Thursday, December 1, 2016

Some New Stakes Sponsorships Are Head Scratchers

Turfway's Spiral Stakes gets a new name, blasts a DRF headline yesterday. The Spiral's name was changed to the Horseshoe Cincinnati Casino Stakes awhile back, and now it's being called the Jack Cincinnati Casino Stakes.

Thank goodness for that, because people leaving the Spiral might've headed to the wrong casino on the way home. 

This represents a trend in horse racing, and as revenues from betting fall, we at the PTP Blog expect to see more and more of it. Racetracks need more money, and this is a way to do it, and it is not going to change.

What might we expect to happen to stakes race names in the coming years?

"We will see some name changes that defy logic," Cub Reporter tells the PTP blog. "I've heard from several insiders and have a list that I can share with you, but only if you don't post it on your blog," s/he added.

I post them for you below.

"The Belmont will be named the Andrew M. Cuomo Stakes," notes Cub. "NYRA braintrust realizes that even if he gets voted out, he'll still hold sway over the organization. This move is purely political."

"Yum brands has been outbid so the Kentucky Derby will be renamed the Kim Jong Un Kentucky Derby North Korean Classic," says Cub.

"Churchill thought about the bad PR of this move, but the dude gave them a big check so they said 'welcome to the Derby Mr. Kim!'"

"When this is released and the stock goes up it's 'mission accomplished', my source told me".

"I have it on strong authority that the Breeders' Cup Classic is to be renamed "The Breeders' Cup Day Prep for the Kegasus at Gulfstream brought to you by Frank Stronach," says Cub. "It's not catchy, but it gets the point across."

"Stars and Stripes Day will be renamed Chris Kay Day," says Cub. "They feel they need to honor Chris, because he has the finger on the pulse of everything racing," says Cub's source. "Dignitaries like Daughtry will be on hand to sign stuff for fans," added Cub.

"The Zenyatta Stakes will be changed to the Thoroughbred Owners of California Stakes", notes Cub. "The TOC wants recognition for taking a larger piece of a shrinking betting pie for purses. Without them raising prices - my source tells me - California racing would be broke."
 
"The Arlington Million's name will be changed to the Arlington Quarter Million brought to you by Pete's Tire and Radiator," Cub says. "Arlington purses have fallen on hard times, so the purse is reduced, and this Pete guy contributed $20k, as the highest bidder."

"The Toyota Blue Grass Stakes will be changed to The Chrysler Blue Grass Stakes," says Cub. "My source tells me that since rural Kentucky went something like 98.2% for Trump they don't want to be associated with one of them foreign car company things."

"The Sword Dancer is now brought to you by Juddmonte," notes Cub. "This is on condition they don't run another rabbit. Strategic play by Kay," added the intrepid reporter. 

"Although there will be no official name changes, my source tells me that all stakes at Parx in 2017 and beyond will be now sponsored by Clenbuterol," says Cub.

"The Sunshine Millions at Calder will be now named Sunshine Millions Girls Girls Girls Exxxotic Stakes," said Cub. When I told him that's already the case, he said sorry, he did not know that.

Have a nice Thursday everyone!

Wednesday, November 23, 2016

Why Do Trainers Cheat?

Well, 

"According to an agreed statement of facts read in court, Chris Haskell, 39, was filmed using a syringe to give horse He’soneinamillion a tracheal and “intramuscular” injection during an OPP horse doping investigation in October 2010.

"A search of his person revealed six “loaded syringes” full of performance-enhancing drugs which police alleged he intended to use to give his horses Enzo Seelster and Ideal Gift a boost."

He was (after a plea deal) convicted of fraud.

His punishment, 6 years after the fact -- "a $2,500 fine for the fraud (injecting a horse) and $1,250 for attempted fraud (being caught with drug-filled syringes)."

That's a purse check for winning a $7,500 horse race.

Why do trainers cheat? Probably because even if you're caught and convicted for fraud via a provincial police investigation, it's worth it.

h/t to @righthind


Tuesday, November 22, 2016

Derivative Betting Instruments Work ..... If You're Growing

I remember back in the 1990's I got a "hot tip" in the markets. Apple was going to be bought by Microsoft. This was not the craziest thing I had ever heard, because Apple was not doing so well, and Gates and crew would certainly be interested in it.

Apple was trading at $17 a share, and I had a choice - buy the underlying equity, or look at derivatives. The $25 calls, a few months out, were trading at a buck or two with plenty of liquidity, so I leveraged using those.

Options and futures markets work for many reasons, but the biggest one, is that the markets don't trade 100 million shares a day like the old days, they trade billions. The markets are all growing, and when they have, derivatives grow, as well.

In Vegas, US Fantasy is a new offering
It’s just like betting the horses. Instead of races, there are props. For instance, Prop No. 1 for Sunday’s NFL action was a group of 12 quarterbacks. You could have bet, say, Tom Brady to win, place or show.
There are daily doubles, pick threes, exactas, trifectas and superfectas available. There’s even a chance to win as much as $1 million on a $1 bet for correctly selecting the winner of seven different props.
The scoring systems are quite simple. Only yards and touchdowns count for football while points, ­assists and rebounds are used in basketball.
As with horse racing’s pari-mutuel system, payouts are determined by the total pool of money that’s bet on that particular prop, minus a 10-12 percent takeout (compared to 18-20 percent, if not more, with horses).
Knee-jerk reaction to this derivative of sports betting is that players will always choose to buy the underlying equity (if you think Tom Brady is going to have a great game, bet the Patriots). But I am not sure I lean this way.

Yes this might be a longshot to catch on, but derivative instruments like this do have a chance, because sports betting is growing, and it's bringing in more and more new users. DFS has surged, despite the levelling off of the last year or two. Fantasy players with strong opinions are in the millions. Fantasy geeks might not want to bet the Pats, but they might like the odds on Julian Edelman this week.

Horse racing (even today) tends to add more derivatives to the win place show pools, and when wagering was growing it made perfect sense. Adding more now does not. However, for the growing sports betting markets, I think we'll see a lot more of it. The obvious blue sky is that while horse racing can be bet in 43 states or so, this type of wagering is only offered in one. That is sure to change.

Have a great Tuesday everyone.



Monday, November 21, 2016

Retail Markets & Betting Markets Have Big Differences

Yesterday on the twitter I posted this (at left) screenshot from a book. It's about LEGO, who was falling on hard times in the early 2000's, and they commissioned "big data" to tell them what was wrong with their product.

The global data said that the digital generation (born post 1980) had "short attention spans", needed "instant gratification", and big, difficult, time-consuming puzzles were not going to fly in the new world.

Luckily for them, due to smaller, anecdotal data, the company took the opposite approach and made their product even tougher, and more time-consuming to use. This strategy worked, because by 2015 LEGO passed Mattel as the world's biggest toy maker.

Ain't that a kick in the pants.

For us in horse racing who believe this is similar to what racing experiences, it's refreshing to read. The LEGO experience is a polytrack race with 14 horses, versus a five horse field where the speed horse sprints and staggers home at 3-5.

The spawned a short discussion. One tweet caught my eye about using customer data.
In retail getting the customer to spend more in gross dollars is the goal. Always has been the goal. In fact, it's not only in retail. As noted in this marketing piece last week, the Trump team spent their marketing money in large fraction to get their voters to do more, too.

From my experience, racing thinks the exact same thing - get people to spend more. Of course, this is fine if we're talking churn. But their 'bet more' mantra is all about retail.

It's a jackpot bet, fractional betting, a guarantee, a post drag. It's tweets about an event. It's the Kentucky Derby shoehorning more people into the place. It's hats n' Miss Cougar II, n' stuff. It's all about one disparate entity getting a customer to spend more on their entity, venue or bet.

What many in racing miss, in my view, is that they can crunch numbers until the cows come home, but if their goal is to squeeze the customer for more, without tempering that with considerations of their customers' betting ROI, they're toast.

This is not a challenge for a lot of companies who depend on similar for growth (think Google), but racing has a great deal of trouble with this. Corporate entities compete, and if a jackpot bet breaks a betting base and hurts the sales funnel for all of racing, so be it. You can run down bankroll degradation examples, you know them all by now.

It's funny because, oh, about 15 years ago now I had a track executive tell me about something they found in their data, in an almost giddy-like way -- "It's amazing how much and how often customers bet when they're winning!"

A few years later his track raised takeout. In present day, their marketing team promotes their jackpot bet.

Have a great Monday everyone.


Friday, November 18, 2016

Numbers Are Our Friend

Everything's numbers. Well, not everything.

Churchill Downs today announced a $37 million capital expenditure for luxury suites. People-be -going, wow, $37 million spending for a racetrack, and they'd be right. It is a big amount of money in this business. But, the numbers probably show it's the right thing to do, because Churchill isn't dumb, and they own the Kentucky Derby.

At $1,000 a person (this is likely higher) for the Derby only, we're talking $2M in revenue for one day. If Oaks day is added, at say half that revenue, we have another $1M. With simple payback time as a measure, it's a shade over ten years. This ignores the other days of the year where they will generate some revenue, and discount rates, NPV etc.

It's nothing new. The Dallas Cowboys built an entire stadium for suites -- 300 in all - which bring in a couple of hundred million for 8 games (plus, I am assuming some other events). The new stadium in San Francisco sold $140 million in suites before turning over sod.

It's not going to work at Mountaineer and Penn, but I am sure the numbers show it will work for Churchill.

What's curious to me about the Derby and CDI itself is not its popularity, but when will the lemon be squeezed too much. With increases in general admission prices this week, plus more boxes at high rates, at what point will demand fall? I am sure the numbers will tell them, and they will adjust, but to me it's been an interesting question.

Fanduel and Draftkings ran some numbers of their own and merged this morning. They have protection in states which passed regulation to (ironically) protect consumers. Merging should allow them to raise prices more, and stifling competition will help. That, in my view, is a win for the two companies, a loss for their customers.

On the "let's not use numbers for the most part" front, we have racetrack marketing tactics, as described in HRU this morning. Marketing is about numbers in this day and age because almost everything can be measured. Spending $37 million is an exercise in projecting and discounting cash flows, developing IRR numbers and running formulas.  Today's marketing in racing should be able to answer "if we spend $500,000 marketing X, what type of return will we get?" But it is unable to.

Last up, if you are going to pass a new rule on geo-targeting or shutting off betting for customers, should you not be able to (at least in a rudimentary way) have some numbers to look at before making a decision? O_crunk looked at this phenomenon today at his blog, with regards to yesterday's CHRB meeting.

Have a great Friday everyone.



Monday, November 14, 2016

Horseplayers Don't Delete

It's been pretty wild to watch the last week. Tweets like this are being screen-shotted, rehashed, propagandized, and, yes, deleted.


I know I don't speak for horseplayers, but I am one. And as a horseplayer, I profess:

Don't hit delete. And for everyone promoting this so-called grand "wrongness", don't be a goof.

Why? Because it happens to us all the time.

Someone once said, "Zenyatta is a surface specialist".

Someone once said, "American Pharoah is a lock in the Travers."

Someone says, almost daily, "this horse has no chance to lose."

Those proclamations were wrong. Those horses all lost.

And Horseplayers don't delete.

Horseplaying (and training and owning and being a fan of these animals, too) is humbling. Not only do most of us only hit one of every four of our bets (if you're good and you're looking for a sweet spot in the odds), we oftentimes make some of the worst, boneheaded, stupid, awful, incredibly wrong predictions.

We don't delete, because it's a truth in any gambling game. We will - sooner or later and more than once - have egg on our face.

Our horses come up sore, and sick, and get bad rides, and don't like the weather, and ship poorly and have a fever; have a cough and have allergies. They get bodychecked and stopped right in front of.

They kick themselves in the trailer on the way over to the track.

They see a shadow at the half mile pole, and it messes them right up. A bird flies in the infield, and despite a massive hood with full cups, the horse sees it.

A horse sees a grey pony when loading into the gate and it scares them, throwing them off their game. We bet a horse yesterday who was lone speed, but they get ridden into the ground by another horse, because that grey horse spooked the other horse first.

The Donald had a small chance to win Michigan a month ago. Via the polls, if a couple of people out of 100 changed their minds -  or if a polling methodolgy about turnout was off a smidgen -  he'd win the state.

It's not worth deleting a tweet, or hiding a prediction, because that grey horse can be anywhere - at Mountaineer or Monmouth, Gulfstream or Golden Gate. Or in Michigan.

For us it's old hat, for them, not so much. But they sure could learn something by going to the track more often.