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Showing posts from August, 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.

The…

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. pic.twitter.com/Hjr1Yw9sbf — 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 Betfair.com) 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…