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Showing posts from 2017

McCraken Press Conference - Live Blog

As you all know, the buzz horse for this year's Kentucky Derby is none other than McCraken. His works are "amazing", he cools out "like a good horse should", he looks "shiny like a seal", his baths are "Orb-like". As well, there are numerous rumours surrounding the horse, and his super-human ability. He has captured the imagination of everyone; even curmudgeonly turf writers like Marcus Hersh.

With that, after this morning's jog ("perfect") McCraken met the press for the very first time.  Here's a summary.

"I know y'all have wanted to talk to McCraken, so today McCraken speaks," said McCraken. "Go.... you right there." McCraken motioned his glistening hoof to the DRF's Marty McGee. 

"How are you feeling? You look good, you look strong, you look formidable. Are my eyes deceiving me? Or are you really this good?"

"No Marty, your eyes are the windows to McCraken's soul, and McCr…

Amazon's Business Strategy is Just a Tad Different

I caught this tweet today:

#amazonprime had 80 million members in the United States at the end of March 2017 - via @cirpllc
— Statista (@StatistaCharts) April 26, 2017 This is pretty incredible. 80 million. This is a store, not a social networking site like Snapface, as the great Bill Belichick likes to wax poetic about.

The Amazon business model is complex, yet simple.

Build products and deliverables that market themselves >  Once customers are captured, increase customer utility, which increases company ROI > Deliver more service through membership privileges, which lowers churn > Use technology and customer service to keep customers happy and buying for life

This is exactly, in my view, what racing's ADW model should have always been. Right down to the letter. But it's not. Not even close.

Think about what "ADW Prime" delivers to a customer. At Woodbine's ADW, they won't even pay you track odds on …

Entitlement versus Reality

I read a brief overview of a book on the 2016 Clinton campaign recently. One paragraph struck me.
 Stumped for months by how to explain why their candidate wanted to be president, Clinton staffers began toying with the idea of seeing how "Because it's her turn" might fly as a public rallying cry. Seriously.

The book, (from mainly anonymous sources, but is not really being disputed too much) goes on to talk about how data was not used properly, how Mr. Sanders campaign was simply a bump in the road and not any sort of movement they needed to react to, how signals were noise, and how slow the reaction time was to what was really going on.

It's easy to stick the knife in when someone, or some team, or some horse loses. We live in a social media world where blame has to be assigned, and we have to club that person or institution into submission 140 characters at a time. But I think that one line - "because it's her turn" - means quite a bit.

When a busine…

Racing Data v Other Data, Part One Hundred

I was delving into different forms of betting in sports recently, and came across another item.

Esports betting is growing like a bad weed, with some expecting handles north of $20B in a few years. With that growth, the demand for data is huge,  and it's in the very nascent stages. 
“Esports is quite unique,” says James Watson, head of esports at Betradar. “The data is available from the games themselves, of course. But it isn’t necessarily available in real-time.
“That’s why we have partnered with official data providers in the space,” Watson continued.” Without those partnerships, suppliers and the operators they service are relying on public data – public data that is delayed at source by the tournament organizers or game publishers.” The pressure to deliver this data, seamlessly and efficiently is key to the sports' betting success. So, it's all hands on deck, with various providers doing the necessary R and D and investment. Other than the obvious reasons, it'…

There's More to Racing's Market than Men & Women, the Old & the Young

I marvel sometimes how we get so stuck in a bog in racing.

Racing is about rich people and brands, where old men gamble and women watch them (while wearing a nice hat); where the young fellow at the end of the grandstand is boozing on 50 cent beer.

Targeting them involves that stereotype. It's the way it is.

Instead, others take a different path.

I had to do some research recently and learned that the video gaming top-line demo in the US is primarily male, and young. I guess that should be no secret.

So, a marketer (a terrible title for today's profession, but we'll use it) should, according to racing, act accordingly. This is an open and shut case, no need to call Matlock.

But it's not the way things work in today's world. That's why others use cohort analysis, subsets of subsets, and take advantage of the amazing tools data and the web affords.

When you do that, doors open.

Looking at the subsets for video gaming, you learn:
 Adult women have recently unseate…

No Confidence, No Will & No Passion

If you ask executives in racing what they think about the future, and the business of the sport itself, you usually get answers like:

We have a nice base with slot money, and table games might be coming in, so I'd say the future looks good.

We hope to have poker rooms approved soon.

Our Big Fish unit has been really good.

Sometimes we wonder what business the horse racing business is in.

I read an interview with the Woodbine CEO in the Toronto Sun recently:
“Single-game sports betting is a real game-changer and I follow it closely wearing both of my hats,”“Our trick from a horse racing standpoint is to make sure it doesn’t cannibalize what we’re doing. The influx of lotteries and internet gaming and offshore gaming hurts us significantly today. The sport of horse racing has been cannibalized by the lack of enforcement, shall we say, of offshore wagering and the influx of corner store gaming and pro-line gaming. None of that existed 20 years ago. Single-game sports betting, it goes …

Jeff Sessions is Racing's New Best Friend

If there's something we learn often - so much so it should not be surprising anymore - politicians really like freedom, except when they don't like freedom.

In this week's edition, there are rumblings in the US that the 2011 opinion that allowed states to run and regulate internet gambling is on the way out.

"Sessions indicated that as attorney general he would revisit and likely overturn a 2011 opinion by the agency that restored federal gambling law to Congress’s original intent and returned power to regulate intrastate gambling to the states."

With lobbying, cronyism, and other isms, this could mean that gambling online, as we know it, will be banned in some form.

While the ACLU and true conservative groups complain, racing - outside the large gaming companies, of course - should be happier than Exaggerator in slop.

Racing's big edge, for about as long as we remember, has been their monopoly power. Even as it eroded over time, it was given carve-outs wi…

It's Always Day One or It's Stasis

Awhile back, Jeff Bezos of Amazon released a shareholder and employee letter from 1997. In it, and much more recently, Bezos describes his company as a "Day One" firm. To him, a day one company is one which is just beginning in its journey, not in the middle, or at the end.

"Bezos compares "Day 1" companies — companies that are at the beginning of their potential — with "Day 2" companies. "Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1."

20 years later is still a day one company.

"It takes a long time to build sustainable long-term value. It takes a big long-term vision and obsessive focus on the few things that really matter (in Amazon's case, customer satisfaction). It takes a thick skin and the willingness to ignore the screaming and disgust of shareholders looking for a quick score (which, because of the intense c…

How the World (Outside of Racing) Sets Prices

It's kind of geeky, but I've had a lot of fun reading articles since Monday on how airlines set their prices. Of course, there's the overarching easy answer to that question in the capitalist system, devoid of regulation - the market sets them. But with inventories, capacity, hubs, spokes, backwards and forwards linkages and supply chains and myriad other things, the way the market sets prices is pretty interesting.

Techcrunch had a decent look at it yesterday. Here's what I learned:

Airlines operate on 1% margins. I suspected it was more than that.

They move 900 million passengers a year in the US.

To move massive amounts of people at 1% margins, they need to study reams of data, and formulate a plan that makes things work, at the lowest cost possible.

Up to 15% of the people traveling miss their flights.

Airlines overbook, primarily, because booking 180 people for a 200 person plane (allowing passengers who switch tickets or miss flights would be guaranteed a seat) w…

Empowering People

Harvard Business Review posted what I thought was a good business article some time ago. It focused on adaptability. In a nutshell, it believes that in the inter-connected world, companies that adapt quickly is the new competitive advantage.

Adaptation, according to the authors, is built on four pillars: Reading a signal, experimenting, managing the morass of intra-company and industry framework,  and mobilizing the new strategy that comes from it. Today, these four things have to happen very quickly.

One line caught my eye: "Perhaps most important, they have learned to unlock their greatest resources—the people who work for them."

Yesterday (and yes I realize this has been beaten to death) United booted that fellow off the aircraft and is in a heap of trouble. It probably could've been easily avoided.

Employees are empowered to implement policy, not think on their feet, or use game theory. In fact, in a lot of large companies, employees thinking on their feet is discour…

United versus Churchill, Who's Worse?

So, in one corner we have United Airlines. We all heard about that today - they overbooked a flight, offered the usual bonus on the booking (in this case, they went up to $800) to get someone to leave the plane, and when no one took them up on it, they had the cops forcibly remove a dude from his seat.

That's some bad mojo.

Overbooking, as a rule, is something often done, accepted, and not without reason. It's economically sound. But, as they say, the cover up is worse than the crime. Man, it's worth typing again, that's some bad mojo.

In another corner, we have the Churchill Downs pick 6. In this instance, one lucky ticket holder was poised for a chance at a $750,000 score on a 20-1 shot in the last leg of a jackpot pick 6. The last leg was cancelled after a brief delay due to the weather. Snooze you lose Mr. Customer. Don't measure the drapes!

This could be described as economically sound as well, because if a pick 6 carries over, the track makes mucho moola wit…

The Press is Treated in Polarizing Ways

The Masters begins tomorrow, but for those in the press pool it began earlier this week, because, for them, something changed. Augusta National invested millions in a state of the art, brand new press room and restaurant for the world wide reporters and commentators covering the event.

 Golfer Rory Mcllroy:
 These guys [the press] are not going to want to leave. You’re going to want to cover Harbour Town next week from there. Just get a feed and like stay there.’ It’s nuts. It’s unbelievable. It’s a bit of a museum as well, there’s so much cool memorabilia from the Masters and years gone by there, it’s, if I wasn’t playing in the thing I know where I would want to be hanging out that week.” The Masters is an older event, and they've always catered to the press. In fact, it is scheduled in early April because Augusta National wanted to accommodate the press; the press who were driving back to east coast cities from spring training. There's definitely been a relationship.


Racing's Unhealthy Obsession With Cannibalization

In racing we often hear about cannibalization. This "refers to a reduction in sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer."

Horse racing contests, more exotics, Derby futures wagering, exchanges, internet wagering, fixed odds -- they're all things to fear in some way, because they 'detract from the core betting pools'.

Daily Fantasy Sports should be doing similar, one would think, to sports betting. In fact, a big slice DFS players see it as a substitute to sports betting.

 But, if sports betting were legal across all 50 states:

This helps explain why since 2010 or so, when the proliferation of DFS sites occurred, sports betting revenue marched on, in tandem. In Vegas, sports betting volume has moved from under $3.0B to over $4.5B the last few years alone. DFS has added about $2.0B in "wagers" per year.

In mergers and acquisition economics you'll often hear the wor…

Running & Hiding Isn't Preparing for Racing's Future

Technology breeds change, and at times, this change can be felt (by some demographics and geographies) intensely. Take the recent adoption of robotics and its influence on the rust belt. That - in itself when we look at the electoral map - is a big reason Donald Trump is President.

The narrative is real, not made-up, and most everyone is pushing it:
 But even as some politicians look to divert attention from the issue, public focus returned to the evils of automation. The New York Times ran a story titled “The Long-Term Jobs Killer Is Not China. It’s Automation,” while the Associated Press explained “Why robots, not trade, are behind so many factory job losses.” You get the picture. Technology is killing manufacturing jobs. The problem with most of this story, is that it relies on what's happening in a text book, not what will happen in the future.

Case in point - Adidas.

Adidas has long produced shoes overseas with cheap labor. You know the drill. But with robotics and a new bus…

Arrogate's In-Running Odds? It's a Shame you Couldn't See it

Yesterday, as everyone knows, Arrogate again proved there's no horse in training anywhere near him in ability, in the world. Back in August, a geared down Arrogate dusted Gun Runner by 15 in the Travers. Yesterday the same thing happened. The only thing different was the margin, but it appears poor old Gun Runner needs an even bigger head start to change the result.

While most folks talked about how impossible the bad start was to overcome - always a fun debate - in this day and age we can actually quantify it. This, thanks to in-running betting.
Fantastic to see #Arrogate get the job done yesterday. Hat tip to NJ Exchange players who took almost 2/1 on him during the race. #inplay — BetfairUS (@BetfairUSA) March 26, 2017 This type of betting has been around for awhile.

Those who have patronized Betfair for many years, they knew that Calvin Borel's ride on Street Sense was worth a 5-2 (28% chance) answer, when he took his last risky move to be potentially shut-off, around the…

California Racing's Slow but Sure Customer Drip

As horseplayer Andy Asaro's led boycott of California racing reaches day three of three, I recently had a look back at a few numbers from the Golden State.

In 2010, as most know, California raised takeout for a reason we often hear from horse racing's braintrust - to raise more money. As Will Cummings put it in his analysis of the racing industry's pricing history, "for [racing] it's a way of life."

Via the BH, seven years ago:
 "Currently, over $4 billion is wagered each year in the state on horse races and almost $800 million is withheld as the takeout to fund such things as horsemen's purses, racetrack operations, state oversight of the industry"".....a 2% increase in the takeout would result in approximately $70 million in horse racing revenue being redirected toward the industry, rather than provided to bettors as winnings."Supporters say the increase will stimulate purses, leading to increased field size and more wagering. Ot…

ADW's, Critical Mass, & Value

I read an interesting article on Techcrunch the other day about Spotify, the online music streaming portal.

Spotify, which in 2018 will likely IPO, pays royalties per listen to artists, and has amassed a more than 50 million person listener base (from just a handful at startup, in 2008). Early on, the company had to pay about a 70% royalty, but that's changing. Because of their critical mass, they now command value, and are negotiating lower and lower rates.

These lower rates can, and probably will, work, because of volume, and reach through convenience. 
 While at first glance, Spotify paying less for per stream might seem worse for artists trying to make a living on music. But the success of Spotify and the path it could forge for streaming services is also in the interest of those artists. Not only could royalty rates start to climb closer to CD sale revenue if it grows big enough. Spotify is also incentivized to help artists use streaming to promote their merchandise and…

When the Habit is Gone, It's Forgotten

It's been several years (2009)  since New Hampshire enacted a betting tax on winnings over $600 that had disastrous results on betting handle. And it has been several years since the tax was repealed (2011), hoping to regain the lost handle and revenue.
“It’s been two years since this tax was put in place, and hopefully, the people who left have not become too comfortable betting someplace else and will return to the track,” said Rockingham president and general manager Ed Callahan. “What they (the legislature) did to the racing industry in New Hampshire might be something that cannot be undone. Those two men were prescient. People changed their behavior, and no, they have not come back to the track.

Handle in 2016 in New Hampshire was $53 million (versus about $140M in 2008).

Revenue to racetracks and bet takers in New Hampshire in 2016 was about $10 million (versus about $27 million in 2008).

There are a number of factors that come into play with regards to handle and track re…

They're Bettors, Not Bank Customers

The dichotomy between racing's treatment of their customer base versus the way other gambling games treat theirs is always eye-opening to me.

One looks at the base like they're customers of a bank, the other treats theirs like they're, well, skill game gamblers.

It was reported by the AGA that there will be $10.4 billion dollars wagered in some form on the NCAA tournament this year. Today, David provided us with some early buzz surrounding the wagering of the event.
Huge handle on tourney Thurs @southpointlv: "We wrote half the amount of our entire Super Bowl handle just yesterday," per @andrewssports. — David Payne Purdum (@DavidPurdum) March 17, 2017 These are with ten cent lines (about 4.5% takeout, as is customary since, forever), myriad betting products, and a will to grow said betting products.

Meanwhile, horse racing takes a different approach.

I heard there's been a new rule passed in Ontario for racing. Super betting is now allowed in five hor…

About that Whole On-track Thing.....

Texas has always been pretty consistent about not letting their customers bet racing over the Internet. This was at the behest of the industry in Texas. A few years ago they even went to court to keep the ban on Internet betting in place.

That - and I know this is not shocking to anyone - hasn't been a good policy.
Since 2001, T-bred handle on racing in TX is down 76% (-$320M) on 52% less races (-1,029). Purses down 50% (-$15M). — o_crunk (@o_crunk) March 15, 2017 Now, many years after the original ban, they've reversed course.

If Texas was a country it would have the 12th largest economy in the world. It would be bigger than Australia. To not embrace change, in the form of wagering over the internet, a whole swath of customers have been ignored, or worse, have left racing as a wagering pastime forever. 

Consumers have choice, and when they are not given one which fits into their lifestyles, they will substitute. They won't drive to the track, whe…

Racing Selling the Turtle

March Madness is upon us. This thing with the non-paid semi-pro student athletes has grown leaps and bounds the last ten or twenty years. That's no secret I guess; all you have to do is search "bracketology" on google and the results will blow your mind.

What CBS and the NCAA et al have done is allowed the event to flourish. If you're gambling it, gamble away. If you are playing in an office pool, here's a printable bracket. If you want to partner up and offer ten billion dollars for a perfect bracket, knock yourself out, advertise away, it helps us. If you want to watch on TV, online, on smart phones or tablets, here's a link.

By allowing an ecosystem to flourish, its flourished. They aren't worried about the disparate A, B and C, they worry about the topline ABC's.

Racing, as we all know, doesn't work like that.

The first time something looks like it may flourish, racing tries to shut it down or tax it mercilessly, because it might 'hurt th…

Sam McKee

By now we've all heard about the tragic passing of Sam McKee. It's been a tough time for harness racing, because Sam was, well Sam.

People who knew Sam well will tell stories and talk about him in ways I can not. But I will share, from my perspective, what I find remarkable in the hours since we received this terrible news.

When someone passes with a public persona, or who most know from their professional life, the immediate condolences all have a theme.

If a hockey player passes, people reminisce and pay homage about his hockey playing career. 

If a baseball player passes, he was a great first basemen, or catcher, or clutch-hitter.

If a businessman passes, she was a great CEO.

If a musician passes, she wrote great songs.

After the initial condolence, then sometimes people talk about the person, and his or her life. 

When Sam McKee passed, it was the exact opposite. The initial thoughts on social media and elsewhere were all about Sam as a person.

"He helped me when …

When Racing's Core is Not Sound, the Ancillary Goes Bad First

Back in the early 1990's I got my first real job. I was a pretty much an office gofer for a mining consortium.

One day a gentleman came in the office for a meeting. He had just returned from a trip to Russia. This fellow was there at the behest of the Russian government, to get his opinion on their state-owned zinc and copper mine in the southwest of the country. The story he told was very interesting - especially to a fresh out of school business major, who learned most of this man's craft in a textbook.

He had already studied the numbers and they weren't good. The mine was producing zinc at a cost per ton that was 25% higher than the revenue per ton. The only reason it was running was because the government was printing cash for the shortfall. However, because the industry in eastern Europe was not using modern western engineering, management techniques and technology - which could make a difference -  he still held out hope they could be helped.

While being driven to t…

If #harnessracing is Afraid of the Answer......

There's a saying, apparently, from the legal community - never ask a question if you don't know the answer.

Today at the USTA meeting Jason Settlemoir put forth a motion that the USTA ask its membership the feelings on a question regarding slots and marketing. In a nutshell, it asked if a percentage of slot money should go into a slush fund to be spent on marketing and ancillary items to promote and grow the sport.

When the 54 director votes were tallied, the score was 47 to 7..... against.

Yes, the leadership of an organization voted down, in a landslide, asking the grassroots membership a question. 

Sure this seems super-silly, but why they did it, I think, is an easy one. They knew that if they asked the question the answer would be a resounding "yes". Then all hell would break loose. They'd have to try and get that done.

If harness racing is afraid of the answers to questions, they don't ask them. That seems to be the mantra of the sport. And it's p…

The New York Times New "Anti-Trump" Ad Campaign Isn't Wrong, & Racing Can Learn From It

The New York Times is running their very first TV ad campaign.

The goal of the new campaign is to increase their paid subscription base. This base, with every Trump tweet against the NYT, grew in Q4. But despite the top-line growth, advertising revenue was down in Q4 by more than subscription revenue was up. They clearly need to build up the subscription base, in this chicken and egg corporate scenario.

A tweet caught my eye about this marketing spend, and it echoes something we hear in racing quite a bit:
What I don't get about the NY Times ad campaign is that it is targeted at its base audience and employees. Won't encourage any new converts. — Rory Cooper (@rorycooper) February 26, 2017 This is indubitably correct. They are absolutely preaching to the choir. But is that bad? Not in my view.

Currently there are many millions of 'soft readers' who completely agree with the Times editorial slant, who do not pay. Using Trump, "truth" and his tweets which sh…

The Number of Races Aren't as Important as You Think

'Spreading a product too thin' is something that major league sports, like the NFL, grapple with.

"For the 2016 season, that meant a total of 110 NFL television windows when you add up the three every Sunday, plus Monday nights and Thursday nights, Thanksgiving and Christmas, That’s more than the league has ever had before, and the ratings data suggest that some fans felt that football was spread so thin that they simply couldn’t keep up with it all.

The NFL may realize that’s a problem, and there are already indications that the league is looking at scaling back".

In racing we (obviously, look at field size numbers) spread much too thin, but there are clearly forces at play -- mainly about keeping the supply side humming.

However, and more broadly, there is a parallel to horse racing.

When we examine the monthly quarterly Equibase handle numbers, we may see a headline "Handle down 2%, races down 2%" and think everything is fine. But that's missing…

Survivorship Bias In Super Bowls; It's Why in Horse Handicapping We Need to Study the Losers

There, as often happens in sports, was quite the discussion about play calling, play execution, and just about everything else after the Falcons blew their massive lead on the weekend in the Super Bowl. This is, generally, what we as sports fans do when something weird like this happens.

"If team X [ran the ball], [passed the ball], [killed clock] etc, they would have won the game!"

Maybe if one or two of those things happened, yes, this startling win might've not occurred, but this analysis sometimes has a built in error with something called Survivorship bias. This is, from Wikipedia: "the logical error of concentrating on the people or things that "survived" some process and inadvertently overlooking those that did not because of their lack of visibility"

We see the success of something (a big comeback) and start attributing, because the success is apparent. What we don't see is the times this success was not achieved (in this case, say for e…

The Horse Can't Lose

Mark Cramer's book, Value Handicapping, was the first book I ever read about making odds lines. It provided me with a good gambling lesson, namely, anything is possible. If you have a horse in the race, that horse - somehow, someway - never has a zero chance to win.

For casual football fans that lesson was proven yesterday, when the New England Patriots came from an impossible spot (about a 1% chance in the 3rd quarter) to win the Super Bowl.

Yes they needed a lot of 'luck' that involved a lost fumble (it's about a coin flip on who recovers one), a catch that could not be caught three times if you threw it a thousand times, an actual coin flip in OT (not even giving the other team a chance at a score) and about ten other things. But, they had a "chance".

When something weird happens we tend to see a lot of this:

Somehow, a series of fortunate or unfortunate events (depending on your perspective) resulting in a surprising result, gets turned into "the mat…

Packaging the Derby Preps

There were three Derby preps yesterday, which is always nice for fans. Two of the races had potential superstars, and one had the top seeded Derby horse in training. Even though it was early in the season, when we should take results with a grain of salt, I don't think anyone was disinterested in the preps.

What I often wonder is, why weren't the preps packaged in a way where, say, the three races are raced in sixty minutes? With this timing tweak, TVG, XBTV, and major track signals could show all three preps at proper intervals in packaged form. A one hour Derby prep "show" with three scheduled races seems to me to be effective marketing for this sport (or any sport). It would probably increase handle in each of the races, as well.

As a sport, I think the Derby (through Churchill Downs Inc.) does things better than most. But I don't think the sport can't do better. Always improving is at times elusive, but should always be a goal. In a sport like horse racin…

Progress in the Sport - We Learn Things if You Let Us

The Pegasus' timing was wrong. How do we know? Because some people - not employed by Gulfstream or Equibase or any alphabet - had access to video, and the brains to decipher what they were seeing.

10 or 15 years ago no one would've even known.

Meanwhile, January's handle numbers were released.

Hold it, who is the person with the funny avatar? Where are the real numbers, the ones from the industry?

They're not being published until the quarter is over.

Reporting of handle has progressed, and it's gotten better, but it's not coming from the industry. Social media discussions, and some (like o_crunk) with access to the numbers, have provided that progress. We are smarter because of it.

As above, we don't need a degree in statistics to figure out that January was a decent month for the sport, with the tracks in the middle down a wee bit.

This industry data has still not been unleashed; it's really been about one or two people doing some datamining. But thin…