Society's Off-Income Gains, Racing's Opportunity Lost

We read a lot about income inequality in the web world in 2020, and much of what we read is correct. But, as we often see in the web world, looking a little deeper we can learn a few important things.

From the late 70's to today, real wages for the lower rung of workers has stagnated in real terms (it's almost flat), but what's not taken into account is prosperity. Today we receive things above wages we did not receive 40 years ago - benefits like group health and life insurance plans, child care, transportation benefits, moving costs paid leave, profit sharing, employee discounts and more - totalling up to 40% of our salary.

In addition, virtually everything we buy today costs less. In terms of hours worked, household goods are 81% cheaper than in 1960.

What this means is that in the aggregate we're better off today, because these benefits are real. We can live better lives than you and I did if we grew up in the 60's or 70's.

In horse racing, let's look at the purse growth since 1988. It's up close to a double, but with inflation, about a double since '88, like wages, it's flat.

But, like total wages, total purses only tell part of the story.

Horse racing has also received tremendous benefits, off book. They don't have to inject capital into earning dollars because billions have been given from slot machines. Racetracks don't have to fight for a customer in New York or Toronto because it was afforded a carve out to offer their product track by track, across state and country lines. In 2006 it was given a monopoly on online wagering.

In addition, while the number of racetracks and race dates dropped, total variable costs to run the business also fell. New capital didn't come from selling stock or issuing debentures, but from the retained earnings from slots.

These are elements that any business or individual would kill for. 

While many live better lives because of profit sharing, pensions, cheap stoves or dishwashers and a hundred other things our parents were not afforded, no one can say racing is living a better life. In fact, we read a racingisdead-racingisnotdead hashtag fight on the twitter extolling just that.

Humanity has progressed with stagnating wages because it evolved, and although you and I aren't Bill Gates, we embraced the advantages given to us. Racing, in my view, has not evolved; it has not embraced what it's been given. I believe it's the single biggest failing of the business.

Have a nice Tuesday everyone.

Wagering Horses, Like Oil Markets

I got a note on Friday from a friend, detailing his view of the general credit markets and, in his first paragraph, oil.

He doesn't wager, he trades, yet his mantra of making sure someone else is on the wrong side teaches us bettors' a lesson we all, deep-down know.

Last Monday, the consensus on oil was to be short. The entire world was running out of stockpile capacity, and supply was up thanks to the Saudis doing bad things. Because of this, especially in inland basins, the consensus view was for negative prices.

Then, next-level replaced first-level. Diplomatic pressure on the bad actors, from primarily U.S. but backed by most others, cracked the narrative. Oil prices rallied 40%, and the consensus view lost a pile of money, scrambling to cover.

He wrote, "it's a reminder there is usually no way to make money with a consensus view".

Those words involve billions of dollars a day, but they're exactly what we have to do with our $48 pick 4. We get paid when we're against a consensus view, and we get paid in multiples when that view clicks.

This process is hard for you and me, and it's hard for traders as well. Navigating implied versus realized volatility is not easy when trading oil, or making a pick 6 ticket.

But as a discipline there is no way around it; it's something we absolutely have to embrace. With 20% takeout, it's as impossible to make money with consensus as it is for people trading oil off a consensus twitter trend last Monday. "That horse can't lose" is not too dissimilar to "there's no way oil can rise this week" more often than not.

Have a nice Sunday.

Snuffed Out

Yesterday, many of you were readying for the Cal Expo racing card, only to learn shortly before post time racing bit the bullet. As reported, the Country Director of Health instructed the track to shut down a few hours before post time.

This, to me at least (and from what I read, many of you), sounded illogical. Cal Expo raced yesterday (after applying to change their dates to Tuesday and Wednesday a week or so ago). They were not racing - at the conclusion of the Wednesday card - until next week.

Why, with two shakes of a lamb's tail; with horses warming up or already trucking to race; with track employees, judges and the betting network fired up; with everyone almost behind a starting car, would this get so abruptly cancelled when they could just cancel it on Thursday? It had to be something, right, because even in the world of government this didn't really make any sense.

It appears (and in this day and age of doctored news etc I am hesitant to believe a lot on Social Media) an animal rights activist and a county civil servant served up the snuff out:

If this email is correct, someone named "Aquawoman" - no, not a joke - seems to hold a lot of sway.

We learned pretty early on around this big wide world recently that viruses move faster than bureaucracies. In this case however, an activist sure made a bureaucrat work fast.

Enjoy your day everyone.

h/t to @gocashking for the screenshot

Horse Racing's Value Prop

Hello people. I hope you're all managing your lives and loved ones in this crazy time we're living in.

With more time at home, it means more blogging, which six or seven of you probably care about, so here goes.

I read a book by Jonah Berger, a marketing professor, recently called The Catalyst. If you're interested in business, marketing or perhaps politics, it's a pretty decent read. (Warning - if you're right of center you might not like some of the analogy, but the principles can be politically flipped and they're strong arguments either way.)

I caught a podcast of his, and he talked about one part of his book - primarily a problem many have in the gig or creative economy: If you are doing great work and providing value, won't you eventually get noticed; noticed because people (i.e. the market) are always attracted to value?

He, as an academic, learned he could produce great work with tons of value, but that work would get lost in a sea of other academic work. It was never broadcast.

His examples on the other end of the sphere talked about fake news. Was it great to learn (wrongly) DJT's famous words that the coffers are brimming with Chinese money because tariffs are "tremendous"? That a reporter told you the MLK bust was removed from the White House? Nope, the value people get from it is through bias, and trying to strengthen their arguments (right or wrong) but certainly not providing value. This lack of value has not stopped fake news being broadcast, each and every day on our twitter feeds.

What's interesting to me is that with just about anything - a start up, a music release, a new self-published book, art or photography, he's totally right. It's an uphill struggle no matter how valuable you are. We, if we're a writer or new business, have to have a great product that provides great value, but it's more than that. It needs a push, through marketing and otherwise.

That may fly in the face of what you read on the blog here about many of our views of wagering on horse racing. We often type or twitter - provide value to bettors and racing will grow.

Are we all wet? He's the marketing prof and I'm a nobody after all.

I think we're talking about two different things, because wagering is a different beast.

If we provide betting value to customers - deep fields, attractive bets, great takeout - it's pretty much all we need to do, because value is the giving away of money to smart people who are searching for it. What they seek, they will eventually find. Every bettor, in any game, is searching for a chance at profit. It's their 100% focus.

There's some value left in online poker (not much, but with more "fish" during the COVID outbreak some) and that has suddenly attracted more volume.

There's some value in DFS, and League of Legends is attracting a $300k tournament this weekend. Our old pal Multiracewagers sent me a note that he was diving into learning League of Legends to play these tournaments. Seriously.

Horse racing possesses a value mechanism already. It's called the betting pools.

If racing makes the wagering better, more affordable, easy to use and lower cost, we won't need multi-million dollar marketing plans; Triple Crown winners, hit movies or to be on cereal boxes; fake news or real news or news from Mars. Unlike so many other businesses, we just need to turn the value machine on, and people will come.

Questions Questions

The past couple of months have been pretty tough. I hope y'all are working through this, and that you and yours are staying safe, and doing your civic duty the best you can.

I've been chatting a lot about the changes we're seeing - more long term, not short, mainly in the business world. One area most interesting to me (leaving aside the gloom and doom which is very real), is that people are currently doing new things in new ways, because the old ways aren't available to us.

I've had someone tell me they ordered online groceries, who would not order online if you gave her a $1,000 free food coupon. She loved it and she said she can't wait to use it again.

I had to call an ISP today, and with the help center shut down, the call was routed to someone's home. He provided excellent tech support, and I wondered, if you owned this business would you want to pay overhead for a center after it's all done? ZOOM, DOCU and ADBE stocks are all up because of home work, but do they have to come down if business strategy changes?

Dining out is huge and has been growing massively in the service economy for years, and people are proxying with home delivery services. Dining in is not quite as huge, but home food delivery services like Hello Fresh allow you to cook fresh food at home.  From what I hear these services are in high demand.

Online doctor visits, deregulating occupational licensing across provincial and state lines are happening as we speak. I know many people over the age of 60 who would never think of something like an online doctor consult, and now they appear to be.

There are some fascinating things happening, right before our eyes, in my opinion. Some of them will be cost effective, they could move society forward in a good way. There is, or will be, some optimism in some businesses.

Now, onto our beloved sport, horse racing.

When I look at a path forward, unlike above, I am not finding any good vibes with the questions I have.

Will some of the smaller tracks who have closed even come back with meets?

Will slot money, with super-cash strapped governments, return just like it always has, filling the coffers for purses?

Will people like Stephanie ever work in racing again?

With the stock market tanked, and maybe not seeing a recovery for some time, does the foal crop get crushed so bad it can't recover for many years?

I realize these are tough times for everyone, and perhaps horse racing should take a back seat. But this is a horse racing blog, and those questions all worry me. Do we bounce back, or like so many other businesses or sectors, is business as usual over forever?

The Racing Hiatus

It's Friday - the weekend! - where the tracks are ready to fire-up some serious betting entertainment.

As we know, that's primarily not the case, and just last evening Woodbine announced they're closing up shop for the time being. They've been a staple, and as much as I am critical of their betting policy towards customers, I praise their corporate governance in keeping the track open so many people can keep the lights on.

I am not one to be critical of politicians and policy makers when there are so many unknown variables in the beginning of a crisis not of their making. And that goes for politicians I - like some of you - am not overly fond of in North America right now. Everyone's a genius looking backwards, especially in the banality of a twitter mob. So, looking forward, I think the current question being asked, "how can we close things", will need to be replaced with "how can we keep things open".  That, I believe, is inevitable critical thinking.

Racetracks are something - under current federal guidelines in Canada and the US - which can safely be open, if not now, most likely very soon. Let's hope it can be accomplished sooner rather than later, because how can we stay closed is yesterday's question, not tomorrow's.

Cangamble started the morning off with a funny today.
If ITP was here he'd do the Tony Soprano Bingo Gif. We know that during the hiatus this won't happen. This is priority 2,540, like it always has been. And I think we all know that racing will come back under the exact same policy before this all happened. But I love his optimism wishful thinking.

What are you doing as tracks die down, and a good lot of you horse racing gamblers are home?

I heard from one friend who is working up his database for DFS. Another - an old friend who professionally gambles that can't right now but still knows a thing or two about horse racing - is playing the races (at the tracks we have left). I am planning - if work slows - to database some of the trainer results since "Servis-Navarro Gate" to see if someone's horses are being raced cold. I'm also looking at my (so far not very good) ROI numbers for 2020. What am I screwing up?

This sure was all pretty unexpected. A few months ago in the US there were 7 million jobs offered, and 5 million unemployed. My professional gambing friends were gambling, my professional horse racing betting friends (all two of you) were betting the horses. People were hotwalking and jogging, training and entering. A few, after the indictments, were looking forward to a level playing field, at least for a little while. Boy, how fast things can change.

Have a great weekend everyone.

Fleeting Racing Wagering Opportunities

I was having a quick chat with an ADW dude on the twitter today. We were speaking about the lack of advertising of ADW's, and horse betting in general. I'm too lazy to check, but I am sure there are a hundred blog posts here on that topic. It's certainly real - it's difficult to advertise horse wagering in a number of places.

However, despite these roadblocks (and lobbying to break down the regulation should have been done), the fact remains - for racing and its online wagering, the critical mass is just not there, advertising or not.

The graph above shows (click it to enlarge) total searches for betting horse racing, month by month. Other than the Derby month, the number of people wanting to learn about betting horse racing online is a very small pool. In some months there are barely a thousand searches for "horse racing betting" and associated matches (if you look at exact, bet horse racing, the numbers are much smaller).

For a comparison, here's a snapshot of one game (daily fantasy) and one sport (the NBA).

Daily fantasy basketball has only existed for a brief time, and brand searches are higher than many broad match horse racing betting queries.

I believe this is a pox on racing's house. While initiatives like America's Best Racing have been funded for lifestyle dynamics (and this was recent), horse racing and their monopoly on online wagering didn't do the work. The monopolist's mindset (and general average cost equals price inefficiency) has ruled the day, in my view.

Why do the work when you're technically the only game in town? You do the work because you want people searching for what you're offering to increase over time. We do the work to increase pull demand with push demand. The sport never really embraced that, and even in times like this where marketing should increase to capture new markets, it does so in a bit of a vacuum.

Have a great Thursday everyone.


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