Tuesday, September 27, 2016

Horseplayers Haven't Lost Touch, Horse Racing Has

Back in the early 1960's there was a big battle in the National Football League.

Some owners - in large cities, where attendance drove big gate revenues - felt television would hurt their revenues because people would stay home and watch, rather than go to games themselves. In the end, of course, the NFL embraced television (it was made for it, really) and the rest - including multiple billion dollar TV deals - is history.

In Steve Haskin's blog yesterday, he touched on the fact that maybe folks who stay at home have lost "touch with the horse."
  • But what of that special, cathartic connection with the horses themselves? It used to be where the bettors would actually make it a point to see these horses close up in the paddock, post parade, and galloping to the post, and make their final determinations. They would line the walking ring 10-deep to get an intimate look at the horses, even if just to bet on the pretty one. The horses were flesh and blood creatures who they got to know on a weekly or bi-weekly basis. No one is insinuating that racing technology is a bad thing. It is actually pretty remarkable. But why rely only on that and give up the true essence of Thoroughbred racing and what it was meant to be? 
If the TV deal went bad in the NFL, I think much the same would be written.

"But what of the bond with the players themselves? Sitting on the sidelines, water vapor breath in cold Green Bay temperatures, the sound of the hitting, helmet to helmet, the roar of the crowd, binoculars hanging from a neck with a beer and a hot dog in hand, body firmly pressed on steel seating ....... "

We all have bonds with the players - they are on our TV screens, handhelds, tablets and desktops, and in 24 hour cycles on a football network. We hear the sounds, the roar of the crowd on 52 inch TV's with sound systems; systems purchased for the price of what a 14 inch black and white tube was in 1969. We eat hot dogs and wings at home in a recliner.

What we also do is....... go through stats, for free and play fantasy football, lay a few wagers, participate in office pools, use our Xbox to plug in teams and have them updated in real time, participate in online contests, bet in-running, download free apps on our phone with everything we need at the touch of a button. And about a hundred other things.

The NFL has married technology with football, and they win.

Racing, on the other hand, has had a remarkable, glorious, wonderful carve out - the only real "legal" game to gamble on over the net. But they've done little with it.

You need data, and past performances and accounts. You aren't watching on an Xbox, you aren't backing and laying on an exchange (unless you live in NJ). Online contests? Well, the horse racing lobbyists decided in more than one place this is not an asset, but something that should be banned, or even sued.

And despite that, when you decide you want to play, you have to into pools with egregious rakes.

It's fun to talk about the majesty of the horse and the greatness of live racing. No argument here. But to say "horseplayers have lost touch with the horse", I believe is wrong. We have never lost touch with the horse, horse racing has lost touch with us.

If the sport ever gets horseplayers back, there will be no need to even have these conversations, because there will be more people at the track, more people buying horses, and the sport will be in better shape.

When things are good there's less need to grumble, or wish for the way things used to be. When the future is bright we look forward and wonder what we could be, we don't look backward and remember what once was.

Thursday, September 22, 2016

The Reality of Regulation in Our Sport, Through Others

Yesterday we looked at the excellent interview from ITP on Dink's radio show. He and Dink examined some of the issues for customers, and bettors in horse racing. It was great, but I thought taking a look at the environment they were talking about was probably a decent idea.

In some states and cities it's pretty tough to be an interior designer. In Louisiana, for example, it's more difficult to be one, than to become an EMT. It can take years and thousands of dollars in "fees".

Now, to probably you, me and most everyone else, this sounds silly - if someone is a bad interior designer, he or she will go out of business; this is what Yelp is for - but the way things are working nowadays, this is the new normal.

What happens, is an industry group who wants to create a form of monopoly lobbies (sometimes with wild assumptions) to those in power wanting regulation. This regulation acts as a barrier to entry, and the said group (who are likely grandfathered from any regulation, or have some sort of edge, because they helped write it) benefits. Governments do well, because the licensing fees go to them.

Now, I realize this is a hyper-political world where some people tend to look at what letter is before something before they agree or disagree, but this issue is not like that. President Obama's committee to study such issues has come out against this new regulatory environment, asking for "cost-benefit" analysis to be the overriding factor (to ensure consumers are protected). Some red states have it, some blue states do. The middle of the road Economist has been harping on this for years. It's non-partisan reality.

Recently, when the DFS brouhaha was going on - there were issues with security, employees entering teams etc - I feared that regulation would go along this route. I bantered back and forth with a few who made it a mission to "fix" the industry, because common sense said regulation was not going to protect consumers, it was going to increase prices and stifle choice. Just like it has with interior designers, or a hundred (thousand?) other industries, where regulatory capture takes hold.

The results thus far, of this "consumer protection" regulation?

Fees as high as $500,000 (in NY, natch) for existing providers (this stifles choice and as the article notes helps create a "duopoly").

 Prices, you guessed it, have gone up.

Notice the prices went up on who? The small guy or gal playing "under $25" tournaments, who were, ironically, the players the New York Times, New York AG and others were screaming to "help". If a 50% price increase is help, I'd hate to see what happens if they really, really want to help.

Folks who foresaw the above coming did not have some sort of crystal ball. They aren't the Long Island Medium lady. They didn't even need to look at President Obama committee's, or interior designers for insight.

They had racing. Lots of years of racing.

They saw a CHRB - a "regulator" of sorts - increase prices on consumers and applaud about it, with little discussion from a "cost-benefit" analysis. Look who makes up the CHRB.

They see wildly successful Kentucky Downs wanting more dates - to you, me, owners, trainers and consumers of the racing and betting product absolute common sense - and apply for such in Kentucky, only to be thwarted by a commission that is captured by large entities.

They see slots legislation written where revenue goes 50% to purses and 50% to the company who owns the slots, when the people lobbying for the deal were, you guessed it, horsemen and racetrack operators (almost mirroring the duopoly in DFS we are seeing now).

Those are three examples. I am sure you can come up with a hundred and three.

So, ITP and Dink had a great discussion. It was informative, much more right than wrong, and a lot of it had wonderful, sometimes lost, common sense. I happen to agree with ITP -- this sport, in North America, should be capable of doing $50 billion in handle.

But, because of an environment that strays away from increasing handle, and worries more about putting revenue in the proper boxes from those who bend the regulator and commission's ear, it's one tough row to hoe. The chances of it ever changing are probably close to zero.

Have a great Thursday everyone.

Wednesday, September 21, 2016

A Constructive, Instructive Industry and Gambling Interview

Inside the Pylons, at home in Vegas (artist rendering)
Last evening Dink had "Inside the Pylons" as a guest on his radio show - Eye on Gaming.

The full interview is here.

This is a pretty good discussion, not just for gamblers, but for everyone in the industry to listen to. For no other reason, perhaps, because you simply don't hear interviews from people like this very often.

One part of the interview was particularly insightful, in my opinion.

From the betting side, you heard what you will hear sometimes (from this blog and elsewhere), but at times it's hard to get your head around - the game is not about picking winners.

It's worth hearing that, in person, from someone who lives it, who has never had a job to support the family, other than wagering. And as a bettor, it is a powerful message that is all-too-often discounted as some sort of strange betting voodoo.

I remember getting that message delivered years ago, with regards to my numbers betting superfectas. Superfectas were $1 minimum, and early on they were a huge edge for people who don't worry about cashing tickets, but worry about cashing good tickets. While a good deal of folks in the pools focused on boxing three chalk with a bomb, or using chalk with all's underneath in the 4th spot, hoping to catch a 40-1 shot in 4th, it was optimal to completely fade that strategy.

At times you could it a super for $8,000 with a tri paying $500. There were pool shots that should've never been pool shots. It was the salad days for those who took chances, weren't afraid to invest $112, or $256 or $324 into tickets with a low hit rate, or structured super tickets like few others were.

That's generally my playing style, so after playing supers for a few years, my ROI was superb, and it was really a go-to bet.

Then, along came the switch to 10 cent mins, at most tracks. After about nine months playing supers in a similar fashion into these strange fractionals, I checked my ROI, because I felt I was not doing as well with them. In my mind I was at, perhaps, an ROI of 0.92 or 0.95, which was well down from previous years.

My ROI was 0.77. Yep, it's like I was picking numbers. I was a dart throwing monkey.

Although my results were lower that year overall, I did not forget how to handicap. I didn't turn into a dart thrower who lost the juice. It's not like I switched to betting Australian dog racing. I simply was not sharp enough to notice the environment changed, and I was not structuring tickets right with that change. It wasn't about picking a winner, it was about ticket making gone very bad.

ITP is correct, in my view. Horse racing, instead of shoving ridiculous jackpot bet tickets down newbies throats, they need to teach them how to make tickets; how to bet the horses. Teach people what's important, like board and ticket value. Y'know, the whole teach a person to fish thing.

If the industry gets out of people's way, it's simply an amazing game.There are a hundred ways to win, or to be close to winning. If the industry ever got it together enough to sell this game in a value driven, gambling driven way, I am still convinced the sky is the limit.

Enjoy your Wednesday everyone. And yes, again, if you are a bettor or industry exec, give the interview a listen. You will learn something.

Tuesday, September 20, 2016

Canterbury Park Meet Analysis

The Canterbury Park meet just closed for the season, after the first year (hopefully) of them trying to attract more betting dollars to their smaller venue. One of the toughest - if not the toughest - job in racing is getting people to notice your small track. Canterbury Park sure gave that a college try.

Handle was up 5% for the year, and about 10% on a per horse basis. For a small track these numbers are good, considering neighbor tracks were down double digits this season, and small tracks are getting eaten alive by the bigger signals in 2016.

Crunk has an eye-opening and very heady analysis here (give it a read, he did a much better job than I can here between meetings), so there's no need to delve much more into it. But a few of his points are worth repeating and analyzing.

They had some terrible luck, with almost one full card consisting of four and three horse fields. This season 138 races (about 15 or so cards worth) had six or fewer horses. Last season that number was about 30% lower.

Turf cards were washed out, some on their best night, Thursday. 43 turf races were off turf, versus 17 last season.

Using a little betting math, a 7% reduction in field size, apples to apples, year over year, handle should be down about 4%. When cards are washed out, more like 7% or 8% is probably a better estimate.

With neighbor tracks down about 15% or more, there's that to add to the equation.

With so much bet on track, bad weather is more important, too.

The 'Shakopee Bridgejumper' stayed home this year, which is good for the track, but bad for handle.

Doing nothing, standardized, one may expect a 10-15% decrease in handle, at a bare minimum. So, 5%, or 10% per entry up certainly (as O_Crunk concludes) was pretty good.

Folks asked me early on what I thought might happen this year and I honestly did not know. It's a small track, lowering takeout to a fair level (but not out of this world). If a gun was held to my head I answered that I thought 15% would be a nice gain. Considering the characteristics in Crunk's post, I am pretty happy with that estimate. I think that was probably in the ball park.

Where does the little track go from here? Who knows, but like I did this year, they will see some of my dollars at these takeout rates. I had a fun meet, and enjoyed the racing, when the sun was shining and the box was full.

I would like to make a note before I rush back off to work, on Canterbury itself:

A meet where people have fun; where the simulcast feed is filled with families on my screen watching horse racing, eating hot dogs and soaking it up; a place that has alternative gaming money and wants to use it to make the place fun and exciting and bettable; a place that seems to be doing everything they can to grow, to say "hey have a look at us"; is what horse racing is supposed to be. It's what we ask all tracks to do to promote this sport.

Hats off to them for trying. Canterbury should be very proud of their efforts and I wish this sport had a hundred tracks like them.

Have a nice Tuesday everyone.

Monday, September 19, 2016

Releasing the Racing Hook that Hooks Ya

I read, like a lot of you, Lenny's post about giving up his passion as a horseplayer. If you have not read it, give it a look. It's informative.

Although Lenny touches on a lot of personal issues, his overarching theme regarding the handicapping and betting genre is pretty eye-opening and interesting. I don't think anyone can argue with him: This is one tough, expensive, frustrating, time-consuming game.

And sooner or later (for whatever the reason, but clearly it's related to utility maximization) a lot of people finally say "no more".

Back in about 2007, Bobby Chang who was (might still be, I don't know) the vice-president of wagering for the Hong Kong Jockey Club was presenting at the Asian Gaming conference. Hong Kong was going through handle losses (or stagnation) and Chang looked into what was going on. He concluded some long-time, dedicated players (not unlike Lenny) were leaving; some for other gambling avenues in Macau, some just leaving for the sake of leaving.

Mr. Chang said (paraphrasing), 'Once people leave a betting game that hooks you like horse racing, they are hard to get back. So we had to do something'.

Mr. Chang decided one reason for the losses was that some of these players were not making enough money to keep them doing what Lenny does - watching races, making speed figures; being customers. So, he offered out a pretty stout rebate on tickets of about US$1,000 or more. Wagering in Hong Kong was about US$7.8B and falling at that time, now it's US$14B and rising.

There were other factors at play for the turn around - there always are - but what's more relevant in this instance was the actions of Mr. Chang and the HKJC. This was an executive that noticed:

i) Some customers were not having their utility maximized

ii) Competitors were offering something they liked

iii) Time was of the essence, because when these customers are lost, they don't come back.

Notice a trend, analyze the trend, make a plan to offset the trend, then quickly (within one meet) make sure said policy is implemented, because the lifetime revenue of the sport is at risk, and no immediate action is not an option.

That, of course, doesn't happen here very often. As Lenny's letter above notes, the things he complained about are never addressed. Not only are they not addressed, sometimes gasoline is poured on the fire, making them even worse.

Worse, for example, like a game that needs churn to keep customers happy doing the exact opposite with 57% takeout jackpot bets; jackpot bets that are erroneously and disingenuously advertised on industry websites as "carryovers"; jackpot bets that if some poor, ground-down chap actually has a chance to win one to change his life forever, sees a last leg callously cancelled, like the track was shutting down a hot dog stand because it ran out of buns.

I picked one example off the top of my head (since Lenny mentioned it), but you or I could've come up with dozens of them.

Lenny's issues are personal. Whether the sports' issues are fixed or not will likely not affect him personally, or alter his decision. What is relevant is that too many people have left horse racing, to spend time with their family, to play other gambling games, to watch sports, bet DFS, or a hundred other things. It's shocking that the industry here, unlike in Hong Kong, treats these things with absolutely no urgency.

I don't know if there's the know-how, the passion, or the will inside the sport to fight to keep customers, or get them back. If there is, I haven't seen it, and yes, I've been at this for awhile. 

Best wishes Lenny. You were passionate, loved the sport, and fought for what you believed. There is one fewer of you today, and it's racing's loss.

Saturday, September 17, 2016

Saturday's Notes -- Big Cards in the Land of Maple Syrup, Traffic & Eye-Opening Racing Traffic

North of the border there's quite a bit of action this weekend.

Today there's quite the buzz for Tepin at the Woodbine Mile. This mare has been iron-tough, with a dazzling set of speed figures, and is probably the biggest headliner for this event (along with Wise Dan) perhaps ever. If you're a racefan, she's hard not to like. I have not gone through the card, and may not, but I will surely be watching her.

Meanwhile, after the Mile, about a half hour or so across the 401 (two hours with traffic!), Mohawk hosts a sparkling card of racing, with the highlight the Canadian Trotting Classic.

Actually, that's probably not right, the highlight is another mare - Hannelore Hanover - taking on the boys in the Maple Leaf Trot in race seven.

Well, take your pick really, there are five (for Thoroughbred fans) "Grade I" stakes tonight. Lots of highlights.

Here's a free program right here. 

While some of the twitter peeps get up close and personal with Toronto traffic for the first time, I had another light-bulb moment yesterday.

Not long ago, the post I wrote on the shenanigans in the Sword Dancer ended up taking a life of its own. Before much of the racing press was talking and debating about it (it finally started when the appeal was filed) this post absolutely slayed traffic. Not linked on any site, and not retweeted much by old time racing people, it just got passed around. All told, it was the highest trafficked post on this little blog, since 2007, its inception.

Yesterday I was reading Harnessracing.com's Weekend Preview, and noticed a story on last week's Ewart Memorial, and the judges. It wasn't about the stirrup issue, it was, it turns out, about something else that insiders were worried about (that no one else seems to be). The stirrup thing is relegated to harness racing myth, I suppose.

I said,"I wonder what that little post about the Ewart did on my blog" (where I did talk about the foot out of stirrup issue), so I flipped over and checked. Now, harness racing posts do much less traffic as a rule because its a smaller audience, and I did not expect much, maybe about equal to the average.

It was 650% above average. It, when all is said and done, might end up being the highest trafficked harness post on the blog.

I remember working on the street as a lad - Canada's Wall Street. I was sitting at a pub with a few promoters, who were looking for flow-through financing deals (for US friends, this is a type of Series A). These people dealt on the old Vancouver Stock Exchange, which was (in many ways) like the old west, and a couple (not all) were quintessential pump and dumpers.

The exchange was seeing a few people in the press challenge the status-quo and that's where the discussion went, but no one cared, because, you see, they suspected no one cared about the Vancouver Stock Exchange. It's like they were talking to each other in a vacuum. For a kid who was not in the business for long, it was quite eye-opening.

The VSE was folded in the late 1990's, regulated properly, and merged into the now successful Venture Exchange, which enables the capital markets to function on the seed scale (essential to all economies) seemingly pretty well. 

Sometimes I remember those meetings about the old VSE and think of racing. Those two posts are things that people wanted to talk about, and read, and I'm convinced they were because they were "outliers"; discussions you don't see much anywhere else. They were outside the norm. I think harness racing especially, screams for it, because, like the Vancouver Stock Exchange, it seems there are a lot of people who are aware there's a reason no one seems to be watching, and they want to explore the potential reasoning why. It's much more powerful, and easier to learn, when you are not surrounded with confirmation bias.

Regardless, in horse racing it's easy to be a sponge, because you seem to learn something new every day, a lot of the times with pure serendipity. Those two posts did it for me the past couple of weeks.

Have a great Saturday everyone and enjoy the racing!