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Showing posts from January, 2016

Budweiser Knows, Big Changes are Boo-Scary, and Weekend Racing Notes

It's Super Bowl week and we all know what Super Bowl week brings - commercials!

Over the past few years I personally have enjoyed the Bud commercials most. Call me a softee, but I absolutely love them. Lost puppies, baby horses, little animals? Are you freaking kidding me, I get misty just thinking about these great commercials.

This year though, Bud is changing it up, because well, puppies don't drink beer.
Anheuser-Busch has announced that the 2016 Budweiser commercial will not feature yet another adorable puppy. Why? It’s simple – as beloved as they are, the ads don’t sell beer. Budweiser is an old, blue collar, after shift, dirt under your fingernails, hard working American beer and it always has been. Marketing is most effective when your product matches the message and your message matches the market; knowing who you are and being who you are is an immutable law. Budweiser isn't puppies.

So they've switched it up, primarily with a message like below:

That proba…

Engagement

We speak often of engagement here on the blog, but it's done because in this world it's a big reason something succeeds or fails.

Bob Marks wrote a fantastic article about a typical Friday evening race night in 1979, where harness tracks alone showed amazing attendance. Sportsman's Park in Chicago 16,000, Yonkers 13,500, Blue Bonnets in Montreal, 9,500. In all $42 million in today's dollars were bet.

Those were some engaged people in harness racing.

Today monopoly is only a board game, not the racing business. But there's much more to it. There are thousands of things to spend time on, hundreds of sports or games to be a fan of, and there are still only twenty four hours in a day. Grabbing a slice of that time is what every business or game or league is grasping for.

One way Thoroughbred racing engages is through the Triple Crown, and although most outlets do a good job at it, I think they could do even more. If you're going to throw money at marketing, it'…

Racing Needs to Work With Its Betting Partners. They're Not the Enemy.

In the summer of 2012, Australian racing (in this case Racing Victoria) had the bright idea to raise fees on exchanges (I wrote about it here on the blog when it happened). They began charging an obtuse and horribly short-sighted "turnover tax", which made backing and laying on an exchange a thing of the past, for the most part. Those who still tried to trade the horse betting markets this way were subjected to a "premium fee", which pretty much wiped them out.

This replaced the "gross profit" model that had been working; Betfair had been paying 10% of bettors profits to racing. 

Bettors responded by doing what they do when they have no shot to make money - they curtailed their handle on horse racing. 
Without giving figures, my turnover with them dropped by 90% on the punting side, and I used the Fair for laying only which was NOT subject to the tax. RV got nothing, and the Fair lost out on the commission I was paying on the punting side, which was s…

Hong Kong is More than a World Away

As we've discussed here, and if you follow Sid Fernando on twitter (I think everyone follows him except maybe Adele and President Obama, so you likely do), you've noticed chats about Hong Kong.

Generally, we, as horse racing bettors and fans, look at the success they've had and say "we need to be like that!" But, because of myriad hoops and roadblocks, partly caused by fiefdoms, governments, regulatory overreach, commissions and all the rest, it really is a pretty high bar. No, as Sid likes to profess, horse racing here will never be like it is in Hong Kong.

However, there are major differences in the two jurisdictions that aren't based on the above roadblocks. A lot of it, in my view, has to do with philosophy.

Yesterday across the pond:
HKJC CEO says racing is chock full of insiders who tend to only look inside for solutions and that is a continued path to disaster — Pat Cummings (@PatCummingsHK) January 26, 2016 That's one we have to let sink in, isn&…

Fear is Paralyzing, and the Good Ship Racing Can't Break Free

In Washington state there is a law currently being forwarded that would make operating or advertising a fantasy sports site a felony. The bill is being sold in many ways, some of which, well, are let me say, curious. Speaking to ESPN, the author of the bill, said this about these websites:
“This is no different than El Chapo down in Mexico advertising heroin or methamphetamine on our airways a thousand times a day to get kids to try it.” Despite the obvious - that's insanely funny - it's interesting that in Washington state, ads and companies advertising to young people with "free booze, come to casinos and get rich" and powerball "you can be a billionaire" messages, are just fine. Maybe even encouraged.

Stoking fear, in this case the ultimate horror of fielding a team for $3 at a website, is not uncommon. It happens a lot.

Back almost a decade now, Betfair was being licensed in Australia. In the betting mecca that is Down Under, there were government o…

Things to Do During a Blizzard

Hello everyone!

If there's something we know about in Canada, it's maple syrup, back bacon, high taxes, beer, hockey, waiting six months for an MRI, snow. For those of you in horse racing land, here are some ideas for you to spend your time fruitfully during a blizzard.


With Chrome landing in Dubai yesterday, it's a perfect time to fire up a new #bringhomechrome facebook page. With the storm you have time to do this, so there's absolutely no excuse. Let's get the big fella home.

Crash a Chris Christie storm press conference and ask him what he thinks of Jeff Gural.


Write an essay for your RTIP racing class answering the philosophical question - If you did not have power and had nothing to burn to stay warm, would Equibase still charge you for print past performances?

If you're really bored, pop over to a horse racing thread on facebook and ask "Hey guys, what
y'all think about lasix?"

If you are in Brooklyn, walk over (don't drive for cripes…

Making Sense of the Senseless Regarding Pay to Play PP's

Probably one of the most frustrating parts of the horse racing business is paying for past performances. I know what you're saying, oh boy, another article on paying for past performances. But, well, read on if you are interested.

First off, the capricious nature of the whole pay big for past performance phenomenon flummoxes. If you are at an ADW and bet $250,000 a year in 2014, you get free unlimited PP's. This makes some sense, of course, because $250,000 results in over $50,000 of revenue, and if someone is handing your restaurant $50,000 in revenue, you better damn well not charge him or her for a menu or water refills. Then, say in 2015, you bet $150,000. Well, that's $30,000 in revenue -- still quite good -- but then you charge that person for PP's.

Why would you give a customer free menus when they spend $250k on steak, but annoy them by charging them for a menu when they spend $150k on steak? Who makes this rule, and why is there some arbitrary cut off? If the …

Daily Fantasy 2015 Numbers - Growth. Handle and Margins

The Superlobby website scoured the Daily Fantasy contests in 2015, and came up with some numbers.
There were 342 million entries in "GPP's" - guaranteed prize pools (different than head to head, or 50/50 games)With these games, $1.8 billion was generatedThe effective takeout for all sports, and all games, was just over 9%.  Although global industry numbers are hard to come by, we do know that in 2014, FanDuel realized $621 million in (all) entry fees, and DraftKings about $304 million. In 2013, FanDuel generated about $150 million in fees.

The top line growth was, once again, pretty staggering.

Clearly the story of the year was not rake, top-line growth or business interests, but political risk (or more apt, political risk on steroids). As Mark Cuban (a gambling and fantasy sports supporter) put it this week, the industry is dealing with more than racing dealt with for years during its nascent state - just tax hungry politicians:

"Seeing politicians just do somethin…

Mayne, Irwin and Assorted Reactions, Same Stuff, Different Day

On Saturday, ESPN's Kenny Mayne called a race at Santa Anita. Y'know, one of those celebrity race calls (although I would expect Kenny would cringe being called a celebrity), where the sport gets a little free press on a nondescript field of claimers, or maiden claimers.

What followed, in some quarters, was a hand-wringing exercise. How does this really help the sport!? It's a mockery! This glosses over real problems! Racing needs to concentrate on fixing racing, not on stunts!

I think a Kenny Mayne race call is fun, and nothing harmful in any way. I mean, how could it be? But, I don't blame people for being so inflamed by things like it, because this is a symptom of something that doesn't have anything to do with a Kenny Mayne race call.

Case in point: Barry Irwin.

Barry, in the Paulick Report today, wrote:
And, in retrospect, I guess it shouldn't have surprised me, as last year I was told by a highly placed and nationally respected racing official from one…

The Horse Racing Anti-Change Culture is Impenetrable

In those best selling corporate books, speeches from good leaders, and in a lot of every day places, you will often hear about "changing a culture". It's probably overused, but for people who have changed a culture in a sport, business or even family, they stand behind the concept vehemently.

The NFL has a real problem with violence on the field. Today the players are bigger, stronger and can inflict tremendous damage to opposing players. The NFL, a few years ago now, started to demand more from the coaches, players and rule makers to address several issues, like leading with a helmet, late hits, hits over the middle, 'defenseless' players; anything that is deemed far too violent has been looked at.

Early on, the players hated the changes, as did the fans. Several years later, it's changed.

A few weeks ago, Broncos tight end Owen Daniels was nailed by the Bengals' Reggie Nelson.

Nelson played that exactly by the rules, turning his head, not wanting to hur…

Eclipse Award Recap

Well the Eclipse Awards are over for another year! The show was grand, and at times, shocking, but these are never not fun. For those of you who missed the show because you didn't have TVG, HRTV, Free TV Austria, an internet connection, here's a recap!

First up, the winner of the Best Jockey Who Appeared on Dancing With the Stars Award presented by Adam Hickman ® - went to Victor Espinoza. That wasn't the whole story however, as told by Peter Rotondo to TMZ. "Backstage, Irad Ortiz let Victor know about some critical tweets from Adam and all hell broke loose." The Awards were delayed for ten minutes, which prompted Frank Stronach to say, "just like one of our post drags." Everyone had a belly laugh.

Next up, The Trainer Firing of the Year Eclipse ® went to Mattress Mack. Because Mack wanted to thank each and every trainer who ever worked for him, his speech went too long. When ESPN's Jeanine Edwards tried to get him off the stage, Mack demanded she …

Horse Racing Does the Wagering Economics Thing, Kinda Sorta

The Powerball was won! For those of you who took an 8-27-A-A-A wheel because the 8 had the top pace figure and the 27 was sneaky good the last couple, you played the wrong game, but congrats.

The Powerball lottery we saw over the last couple of weeks should be studied with a grain of salt when it comes to gambling behavior, of course; but there are concepts that explain why we had a case where an impossible to hit bet had otherwise fairly rational people standing in line for hours, wanting to give the state their money.

In general, gamblers trade off the expected return of a game for skewness. If it's 1 in one trillion to hit something, but the payoff is some obscure amount, like $1 billion or more, hey, you take a shot. This convex function is shaped differently because of the the size of the payout.

For horse racing, this also helps explain the lottery bet attitude. Why do people bet 52% takeouts for a twenty cent bet they won't hit, with that terrible expected return? It&…

In Sports, the Stars Do Have Coattails

Tiger Woods was injected into the sport of golf in 1996 and was the most talked about golfer of our era. He created buzz.

In 1995, the year before he turned pro, Greg Norman was the top money winner, earning $1.6 million. Last year, Jordan Spieth was the top earning golfer, with $23.3 million in purses. In 1996, the leading money winner in golf earned about what the Major League Baseball average player did. Since that time purses for golfers (on just the PGA Tour, not counting the other tours) have quadrupled.

In terms of sponsorships, Woods changed that, too. Mark Steinberg told Golf Magazine this month that "the number of non-endemic industries grew, and the endemics took a whole new view of the sport." Think Nike creating an entire golf division.

In 2015, sponsors like Red Bull and Under Armor are footing the bill, and new companies show up to sponsor tournaments. Good, but not top tour pros like Jimmy Walker and Graeme McDowell make upwards of $4 million alone in sponso…

Choosing the Hardest Path to Victory

Company A is in the widget business, they make a really good niche widget, and are a leader in the space. On its income statement, $700 million is realized from widget sales, and $10 million is realized from sales of accessories for their widgets. There are accessory for widgets companies that do some really good stuff, and widget company A doesn't do that part near as well.

Strategy A: Spend capital and time to increase widget sales to a global market that is much bigger than the $700 million you sell.

Strategy B: Spend capital and time creating new products and gain market share for the $10 million, against market leaders you probably have little hope in competing with.

Strategy A, because it's easier as a leader to grow, and because of pure math, seems to make the most sense. A 10% increase in revenue yields $70 million. You could double the 'other' part of your income statement and only realize $10 million.

Racing, which yields about $700 million for purses a year …

The Fixers Doing the Fixing, Notes

Good day racing fans!

From the Kentucky Thoroughbred Association's panel yesterday, with regards to getting more customers to bet more money and improve handles:

"Flanery said racing needs to present a product of competitive, full fields attractive to handicappers and to figure out a way to be relevant to the changing fan base."

That's a quote from the President of a company who raised takeout, making it worse for handicappers, and scaring away a price-sensitive fan base.

'Panels' in horse racing frustrate customers. The folks who are asked for suggestions to fix it are the ones creating the policy that needs fixing. It's like going to the doctors with a cold, having him break your leg, with a promise that if you come back in a week he'll make it feel better.

"California Chrome Powerful in Return". I would call it useful more than powerful. In fact, it was probably a similar performance he had last season in his debut where he seemed soft at…

"MegaCast" Helps Draw More Eyeballs By Adding Choice

Last year for the College Football National Championship, ESPN and their related channels sliced and diced the audience with the so-called "MegaCast". The megacast involved different audio feeds (each school's radio teams), different perspectives (a living room type atmosphere on one of their channels with sports figures watching the game), a "command center" with continuous replays, different camera angles, feeds and (and this is bigger and bigger now), fantasy stats and advanced analytics in real time.

Last season, 34 million people watched the "MegaCast" in some way, shape or form.

This year ESPN has added a few new wrinkles to try; including the "replay booth". When a replay is called the main network will go to a commercial, but another will have NCAA officials onhand dissecting the replay film, under the hood, so to speak. For fans this is pretty interesting.

Complete details are here. 

ESPN clearly believes that harnessing technology,…

"Counterbalance" Is Gambling Life

I read with interest - more like the interest I might have watching a high speed chase on KTLA - the New York Times article on betting, out today. I say betting, because the subject matter in it can refer to any pari-mutuel game.

The column, like most churned out by the Times and others, speaks to the inherent losses occurring in a pari-mutuel game; the larger players feasting on smaller ones, the 'inequities' of such games. In general, these articles state : unless you are good, have a nice bankroll or have special skills, you're a sucker, and the companies know it. They usually feature buzzwords like "preying" and "innocent newbies".

"Big players" making money from smaller ones happen in games like racing and DFS, not because of some grand conspiracy, but because that's the way the games are built.

"Large players" are not big by choice, Because they are better than average (or average plus ten points) and have generated a ba…