Friday, June 29, 2012

Fascinating California Follies

When I was a dumb kid fresh out of school, I got a job at a heavy industry company who was expanding. Production was good at the mill, and when everyone ran the numbers, increasing production and a plant expansion was the goal. After meeting with the Environment Ministry, the city, the provincial government, public groups, the union - and of course securing new financing via private equity - the shovels were in the ground. It took about four months, and construction took another nine or ten, but off and away we went.

When I look back, it's amazing how many groups you had to talk with, get approvals from, and all the rest. But lo and behold, millions were raised and spent, a new mill was built, and about 150 new people were given high paying jobs within a year.

If we look at yesterdays CHRB meeting on exchange wagering at Los Alamitos, we see exactly how much different it is in racing. The track is hurting badly more than ever (despite the takeout increase in 2010 that some thought would 'cure all ills') and they want to try and jumpstart it with exchange wagering. The wagering provider (Betfair) is also game to give it a whirl. It looks like an easy peasy time for a test case, and they've been doing due diligence and talking about it for more than two years.

Unfortunately this is a case study in why racing is stuck where it is. Despite all that it was delayed even further yesterday.

Some quotes:
  •  By a 5-1 vote at Betfair Hollywood Park, the CHRB kicked back a series of 25 proposed regulations governing exchange wagering to its pari-mutuel wagering committee, where suggested changes in the new rules will be given further examination.
  •  The Thoroughbred Owners of California has announced it will not vote on exchange wagering until next year
  • Other speakers objected to portions of the rules in large measure because they felt they were vague and open to varying intepretations.
  • Yes, we believe that to put a system where you bet on a horse to lose is a system that has integrity issues," said Richard Specter, an attorney representing the racing associations that operate racing at Santa Anita Park and Golden Gate Fields.
  • Scott Daruty, also from the Los Angeles Turf Club and Pacific Racing Association, part of The Stronach Group, objected because exchange wagering under the proposed rules is limited to Internet bets.
  • The Los Alamitos Quarter Horse Racing Association also sought approval to amend its current license
  • The delay also tabled for now applications from the advance deposit wagering firms Betfair-TVG and Twinspires.com to conduct exchange betting on their websites

    This reads like the Abbott and Costello routine "Who's On First".

    We have competitors like Twinspires and Magna, who don't want to see TVG get more of a market share. We've got lawyers talking about Interstate Horse Racing Acts. We've got horsemen who want like 100% of every penny of revenue known to man, we've got people talking about "integrity rules" like they haven't been diced and sliced already since 2002 in about twenty five countries already. I'm surprised a bet taking union head is not there to object by asking for a bump in salary for tellers, because people might actually want to bet with a computer.

    Some people call this stuff being open and transparent. It looks more to me like a fiefdom convention.

    Could you imagine if it was 1876 and we were going to introduce betting to racing? If the above is any indication, it would likely have been approved sometime after the second world war.

    You'd think we're reinventing the wheel here not doing a test case at a small handle track to see how it goes, of something that's been legal in the world since 2000, and has been approved for use in California for over a year.

    What's even more curious is that this is a business where these same people will spend $500k on a yearling, that you don't even know can run. We're not exactly risk averse.

    Anyway, I have to get back to work. My head hurts.

    Friday Notes:

    Thanks for the Aussie comments and links on my Betting Exchange Tax piece yesterday. I got more hits from Australia yesterday than the time I posted a picture of Paul Hogan drinking a Fosters.

    Kyle left a comment on that piece about Tony Black on the Byk show. I have heard little spoken about it on the interwebs, and I have not listened yet. Has anyone seen anyone talking about it?

    Have a nice Friday everyone.


1 comment:

Equinometry said...

After another year or two of complaining exchange wagering will be rolled out but based on recent history the takeout rate will probably be around 25% and even more complaining will ensue. After a year of little to no handle the idea will be deemed a failure and will be scrapped. Then we can all go back to betting tracks in states that have a little common sense and the world will be right again.

Lenny