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Showing posts from May, 2017

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…

So, I Bought Big Mac Sauce at the Grocery Store Yesterday

I walked into a friendly neighborhood grocery store yesterday, and much to my surprise I saw a display.

In nice bottles, with McDonald's logos, stood Big Mac sauce, Filet-o-Fish sauce and McChicken sauce. I found out later these sauces went on sale in Canada-only earlier this spring.

This was, on the surface, kind of a curious decision. McDonald's selling their sauces (through a licensing deal with Kraft) is an affront to their core product (restaurant sales), right? If people can buy the taste of McDonald's on the grocery isle it would seem so.

It's also a potential detriment to franchisees, who they have to keep happy.  A McDonald's franchisee pays big money to own a McD's and works on a high volume low margin business model. For example, a front-line employee who makes $20,000/year has to bring in $200,000 of revenue, or the franchise resale cost will go down. It's why they fight margins, and squeeze suppliers so hard.

Offering a product "off book&…

So What's the Big Churchill Downs News Today?

This was tweeted last evening:
Churchill Downs CEO, Gov. Matt Bevin to make announcement Tuesday: https://t.co/KmCwwCf23wpic.twitter.com/CyNo5fJsqb — WDRB News (@WDRBNews) May 30, 2017 Twitter was abuzz. What could this big news be?

No one seems to know, but there have been many, many rumors. Bigly rumors. I'll share a few that I've seen on the social media machine here. I should caution, despite many of these rumors sounding perfectly plausible, they are not news. Some might even turn out to be fake news.

Tax Deal Announced. "Kentucky Derby" to Stay the "Kentucky Derby" -  No, the Kentucky Derby will not be renamed the "Big Fish Jackpot Stakes brought you by Big Fish Games" as proposed by the gaming giant. The Governor gave in to demands for a 0.1% tax rate on all CDI revenue until the year 2055, and a special "Louisville Hardship Development Grant" for the iconic racetrack. Commonwealth crisis averted.

Churchill: Jackpot Pick 6 Last Le…

Solvalla Shocks and Superstitions

Yesterday the best trotter in the world - and it's not really close - delivered an awe inspiring performance in Sweden at the Elitloppet, thrilling the fans in a way we will rarely see. Bold Eagle, the six year old Ready Cash horse, raced first up and grinded down a very nice filly in Delicious, on way to a stunningly easy win. The time - about 1:50 - and the ease in which he did it, were equally jaw-dropping.

We all waited with breathless anticipation to see the 1-20 shot win the final easily, stamping himself (yet again) as an all time great.

Then it happened. Clunker city. The horse who could trot a hole in the wind, suddenly could not even spring off perfect cover and hook a horse he had beaten a dozen times with ease. He was 12 to 15 lengths slower. He didn't hit the board.

When have you seen an elimination winner so far ahead of his foes bounce in a second heat before? It's not only uncommon to see a horse win his elimination so easily, with such command, with no ur…

"If Only Those Gamblers Were Just Like Me"

Racing has interesting subsets of customers. Of course there's the gambler, looking for a score. There's the participant, who earns money from the sport. And there's a fan, who may bet a little, but he or she mainly watches racing, because he or she loves racing.

In many sports, these three subsets of customers happily mix, and almost all the time their interests overlap. In the NFL, for example, a gambler might want better injury information. But so does the fan, and so does the opposing coach. A player might want lower ticket prices because they want to play in front of a packed house and this is what the fan wants, too. It's all simpatico.

In racing it's not like this at all. The gambler - who might want higher field size and lower takeout - is completely at odds with many participants and fans, who seem to want to work against them. It's almost like it's a challenge of some sort, like a grand boxing match of yore.

"If only those gamblers were just …

Derby-Preakness Coverage Contrasts

Yesterday:
Contrast this coverage w/ CDI and Derby day where horseplayers are scrambling to find live feed of races omitted from live broadcast / ADW. https://t.co/7Dra7giPyI — o_crunk (@o_crunk) May 19, 2017 and
@o_crunk Also note the difference in the Periscope vs. Roberts stream quality — same device, same connection. pic.twitter.com/PqUfVJocRn — Jessica Chapel (@railbird) May 19, 2017 Those tweets are self explanatory. If you are not watching the XBTV, or Pimlico hosted track feed today, you're probably missing out.

For those who want the pomp and pageantry, the NBC feed will have it. For the rest of us, we have a nice option - crisp, clear, smart coverage, while we bet a few dollars into the pools.

Notes:

Who cares who I like in the Preakness (I'm not sure I even know before seeing the odds board), but one horse I will not bet, will be Always Dreaming. Not because I don't think he can win, not because I don't think he can win by a lot. Not because 3-5, or whateve…

Racing Goes Full- Blown Napster

I've been reading some of the interwebs today regarding the Stronach lawsuit against Derby Wars. As most know, Derby Wars - a contest site - has been in business for quite awhile (even partnering with some tracks with a revenue share).
Last year, after the suit was filed, Derby Wars reached an agreement with Hawthorne Racecourse near Chicago giving the track a portion of its entry fees on tournaments using Hawthorne’s races. At the time, Midland said the agreement was part of a larger strategy to work with the racing industry. “We see working with racetracks as important to growing contests,” Midland said. “Partnering with the tracks is a natural way to do that.” Stronach does not want to do that, apparently. Instead they've gone full-blown Napster.

The problem, as I see it, is you should never go full-blown Napster. Full-blown Napster is not considered good business. And you don't even have to possess a fancy business degree to understand why you never go full-blown Nap…

Stronach v Derby Wars - Killing Customers, One at a Time

It was announced today that a federal judge ruled for the Stronach Group and against Derby Wars, citing that the contest site was operating like an OTB or ADW.

"A federal judge has ruled that horse racing tournament website Derby Wars has been operating as an off-track betting business and is subject to the federal Interstate Horseracing Act, which requires consent of racetracks and racing commissions prior to accepting any wagers."

This probably pretty much shuts down the company, as is.

Leaving aside that Derby Wars is probably about as close to an ADW or OTB as a hamburger is to an octopus, this is really, really disturbing. Other sports simply do not act like this.  No, most other leagues or games, looking for reach for its core product have looked to partner with tournament games. This is especially true for small, niche leagues, like the CFL:

“This new fantasy offering will give avid CFL fans and sports fans new to our league an opportunity to deepen their engageme…

Squeezing Those ADWs Out of Business

Some racetracks and horsemen groups search for a lot of bogeymen under their beds at night. The latest, in that long line, are ADW companies. They either don't pay enough, or need to be monitored at every turn, including with geo-targeting.

Now, I am not here to defend a rather strange and sub-optimal betting delivery system, but I will continue to defend one simple point: Squeezing them won't grow horse racing.

Today at TechCrunch, Zack Kanter, the founder of Sedi (a company in the really tough ERP space) wrote a fantastic article about retail, and the various machinations of it. The article is really good, and if you're interested it's worth a read. One part of it, about backward (or forward) linkages caught my eye:
"the increased margins typically evaporate over time. There are great examples of this in the automotive industry, where automakers have gone through alternating periods of supplier acquisitions and subsequent divestitures as component costs skyrock…

Please Powers that Be: "Save Us From the Twinspires Players Pool!"

Crunk's well-written piece about the Twinspires player's pool has been getting some traction on the interwebs. For those who have not read it, Crunkland talks about the brouhaha with the Derby superfecta hit outside the player's pool, and the overall ROI of the player's pool over the last eight months or so (it's poor).

The reaction to this in some quarters (and maybe this should surprise no one in this day and age) is to ban these player pools.

That in my view, is nonsensical overreach.

Player's pools have existed for a long time, in many countries, including Australia, where they continue to be quite popular. For a low buy-in, customers can play along, looking for a huge score in a carryover pick 6, or place pot, or what-have-you, in pools that are too expensive for their bankrolls.

They, like you and I who may be playing more money into these pools, get the same thrill cheering along as we get one, or two, or three winners on our tickets. It's worth $20 …

Big Racing Days Are Great, But They're Missing Out on Landing New Fans & Customers

Over the last few years there's been quite a bit of talk about big racing days. As smaller tracks struggle with handles, the large tracks have done fairly well (in racing context well, which is incremental). When a big day is added, a track can do really well.

And, when a track does really well, like Churchill's handle was this weekend, it does spin off.
Non-CD handle did pretty good too yesterday. All non-CD handle up 10.7% ($59.6M vs $53.8M last year), per race up 11.8% on 20 more races too — o_crunk (@o_crunk) May 7, 2017 This is, when we think of it logically, the way things are supposed to happen. It's all good.

Further to the core numbers, as written last week, the Derby brand creates buzz, and this buzz spins off in other ways:

As those graphs show, not only are there more bettors and fans watching these days, there are more people who are newbies who are looking to learn about horse racing.

That's wonderful, right? Sure it is.

Check out the same phenomenon wit…

Horse Racing's Unwillingness to Create Wealth, Destroys It

I saw a couple of stories recently.

Amazon.com has continued to expand their reach, this time with something called the "Amazon Echo Show".  It's, generally, a hub to turn your home into an automated, voice activated, connected system. It's actually pretty remarkable. Tech Crunch reports that this device (and its hardware, the Echo) will have 70% of the voice activated speaker market in 2017. This is while competing against tech giants Google and Samsung.

More close to home, Betfair has purchased a Daily Fantasy Sports company for what could be $48 million.
Scale is the key word with this acquisition and expects that the company will grow from ten people to twenty very quickly, as well as increase its marketing spend by roughly 100x over what was spent last year. The substantial marketing investment will cause DRAFT to incur a $20 million operating loss during this financial year. The edge that betfair sees (and the reason they are willing to incur a $20M loss, a…

The Derby Betting Crowd Isn't Dumb

Handicapper Mark Cramer has a nice section in one of his books about chaos races. In general, he believes that when there are four or five solid contenders in a contentious field you want to land on the chalk. The thinking is pretty simple -- the crowd is smart, and if you can't decipher something, the wisdom of them will do a better job.

At this past weekend's Kentucky Derby, Always Dreaming was one of four main contenders.

Irish War Cry, who had some pretty solid buzz surrounding him, and who came off a smashing win in the Wood.

McCraken, who in training could do no wrong, massively loved Churchill Downs, and was ready to run a big top, with a trainer who points for such things.

Classic Empire, who had a similar profile to McCraken, but who was also the fastest horse on paper in the race. He was the morning line favorite, and I did not see one person, pundit or twitter comment that disagreed with that morning line promise.

As for Always Dreaming, well he was a bucking bronco…

Derby Handle Was Up, For More than the Obvious Reasons

The Derby card handle was up to over $200 million this year. It's a big number, in an industry that (outside big days) doesn't see many big numbers.

There's a rush to judgement on big days like this, namely, it's a one-off, the promotion and red carpets and NBC coverage and well, the Derby, is the reason for this big number alone.

Of course the obvious makes a difference, but, for me, it's much more about Occam's Razor than anything else - attracting betting dollars is a very basic proposition. Cards that we see at the Derby, or Oaks, provide betting value.  

In the Edgewood on Friday, the two logical horses were coupled - the sensational La Coronel and Dream Dancing. These two fillies were 4-5 through most of the betting, but the place pool lagged and lagged the win proposition. On other days, in smaller pools, with less interest, this gap gets filled near post time. It happens almost all the time. But not on this day. The entry ran one-two and paid $4.40 to…

One of the Kentucky Derby's Two Tribes is Taken For Granted

Horse racing, in my view, has always had a problem subsetting their customer base.

I think I first realized this many years ago at a conference. I talked about some betting stats and threw up some gambling charts on takeout rates and rebates. These showed the obvious - regular players, if given a price break, invest back in the pools without thinking, and it's a good way to reward customers to keep them engaged.

A track person replied, "I went into the grandstand and asked a handful of people. They didn't even know what takeout was."

Oh well, that's that then.

This weekend, the Kentucky Derby nicely illustrated these two tribes. The fans, dressed to the nines, having fun partying, along with the folks who bet Patch because he looked super-cute. On the other side you had folks who were constructing tickets with the precision of a NASA engineer, watching replays over and over; trying to find an elusive Derby day score.

Although there is some overlap of course (ther…

Cub Reporter Visits the Kentucky Derby Trainer Dinner

As everyone knows by now, the hundred and somethingth Annual Kentucky Derby Trainer Dinner happened yesterday at the warm confines of Churchill Downs.

Much of the reporting so far has been from the racing media. And we know they're in the tank, like the New York Times is for the Trumpster. I wanted to know what really happened, and since classy, seasoned newsmen like Bill O'Reilly have been recently canned, I texted my old pal Cub Reporter.

"Cub", I said when I reached him at a pay phone at the track, "You there? Can you get me some quotes for my hundreds of thousands of blog readers?"

"I'm here. I sneaked by security when they were checking Steve Asmussen's hair for weapons. I'm standing right beside a CDI Vice President right now; although he's on an expensive cell phone, and I think he's firing an entire small town as a cost cutting measure. So he's busy," said Cub.

"I'll be back to you," said Cub.

Sure en…

Why Lowering Takeout Increases Handle 100 out of 100 Times

@righthind tweeted out a great link this morning, a research paper titled - "How Do Prior Gains and Losses Affect Subsequent Risk Taking? New Evidence from Individual-Level Horse Race Bets."

One of the conclusions:
 The “house money effect” [shows that] bettors ..... mostly spend the money they have won. This means what it says - when you are making gains, you bet most of what you've won. This behavior is often linked to the "break even effect", which is a way of saying the vast majority of people will bet at a slot machine until their original $20 is gone.

This is, in fact, a big reason why slot machines were taxed, at one time, at 25% juice, but this rate went lower and lower. The people playing to break even were not enjoying themselves at 25% and the casino was not making as much as it should've been.  At 5% you had a whole lot of people on the floor chasing break even. Chasing is maximizing utility.

This theory is relatively simple, and it's not sol…