they were just clues that were difficult to act on. You simply could not use this like you could in 2016. 

The Florida Domino

The big tell of the evening, that likely cost a lot of people a lot of money, was Florida. It's the first state that really doesn't have its head up its ass in reporting results. And those results were good for Trump. If we knew on Monday that Trump was going to run ahead of 2016 in Florida, we'd portend Georgia would be a 5 point or more win (and hammer at -180), we'd surmise he should be chalk, and we'd bet accordingly. That's exactly what the market did and it acted perfectly rationally. 

When the numbers that followed in the midwest - Ohio looking near exactly the same as 2016 (if you lost money on the fake-out with early results showing a 10 point Biden lead you surely will remember for next time), and Iowa looking +9 - the markets in Michigan and Pennsylvania followed. Again, as perfectly expected. When Wisconsin, which counts fast, showed the same results as last time, it was another arrow in the -400 Trump quiver. 

This election was looking like 2016, and because of recency bias, the markets probably overreacted, but to say they were 'wrong' is missing the big picture on what we do each election. 

Perhaps we can point to softer vote in Arizona as a big red flag, but think about it, if NV came in faster than AZ, Trump would've been even lower. Georgia, which *looked* softer than Florida, maybe was another caution point. I was losing confidence in some of the county data in the midwest (it was softer where Trump won razor thin margins) and acted accordingly (a good move), but it was not a big position. 

This year, Florida along with knowing what happened last time, drove the bus. 

The Case of no 100%'s

The phenomenon of this election was the case of no 100%'s. Early voting (that comes in late in some states, with the results in others, or early in others) generally assured we'd get no 100% reported counties and that was pretty deadly. Even decision desks and needles, which can be no help at all but built real time models with a team for many months, had trouble with modeling turnout, and what's left in said county from where. I was checking Indianapolis and area at 9:30 for clues to bet MI and WI and PA, but it wasn't even 70% in. 100's are our best friends, and with mail-in voting and otherwise, we were toast. 

Biden Value

For everything presented above, the value this time was with Biden, no question. Not because we were sure he'd win but because in 2016 the markets were anchored to the polls and this time they were anchored to Florida (and to a lesser extent Ohio and later Wisconsin, where Trump in the RCP average was down 7%, and it looked even). This, truth be told, was again pretty difficult to act on. Gennessee County in MI showed Trump overperformance with most of the vote in. Kenosha in WI similar. You'd want to pull the trigger, but you'd get close to 100% data that threw you for a loop. 

In PA, where I tweeted out Trump felt softer, again it was tough, but with Trump at -250 your value was with Biden, in my view. It was the only bet you could make. But if you want to bet 4 figures on that, you have a stronger stomach than I. Good on ya, you made a nice bet. 

Notes:

Polling

I read a bunch of books on the 2016 election. In each of them I was struck by how damn smart Jared Kushner was - with data, with fundraising via the web and with his polling. I think I tweeted it out once and got dive-bombed by the left wing luftwaffe, but it doesn't make it less of a fact. I had read a week or so ago that whispers about internal polling from him and his team showed Iowa Trump plus 9 and Ohio Trump plus 8. I didn't act on it as much as I should. But with those numbers, we could forsee a Trump win, so maybe it's good I didn't. 

I like most of you, relied on the polls from the smart people (OH Biden plus 2, Iowa about tied), and those smart people in many places did not do well. This was my anchor at times and because I bet 50X more as the vote comes in than in positions before the vote, it might've been much ado about nothing. But I can't believe I had a blind spot. I'm sitting here giving more weight to Quinnipiac who had been dreadful since forever with Trump, and don't give weight to a guy I know is smart with this stuff, who co-created Cadre at like age 27. 

More money was perhaps to be made in the Senate and House markets (Collins RCP average minus 7, she won by 4, for example), but anchoring to the polls this time, like last, was deadly for your brain, and bankroll. 

With a normal candidate with less of a broad coalition the polls will be better no doubt, but wow, in some areas they were complete trash. 

My other blind spot this election was the size of the city vote, and just how big Biden's lead was with mail-in. It was difficult to model, but there were clues early this would be bigger than usual. How do I not up positions in MI, or PA on that? I simply missed it. 

Is there Meat Left on the Bone?

What struck me most perhaps on this election, is the normalcy of US sports betting and the number of people betting the election this time, rather than last time. When I was posting thoughts in 2012 I think most people blocked me because they weren't betting and I was going on about some obscure county that looked good for Obama. This time, like everyone was betting, and they are some really, really smart people. I'm glad these people weren't around in 2004 or 08 or 12, because the chances for profit would be a lot smaller. 

Back in 2008 I was playing the Missouri Primary at Betfair between Hillary and Barack Obama. I had precinct level data via the Missouri gov website in some sort of ASCI format. The vote came in and it was massive for Clinton - but it was virtually all suburbs and rural, where we knew she was super strong. Some networks were assuming it a win for her with these big numbers. 

But St. Louis had not come in. With some back of the napkin calculations, it appeared to me Obama was at the very least a coin flip. Betfair had Clinton trading at 1.01, yes, people just unloading positions. I took all I could - which was pretty sizeable at that time. About an hour later Obama had won, by a not insignificant 12,000 votes. 

In 2020 - that never happens of course. People are smart, they're engaged, and like in any game of skill, the implied probability will be near actual, not farther away. 

Having said that, if this was your first big betting election, I can stress - it's not usually this hard. One would expect states to be more like Florida in their vote (much of what we see with flash-quick results in Canada), and we won't have COVID issues changing just about everything that comes in. I am fairly sure the data holes will be plugged, which will make it easier to pick a winner, but maybe with no change in lesser value. 

Thanks for reading everyone, and have a nice Thursday. 



Summary of my bets (probably on my twitter feed, but since I am not selling anything, it's not like I am searching for them):

Trump (pre-COVID) long, January and February -105 average (for too much freaking money, but seeing the results this was one of the better bets I probably have ever made)

Iowa Trump -250 and later in the night -300. 

Biden +180 in October in GA (looked like a loss, but maybe not)

Biden -800 election night NH after some city results reported

Biden WI small as results came in

Trump Arizona, fairly large at I think -150, when the FL hispanic numbers came in. 

Biden 26-27 states at I think +375 or something

There are probably a couple others, but I have not gone through them all yet. I'll wait until it's over. 



About those ADW Splits ...

There was a discussion - and yes, I realize this is like a Christopher Nolan movie - about ADW splits on the twitter yesterday. It was spawned by the venerable Pat Cummings tweeting the following:

 "More of a share" has been the mantra for fiefdoms in this sport since about forever, so this is nothing new. But one thing that bothers me (and I know most of you, too) is that when you're not building wealth, or growing, taking more of a share can end up degrading wealth creation and growth, and no analysis in this sport ever seems to take account of that. 

If an ADW makes $50,000, this analysis contends that if you take $40,000 of that $50,000 for purses, nothing will change. We're applying single variable conclusions to a multi-variate problem and it can be very maddening. 

In the ADW world, gross margin is made from the takeout minus the host fee (along with several other fees). For simplicity, let's say net margin for the Acme ADW is 5%; that means if $1M is bet, the ADW takes home $50,000 for their business. Of that $50,000, $30,000 might go back to you, the customer, to encourage you to play more and stay a customer of horse racing; a portion may go into marketing for customer outreach; a portion to promos. 

That money is reinvested to grow wagering. The $30,000 alone, with a modest churn rate of 7 means $210,000 of added handle to the sport (of which a fixed percentage is returned). As well, marketers and businessmen and women will often talk about Lifetime Value of a customer, and the LTV goes up when perks like this are added to the mix, when they are taken away, the LTV goes down. LTV is simply future revenues. 

This is not static. In our example, sure at this distinct point in time a set of purses have gone up by say $20,000, but a month or a year from now that $20,000 might not exist because the players' LTV has gone down by X times and they are not contributing near as much through handle. 

At a Capital One or Discover card meeting you won't hear about the elimination of 3% cash back, front of the line concert tickets, discounts on gift cards, or whatever to increase general revenues, with impunity. In racing - in some quarters, not all; certainly not CDI analysts or the O'Rorke's at NYRA of the world - this seems to make perfect sense. I haven't got it since it was brought up 20 years ago, and I don't get it now. 

Until the sport rows the boat and doesn't worry about what each paddle is doing I can't see handle increasing. I just can't see the sport growing. It's a pox on the sport, and in my view, it makes seeing a positive way forward very difficult. 

Have a nice Wednesday everyone. 

Note - I hope the post above wasn't read to be about Pat's article, rather than the simple fact racing tends to focus on the small items like this, rather than larger ones. Pat and the TIF, I believe, have always centered on growing pies not splitting them; trying to find the unbelievably elusive common ground that is (at times) unfortunately needed in a sport devoid of leadership. They have a difficult job and I don't want to add to the chorus. I support them, their hard work and their vision and wish them nothing but good luck. 



People Love Jackpot Bets, Maybe.

One of life's many mysteries on gambling twitter is the Jackpot Bet. 

Oftentimes people like @shottakingtime, echoed by others, will post a jackpot bet pool (not a mandatory) where $15,000 or $20,000 was bet into it. The resulting discussion revolves around the statement, "who the hell are these people."

I don't know, and I wonder if 'racing' knows who they are either. The data is sporadic, there are computer teams who are probably trying to game it with some sort of contrarian ticket, huge rebatees; or it could be Russian bots, many of whom frequent this website. 

If they don't know, and don't seem to care, shouldn't it worry everyone?

Back in the 1870's Thomas Edison created Menlo Park to do what he called, "the invention business". He assembled 200 scientists and craftspeople to, according to Matt Ridley, "find out what the world needed and work relentlessly to meet that need, not the other way around,"

It worked. In only four years the team had over 400 actionable patents, some stemming, like the Nickel-Iron battery, from 50,000 or more trail and error tests. 

An idea is broached that a market demands, the idea is studied, implemented, then data is analyzed and married to market concerns. Sounds so simple, right?

When it comes to jackpot bets, racing makes the same mistakes that many businesses and entities make even today. They weren't Edison. They created something for them, not for you

They have not created something you demanded; they have not analyzed what these bets do to customers' bankrolls, frequency of reups; they have not determined how detrimental they are to lifetime value; they have not tweaked them, or changed them, or completed "50,000" experiments to make them better. Hell, they don't even seem to want to tell us when a jackpot is a jackpot carryover or a real carryover on ADW websites. Revenue by hoodwink.

Do people love Jackpot bets like Bucky likes to opine on twitter? Do they help the game, hurt the game or something in between? Is this a bet something players want or wager on them only because they are offered?

Your guess is as good as mine on those questions, but the worst part: Racing is right there with us.

Have a good Tuesday everyone. 

It was an Odd North America Cup Night

Hi Everyone. Last evening's North America Cup card is in the books, so please allow me to share a few thoughts. 

Handle came in pretty solid, although it's hard to compare historically because of the number of races and a super high five mandatory; the latter in what I hope is another indication shows this is a gambling game, as new money for the carryover was more than was bet on the North America Cup. To those of us who gamble, this makes sense, but really, it was about the only thing that did most of the night. 

We saw massive form reversals like American History at even money in the open, horses stopping, numerous breakers including Atlanta who seemingly never breaks, the best pacing filly in the country who looked like she should've stayed home; we had horses racing off the course for no reason. 

And it in the Cup itself, well we had some head scratchers. 

$1 million on the line, glory, biggest pacing race in the world and everyone but one horse tucks? 

Most of us made serious light of Bob McClure choosing to drive a longer shot rather than an elimination winner, and that was not the case as his choice was inexplicably lower odds than the elimination winner. I say inexplicably on paper. Captain Kirk, who is two and ohh against Papi Rob Hanover and almost beat Tall Dark Stranger in his pace elimination, raced exactly like the dead on the board horse he was. Jody was ducking faster than a solider on the Maginot Line in summer of 1940. Maybe Bob knew the horse would be no good; I have no idea. We peons are usually in the dark about such things. 

Why so few other horses came to race - this is still the richest pacing race in the world - is something maybe more than one or two of the local drivers would like a do-over with. That no one other than Bob tried to get placed near the front is bizarre. Kudos to Drury with Moneyman Hill. A recent purchase for a reported $80k US, the horse fell into third, sat third and came third, pocketing $120 large.

Something surely a lot feel haoppy about as do I, is for Gingras. The dude moved to Canada, quarantined and did so primarily because he wanted to win this race. 

The race was a total snoozer, but the best horse and driver won. 

Overall, and bigger picture, I'm happy for all involved, as they got this race into the books. Still, I can't help but think of next year with better horses, better drivers and a deeper undercard. It should be back to its old self.  

Have a nice Sunday everyone. 

#theyknew Hold it Who Knew?

 The Theyknews are the talk of the town on the twitter very often. And also very often they're pretty good, especially in smaller pool tracks where it's easy for the connections to be on something that you aren't. But, last card at Mohawk, there was a theyknew where I have no idea who the they were. 

In the second we opened the PP's to a two horse race. Free Flying Ticket had beaten better and was going for three in a row as the 2-1 morning line chalk, and favorite in the doubles. The five was a close second choice in multis, and had a nice win last time. 

The betting started off weird, and especially because I thought the five had a shot to beat the chalk, I was dismayed (intervals below). Then I checked the perfecta payoffs and saw a decent edge with like a $10 and $12 payouts (two was still chalk in ex's) and I told a friend, "I can't believe I am thinking of boxing these two, it can't come any other way can it? Is something up here, they are too high?"

The two came out on the track, looked perfect, the five looked good as well. It felt like a green light, but something also felt very, very odd and it got odder at the gate: The five horse went to 1-2 and the two horse went from 7-5 to 2-1. 

You're probably saying that you've seen this before and it was the typical #theyknew. But here's where it gets interesting. When we see a theyknew, the rider or driver is usually in the know - they know the horse isn't great; she felt off, the connections told her she was sick last week; whatever. And they underdrive or underride the horse. Not this time. Paul Mac pulled at exactly the right time, was aggressive, and at the half looked like a 1-9 shot. He drove her to win. 

 

 And pffftt, the filly crumbled. So, if Paul didn't know, and if by deduction, the connections didn't know, who the hell knew?

I have no idea. 

Have a nice Thursday everyone. 

Horse Racing Trade Media Disconnects

It's a pretty common occurrence to see analysis of the media - any media really - nowadays that contains a whole lot of grains of truth regarding a strong disconnect; a disconnect with statistics - like handle and TV coverage - or something seemingly as tangible as what's happening on the ground right in front of our eyes. 

Last night, this was the headline from a trade paper about a performance of a driver. Big night; one for the ages! When you scroll the article, youtube videos are linked, including to the second race, which was not won by the driver in the headline.


 

 Jody was driving the 1-5 shot and if you watch the video, there was something for the ages and it was something. He sat behind a leaver, and never pulled, only getting out at the end. It's one of those drives that in Hong Kong would get you shipped onto the next plane to Northern Tibet Raceway. It was one of those drives where in North America, bettors scream "fix!" and head to the poker tables. It's the drive customers were were talking about on twitter. 

If you read the headline of the trade paper, you'd never know it even existed. "Local Driver Has Great Night", time to move on. 

Now, I don't point out that drive to suggest something sinister happened. Not only do I not believe it did, suggesting it (without fact or knowledge) I'd be as bad as the media we criticize so often. The filly could've felt like she had zero go, she could've felt lame; a hundred things where a chalk might sit in. 

But the fact remains - what you at home were talking about was not reflected in a trade media story. 

Horse racing media - and I think this is true with most media - lives in a vacuum. Sometimes this is by necessity (advertisers, don't rock the boat) and sometimes it's by an unwillingness to listen and understand what's happening around it. For whatever reason it's been here since what seems the beginning of time. And it doesn't appear to be getting fixed anytime soon. 

As for Jody's drive, well, that's a pox on horse racing's house. As I note, I have no idea why he drove the filly like that and neither do you. And that's the problem. 

Information needs to be disseminated in this sport; things can't just be buried. When upwards of $200,000 is bet in multis and in-race wagers on a race like that, the people giving you their hard earned money deserve more than silence and a story in a trade paper about what great a night the guy had. 

It leaves you scratching your head and it leaves me scratching mine too. It's no way to run a gambling sport. 

Have a wonderful Travers and Hambo weekend everyone. 


Horse Ownership and the Health of the Game

I saw this tweet this morning:

This is not breaking news to anyone, but it certainly strikes a chord, doesn't it? And to me it shows just how unhealthy the game has gotten.

For systems to thrive (and price things correctly) there is an immutable truth - the volume of buyers and sellers is the KPI. Whether we are buying a stock on the Nasdaq, bartering at the farmer's market, or visiting our local proprietor selling every day goods, we want lots of buyers and lots of sellers. It's how a healthy system rolls.

In horse racing we used to have that.

Leaving aside the big dogs in the runners, as Crunk details above, I was thinking about harness racing in this vein recently. 25 years ago when I was hanging around the track, watching baby races or qualifiers, chatting with bettors and owners, the conversation in the late spring and early summer went a little like this -

"Burns has a nice two year old for Shipp"

"Fritz has three good ones that should take a beating in the sires stakes"

"Kopas has a bunch of New York breds that are all good"

Doug Arthur...... Ben Wallace..... on and on have a some stock  ....."

There were dozens of trainers and dozens of owners who were all active at the sales, looking for a good one.

Last night - and again, this is not unlike any MSW in Thoroughbred racing now - we saw the Dream Maker for two year olds, and we sure as hell didn't see this. We saw two barns, with a half dozen now two year olds with yearling prices ranging from $120,000 to $340,000, and then everyone else. The everyone else was racing for fourth.

Flip open the program to the Meadows, the Meadowlands, Yonkers, Tioga. It's all the same. It's concentrated power.

As with most of this blog since forever, it's observational, and most of these issues are well above my pay grade; I'd offer, perhaps, many don't even have a solution. But, the declining breadth of ownership and the lack of interest in people wanting to take a shot at glory in this business surely is troubling.

Have a nice Wednesday everyone.

Similar

Carryovers Provide Big Reach and an Immediate Return

Sinking marketing money directly into the horseplayer by seeding pools is effective, in both theory and practice In Ontario and elsewher...

Popular