Identifying Horse Racing Space Aliens

As you know by now, everyone is talking about colors of a dress. The dress, which is blue and black, has spawned a weird cult of white and gold people. Last evening on the twitter, when I posted the color and saw the responses, I began to realize, that there was something wrong.

Dougie Sal: Earthling

After analyzing the white/gold, blue/black data the best I could, I believe, and posted, fervently, that I think the white and gold people are space aliens.

It's really the only logical explanation.

After that - maybe the aliens got a memo from the mother ship - fewer and fewer people were willing to tweet or post they saw white and gold. So, today, it is much harder to tell who is space alien or not. Space aliens, as we all know, are very smart.

Now, here on the blog we are not going to solve these space alien issues. Some are friends so I hope they are not exported; even if they have to live in camps with leg monitors, at least they are around and we can visit. But, regardless, I'll let smart people like the United Nations or George Clooney figure it out.

But I can do a service to everyone in horse racing land: Here is a sure-fire, foolproof, impossible to fool way to figure out if your horse racing friend is an earthling, or from outer space.

CDI board meeting

Takeout Hikes - Ask someone about takeout hikes. If he or she is for them, there's a good chance you're having a close encounter of the third kind. As I proved last year during the Churchill Downs takeout hike, CDI executives are, in fact, space aliens. As an aside, revenue from the hike last year at Churchill, outside Derby week, was down. Tracks run by non-space aliens take heed!

Do they congregate at DRF Live? - For this one I have done the work for you. I began looking into this some time ago because this "DRF Live" place that they meet felt like some sort of secret spot they go to talk about earth domination - like the free masons, but instead of talking free mason stuff, they talk about Delta Downs. I like a lot of the DRF guys and gals, but if we are being honest, they are (with 98 or 99% certainty) all from another planet.

Best Horse Racing Movie - Ask someone what they think was the best horse racing movie ever made. If they don't answer Phar Lap, they are clearly not from terra firma.

..... and space alien.

Equispace - This is an easy one. He admits it. He calls himself the space man, is married to the space gal. Watch out for him if you are ever in Buffalo, he might beam you to a Sabres game.

Anyone who has been on the America's Best Racing Live Bus - This one is simple. If anyone has entered the bus, they are beamed to the mother ship, turned into a space alien, and their memory is wiped. I am hearing stories that pro-lasix people come off the bus anti-lasix, because horses on the planet Zoltar do not use the diuretic. I am also hearing this goes higher than just the bus. There are rumors ABR parent the Jockey Club will be buying the Bloodhorse, to further their space alien message. Watch for it.

TimeformUS users - If you are at the track and see a dude on his iPad reading a TimeformUS past performance, check his drink. That's not diet coke, it's space juice. Anyone doing new things in horse racing is from another world. Some of the people at TimeformUS sound ok (outside the guy who likes bands like Husker Du). One even talks about the Oklahoma Thunder on twitter like he was born here. But don't be fooled.

E-Nicks Users - Enicks (get the app here!) is a great product. Sid Fernando is involved which is good, but I believe Sid is from outer space. Remember that big storm forecast for New York a few weeks ago that only turned out to be a dusting? While people were hunkering down the night of it, Sid was posting pictures on twitter of him eating in a Turkish restaurant in Brooklyn. Space aliens can forecast the weather better than we earthlings. He knew. Use the app, enjoy the app, it might bring you a Kentucky Derby winner, but remember: You are supporting a probable invasion of earth.

We're obviously at a critical point in world history. We've been attacked by ice ages, meteors, Al Sharpton, but never have we been in such peril. In my one small way, I hope we've helped identify the enemy in our slice of the world. Losing this battle will almost - not quite but almost - be worse for us than losing slot machines.

Have a good day fellow earthings and enjoy the weekend, if you can.

We Can Handle the Truth

Jack Nicholson was wrong. Racing can handle the truth, because the truth allows us to do the right things, rather than the wrong things. And it's a way forward.

Churchill Downs net income dropped 16% last year. Which is due to many factors. Most important to horseplayers in 2014 was the takeout hike, which decreased payoffs whenever you cashed a ticket. That spurred a pretty stout backlash. At the time, everyone and everyone's grandmother believed that Derby Day revenue would rise; which was pretty simple logic. It was the other part of the meet that was in trouble, handle wise. That turned out to be true:

The problem is, narratives about "field size" and other items muddy the truth, and that's where racing gets in trouble.

A takeout hike will hurt handle; you know that and I know that. But when the message gets muddied, the business glosses over it with other factors - weather, the Olympics in Vancouver, the economy, losing a half a horse in field size. No one wants to be wrong.

But that's dangerous, because the other factors permeate the industry and are used time and time again as a crutch, to raise juice, slap ADW taxes, make it harder for you to be a customer.

Racing not only can handle, but it needs to handle the truth. "We raised takeout to make more on Derby Day, and we succeeded, but the other days were soft, because we raised takeout".

Then, maybe, the next track, and the next, and the next, will think twice about it, and we'll not read year end press releases about handle being down, ad nauseam.

As well, I noticed a post at the Paulick Report about a trainer in Australia who got a TCO2 positive and was banned for three years. If and when this happens in North America - and it happens often - it's a slap on the wrist or an investigation of some sort. Some in the press will apologize for it time and time again (the "he's a nice guy" defense).

But we can handle the truth.

A trainer, known to many who has had various run ins with folks, but now seems to lead a pretty decent life as a very good trainer, posted this on a chat board recently (click to enlarge).

What he is saying is, sure you might've not used soda, but when you are tubing, the properties of what you use are giving you this reading. In other words, you meant to pre-race on race day and avoid a positive and you thought you were using something that would not affect blood gas levels, but it does. So you can get caught.

This does a service to everyone. First, don't drench on race day and you're okay, and two, to those who stand up for multiple TCO2 positive dude or dudettes, you might be hanging your hat on the wrong rack.

Handle will fall when takeout is raised. Positive tests can and do happen when someone might not mean to, but does intend to do something wrong. For the horse racing industry, the truth is better than obfuscation, or apology. Obfuscation and apology are nothing more than an excuse for the status quo.

Have a great day everyone. 

It's Fun to Slam Stews, But it Could Be Worse

A recent article originally published in HRU. I thought it kind of apropos after the weekend races at Gulfstream, so I repost it here.

I’m about to submit an article in support of the judging system. You read that right. For the few of you not so perplexed who plan to keep on reading, I promise, it will at least make a bit of sense. 

In the second round of the playoffs an NFL game occurred between the Dallas Cowboys and Green Bay Packers. It was a dandy affair with the underdog Cowboys playing inspired football against a hobbling Aaron Rodgers and the Packers. The NFL was dubbing the game “Ice Bowl II” which was a little disingenuous, but the game was not disappointing. After being behind most of the game, Green Bay had just taken a 26-21 lead, but Dallas was charging for a go ahead score, on the Packers 30 yard line. After three plays, a pivotal 4^th and two play was not your average, every day fourth down. It caused quite a bit of controversy that will probably last a long time; possibly resulting in rule changes. 

The play was a fly pattern from quarterback Tony Romo to Dallas wide receiver Dez Bryant. Mr. Bryant went up, caught and controlled the ball, took three steps and appeared to reach for the goal line. Was it a go ahead touchdown? No, it did not look like it, but Dallas was in business at the one – first and goal. Not long after, however, a challenge flag came out, and upon further review, the ball seemed to hit the ground at the very end of the play (it popped up, so it likely did, anyway).  The new NFL parsed-replay-catch rules read like Swahili when it comes to catches and non-catches, but in a nutshell: If a receiver catches the ball – even if he takes three steps – but fails to make some sort of “second move” and the ball comes free, it is no catch. If he makes a “second move”, it is a catch, and if the ball comes free later on it’s a fumble, or down by contact, depending on the situation. A second move is simply some sort of move that involves avoiding a defender, reaching the ball out to get a first down or score, anything really that would be considered a “football move.”

After a long replay review, the biggest play of the game – the biggest play of the entire season for either team – was reversed. No catch. 

After the game, league officials explained they didn’t think Dez Bryant made a football move by trying to score, thus it was no catch. Many in the league’s media, like NFL Network’s Rich Eisen and Fox’s Howie Long thought it was obvious he wanted to score by extending for the goal line, and the evidence of that is if the catch was made at the ten, he would’ve just gathered the ball in, like a regular in-field play, thus making it a legal catch. The referees, one way or another, had to judge whether someone’s intent met what was shown on the video, and they disagreed.  By definition and consistency, they don’t reverse plays on the field when the word “think” is involved, but this time they did. Green Bay was given the ball on downs, and ran out the clock.

Horse racing has a lot of experience with this already. Video evidence has been judged on a daily basis since video was invented. It’s old hat. And boy, oh boy, the NFL can learn something from this sport. 

Horse racing judges call fouls not by the letter of the law, but if they are sure the outcome of the race, or a placing warrants it. There are dozens of infractions a day when a horse might get shoved out a little bit, or someone shuts a hole a little late, or who drifts out sideways a little in the stretch. These don’t cause placing’s because things happen in a horse race with 1,000 pound animals pulling sulkies, or having a 120 man or woman on their backs, and most of them have no bearing on the placing’s. They’re only called when they are blatant and obvious. 

I guess the biggest example of that this season, was the $5 million Breeders’ Cup Classic, televised on NBC.  At the beginning of that mile and a quarter race, eventual winner Bayern broke inwards at the start, bothering race favorite Shared Belief. Was that interference so bad and malicious that it changed the race finish? Was Shared Belief so bothered that he lost all chance to hit the board? After review, there was no change. The stewards said they could not tell for sure if it affected the outcome, and Shared Belief had the entire race to make a move to improve his position, which he never did. 

Probably half the people who watch that race agree, the other half don’t. But the stew’s never bowed to pressure. They kept to racing’s judging mantra: Unless we are sure, we have to let the athletes decide a five million dollar race.  Compare that to the NFL call this weekend. Half the people believe the receiver was making a football move, half don’t, but the officials changed the result. They did not let the players on the field decide. 

In harness racing – as much as we get upset with judges - when a horse in the stretch is bothered, but the horse is losing ground and unable to keep pace with any closer or the leaders, there is no placing even though a rule was broken.  Meanwhile, if a horse is charging hard on the outside, decelerating slower than the lead horse and he or she suddenly stops because of interference, it’s an autopitch. In another case, if two horses are slugging it out and there is some movement, but the judges can’t tell for sure that the outcome is altered, judgements are left with the participants on the track, and the result stands. 

There are some people who do not like this form of judging, but to me, the alternatives are much worse. We as horse owners or bettors do not want judges to use a crystal ball, to try and surmise what might’ve happened. We don’t want them to say “well, the horse was bothered by the six at the eighth pole and might’ve lost three feet, so since he lost by two feet to the offender, we have to place him.” Tic tacs are mints, not something to decide horse races, and we don’t want inquiries lasting ten minutes every second race. In turn, we certainly don’t want a free for all on the track, where drivers can commit dangerous moves, endangering our equine and human athletes, where the judges let everything go, to decide things on the track.  This bar is set just about right.  

Sure horse racing has plenty of controversy when making rulings that are not so cut and dry. Remember the slow quarter incident at the Red Mile two years ago, for example. You will simply have that with tens of thousands of horse races, with horses and humans pacing or trotting around in a circle at more than 30 miles per hour. Things are going to happen.

The NFL is a marvelous league with a tremendous history. Its revenues are at an all-time high, it is proactive and has made good move after good move to grow the game. It usually makes horse racing look like it lives in the business dark ages. However, in this one instance – judging – they should’ve looked to this sport; the sport of horse racing. If they’re not sure about a play and have to think, they need to let the participants decide an outcome, not a fellow in a replay booth watching a video. That’s what racing does, and it’s the right way to go. 

Maybe we have to give the NFL a break. Racing has been dealing with these questions for a century, they’re only just learning. 

Mass Market

A post that I vehemently agree with was made on Godin's blog this week. "Mass Market" is a concept we've spoken about a lot here, so I guess that agreement is not shocking to anyone. But it's nice to see a talented writer talk about it, rather than me, your not-so-talented host. 

•  When someone wants to know how big you can make (your audience, your market share, your volume), it might be worth pointing out that it's better to be important, to be in sync, to be the one that's hard to be replaced. And the only way to be important is to be relevant, focused and specific.

Horse racing's main edge in the marketplace has not come from television, or mass market appeal. In fact, television has supplied racing with very little reach, and mass market appeal for its product is virtually non existent outside Triple Crown days.

What has kept it afloat is the fact it has stayed 'relevant, focused and specific' - not because of a marketing plan - but mainly because of what it is.

It's not a game of chance. This is an edge that poker, horse racing, sports betting and now, Daily Fantasy Sports has. This has relevance with gamblers; and the market for such skill game pursuits approaches a half a trillion dollars each year.

It's niche. It takes a special person to bet each day, every day; to buy PP's, software, develop angles, compile trainer stats, FTS trip notes and angles, and to make their own pace figures. Racing will draw that person in, because that person enjoys that type of pursuit. With lower juice, a better value-product to wager on, that person and persons can bet a whole lot of money.

Horse racing, despite its many failings, will always have a place in the gambling world. When takeout went to 40% in Italy, and the country's racing product was virtually destroyed, those gamblers did not leave; they found another place to play. The world is connected in a mass way, but there will always be niche customers looking to conquer arguably the greatest gambling game ever invented.

When racing realizes its a niche sport, and caters to the mindset that wants to enjoy it, not to a mass market slot player, or casual fan, it will be much better off.

The Gulfstream DQ's & Non DQ's Were (Unfortunately) Consistent

You probably watched the races from Gulfstream on Saturday. Although the headlines were dominated by the Fountain of Youth disqualification of Upstart, there were two other stewards decisions on the same card. Mike Watchmaker made some proclamations about those decisions.

Let me repeat because incredibly some don't get the connection. If you leave up House Rules, D. Dynaformer, you have to leave up Upstart.
— Mike Watchmaker (@DRFWatchmaker) February 23, 2015

Earlier on, he wrote that "consistency was needed for the GP stewards".

I understand where Mike is coming from, and I bet you do too, but I think there's a problem with that.  The three rulings were not the same infractions; they were three separate, different racing incidents, which exemplify how difficult the sport is to judge consistently. And if we look at the facts, I don't think they were judged inconsistently at all.

In race 4 you had a horse on the outside, who looked like a pretty clear winner (the horse was getting clear and decelerating slower than the two inside foes), cut off the five horse (at 22-1) who ended up coming second.

In the Fountain of Youth you had a horse on the outside (the eventual winner after DQ) moving forward and getting within about a half a length of Upstart. Then suddenly, Upstart swerves out under the left handed stick, crosses over directly in front of him, and four strides later is a length and a half ahead of Itsaknockout.

In the last we had a two horse affair, with a little bit of bumping and herding, which happens almost every tenth or eleventh race in this sport.

In the fourth, the judges applied a long held tenet of judging. "If the horse that committed the supposed infraction ran straight, would he or she have still won easily? If the offended horse was allowed to run straight, would he or she have won the race, or did it cost him or her a placing?" In that case (if you rewatch the race) the winner does appear to be able to win, with or without a DQ, and the offended horse probably would've come second, and did come second, if given a straight path. Therefore, I could see this call being made, and I think 95% of the time it would be called exactly as it was.

In the Fountain of Youth we had something different occur. This time it was not a horse with all the momentum cutting off another horse who appeared to be struggling, it was the inside horse cutting off a charging horse. If Upstart raced in a straight line and did not cross over into Itsaknockout, would he have still won? If Itsaknockout was allowed a straight path, would he have won? I don't know, and I'm sure you don't; it's clearly a judgement call, as it is with all horses charging on the outside. Maybe Upstart would've found more, maybe Itsaknockout could've outstaggered him to the wire. He certainly was moving up on him, and in those cases these horses usually do go by. Again, a fairly consistent call based on the tenet.

In the last race, in my view we have the scourge of this sport. A jockey coming out on a horse with all the momentum and doing the obligatory bumping to stop his momentum. It's a jockey trick that is used constantly, it's bad for this sport and is such a blatant infraction it should be a DQ 100% of the time. But if you're asking for consistency, well, the stewards at Gulfstream were pretty consistent here, as well. I'd say about 30% of the time this is called an infraction, and 70% of the time it's called "mutual bumping" or "things that happen in the stretch" with 1,000 pound tired animals.

You and I and thousands of other fans and bettors will not agree on every call made, because they are subjective. It's the way the sport was in 1915, 1955 and is in 2015. But we do ask for some consistency, and if you look at those three calls dispassionately, with cold, hard, ugly logic, and with the history of such calls at Gulfstream, the stewards, in my view, were fairly consistent.

The Curious Case of Horse Racing Television

This past week everyone began to digest the merger of TVG and HRTV. Instead of two separate channels on two US cable systems, there will be two channels on one. There are proclamations this is good for the sport, bad for the sport, or indifferent for the sport.

TV and racing is a very curious marriage. Racing on television is not football, or hockey or baseball. Those leagues sign deals with networks, and some of them run into the billions of dollars. In a quid pro quo, the network gets viewers, sells advertising, and the leagues get revenue and exposure.

Racing on the other hand - barring the Triple Crown races - pays networks to show their races. It's not because racing is too small, because rodeo, pro bowling, the WSOP and countless other small sports with only a few hundred thousand viewers or fewer, get paid for programming. It's just because racing is a gambling game, and having to show the product to everyone at all times, is a staple for the main revenue driver of the business (gambling dollars).

I think this was no more apparent than yesterday. TVG had a split screen up on their network with two races going off near the same time. On one side of the screen was Gulfstream: There were nice trees, happy people, sunshine, a great setting and a stakes race with high quality horseflesh. On the other side of the split screen was Aqueduct. It was snowy, dark and a short field of cheap claimers was ready to go.

That's tantamount to having an NFL Wild Card Game on one side of the screen, and the Mississippi Pop Warner regional final on the other.

Real sports don't function like that and the reason horse racing does this, of course, is because of gambling dollars. That grainy Big A race had well over a half a million dollars bet on it, while the GP race didn't have appreciably more.

TV deals or mergers with TVG and HRTV seem to cause a lot of chatter, but in the big picture, does anyone really care? The billions of dollars bet on horse racing are done so through many conduits. Those will be bet whether there's one network, two networks, four networks or no networks. For those seemingly impossible to land "millenials", well they cut the cord long ago. For others, like your 64 year old prime racing demo fellow, he's at the simo-center chatting with his buddies and doesn't much care one way or another. In a business with so many issues, a merger between horse racing channels seems to be big news, but in the grand scheme of things, I just can't see it meaning much.

In Racing, Simple is Too Simple

An Op/Ed in the TDN today looked at simple being too simple when it comes to revenue splits in horse racing. Revenue splits can't really be changed and be accretive, in the truest sense of the word. If you have a pie in an 8 inch pie plate, you can't cut the slices differently and make it a 12 inch pie. But massaging them in certain ways, creatively, can make things run smoother.

Some people make this argument very simplistic but it's anything but.

Let's take this recently tweeted out story by Rich Eng "Plug Pulled on Feed From Some Racetracks" where the author explains that in Vegas there is a negotiation going on between Monarch and them to show content. Monarch, whose head recently said ""The days of the buyer importing the signal cheap and keeping most of the revenue (from wagering) are probably coming to an end", is playing hardball with Mid-Atlantic tracks trying to extract more of a fee. In Vegas, this is not happening.

"Daruty said the race books were not being hit with a rate increase by his company."

So a rate increase for other tracks is fine, but for Vegas books, no.

See, not so simple as "increasing a fee because the host track should make all the money"

Vegas has floor space designed for racing and if they don't make enough on it, they won't show horse racing. The Mid-Atlantic tracks have an opportunity cost of showing Monarch races too. So does anyone taking a signal.

Signal fee changes are not simple. The sport needs to look for creative ways to do things; blanket changes will never work. The dichotomy between Vegas and the Mid-Atlantic track proves it.

Interstate Horse Racing Act Chatter Always Fails Customers

I spent some time reading the dissertation about the IHA on Chuck Hayward's site today, written by lawyer Joel Turner.

The piece is not unlike many we've read before. It's about getting more money from the existing wagering pie, for, in this case, horse owners.

It begins by speaking about off track handle, which has gone up, while higher margin on track handle, has fallen. Because of that, more taxes, more fees, more regulation is needed to cure that so-called ill.

The problem is, and this is always the problem, all of those things hurt handle. Take this case in point from the article.

• The migration of handle to simulcasting and ADWs has left on-track wagering a virtually meaningless part of the pari-mutuel landscape. Even at racing's most well-attended event last year, the Kentucky Derby, the 164,906 patrons at Churchill Downs wagered $23.4 million on track, just 13 percent of the total handle of $180.7 million.

Think about that for a second. If I told you that your widget business in Louisville could bring in $23 million in sales from the local market, but I had a marketplace (say called Amazon.com) where you could increase your gross sales by 700%, would you think it a good or bad thing?

The Kentucky Derby is a great example. You can't shoehorn another person in the track if you tried. You could not increase on track wagering if you tried. $25 million is about a cap. But it does $180 million. Exporting your signal is something that's needed and expected. States like Texas, which is spoken about in the article, have banned this type of wagering. Handle in Texas has fallen to dangerously low, historic levels.

The principle of the IHA and exporting signals have helped top line handle. That's a given. But according to the author, the reduction of handle since 2007 is due to the IHA.

"Is the proliferation of legal and illegal sports betting to blame? Is online gambling, exchange wagering, or bookmaking to blame? Racing clearly does a poor job of analyzing and competing with other forms of gaming for the discretionary dollars. It may be that all of these activities are factors in the decline of pari-mutuel handle on horse racing in North America. Nevertheless, the most likely source of the decline is the legislation that was supposed to prevent it: the IHA.

This makes no logical sense. Giving consumers less choice, higher prices, more fees, new taxes and more inconvenience will not grow handle, it will reduce handle. The IHA needs updating to reflect modern reality no doubt. But selling these changes as handle inducing or pro-top line growth is misguided.

I'd like to see the IHA changed, no doubt. But it would be a lot different than Mr. Turner's view. I want the IHA changed to encourage more growth, and more top line revenue, because when you have top line revenue and growth, your future has some hope. No business will ever grow in the aggregate by decreasing sales. That's just common sense.

TVG Takeover Comments Show Racing's TV Dilemma

TVG and HRTV are set to merge. This probably makes perfect sense, and will likely help TVG (which still has money to invest with through parent Betfair) in the long run.

What fascinates me most, are some of the comments at the above link about this merger. It's a snapshot of just how difficult it is for this sport to deal with itself.

"I really hope that HRTV doesn't lose the excellent coverage of other "horse sports" that it currently features. As someone involved in many aspects of the horse world, I love the show jumping, dressage, and training coverage"

"All this means is more "stretch" calls and more on air talent picks and I couldn't give a flying crap what Todd, or Simon, or Paul like."

"Showing of races and parades should be "real time" as their primary priority."

"For one, I hope HRTV continues it's type coverage. Less talk more races..TVG talks to much and ignores many races so they can all TALK"

"Less talk more races" is the biggest complaint, just like it was up here with HPITV. People are betting - it's a betting sport that is fueled by gambler dollars - and want to see their races. People who like the sport, or horses, want to hear commentary, see other shows, etc.

It's not like that with a fishing network. If I liked fishing, I am sure I would like to see fishing shows, with instruction, with other people catching fish, beautiful rivers and lakes from around the world. I'd be a big Fishing Network fan and so would you. In horse racing TV land, I could not care less about what someone else picks, or thinks, because I am too busy trying to figure out who I want to bet.I, like a lot of you, love horses and the majesty of the sport, but we don't want to hear about it when we're constructing a pick 5 ticket.

TVG has to cater to several different groups, all the while trying to drive handle, because that's their bottom line. It's not the easiest mix, and they'll probably end up making (and have ended up making) few happy. One channel or two, it is what it is.

Best in Show

I can't not post about my pal the beagle; no way, no how. I got to know the breed a few years ago, and holy moly, what a cool dog. They don't just like everyone - the mail lady, the next door neighbor, the chicken delivery man, the chicken delivery man's dog at the dog park - they pretty much like everything.

"Tail Wagging Beagle Wins Best in Show" was the AP headline, and that's the first thing I noticed when I watched the video of Miss P winning. Her tail never stops moving. Wag, wag, wag. Almost every beagle I have taken care of, or the two I owned, wanted to wag (Ted could not because I think his tail was broken, but it would move constantly at the base); they are just a fun, wonderful, loyal, loving dog.

I really marvel at the winner, because she didn't follow her nose when she easily could've. There was an experiment done long ago to test smell senses of various breeds. A dead mouse was dropped somewhere on a one acre plot and dogs were asked to find the mouse.Some breeds took 30 minutes to find it, beagles averaged 15 seconds. She's a darn good dog considering all those smells on the playing field at MSG.

Best in Show is the second best honor a dog can get, and I congratulate her. My old dog Ted received a World's Best Dog edible birthday card for his second birthday with us (maybe his 11th or 12th in real life). World's Best Dog is the highest honor ever bestowed on any canine; at the Pocket household anyway.

Miss P has a ways to go yet, but she's alright. Congratulations to all the beagles out there. You did good.

That Pesky Tradition

Being first in a prospects mind is marketing 101. Not far behind, in my opinion (and the opinion of people with more degrees than me; the type who write books), is that being who you are and not wavering from it, is a prime goal for any business.

Sid posted this today:

Camden Yards on a wintry day. pic.twitter.com/KYHkvW7sxx
— Sid Fernando + Obser (@sidfernando) February 16, 2015

You don't have to be a Ken Burns fan to know baseball is a lot like that picture.

Yes, that's a newer park, but it sure looks old.

I remember being at the SkyDome, for I think, the third game ever played there. It started to rain, and the roof closed. Wow, that was exciting; at the time anyway. That excitement wore off pretty quickly, because it was not a baseball park. Roofs closing in a cavernous, big screen, dual purpose, impersonal baseball park only goes so far.

Horse racing, like baseball has tradition. It's as old as the day is long. It's about watching equine athletes and remembering the lore. It's about beating a 5% rake as a pastime for some, a career for others. 

That's not the way the sport is any longer. Can you imagine Pittsburgh Phil on food truck day?

I understand horse racing is fighting for attendance. I understand it wants to be major league and I understand why bands are booked and special days with dancing and urinal running happen. I feel for the sport. However, running from what the sport truly is, is not an answer. Horse racing is not going to out-casino a casino or out-music a concert. I think being true to itself is the only way forward.

Horse Racing's Super-Strange Model

I've been racking my brain (no jokes please) and I am completely flummoxed trying to find parallels.

Horse racing in North America has, for a million years it seems, dealt in a system of revenue with a percentage of margin. If takeout is 22% and it brings in $1,000,000, the one million is not split, the 22% is. 22% is a margin, not profit, or money, but it is somehow treated as a price, or profit.

If a track wants "more money" or if a horsemen group wants "more money" or a state wants "more money", they don't ask for more money, they ask for more margin. "You get 9% of takeout but we want 11%". "Well, we charge 22% but we can raise that to 24%, would that do?"

It's the only business that I know that even remotely works like that.

If Raptors guard Kyle Lowery wants a new contract, he is not paid in a percentage of a ticket. His agent won't ask for 3.4% of ticket sales, instead of 2.9% of ticket sales.

Wal Mart's margin is about 1.5%. No one in that board room who wants a raise gets one by saying "raise margins by 0.1%, and pay me please". That's just silly.

When my local mine growing up went on strike, they did not ask for an increase of margin on a gold bar sold, they asked for $20 an hour instead of $18, and a new plan for eyeglasses.

There's a simple reason it's not used in every day life; at my job, or your job, at casinos, horse racing in other parts of the world, lotteries, or in virtually anything. Margins are not set by union negotiations, or salaries, or Barack Obama, or the United Nations. Margins are set by the market. You can't tell someone what they are going to pay arbitrarily, they tell you what they are going to pay by buying things. Then what your margin is - through regular good old fashioned management-  is maximized to grow the firm.

In horse racing, what Obama, the UN, Bill Gates or George Clooney or the King of the World (who might actually be George Clooney) can't do, is done as a matter of course. It sets a margin, and moves it around willy-nilly; it's used as weapon by tracks to other tracks, horsemen to tracks, tracks to customers. It's something to be added to with impunity, like dropping cubes of sugar into sour lemonade. It's a super-strange, sub-optimal, bizarre model. And it doesn't seem to be going anywhere soon.

My Daily Fantasy Sports Testing Phase, ROI Thoughts, Strategy and Horse Racing Parallels

By now you’ve all heard about Daily Fantasy Sports. The business has been growing, and you can’t be a sports fan (or a racing fan) without knowing at least something about the medium. For those unaware, participants draft a one day team (in many sports’) under a salary cap, put up a few dollars (from 25 cents to many thousands) and play other teams. The takeout is between 5% and 10%, with the winners getting the rest. Over 2 billion dollars are expected to be wagered in 2015.

Although I have dabbled at Draftkings and FanDuel (both signup links from me), in November sometime I decided to study the strategy, tools and medium for a test betting phase. Is this beatable?

Since that time I have played almost 1,000 games. I have wagered $13,783.25 so far and have played College Football, the NBA, the NFL, Golf, and Hockey. CFB and the NBA I have barely played (I am not a huge fan, and know little about the players, nor am I interested to learn more), and the PGA is just starting. My $1 ROI's so far by sport are:

College Football: $2.03
NBA: $0.53
NFL: $1.17
NHL: $1.09
PGA Tour: $0.79

Those ROI's include all type of play - big tournaments and head to head or 50/50 games. I have won a few tournaments which skew ROI somewhat. My biggest head to head bets were $100. My biggest tournament entry fee was $27. My average 50/50 game is $50. I am not playing big.

Is this something I believe to be winnable at? I am honestly not sure. As Mike Maloney said once, and it's something I firmly believe: "you have to earn the right to bet big money".

I know I am good with longshot bets for horse racing, because I kept my ROI numbers over a six or seven year period (and going). As well, I believe that if you can't make money betting the horses in the win pool, you won't win at exotics. In my return to thoroughbred racing many years ago now, I bet win for over one year, with barely an exotic (other than the 4% Ellis pick 4, or carryover pools) bet. I don't know much after 1,000 DFS games. I am slightly concerned that my ROI is barely over $1 for head to head and 50/50 games so I will probably stay at this lower level for some time.

Here are a few of my learnings the past two months or so. If you are playing, maybe they will help you, maybe they won't. They are so far my opinion only.

1. Play With a Bankroll - Signup bonuses and the like are great for DFS, but if you don't bet size properly, it's not very wise.  If you are going to play for 25 cents or $2 to get your feet wet to learn, you can do that with a $100 deposit. If you want to play $25 head to head games, it's not. Look to play no more than 10% of your bankroll, and it can last with good play.

2. Use the Tools - Lineup optimizers, websites and twitter are filled with information. It's there for you and it's free. Also pay attention on twitter for late line up injury notes. It's amazing how many people still gravitate to their favorite players, rather than look for optimal players. I used a hockey player who is out of vogue, but a great value pick that was publicized on the websites on the weekend, and he was owned by 0.2% of lineups. There are holes.

3. Value is Value - It does not matter if you are betting a horse race or betting DFS, value is what it is. If a player is listed at $5,600 on draft kings and $4,000 at FanDuel, it's a player that needs to be in your FD lineup. In hockey recently, a very hot Calgary Flames player was stuck at $3,500 at FanDuel, while on a ten game point streak. Despite that, he was still under 20% owned in a lot of daily games.

4. Do What You're Good At - You can download your results in excel. Check them and look for clues. This is exactly what you do with your ADW. It's the same thing.

5. Beware the Variance - $2 games end up being a free for all, where, say 60 points are needed to win. In $5 games, it can be 50 points. In $27 games, 42 can win. If you are betting $2 games with obvious types you need a perfect lineup, or get lucky and that can get old real fast. I throw $2 teams up fully expecting to lose. This is like a big tourney for horse racing. I either want to win or finish last.

6. Don't Let Randomness Ruin Your Day - Crap happens. You will like a team, load them up, and your players don't score. I loaded up on Kings tonight in hockey. They've scored three so far, I don't have a point. There's nothing you can do about it. Just grind, just like you do in horse racing.

7. Obvious Teams? Go big or sit it out - Tonight everyone will be on Blackhawks. There are few games on the sked and it is what it is. The same thing happens in the NBA from time to time. I don't want to guess which Hawks will score, and be like everyone else. I was going to not bet, but instead I bet smaller tonight and took a stand against them. I think the Hawks may score 5 and I will lose. But if they score one, I have a huge chance to cash every team.

DFS, I think, is a threat to racing, because the principles of betting it are similar to horse racing. I don't play poker but I never got into it, and I don't feel there is a parallel to DFS. It will be interesting to see how this all plays out. I find it time consuming, but fun. However, I don't know if I will stick with it or not. I guess my ROI will tell me what to do.

As noted, if you want to try DK or FanDuel, please use my links: Draftkings here and FanDuel here.  For years I have never referred ADW's even though I was asked. I just figured it was their business. Since these two DFS companies are huge and I have no ties to them, what the heck.

Good luck at the windows and if you try either of them (I prefer Draftkings user interface, but that's my personal preference) please look for me. Maybe we'll play the same game.

Horse Racing Needs More Vision, Fewer Monetizers

Ah, my beloved hockey. 

The "white out" is one of the best things you'll ever see at a big NHL tilt. For those who have not heard the term, it’s where upwards of 20,000 fans all come to the game dressed in home whites. It makes our TV screens look like a snowstorm. Home whites are like apple pie, an old blanket, a comfortable pillow; home whites and snowstorms for a winter sport like hockey was positive branding. Then one day that all changed. In 2003, home darks were mandated. Why? You see, the NHL saw everyone in each city buying home whites, but home darks were not sold hardly at all. By mandating this change, it made people buy more jerseys.  The white out is gone and unless the NHL rethinks this (there are petitions by fans out there), it will never return.

Most recently, we’ve seen Wall Street meet main street again in hockey. This time the NHL is moving towards advertising corporations on World Cup uniforms. The NHL, with its traditions, long history, and antifragile nature as a sports business entity has been monetized like never before. It's about squeezing a lemon, with most everything else an afterthought. 

The NHL has increased revenues the last twenty years, but it's not like the league is super-healthy. The top teams, in big cities, make the bulk of the money, while the southern US and small market teams bring in roughly a quarter of those revenues. Sports leagues are built on parity, and in the NHL that suffers.  

In the NFL it is starting to look similar, but it seems there is pushback because the league's vision is paramount. Past commissioners - Rozelle and Tagliabue - were more about growth via principle, long term vision, and catering to what the fans expect and desire. Recently, Commisioner Goodell has been leaning different. In the early part of the century, the first down line was sold to Fed Ex for international broadcasts, and ads on jerseys were broached. Goodell, according to one owner quoted in America's Game, A History of the NFL said with distaste, "he uses the terms monetize and commoditize."

It got so heated that in one league meeting, Pittsburgh Steelers owner Dan Rooney sent Goodell a mock up of an NASCAR looking NFL jersey with a note that said, "This is what we're trying to avoid." Fortunately, there are still some people concerned about long term branding over a few dollars in that sport. 

As we’ve seen the last fifteen or so years, everyone seems hell-bent on monetizing everything. Beating a $2.01 EPS has taken a front seat to long term growth. In some firms, if you can cut ten people for cost savings of $450k, but get others to do most of the work where productivity only goes down by $400k, it's a done deal. It's kind of the way things are done. 

In horse racing, another one of my beloved sports, similar seems to be happening. It’s been going on for a long time and I would argue, the sport is worse off, not better off for it. 

Last year near this time, the big news was the Kentucky Derby. Owners were upset about ticket availability, parking spaces, and seemingly everything under the sun. In early April, there was a takeout hike at the track that even a blind man could see it was about making more money for two days, and little to do with business the other 363. What we've been seeing is a corporation, needing to meet Wall Street expectations, monetizing every inch of space, and every customer, to try and do just that. It’s all about a bigger share of revenue. 

Meanwhile, racing’s other big entity, the Stronach Group is fighting with Mid-Atlantic tracks about revenue splits. It’s about “monetizing a signal” better and getting a bigger share of it. 

In California, there was the big fight regarding SB1072, the takeout hike act. A bigger share of revenue from customers and racetracks was fought for. 

Can anyone tell me how a Churchill Downs Inc EBITDA increase from an event in May grows the horse racing pie?

Can anyone tell me how Magna getting 4% more from a signal, while another racetrack gets 4% less grows a pie?

Can anyone tell me how the TOC getting a bigger slice for a purse, while tracks who put on the races and customers who supply the purse money get less, grows a pie?

Horse racing will grow a pie not by monetizing everything, but by looking at the big picture with some sort of vision. 

Slot money need not be monetized via a purse only. Have you noticed great betting races, more owners, and better racing at Aqueduct since slot cash was added? That money needs to be spent to cultivate ownership and increase wagering as its first and foremost metric. 

Betting money needs not to be monetized by getting a bigger share for an entity, but by cultivating customers to bet more money, and encouraging them to become long term customers. 

Corporations will always monetize racing, and that’s the way it is. Not a heck of a lot can be done about it, but for pete’s sake, if you are writing a slots deal with a casino company at the other end of the table, ensure checks and balances are in place that are pro-growth for horse racing. The way slot deals have been written in North America, have been completely devoid of vision. 

A lot of people look at the horse racing industry as a glass half empty. I tend to disagree. The sport has been run (as an entity) with so little vision, with so little thought to the future, that if it’s ever corrected, it can’t help but grow. The first step is changing the culture to think less about monetizing one revenue stream for today, and about how multiple revenue streams can be achieved for tomorrow.

Why Horse Racing Has to Niche Market

Growing up as a kid, if I wanted to bet something, I would play a game off toss the hockey cards, target practice with a puck (most cardboard hits in the top corner after ten shots won fifty cents), or find someone to bet a football game with. It wasn't overly addictive and I sure as heck could not play it each day.

Today, it's different.

Ever wonder how Clash of Clans and Game of War can afford Super Bowl ads? Because they are worth a ton of money. 

•  Clash of Clans" and "Game of War" are the highest-grossing games in both Apple's and Google's app stores. The website Think Gaming, which tracks top games, says "Clash of Clans" rakes in more than $1.6 million a day just from iPhone users. "Game of War" isn't far behind at $1.1 million daily.

and my favorite quote:

"The experts we talked to said the thrill of a win keeps the cash flowing."

When you ask racing execs or horsemen reps what kind of customer they want, they will often say  "young people." Well, a lot young people are playing these games and spending money that way (some well over $100 a day).

It's harder and harder to gain the market you want. It's easier if you decide you're a niche market and learn what type of person you can attract, and go from there.

Comparing Super Bowls to Racing's Super Bowls- One in the same

I watched most of the Super Bowl last evening, like I am sure a few of you did. The game itself was a bit of a dud until the fireworks started in the fourth quarter, but as usual, as a spectacle, it was fun to watch.

It got me thinking. Are there parallels between the big game and racing? You bet there is.

We Hate Camera Angles

The Networks, for some strange reason, like to put a camera on the goal line in Super Bowls, when they don't use one for regular games. When you've watched eight gazillion football games, this camera angle messes with your brain. My twitter feed was not impressed, while casual fans were wondering what the big deal was.

This is tantamount to goofy camera angles in horse racing. Bettors like the pan shot, because they've been watching races that way since Thomas Edison (I think it was him; he invented everything) created the film projector. It messes with our heads and we get really cranky.

Katy Perry, Music, Lenny Kravitz

The Super Bowl halftime show has grown into a monetary giant. The NFL gets top acts to perform, on stages transformed right before our eyes. There are paper tigers or lions or maybe leopards (hard to tell), dancing sharks, costume changes, lip syncing, and an obligatory song with dancers to end it, that's primarily rap hip hop based. It's quite the spectacle.

In racing, it's kind of the same thing. Big huge draws like the English Beat frequent Hollywood Park Santa Anita. The guy who plays guitar for Bon Jovi and once was married to a Melrose Place actress plays the national anthem. New York, New York is sung by a distant relative of Frank Sinatra (except that one year at the Belmont when they played a song that no one in the demographic ever hear of). I have not even mentioned the fact that if your racetrack is tethered to a casino, you can pop over and watch a really cool Abba cover band for free. Like the Super Bowl, racing loves the music.

In-between Races and Plays Entertainment

Advertising pays the bills, and for the Super Bowl, this advertising is a big part of the event. There are car ads, car ads, car ads, insurance ads, insurance ads, insurance ads and car ads. Most are one minute long and cost more than a bunch of cars that are fully insured. They're the bomb.

Like the NFL, racing's TV channels are filled with ads. Especially on late night. There you can get new fangled brooms for $19.99 (not one broom, but if you call RIGHT NOW, you can get two, plus a handy kit that can turn your broom into a toaster), and other such needed items. While the Super Bowl deals with flashy ads, late night racing TV is more utilitarian. But they are one in the same.

Second Guessing: "Julien Leparoux called the last play"

On the last play of the game, Pete Carroll (or the OC) called a quick slant that was jumped by a first year corner and picked off. This probably cost Seattle the game. If there's one thing you learn quickly about the masses (and talk radio dudes) in football, it's that when a pass play fails inside the two yard line, it's a bad call because you should always run. If you don't run, you're stupid. It doesn't matter that pass plays inside the one work better than run plays, there was clock time to look at, or that they had a perfect match up play. You run.

In horse racing, when a horse loses, it's the driver or jockey's fault. The horse could've been coughing a storm after the race, got run into by another horse, ran over a pop can thrown by a drunk Preakness infielder, or didn't feel like running that day. Somewhere, somehow in that two minute trot race, or 1:50 9 furlong affair, the jockey or driver did something stupid. It's just the way it is.

When In Doubt, Charge a lot of Money

Super Bowl tickets were through the roof. Hotels were outrageously priced. A cardboard filled thingy of nachos cost more than three gallons of petrol. Chris Christie would get stopped at the door at after parties cuz he didn't have enough cash. It's amazing.

At the Derby, it's kind of the same. Takeout hikes, ticket hikes, tents, moving the media area from the stretch to somewhere in Western Lexington, you know the drill.  We live in a time where if something is popular, it must be bled of every penny or someone will get yelled at during shareholder meetings. The NFL and the Derby are joined at the hip.

The Betting

Hey, the track is all about the betting. Just ask this guy.

The NFL is all...... hold it. No gambling at all went on yesterday. The NFL doesn't allow it.

Have a great Monday everyone.