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Showing posts from 2017

Ken Ramsey & Purse Red Herrings

Yesterday, big time horse owner and breeder Ken Ramsey made some major waves with his comments on Keenelend (35 minute mark and on). Quips like "they make Benedict Arnold look like a patriot", and a call for players (and the industry) to boycott the track through withholding their wagering got the most play, and deservedly so.

But he also touched on the so called reason for the takeout hike - to increase purses. Ramsey believes that it's a red herring because Keeneland gets so much of its revenue from alternate means - gaming, sales and the like. He's probably correct.

But the reason itself is suspect. Sure it's arguable that raising takeout even increases purses; in the long run it likely doesn't. However, I suspect Ramsey knows what everyone else does. Even if purses are raised, they are not optimally distributing revenue to the business, and the proposed net benefit - more horses purchased, more horse owners getting into the game - is simply not there.


If Racing Wants to Make Big Wagering Decisions, At Least Study the Numbers

For a long while, we've often wrung our hands at how the business of horse racing (publicly at least) studies their facts and figures when it comes to wagering.

What should be a deep dive - something that looks at things with a microscope with statistical significance attached - is often fishing in a pond; a pond stocked with whatever fish you're looking for to boost your argument.

I read this line in a few places, regarding the Keeneland takeout increase, and it's been passed around some as a justification for raising rates.

"Churchill Downs boosted its rates to the same thresholds in 2014, and records indicate that despite horseplayer backlash handle has continued to increase slightly over the past several years, from $501.3 million in 2014 to $511.8 million in 2015 and $516.9 million last year."

There are many problems with this 'fact', and this is very common in the horse racing business when racetracks offer out new policy.

The numbers include Derby…

Anger at Keeneland is Different Because It's an Old Friend

When a takeout increase is announced there's usually some grumbling. Let's face it, no one in their right mind is happy with a price hike; even a smaller but dedicated player who bets $1,000 in a meet and made $50 will find herself now losing money. No one likes to spend hours and hours at a craft, to lose when they used to win.

This time though, it feels much different. The breadth of the complaints are wider - horseplayers yes, but it's also industry watchers, some horsemen and some in the press. There's a sense of deflation from so many quarters. I think this makes some sense.

Over the years Keeneland has always been the track we've leaned on; the track we'd say to non-fans, "go to Keeneland, it's horse racing and they care." It's the track that when you walked in the door you felt catered to, important; whether you were betting $2, or bidding $2 million on a horse, it did not matter. It's the track where it seemed Nick Nicholson woul…

Horse Racing's Bill Murray Wagering Model

There are plenty of internet rumors that low-takeout, value stalwart Keeneland is looking at raising their takeout rates on selected bets. This, for your average horseplayer who has more and more trouble finding churn, is certainly disconcerting. However, in my view it's part of an overarching trend in horse racing, and it's been going on for some time.

Twenty years ago horse racing was in a pretty decent spot -- slots were churning, supply was up, and purses were fairly solid. The wagering numbers, however, were pretty much flat.

About the same time a new way to play horses was emerging, though, through rebating. Price sensitive punters could find - if you looked, at times pretty hard - deals on wagering that lowered their takeout and increased their churn.

The reaction from racing was, well, to put it mildly, not very welcoming. You heard a lot about how it would be the death of racing (because, the thinking said, charging 22% was the only way to stay afloat), and that the …

The 'Helping Players Win' Mindset

I caught an email from Draft Kings today:
I can dig it @DraftKings. — Dan Gaspar (@MrTuttle05) August 1, 2017 This is a response to the phenomenon of larger players playing into small tournaments, and scaring away smaller customers. Draft Kings, as well as other DFS sites, have the same issue all other pari-mutuel type skill games have: Sharks trying to scoop money from the fish, and the fish leaving to swim in other waters.

Draft Kings believes that without new players they will probably, over time, fail.

This interested me because a DFS site like this (and before them, places like have to answer to one person for their success or failure: The Customer.  It's pretty basic.

As time goes on, or if the structure of the business is dependent on more than a customer, that's when things can possibly go off the rails; for example, if the regulatory environment is leaky, if they have to pay high fees to racetracks, if they have to answer to sh…

There's Big Day Racing & Really Big Day Racing

I noticed the Haskell card checked in yesterday with over $12M in handle, up around 7%. That's a pretty good number, and the race was excellent.

That $12M in handle, though, represents only a sliver of total handle for the Monmouth meet. It's that way with most big events in North America, outside the Derby I suppose. 

Down in Australia, I noticed a figure or two which I found eye opening.

The Cox Plate, Melbourne Cup and Caulfield Cup races attracted over $1B in total handle last year, representing 44% of total handle for the entire meet.

The overall spring meet is good for betting customers - a field size of 10.9 with good pool size, as well as plenty of ways to play, like fixed odds and exchanges. But to have near half of the volume on the three big events is formidable.

I've often believed that mature gambling markets are a leading indicator for North American racing. Big days have been big in these markets for a long time. The US and Canada are catching up, but maybe…

DRF Purchasers Look at the Blue Sky

After what was rumored to be a great deal of time, the DRF finally sold. Details of the deal were not announced, but speculating, it was likely for less than the (again) rumored $100M asking price.

Being a private company, it's very difficult for us to value the DRF based on discounted cash flow. What we do know about their cash flow, however, is that it relies primarily on PP sales, advertising and a margin on each dollar bet. All three of those things are not high growth. In fact, a probable argument can be made that at least two of three are in or approaching a negative growth phase.

What appears to interest this new group are a couple of characteristics that could be blue sky:
“The big opportunity for us is to digitize the print side of the business, which the former owners started to do—it's expensive and there is still a way to go to make it fully function, and then the online gaming offering,” said Z Capital Group CEO James Zenni On the surface it looks like the plan…

Forget Phelps Versus Shark.....

Proving man versus shark racing ain't dead, I, like many of you were watching Discovery's made for TV match race between Michael Phelps and a Great White Shark on Sunday. Although some people were clearly disappointed Michael Phelps did not race an actual man eating fish in the open ocean, the rest of us were pretty satisfied with the spectacle.

Discovery Network clearly used the event to push "Shark Week" on its network, and feels it's good for ratings.

That got me thinking, in horse racing, actual horses race actual horses thousands of times a year. Even though wiener dog races are the bomb, I feel the sport can do better to promote the sport.

One way, in my view, is to offer some match races of our own. Here are a few of my ideas. I hope you like them.

Match Race : Andy Serling against Someone He Blocked on Twitter

This race might help attendance, and we all know how much Chris Kay likes butts in the seats. This would not be a one-off race, because Andy has blo…

The Numbers are Great! No, They're Bad. They're Great!

Del Mar's attendance was reported down about 20% yesterday for their opener. Handle was down as well.

The sky is falling. But at least no horses died.

"A safely run racing day more than offset a downward spike in on-track attendance on opening day."

Other things that more than offset a loss of attendance:

A North Korean rocket didn't hit the San Diego Naval Yard.

E-Coli was not discovered in the Del Mar drinking fountains.

There were no (reported, at least) floppy hat injuries.

I kid. But often this represents analysis in horse racing.

Attendance could've been down for a hundred reasons - a Wednesday with something else going on, people waiting to see Arrogate on Saturday (attendance will then be up and everyone can stop hand wringing), or a big sale at Jim's Jumbo Burger. Who knows.

Horse racing's use of statistics, are in my view, so rudimentary and knee-jerk, it's no surprise we learn nothing from them.

I think that probably will have to change, es…

Racing's Forever Shifting Goal Posts

When I wrote "Why Lowering Takeout Increases Handle 100 out of 100 Times" recently, I did so because talking about injecting betting capital into a system that needs it (to spur end-user demand) is a conversation worth having. I must confess, I did it for another reason - to see, from those who are pro-status quo and don't like to talk about racing's high juice, where the goal posts would shift to.

What I saw, I must also confess, surprised me a little. I knew some shift would occur, because being 'anti-handle growth' in a game we love is not a warm place to be publicly or intellectually. But I did not expect the posts to move so forcefully into the argument that, yes, handle will go up, but not up enough to make more money.

I see it more and more as times goes on. It's not about increasing short term end-user demand anymore. It's about increasing short term handle, and making more short term profit.

Why did these goal posts shift so much the last few…

Racing's Legacy Business & a Closed Mind

About 30 years ago now I worked summer vacation in a meat plant. My Saturday job was, generally, to be a garbage man - clean up the plant and and make trip after trip, dumping whatever I was cleaning into the incinerator. The plant was not 24/7, and on weekends I was all alone. To make the time pass, and since I had no one to talk to all day, I - under the hard hat and parka - had my ear buds in and I'd listen to music.

One day, the union rep came in for something and flagged me down. He saw the ear buds. He shook his head and said, "kids today."

Fast-forwarding 30 years, I was out last week on the lawn tractor cutting the neighbor's lawn. He was in an accident at work and hurt his ribs, so I figured it'd be a nice thing to do. Dutifully I grabbed my blackberry (hey, don't judge) and ear buds and while mowing streamed music.

An older person in his 70's walked by and saw me. He told me later, "You kids today. Electronics on a lawn mower ....."


Do You Think You Can Beat the Races? Here's Your Test

In horse racing you'll find a lot of opinions, some of which are right, wrong or debatable. One that is considered an immutable law of racing, however, is that winning long term is very hard; so hard in fact, that without lower takeout through rebate, I'd submit only a handful of people could ever hope to beat the rake.

What makes the game more difficult than ever, in my view, is that yes, information is more flowing now, and fields are shorter which makes chalk more formidable. But more than that, one piece of truth has been harder than ever to test -- if you can't win while betting only the win pool, you don't have enough skill to beat exotics. Exotics are everywhere, and for newer players they're a black hole of bankroll death because the rake is high, and ticket structure (along with keeping your wits about you through inevitable bad losing streaks) is a learned skill. You can, and will, lose money faster than ever before.

With that, I was perusing the interweb…

When You Can't Find New Customers, Go After Someone Else's

Crunk >
It may be smart but it's also tacit acknowledgement, along w/ Ritvo's recent comments, that only growth comes from stealing comps customers. — o_crunk (@o_crunk) July 4, 2017 This seems to be the crux of the entire sport of horse racing right now - not expanding the tent but inviting people from other tents into theirs as a measure of success.

Each day, you and I as regular players see examples of it.

Why do tracks post drag? Is it because focus groups discovered that sports bettors have a deep attraction to watching a flashing zero for eight minutes? Maybe it's because new fans love watching horses walk around in a circle behind the gate; it brings them back to their whimsical youth when they liked the merry go round at the county fair.  In this delirious state, high-level racing researchers discovered that endorphins in the brain are released which makes them want to wager.

The jackpot bet arms race sure doesn't appear to be something that is attracting…

The Changing Horse Racing Rebate World

DeRosa did a little bit of 4th of July tweeting today on the twitter:
Parx was the third-most popular signal yesterday, but keep telling me how important takeout is to horseplayers — Ed DeRosa (@EJXD2) July 4, 2017 He's generally right when it comes to casual players, of course. Four team parlays at terrible juice are still popular in sports lotteries around the world, because people are playing to be playing. No player alive can bet into Parx juice (other than maybe spot playing) and end the year up money, but it still attracts some handle.

What's not quite correct about the Parx numbers - and this has been true forever - is that Parx still does decent handle because of low takeout. At the present time, a large player doesn't pay 30% for supers, he or she pays about 9% - rebates for Parx are in the 21% range for serials.

Without that low takeout, Parx's handle is in the toilet. I doubt they'd do more than $700,000 a day.

This has been a phenomenon we've see…

Penn National Trump Tweets

In case you hadn't heard, there was a trial last week in federal court regarding Penn National trainer Murray Rojas, and the verdict came down:
 A Pennsylvania-based trainer has been found guilty of "misbranding" animal drugs and related conspiracy counts after a split verdict in a long-running, high-profile case involving alleged race-rigging at Penn National. However, a federal jury on Friday cleared trainer Murray Rojas of the most serious charges of wire fraud and conspiracy to commit wire fraud, which could have left her facing jail time. The result is fairly straightforward: those trainers (and despite what you may read in the racing press about this, there are many) who use raceday meds - through prerace or otherwise - should be on the lookout for Elliot Ness. However, proving pure fraud which will land you in the big house is pretty hard to do. Still, the case clearly shows that things have changed. Business as usual in some barns isn't business as usual…

The Old Days Were About the Gamble, Too

I was chatting with racing historian and jack of all trades Bob Marks via email recently. I shared a story about the 1980's and the state of racing in Ontario.

The family stable, along with some friends, bought a horse in a New York sale, sometime around 1983. He turned out to be a pretty decent colt, winning a few New York Sires stakes and a 3 year old open or two. At four and five he really blossomed and raced in the FFA class at old Greenwood.

During that time there was no simulcasting, and several Ontario tracks like London, Rideau and others would have free for all invites, for say $30,000 or $50,000 purses (well above the local $14k FFA). These would mostly attract Toronto Saturday night horses. One such event was the Connaught Cup at old Connaught Park near Aylmer, Quebec. Our horse was invited and off we went.

The event was pretty huge, with people everywhere. They showed up to watch horses of a quality they could not see regularly. Keep in mind, these were not the top FFA&…

Fixing Odds is a Fix, But it's an Impossible One in US Racing

I watched a youtube interview with long time horseplayer Dave Gutfreund today. Dave decided to hang it up with horse race betting and concentrate on poker. He believes (among other things) late odds drops through money jamming the pools at one minute to post (via computer batch wagering and off-track money) are too much for him to handle.

He's right and this is a huge issue for gamblers, because it's very difficult to decipher what odds a horse will go off at when we make a wager. If we believe a horse is worth a 30% chance and we see 3-1 we wager, but the horse could end up at 7-5 so it's a bet we never would've made.

In Australia this was an issue, as well, but there was a fix. A fixed odds fix. In the early 2000's, fixed odds wagering represented about $40M in handle. By 2016, this number had vaulted to over $3.5B.

The market spoke and the industry listened. They offered what the customer wanted, in a tech world which demands it.

This avenue allows the industry …

There's No Joy in Toutville

I read an interesting thread on the twitter about public handicapping.

Scott and others make an interesting point when it comes to handicapping the horses for everyone to see - does one pick winners, or try and make money? As most who play this game know, there isn't that big a correlation between the two. 

In my very limited time posting picks (in a trade magazine) I found this a real struggle. When suggesting a pick 4 play, for example, I would key a 15-1 morning line shot who I thought would go off at 5-1, have about a 20% chance to win, while being no lower than around 9-1 in the pick 4's. I'd pitch a chalk I thought was 8-5, who'd be 4-5. I'd do all kinds of things I do as a matter of course when I wager to try and squeeze value out of the pool.

Needless to say, with a short time frame, the hit rate was poor. I'm reasonably sure I got called some pretty bad names (by new people who don't already call me pretty bad names).

I think those who do post pic…

Racing's Competition Excuse

I read with interest yesterday's Bloomberg piece on Hong Kong racing. Some of it was certainly perfectly good fact, but I found it a little doom and gloom; talking about 1% growth rates, n' all.

The fact is Hong Kong racing has seen a major resurgence since 2006 when handles were US$7.7B. Last year's US$13.6B was more than a 70% increase since the so called "great recession". If the same thing happened in North America, handle would be about $24B instead of its current $11B, and I don't think anyone would be saying we're doing poorly.

It doesn't mean there are no storm clouds on the horizon in Hong Kong, and the article rightly talks about them. But the bottom line is, despite massive competition, leaks in the betting pools on the interwebs and all the rest we see in Hong Kong, the product, and business, is very strong.

Soccer betting, for example, has been up leaps and bounds. But handle keeps chugging.

Meanwhile on the competition front, something s…

More Narrative Busting

In horse racing we read over and over again (mainly from insiders) that the big problem with ADW wagering is that purses don't get enough of a share; that it's an upside down business model. In some quarters companies who take bets are considered 'pirates'.  You've heard it all before. It's a narrative that has lived on for many years, and is probably believed more now than ever.

Yesterday on the twitter machine we saw this tweet:
Most don't know that ADWs make next to nothing in Cali. If u live there and bet a PENN super bulk of 32% takeout goes to TOC NOT the ADW. — Ian Meyers (@ihmeyers) June 21, 2017 He's absolutely correct. California racing's pricing is steep. A bigger share of wagering than anywhere else in the nation from ADW goes directly to California purses. It's why you see such small rebates from the state (and, rebating is almost totally prohibited in-state). It's why in-state players play (and get ground down) by massive…

The Gambling Little Things

After being immersed in the gambling world for too long to mention, the differences between what goes on with the private companies who try and earn your business versus North American racing never ceases to amaze me.

I like to scan for carryovers now and again. If work is a little slow during the week or I am sitting around in the evening and have a bit of time to handicap, I figure why not look for an edge and invest a few dollars.

Today, DeRosa posted there's a pick 5 carryover at Fort Erie, so I decide to have a look. Carryovers are value, attract money, and are some of the best things this sport offers gamblers. In fact, it's one of the very few edges this sport has in the gambling world. 

I log into the Canadian ADW to research and I see this:

That tells me just about nothing.

I don't know what race the carryover starts on, if it's a jackpot or not. It's relatively meaningless to me.

Since DeRosa is not an idiot, I kind of figure he's not betting into a …

The Unbearable Lightness of Being There

This past weekend the North America Cup charged $10 for entry, for the first time in a long, long time.  As most know, with slots tracks, the doors were thrown open for anyone to enter, big day or small, and this is simply the way the (harness sport) works. The full story, with some thoughts, was penned here.

Most people like the idea of not charging admission to the races, because of one simple premise: If you don't let people in free you are limiting the audience, and racing needs an audience. Further, this audience - if only one person out of 1,000 loves the races and comes back - is positive for growth.

I never really get this line of thinking.

Google is google, not because of flying cars, or Motorola buys and sales, Google Glass, Google Home, or Android operating systems. Google is google because when people visit their search engine they are prequalified to do something, and google gets them where they want to be for a fee. Out of $100B in revenue for Google, about 90% comes…

Fooled By Randomness

We as horseplayers, industry watchers, and well, humans, immediately want to look for reasons for something when it happens. As someone much smarter than I wrote, we look for causality in just about everything. The problem with that is, much of the time there is none.

Today it was reported that Belmont viewership was down over 15%.

That was because, of course, there wasn't a Derby runner in the field, that the field wasn't deep enough, the card wasn't as good, and maybe people didn't really like Andy Grammer. 

Maybe one of those are correct, or (more likely) none of them are.

The fact is, this is a one-off horse race, with little long term data to compare it to that makes any sense. The result could be completely and utterly random.

This is a characteristic of small data, and we fall for it often. If a trainer is 8 for 11 over three years with a move, we should bet him each and every time thereafter. What often happens, is the trainer then goes 0 for 14 and we lose ou…

UK Rake Hikes - Tote Betting Has Its Place, But It Can't Be King

It was announced this week that (again) the UK tote has raised takeout on UK punters:

"From June 29 the win pool deduction is set to increase to 19.25 per cent from 16.5 per cent, while the place pool deduction is to increase by two percentage points to 20 per cent."

Although that might be a shockingly high increase to many of you, the UK tote - set up in the 1920's by Churchill to combat corruption in the betting pools - only represents 3% of the betting market (as of 2015). 

The reasons for the hike are probably pretty obvious. In the unregulated, mature UK gambling market, products like fixed odds wagering and exchange wagering generate the most net worth to the punter. Customers flock to those high volume low takeout (overround) products -  $3 of every $4 are spent with fixed odds bookies and exchanges. Betfred (who runs the tote), appears to have decided in the sunset of their deal with racing, that the only strategy they have left is squeezing the lemon.

While the t…

Why Horseplayer Advocates (& Horseplayers) Give Up the Fight

As most know by now, the $891,000 pick 6 jackpot was hit last week at Santa Anita, but as the DRF reports, it was not without controversy

The controversy arose a half-hour before the race when Horse Identifier Jennifer Paige discovered Fly to Mars was a gelding, even though he was listed as a colt in the track program and past performances.

Paige immediately phoned the stewards, who said they were alerted as the horses were loading the gate for race 10. Stewards quickly investigated and learned the Peter Miller-trained Fly to Mars had in fact been gelded since his most recent start in June 2016.

He was a “first-time gelding,” a piece of information that most bettors consider to be a potentially significant handicapping factor.

The problem Saturday is that no one knew Fly to Mars was a “first-time G” until after race 10 had been run.

At the present time there are insiders, horseplayers and others calling for changes to the "first time gelding" reporting rules, because t…

Racing & Change? Not Kodak Daunting, But Daunting

We've spoken about the harvesting business strategy here before. This involves straddling a middle line of the status quo and only making small tweaks, rather than big change. Although many of us - fans, bettors and even those working in the business - find this frustrating, at times there is a reason for reluctance to change.

One such case from the business world involves Kodak.

In 1975, some may not know, Kodak invented the initial plans that would end up being the digital camera. The inventors were allowed to keep working on it, to make it marketable, and in 1989 a near-prototype was created. It looked and acted the same as the digital cameras of today.

When it was brought to the leaders and the marketing department of Kodak, the project was immediately shelved. It was deemed too big a change, because Kodak owned the many steps of photography production - the camera, the film, and the development of pictures at mall kiosks everywhere. Change might mean billions in new sales in…

Optimal Purses Are Finally Being Openly Discussed

I read with interest the Tim Ritvo interview yesterday in the LA Times. One section was of particular eyebrow raising interest:

[You could put the money into purses], but purses … and horsemen will go crazy when they hear this, are not indicative of success. [New York Racing Assn.] has all the purse money in the world and their field size has not improved; $100,000 maiden special weights struggle every day. I do not believe that people who are going to sales and buying million-dollar horses care if maiden special weights are $60,000 or $100,000 when they spend a million dollars for a horse. What they are looking for is the development of a horse to win graded races.

The everyday guy, of course, that extra $40,000 helps, keeps him in the business a little bit longer and helps pay the bills. I don’t think solutions are taking money and throwing them into purses. I think we’ve seen that in slot-filled jurisdictions. They’ve taken a lot of slot money and thrown it in purses, but…

Tim Ritvo Has His Work Cut Out for Him - California Horses Don't Seem to Race Much

In a sport apparently in need of millennials, California has been attracting them this week. Unfortunately, twenty-something-twitter-memes involving gifs of burning dumpsters is not exactly  positive.

Although I don't believe that a cancelled Thursday card signifies the death of the sport on the left coast, I do certainly think California racing isn't hunky dory.

Racing, in a state that would be the eighth largest country (in terms of GDP) in the world, struggles, and it has continually confounded us.

Sure, we can point to the fact that studies completed as far back as 1989 have told them to lower the juice and be more customer-friendly (while they have arguably done the opposite).

We can point to a 12 Monkey's, X-Files CHRB meeting moment where everyone applauded a takeout increase (seriously, could you see any board of directors applauding a price hike..... "Reuters reported the Ford BOD applauded that their cars just got more expensive"). There are seemingly o…

Nope, Modern Persuasion Ain't My Thing

If there's something I've learned over the years - right or wrong - is that most of life has to do with sales. And to be a good salesman, or saleswoman, you need to have mastered the art of persuasion.

Donald Trump is a good salesman. He's also a very good persuader.

#Fakenews is persuasion, and Trump has mastered its art. He's picked a group of people who have approval ratings below 20% and he's used them to his advantage. Everything they write that he doesn't like is labelled fake, and his minions (which there are many) rally to him, on social media and elsewhere, because, well, with a big enough audience who hates the media, they are plentiful.

It doesn't matter if the news is real and not #fake, or how ridiculous a narrative may be. When persuasion works, facts don't matter.

I won't let the other side off the hook. Barack Obama was a master persuader and good salesman, too. The republican congress's approval ratings were low and they were su…