Wednesday, September 2, 2009

80,000 People at the Track? It's Easy. Just Block all Wagering.

Ray Paulick has run an opinion piece from Fred Pope about a potential match-up and big racing day. The protagonists are Rachel Alexandra and Zenyatta, the two top mares in racing. Mr. Pope has long held the belief that if the tracks take the bulk of the cash from betting, racing will be in good shape.

To make a statement for all racehorse owners about the upside-down, off-track revenue model that bled $500 million out of purses this year, the owners of these two magnificent fillies have a timely opportunity.

For the big event, the fillies’ owners would agree the race would have no set purse amount, but instead they would get 100% of the takeout from on-track wagers on the race. In effect, the racehorse owners take the risks.

By locking out all off-track wagering and televised coverage, if we can get a crowd of 80,000 and drive the on-track handle to $20 million, the takeout for the purse would be $4 million gross. If we paid back to 6th place, there is a huge incentive for the owners of other good fillies to enter the race and drive the handle higher.


Protectionism at its finest. And it never works.

Somehow we are supposed to get 80,000 people to a racetrack. And they have to leave any handhelds, phones, or computing devices at home. They also have to bet about $200 or so, or about 1000% more than on-track patrons bet normally on a whole card, but do it on one race. How many people are going to bet $250 on one race, which probably is not a good betting affair to begin with ($4.40 ex and a $6.60 ex respectively with the two chalk). The answer is: Not very many.

I recently returned from Xtreme horsepower at Georgian Downs. It was a great day. Thousands of people attended - race fans and new fans from everywhere. The line-ups for concessions were twenty deep. The tarmac was fairly full, the rides and games attended and the weather was good.

That crowd bet $200,000 on 12 races.

Mr. Pope should realize that on-track patrons, or fans, or new fans don't bet much. The real betting is done at home, or off-track. That is where handle comes from.

What will end up happening if such a day ever would occur (and it won't) is the following:

Offshore pirates will reap all the rewards. You can not watch the racing day on TV, but you will be able to bet it. Money lines will be placed up all over the world so people can stay at home and bet. No revenue will go to racing, and even if people wanted to travel many miles to bet the race, pay fees for parking, walk miles to the track, stand in line to bet into 22% takeouts and spend hours at the track - they won't have to. The offshores love this idea.

People will bet what they generally bet on track. They won't get 80,000 people for a horse race, but if they got 40,000 (which would be great for an event like this) they would bet the usual $20 a head. Handle would be about $800,000 tops. If you do not distribute the signal, handle falls. It is a modern truism.

We are supposed to march to a drum that raising prices on bettors, making them come to a track and bet, make it more difficult for them to bet, and inconvenience them will result in a raising of revenues and be a good thing for the sport. Ouch.

The constant barrage of old time thinking that permeates us in racing is flat-out mind-boggling. This is not 1938, it is 2009. The internet is here, racing is being distributed far and wide and people are playing it in other ways. We have kids, two parent working households, traffic snarls where a drive to work takes two hours instead of ten minutes, and many things to do with our time and money. People are not going to the track like they used to, just like they are not going to see minor league baseball, or junior hockey like they used to. It is never coming back. Without bringing racing to the masses, we are finished.

I spoke to a bettor yesterday. He was watching and betting an Irish race. There were horses he never had heard of, in a place he could not find on the map. There were a few people watching the race live - and the kicker was, it was a race that was being run on a beach. Yes, not on a track, but on a beach. A race on the beach, in the middle of nowheresville attracted $300,000US of betting on Betfair from at home players. What is the handle without them? Peanuts, that's what.

Yes the world has changed. And it can change for the better in racing if we place ideas like Mr. Pope's where they belong - back in 1938. They have absolutely no business being proposed in this century.

19 comments:

Eddie D. said...

You giving advice to Fred Pope would be like Wilbur telling Richard Mandella how to train a racehorse.

Pull the Pocket said...

Thanks Eddie.

Fred and his folks have done a hell of a job over the last thirty years. Racing is rolling and we are as mainstream as the NFL. Let's follow them into the sun!

I stand corrected. ;)

dana said...

kick ass comments over there at Paulick Mr. PTP.

Anonymous said...

I have read Mr. Pope's op ed stuff for awhile now. What makes me wonder, is that each time he speaks of taking over wagering he says that "$500 million has been taken away from purses" and things like that. Does he really think wagering will stay the same if the track and a horseman group ran wagering? I do not know how he could think that. It makes no sense to me. Resellers are a part of gambling games everywhere and are a big reason for their success!

That's just my opinion.

ITP said...

I can't believe you failed to mention the most important thing....We all know Pope is out to lunch, but it's just incredible that the leaders/voices of TB racing (Satish Sanan, Cot Campbell, Ray Paulick, Barry Irwin, TB Times, etc) all think his ideas are great or that he is a visionary.

Pacingguy said...

Well, it is certainly great to get people in the stands; for one thing it may make our local representatives think racing is still relevant and it helps develop future gamblers. But as you said, with the exception of a few tracks, the on track handle it pathetic. As much as I would love to see the good old days, I know it is not going to come. It is time that those 'who know' get to know it.

Glimmerglass said...

Ah, but if these untold riches poured into the track cashiers for this one day - the likes of which haven't been seen since Citation raced - shouldn't Mr. Pope be afraid of thieves hitting Belmont like Stanley Kubrick's brilliant movie "The Killing" :)

Margaret said...

I read Pope's piece today at Paulick Report and he sounds like he needs a rubber room. Do the leaders of the TB industry really think he's a visionary? That's just scary.

Pull the Pocket said...

Ah, the Killing. I was at a wagering conference awhile back and they played a game at the end of the day. The Family Feud question was "Top Horse Racing Movies". On my team I could be heard saying "The Killing, The Killing". It was not up there. Sacrilege!!

ITP,

I very much respect Mr. Campbell and Mr. Irwin, for example, and there are great people in racing. But I would want to have them doling advice regarding stable management or when to change a piece of equipment or when to inject a hock versus giving a sore colt time off. I really (and I say this with respect) want them to have little to do with wagering or gambling economics. For that I would leave to bettors who live and breath wagering, like yourself, or businesses who have proven to understand what makes gambling customers tick, like Betfair.

We are one of the only businesses, ever, where everyone has a say in things, and every organization has a voice with veto power. I think that is a big problem and it is why so little gets done. I would hope that Messers Irwin and Campbell would look to wagering professionals for help and guidance on wagering, just as we look to them for their expertise in caring for and owning racehorses.

PTP

Anonymous said...

the ADW business is this industry's only bright spot. and that is clearly because smart people who know something about wagering own them. to think that others like thg can takeover those customers and increase wagering is pure folly. the first meeting on betting strategy would end in a big fight about how much each group gets. look at twinspires and the trouble they go through...... and they dont even give rebates.

could u imagine a horseperson group and nyra buying and running rgs? how much would handle drop?

Shlomo said...

My God, does anyone read anymore? Are none of you familiar with Jonathan Swift? Have you never read (or at least heard of) “A Modest Proposal”, the (I assumed) well-known pamphlet published in 1729 wherein Swift suggests that the Irish could solve the problem of the abject poverty of their country by selling their children to the wealthy as food? Swift goes into great detail about how much money this would actually produce if implemented and various methods of cooking the children so as to maximize their flavor. Maybe if Fred had described his idea as a “modest proposal” rather than an “outrageous proposal” you might have caught the joke…but some of you I suspect would not. Really, if the “no cell phones” bit didn’t tip you off that this was satire, I don’t think anything else would.

All he’s doing is pointing out (again), using the details of his fanciful Rachel v Zenyatta match-up, the absurdity of the law under which simulcast outlets/ADWs/rebate shops are able to make large profits with little risk or capital outlay, at the expense of the tracks, owners, trainers, jockeys and everyone else directly involved with the risk and expense of actually running a horse in a race.

Pull the Pocket said...

Hi Shlomo,

Reading is not one my strong suits, however Mr. Pope's assertions of taking money away from ADW and placing it with tracks and purses are well documented in the past - satirical or not. This is a long standing disagreement between bettors, those who study wagering, and the old guard and we have visited it before, and no doubt will again.

Thanks for setting us straight though with the literature lesson. Speaking for myself, I am just a dumb bettor, so I certainly need it.

PTP

ITP said...

Who is portrayed as a fool in all of this?

A) Fred Pope

B) Ray Paulick

C) Satish Sanan

D) Barry Irwin

E) All Of The Above



I think E is the definitve answer

Anonymous said...

PTP
Where did you come up with that $20wagered per person? That is way to low. Monday at Saratoga it was $178per person.
Some random dates from the past, May 7th 1946 at Sportsman's Park in Chicago 10,911 people wagered $731,226 for an average $67 per person. Takeout was 10%.
On June 6th, 1970 the average was $79 per person for 8 tracks. Ak-Sar-Ben was low at $58 per person and Hollywood Park was high at $100 per. Woodbine on that day had 13,609 people bet $1,000,508 for an average of $73/per.
It wouldn't surprise me at all if bookies probably handled as much as the tracks in the 40s through the 70s. Bet now, pay later. Who needed an ADW?
RG
I waited all year for Extreme Night and must have punched Grand River by mistake for the entries. Didn't see any long or short races so I thought I had the wrong date.
I blame you. Don't think I saw Extreme mentioned all week.

Shlomo said...

The point is not a literature lesson. The point is that the merits of the IHA's provisions as to distribution of proceeds from on-track wagers vs off-track, whether at an OTB, "dark" racetrack, ADW, Vegas racebook or wherever is a worthy topic, and it seems Mr. Pope has given it much thought. No one who posted a response to this topic, either on this blog or Mr. Paulick's, seems to have addressed the merits of Mr. Pope's arguments. Rather, most responders seem to have devoted themselves to coming up with new and inventive ways for calling Mr. Pope an idiot for suggesting his "outrageous proposal", which was (literally) an elaborate joke to illustrate his point of the absurdity of the IHA as applied to horse racing today vs when it was written 30 years ago. That he had to go on the Paulick site and explain this to everyone is a sad commentary on the critical thinking skills of many of those who posted responses. Fred Pope is not Jonathan Swift, but his use of irony to make his point was in the same vein.

And I am still waiting to read a reasoned, factually supported, non-insult laden argument as to why the aforementioned provisions of the IHA should not be changed.

Anonymous said...

People in horse racing are so freaking crazy that it's really hard to distinguish satire from just another horrible idea.

The Experts tend to be especially prehistoric.

Pull the Pocket said...

Shlomo,

In the Paulick thread there are excellent points made by people who understand and study wagering. If you look at the archives on Paulick you will see more Pope pieces with responses to where he is mistaken in understanding our customers.

About fourteen months ago I wrote here about how I thought the ADW problems, with rumblings of trying to curtail it and get bigger signal fees, will hurt handles long term. I wrote this before Mr. Pope brought his ideas out and I stand by it. If you would like to read it, please do as it might enlighten you on what we go through.

I might not know my literature, and I might just be a dumb bettor, but I know plenty of other dumb bettors.

http://pullthepocket.blogspot.com/2008/07/henderson-we-have-problem.html

PTP

Anonymous said...

I was going to defend Wilbur's training advice here. After all wouldn't a talking horse be every trainer's dream edge?

Then I remembered that Wilbur was just a Hollywood creation.

Sorry.

Scott Ferguson said...

the higher the crowds, the lower the average they bet. Many are just spectators or there for the party, the queues are too long etc. I doubt very much I'd bet on Rachel v Zenyatta (why bet into track odds with 20% takeout when it is a match race, which should become 4% like a football game?), but I would definitely pay to watch it...