Wednesday, February 29, 2012

The Slots Bring "Rent a Horse" Economics

In the 1980's and 1990's, purse levels for claiming races were pretty normal. A $10,000 claimer would go for $5,000, a $20,000 claimer would go for $7,500 and so on. Claiming activity was also pretty normal, based mainly on if a trainer thought he could improve a horse enough to make it move up the ladder. Sometimes if they had problems they would be laid off, or given some paddock time. Sometimes even, a horse would be claimed "downtown" and brought to race in the top levels at the B's and be kept for a long time.

When slots were brought into Ontario, though, claiming purses grew and racing in the Province experienced the "rent a horse".

It was not uncommon to see a race at Woodbine with ten starters; eight of them switching barns. Horses would be claimed each week, some of the hot ones having "c's" beside every running line on the program. At this same time, vet bills were going through the roof for owners, because there was so much money to race for, the horse would go to the vet each week in the new barn to make sure he was on go. After all, you were likely to lose them that week anyway.

With slots in New York and their artificially high purses, we are starting to see similar in terms of the rent a horse. This even with the fact that claiming in thoroughbred racing has fewer fast wheelbacks and is a different game.

Last week I saw a tweet that one horse at Aqueduct had 18 claims on him. It's not uncommon to see a six or seven horse race this year, with three or four off the claim.

The ORC in early 2000 in Ontario did not feel it was wise for horses to wake up in a new place so frequently. They also didn't like seeing these super stables appear, winning all the claiming races. As well, slots were supposed to supply new horses, not just watch money change hands, with vet bills taking a pile of it. In response, they passed jail time for all harness horses (not unlike many states do for the thoroughbreds), and later, passed a vet passport, so there was a record of vet work. It was generally done to protect the horse.

About seven years later, after the super stables were weeded out (some booted for violations) the ORC changed the rule back to something more workable.

When supply meets demand there is usually a market mechanism that makes things right. When you artificially change one or the other, market outcomes are usually suspect. If $5,000 horses race for three times or five times or eight times their purchase price in places with year round racing, strange things tend to happen. If the super stables with 40% or 50% off claim win percentages start zeroing in on New York racing, it will be interesting to see if any changes are made in the future there.

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