Operation Christmas Horse and How the Horse Industry Was Saved

It all started with a note on a dark web forum populated by several horse racing people called MIDAS – “messages the industry doesn’t actually see”.

“I saw Operation Gift Horse on twitter and it got me thinking,” wrote frequent BARN guest Inside the Pylons. “Let’s do something to improve the industry.”

"We need a big wall around high takeout tracks," suggested POTUS Capper.

“Gift cards for lower juice,” wrote Charlie Davis, the former wrestling star and NHC third place finisher.

The winner came from noted horse intercourse guru Sid Fernando.

“In my travels with the horse sex crowd, I’ve passed by a secret door at Churchill Downs that houses the takeout control room. I’ve been told there’s a switch in this room that controls industry takeout. If you find a way in, you can lower takeout for all,”  Sid noted, while sipping on a craft beer.

crunk, artist likeness

“Let’s call o_crunk. He can hack the schematics,” added Sea Bass.

“This better be important, I’m watching a Phish concert,” growled Crunk.

Sea Bass explained the plan.

“I can have that for you in two hours, now go away,” said an irritated Crunk.

 How could we pull this off?  For that we were lucky to have a thinker.

“This is easy,” said Superterrific. “We start #operationticketloser on twitter. Everyone’s sends their losing tickets to someone creative, like you Keeneland Gal, and she’ll create a giant paper mache horse. Once Crunk gives us the plans, we FedEx the horse to Churchill Downs as a present to that CEO guy, Scrooge McCapitalist, or whatever his name is”.

Here’s where it got really good.

“Inside the horse will be someone athletic, nimble and quick, like former minor league baseball star Andy Asaro. At night, Andy sneaks out, and with Crunk’s guidance, he will enter the secret takeout room and lower the dial.”

“Incredible,” said Charlie. “You’re like a criminal mastermind.”

"It's sneaky, like how no one knows I'm the one who does the Timeform figures," added Elsie Milkowski.

“I saw something similar on an episode of Law and Order ,” replied Superterrific.

“I JUST WANT TO SAY IF YOU GET CAUGHT I WILL REPRESENT YOU FOR FREE”, interjected Jerry Jam, much to everyone's delight.

“Who else should we invite to help?” asked Gate to Wire. “A lot of people we know work in the industry. Can we trust them? Would they even want lower takeout?”

“I agree,” said Pylons. “I like DeRosa, Beem, Candice Hare, and you know I love Todd Schrupp’s ticket construction, but they’re insiders. The only person I trust to add is Chip Reinhart, because he’s not related to anyone so he'll never get a job in the industry.”

“Thanks ITP” said Chip.

“Well, off we go,” said Multiracewagers.

MONTAGE. People planning; Crunk doing schematics, Keeneland Gal making a horse, ITP playing some track no one has heard of, all to “No Easy Way Out”, the theme from Rocky IV.

It was now the day. 

While the FedEx package was delivered to the front door, Robin Howlett, posing as a CDI employee, was late.

“I parked in Ron Turcotte’s parking spot and it was like three miles away,” he recalled later. 

Arriving just in time, Robin said to the guard, "Send this to the basement, or I’ll have your job!” 

The ruffled security guard complied. 

Andy Asaro was getting sore inside the paper mache horse, but his drive for lower takeout was allowing him to push beyond all physical and mental limitations. It was like he was at Striders OTB, half corked on whiskey, and he had to find the strength for one more bet. 

“The coast is clear,” said o_crunk in his earpiece. “Go” 

Andy, with crunk’s guidance, found his way to the door. But it was locked solid. 

Suddenly, with all seemingly lost, out of nowhere popped Ed DeRosa. “I caught wind of this. Here’s the key Andy. Remember you didn’t get it from me,” he said.

Andy felt tears well up in his eyes. Ed wanted lower takeout, too. 

“Thanks Ed,” he said, trying to hold back the emotion and love he felt for him at that moment. 

Andy made his way inside. At the head of the entrance he saw a sign, “high takeout makes us champions today”, that industry employees would touch when entering. There was a long hallway with portraits of racetrack executives (he thought he saw one of a woman, but it was just an old white guy who looked a bit like a woman). At the end of the hall there was a statue of Frank Stronach stroking a large cat. 

Then he saw it. A big golden dial. MIDAS intel was right - it was turned up to 11. 

With sweat pouring from him, Asaro tried with all his might to turn the dial down, but it wouldn’t move. With so many years of high takeout it was stuck. He tried and tried, but could not summon the strength. 

Then he heard a soft voice.

“Go the distance,”

It was Jason Beem. 

“You can do it, go the distance Beemie Award winner,” he heard in his earpiece again. Unbeknownst to everyone, Beem was visting Crunk's Jersey pad, after a late night snack at the Cracker Barrel. 

With the power of Hercules Andy turned the dial again, and it moved. He had set the industry on course for lower takeout. 

High fives erupted at MIDAS headquarters. Groans turned to cheers. Everyone loved Jason Beem. Beem for President! 

There was still work to do; Asaro still had to make his escape, and because of the delays, racetrack employees were making their way to work. 

“Quick,” said Crunk. “Head out the door, look for the "We Must Crush Kentucky Downs in '19" poster and take a left into the main grandstand” 

Andy made his way but was stopped in his tracks. He saw Stronach, one of Stronach's kids yelling at Frank, and a couple Churchill suits. 

This plan was dead without a diversion. 

Suddenly and without warning he saw Candice Hare. “I got your back Andy,” she said.

Hare sprinted to the program seller, and realizing she had to start a ruckus she did the only thing she could do. She asked for a DRF. 

In the mayhem, with Churchill execs running to the scene, Andy slithered by. 

“Candice is still one of us!”, Racetrack Kyle exclaimed. 

“Yippe ki yay!” Dink yelled. 

Then at the front entrance, with escape only feet away, a row of security guards formed. It was going to be impossible for even someone as athletic as Andy to pass. 

"This is worse than the day I stared at the eclipse," said POTUS Capper.

“We need a miracle,” muttered Angle John.  

That’s exactly what happened.

Todd Schrupp came through the front door and said: “Ladies and gentleman, I am Ed Helms, star of stage and screen and I'm offering everyone free autographs!” He winked at Andy as the crowd converged on the TVG star.  

“I love Todd Schrupp,” said ITP. 

Waiting to pick up Andy was a resilient Robin, who again made it the three miles to Ron Turcotte’s parking spot and back. 

The job was done. 

A year passed and no one in the industry knew what had happened, but there was a hike in handle. The racetrack executives - figuring the takeout dial was stuck on super-high for years - didn’t even think to check. And their internal reports showed people really liked the wiener dog races and concerts. They patted each other on the back. Some even got stock options. The status quo remained (except there were plans for more wiener dog races). 

As for the members of MIDAS, they stayed anonymous. They lived their lives, bet their bets. And to this very moment, none of them have ever spoken about Operation Christmas Horse and the day they saved racing. 

Please allow me to wish you and yours a very Merry Christmas.

No One Knows What Sports Betting is Going to Look Like, But it Ain't Going Anywhere

I was digging through some old electronics recently and came across my Slingbox. For those who don't know, a Slingbox attached to your cable box at home and allowed you to watch your home TV from anywhere in the world (over an internet connection). I purchased one way back in 2008 or 2009 so I could watch TV at the little place in the sticks, and have it when I traveled (I hated hotel rooms where I didn't know which channel was which).

This device - developed in 2002 by a couple of guys who wanted to watch the Giants play baseball on their local feed when away from home - was a fantastic piece of tech, well before its time.

Now, many years on, I see this company (purchased by Dish a few years ago) has halted production. And when I go to hotel rooms, or out of the country, I watch a hotel TV, or try to login to several apps and can't because of geo-blocking and other restrictions. The tech world, when it came to streaming and TV channels, has all changed.

Right now in the US, it's 2002 for sports betting. For evidence of that, pull up the Legal Sports Report twitter feed.

There are companies jockeying with others for deals, new states coming aboard, new contest and parlay game marketing. There are massive amounts of money being invested into new tech, especially for in-game betting; there are large companies buying data companies for some pretty nice valuations. And of course, as we've spoken about numerous times over the years here, if you have a book of customers prequalified to bet (like DFS companies do), they're worth a lot of money and are hard targets for M and A.

What we're seeing at the present time is the boom phase, which is a little bit of wild west.

How is this all going to shake out? I don't think anyone knows. Things are so raw and the industry is so nascent you can look silly trying to decide which way is up.

But two things I think are safe to predict: One, what we're seeing now with all the machinations, investment, products and companies is not the long term reality. There are a whole lot of slingboxes out there that won't be around in their current form in ten years. And two, this industry - like the evolving of streaming and television offerings -  is not going anywhere, and will only get bigger and bigger.

There's More Than One Response to One Big Aftercare Ask

Crunk tweeted this today --

What message does "racing" think it's sending when every winning ticket that's inserted into tote machines on track, the user is asked to make a donation to aftercare? I was surprised at this experience at SAR last w/e. Essentially forcing customers to think about this issue.

— o_crunk (@o_crunk) July 30, 2018

On the surface, and for regular horse fans and bettors, this is pretty basic - Help aftercare with a touch of a button. Great idea.

If we slap on the critical thinking hat and look a few rungs below the top of the ladder, it becomes a little more problematic.

If you're at the track for the very first time and see this, your response might be different.

"They don't have a plan to take care of these horses when they retire? What kind of business would do that?"

If you're a politician out for a stroll that is unaware of the size of some of the tax breaks, or gaming subsidies, you might say, "I have to find out how much they're getting from the public, because some of it should be used for aftercare."

If you're more of a casual fan, you might be introduced to the topic and look into it more and more. You know an owner of the three paid $900,000 at the OBS for this colt, and you start to wonder why the horse ends up going to Mexico a couple of years later.

Jonah Berger wrote extensively on this topic in a book called Contagious. When people are alerted to something they were unaware of (or assumed was being taken care of) it has a very big influence on them. It causes them to learn about the problem, rather than the solution, and if the problem doesn't make sense to them, it could do the opposite of what's intended.

I like the idea of being able to give $20 or whatever to aftercare. I drop money in the jar each time I go to the track. And maybe I am the proper audience for this tactic. But I know I'm not the only audience.

Have a great Monday everyone.

Grinding Down the Bankrolls of the Masses

David Schwartz of UNLV wrote a neat article on blackjack in Forbes today (h/t to Charlie).  In it he explores what's happened over the years as casinos have tried to make changes to the margins to earn more rake from each player. This includes 6-5 blackjacks and standing on a soft 17.

Proponents of 6:5 and the other edge-padding rule changes argue that the vast majority of customers don’t know the difference. Walking a casino floor and seeing 6:5 tables packed with smiling players, they might be right. But the numbers tell a different story. 

Since 2000, the number of blackjack tables in the state of Nevada has fallen by over 31 percent. Yes, but the amount casinos win from blackjack is still the same, some might argue, so things aren’t that bad. Factoring in inflation, though, the amount Nevada casinos have won at blackjack has fallen by 46 percent.

This is not much different than is seen with a marginal takeout increase in any game. Betting volume depends on a few things, one of which is bankroll size - as bankrolls get degraded less is rebet. But also, the enjoyment a bettor gets from a game is directly correlated to them having a chance to win, and although the black jack changes are marginal, over time this enjoyment degrades too. 

The same phenomenon was seen in scratch off lotteries, but things went the other way. These ticket bandits started at well over 50% takeout because lottery players scratching tickets were deemed to be not in any way price sensitive.  Over time this was proven incorrect, where now - at least in one state - scratch off ticket takeout on larger sized ($20 or more) tickets is lower than Del Mar exacta takeout. 

In horse racing we don't talk about this much, and frankly, takeout increases are normally hidden, then trumpeted with a short term revenue bump. The key to that is short term, because in the long term, bankroll degradation is something that stunts growth, and what's particularly penal about it as a strategy - you don't even see it happening in real time. You just wake up one day and wonder where half the people went. 

Have a great Tuesday everyone. 

May's Numbers Are In - Here's My Completely Back of the Napkin Monmouth Sports Betting Projections

Crunk linked today's New Jersey gaming report, and here were some numbers.

On $16.4M total handle, 7.8% hold. Full report can be found here (.pdf): https://t.co/FiHAbx0x19 https://t.co/bKx3dLefYs

— o_crunk (@o_crunk) July 12, 2018

Doing a little math we see Monmouth did about $10.8M in handle for the couple of weeks they were operating in May. Extrapolating handle is pretty problematic because this is like a cat trying to catch a laser pointer, but let's say for an average May this would mean Monmouth would bring in about $20M in sports wagers.

In contrast, Nevada Sports Books did $315M this May.

Playing around with the numbers, we can make some probably wildly inaccurate projections, but projections based on something concrete nonetheless.

I'm taking into account a 5% hold (it was reported as 7.8% but it will likely come down), 9% to the state, 50% to Monmouth as an operator and 40% to purses. Those last two percentages could be off, as Crunk in his tweet notes, but they're probably somewhere in the ball park. If you know for sure, correct me in the comments.

I'm also looking at Monmouth doing 7% what Nevada does (they'll do about $5B in 2018), which about the percentage in May. As more sports betting comes on line, this is probably high.

Here's the grid.

In this scenario, you're looking at $6,125 a race in purses. You can add an error band to make it more accurate.

It'll be interesting to see how this plays out at racetracks that do offer sports wagering in the future.

Note --

We had a go at the odds drop phenomenon this week. Click here if you want to read about it. 

Fake Racing News? Talk to People

Yesterday we had an article about how great sports betting was at Monmouth, and how it was probably helping racing because handles were increasing. Crunktathol sent a tweet with some facts.

I ran the numbers *wrong*. Corrected numbers (it's a little confusing since MTH ran on Fridays in June last year). 6/16,17,23,24 of 2018 vs 6/17,18,23,25 of 2017. Handle +16% (+$368K) on 6 *more* races. Per race +2.6% (+$1.3K) on 96 *more* interests. Per interest -10.8% (-$769).

— o_crunk (@o_crunk) June 26, 2018

It's good to get facts, if you're not so entrenched to accept them. Monmouth has been stuffing the entry box and not having a great result; before or after sports betting.

And notice he didn't make some cemented conclusion about the numbers, he just presented them. No one knows exactly what's going to happen with sports betting over the next few years.

That's the way open discussion is supposed to work.

Meanwhile, we saw a tweet today with someone sharing an opinion (since deleted).

"Betting will ruin the sport because racing is not about betting, it is about the jockeys and horses... "

That tweet might've been about gun control or abortion, because the reaction was about the same as we see on twitter most days. The responses weren't Crunkian..... for the most part.

But someone set a high bar - our very own POTUS.

Claudia, with all due respect, we all love the sport and it’s all funded through pari mutuel handle. Without betting there is no sport. Period.

— Potu$ Capper (@POTUSCapper) June 27, 2018

POTUS speaks truth (I can't believe I typed that), and he did it in pure un-Potus like fashion.

Everyone knows that racing is tiny and small without betting. Those of us who enjoy watching horses race would not be able to see it very often without the couple of billion dollars in revenues to the sport from betting. Even overseas, the future of the Dubai World Cup probably depends on us not buying solar panels and electric cars.

Answering with facts with an absence of pure vitriol is so uncommon nowadays it sticks out, and in racing we had a couple examples of that. I think it's why most of us stay around the medium - a nugget or two of decency and truth make navigating the noise tolerable.

Have a great day everyone!

Be Like Mike - PED Use in Racing is About the Least Surprising Part of it

Mike let fly on the twitter today --

I will never understand people who aren’t at least mildly wary of PED use in racing. After Ben Johnson, Bonds, McGwire, Clemens, Lance & the Sochi Olympics you still think what we are seeing is normal? And that’s dismissing the 7 sudden deaths.

— Mike Adams (@GateToWire) June 20, 2018

Mike often talks about the past (and sometimes current) use of illegal drugs on horses in the sport. He gets worked up why some people believe everyone is as pure as the driven snow and would not risk performance enhancing for financial gain, while in other sports it's common.

Leaving aside any specific trainers, past or present, in the broadest sense, I think he makes a very good talking point.

In Scorecasting, the authors studied drug use in baseball from various angles. Although they concluded there are many reasons for using drugs in the sport, one stuck out - opportunity cost. If the player had little recourse in his life, he was more likely to use banned drugs. If he had other opportunities, he was less likely to.

This argument was buttressed with PED use stats from minor leaguers, many of whom were from other countries far less rich than the U.S.. They found the country's GDP was directly correlated to PED use.

So, these kids and those looking to make a buck through them put stuff into their veins at a higher rate to make it. The risk is worth the reward.

In horse racing (this at least theoretically) should be the case (pardon the pun) on steroids.

Not only does a trainer not fear reprisal (these things can take years to adjudicate, and finding blood builders in a test is very difficult in the first place), he or she does not have to inject something dangerous into himself, herself or another person, it's into a horse. An animal.

If he or she is caught, well, what's the big deal. Most of the people caught with EPO already who were given six figure fines never pay them. If they took care of their money they're sitting by the beach at the lake house.

Is it fair to think everyone will act like economics says they should? Of course not. Is it fair to say we're naive to believe at least some will act like economics says they will? I think so.

Have a great Wednesday everyone.

Horse Racing Attendance Facts,..... or Myths?

Monmouth was humming on Father's Day with attendance up over 5,000 from last year.  The prevailing reason given - and it makes sense since the lineups were long - was the introduction of sports betting.

With all those people with stuffed wallets looking to wager, it's supposed to be a good thing for horse racing (an on-track handle did have a little bump). But, overall handle was down over 28% per entry. 

Meanwhile, over at Churchill, Triple Crown winner Justify was paraded on Saturday. And it was reported the attendance - 21,053 - was through the roof to see him. However, on the same evening last year, the attendance was 20,669.

20,000 people at a hockey game is good. 20,000 people in the Arkansas Derby infield are a different kettle of fish. Their net worth is not from $100 seats; it comes from what they wager, and they don't wager much.

The 500 extra people (let's be generous and say it was 2,000) to see a Triple Crown winner at Churchill Saturday are, sadly, not worth a heck of a lot. The extra 5,000 or so people at Monmouth there to sports bet aren't worth much either.

It's curious to me that horse racing places so much stock in attendance numbers, and tries to develop policy based on driving them, rather than focusing on what does bring in the most money - more betting.

Protectionism Doesn't Work in Horse Racing Either

Flipping on to twitter in this day and age and you'll see classical liberal economists up in arms about protectionism. It's not like they don't have a point; wealth is created when we do what we're best at. It's not 1930 anymore.

It's more than that, however, because protectionism breeds more protectionism, and this exacerbates the issue time and time again.

We saw some evidence of this just today, in horse racing.

Woodbine's Clay Horner wrote the following on Facebook:

This new protectionist race is in response to Donald Trump being a protectionist. 

But hold it, Donald Trump was complaining about Quebec farmers who are protected through a supply management subsidy and are allowed to charge Canadian consumers 270% more for milk and dairy products. (This despite a "free trade" agreement).

So, and such is the case with protectionist policies, we have a bit of a puzzle. 

Canadian farmers have protection, so someone outside the country complains and slaps on protectionism of his own. In response, a horse racing executive wants to create a race and not let Americans compete for the money to protect Canadian farmers with another brand of protectionsim. 

Are you keeping track of all this? 

The North America Cup - Canada's million dollar race - is a huge success. It's the biggest pacing race in the hemisphere (I'd say the world) and it represents the jewel of the harness racing season north of the border. It drives the most handle, television coverage and owners and trainers from everywhere want to win it. In fact, it's named the North America Cup for precisely that reason. There's no reason to mess up a good thing because someone in another country likes some goofy 1930's economic policy. 

Have a great night everyone.

Restoring Hope & Discounting

The controversy (if you want to call it that) about the race riding in the Belmont has entered the mainstream press. This, unlike the 2016 Sword Dancer, happened with more mainstream coverage, so the industry finds itself having to talk about it. But make no mistake, they don't want to talk about it.

I have no strong opinion on the Belmont. Sure, maybe the horse was a blocker, but maybe he wasn't. It's not something we have not seen 1,000 times before, if he was. And the public knows that, because they believe - and its been ingrained to them in popular culture since forever - that in horse racing, funny stuff happens.

Although our left brain suggests to us that this presents a barrier to growth  - and it likely does - it's just the way it is. The public discounts this stuff for the most part. 

Flipping over to another situation:

I was just realizing what kind of repercussions this could have in a world in which the NBA is directly involved in sports betting in the US. Clearly some amount of people knew this. Are there going to be penalties for not reporting it? You can go way down the rabbit hole here. https://t.co/5dMtWuezac

— Dustin Gouker (@DustinGouker) June 11, 2018

This - the state of Lebron James' hand - presents a problem as well. But will the new sports betting mainstream press and public take it sitting down like they do with horse racing?

They have thus far - the shadow markets are driving dollars - but who knows what the future holds.

Both horse racing and sports betting drive handle in the many billions, and with the spotlight on them there's a chance they can drive more. Will either sport address these issues for the modern betting public? Or will they just conclude that discounting happens and it is what it is. In the short term I think it'll be the latter. 

This One Small Ruling Explains Why Betting "Integrity Fees" Are a Mugs Game

OMG! A trainer bet her own horse (hat tip to Peter) --

• BONGIORNO, JENNIFER L MANALAPAN, NJ YOB 1990 Fhld on 11/18/2017 FINED: $350 IMPROPER BET Ms. Bongiorno placed 3 wagers to win on horses thet were trained by her.Nov. 18, ’18, $2.01 was wagered to MOONLIGHT RANSOM in the 4th race at Freehold Raceway. Jan. 12, ’18, $10.04 was wagered on ALGEBRA in the 2nd race at Freehold Raceway. Feb. 3, ’18, $10.01 was wagered on at Freehold Raceway. Although these wagers were made in compliance with N.J.A.C 13:71-2.4, the wagers were placed through Betfairs Exchange wagering platform. N.J.A.C 13:74c-4.10(C) prohibits trainers from wagering through the exchange on races in which they have horses competing. For the first violation, Ms. Bongiorno received a formal Warning. As a result of the second violation Ms. Bongiorno received a fine of $100. As a result of the third violation, Ms. Bongiorno received a fine of $250.

Now, Jenn isn't exactly a master criminal, unless you think her betting $10 on her own horse is a crime (it isn't). The difference is, it was on an exchange, and horse racing thinks that's a different kettle of fish. She wasn't "in compliance" and received a small fine.

How did the authorities find out about this terrible, awful crime? Because at Betfair there's a paper trail, unlike in the parimutuel pools where trainers have been making bets (some on not their own horses no doubt) for over 100 years. Legal wagering over the internet brings this out of the shadows and into the spotlight. It's the way progress and technology works.

The sports leagues are currently asking for a whopping "integrity fee" from wagering providers (and like most business taxes, the consumer will pay, not William Hill) because they're worried about corruption. I believe that this is always been a cash grab, not about integrity because the market and its systems ensure such a fee is not needed. And I think the above fine proves it.

For over a hundred years sports betting was done in the dark corners - offshore, at a local bar, through websites in the far east - and there was never a paper trail. There was no way to find out who was betting what, through who. Now, with wagering legal, there is. Logically, sports leagues should probably be paying the books a fee for introducing integrity into the system, not the other way around.

Betfair, Gural - Smoke Em if You Got Em

Gural and Betfair pulled the trigger on a deal today where Betfair will provide infrastructure and know how for offering sports betting at both Tioga and the Big M. This comes on the heels of the NJ government voting unanimously to legalize this form of wagering at casinos and racetracks.

I suspect Tioga will take some time (sports betting is not passed in NY yet) but the Meadowlands should be up and running fairly soon, I would guess. And that's clearly the big prize. Its proximity to NYC has always been an edge - in fact, that was the edge that made slots so wanted for so many years.

How well this does or doesn't do is beyond me offering a logically strong guess, but I think it does have potential. Along with the previous geographical first mover advantage:

i) I had some dealings with Betfair (before the merger) and it struck me that their strength was in their technologies. They were always a tech company ahead of a betting company. That expertise is an asset, because betting companies over the next half century will differentiate and thrive on tech, not on a new bet, or super jackpot parlay card that everyone else can copy.

ii) The Meadowlands is in a very tough spot when it comes to the marketplace. Right now it's teetering at an inflection point, where even a small bump in purses can do major good for their long term revenue outlook. This could provide that.

iii) Paddy Power, as per the release, says they took $15B in sports betting wagers last year. That's more than all of thoroughbred and harness racing combined. They know how to take bets.

Gural, quite frankly, hasn't got too many breaks when it comes to the Big M. If this does work out well, and the overnight stock (as well as the betting menu, which clearly needs some work) improves, maybe he's finally on to something.

As for Betfair, I wish them well. They invested time and money to reach this moment in time. They deserve to be rewarded for that.

Regardless, the landscape is about to change in Jersey. It'll be very interesting to see how this shakes out.

Post Drags & Problematic Opportunities

Dave Briggs wrote an extensive piece about post dragging today. Dave, always a good interviewer, got various execs to open up about the practice, and it's well worth the read.

After reading it, Tom LaMarra on the twitter said, "it tells me there is no desire to fix the problem."

When I read it, I had a similar thought, but when I thought about it even more, they weren't talking about post dragging as a problem, but an opportunity.  This, I believe, happens more often than we like to think in horse racing.

Post drags, not a problem. It's not a problem that with them, scheduling races systematically and for maximum reach is virtually impossible; that an industry shares revenue from all bettors, so shuffling them around doesn't grow the pie, it splits it up differently; that it angers customers. It's 'we can make a little more handle than that track if we keep our clock on zero for forever.' Opportunity abounds!

This is nothing new. Takeout hikes in this sport - a sport where for dozens of years people have talked about takeout being too high and sub-optimal for revenue - are never presented as a problem. It's always, "New York's exotics are 25% so we can raise ours to be 24%", "purses will explode", "we can make more money." Takeout hikes are an opportunity!

We're a cross between Baghdad Bob and PT Barnum.

This is a big reason why horse racing's problems never get addressed. The sport doesn't fix problems, they frame them.

Speaking of problems (and not addressing them) and opportunities there's a piece in HRU on the Mel Bount Rule that the NFL implemented in 1979 to open up the offense, and this was looked at from a racing perspective. There the NFL saw a problem (passing offenses were becoming horrible) and fixed it to provide opportunity. Go figure.

Jim Gaffigan, I don't know who you are, but have you met Michelle Beadle? For those who have not seen the comedian making fun of horse racing, here you go.

I didn't find the piece overly funny, and I expect Jason Beem could've done a better job making fun of this sport. But then again, the BARN invites would go unanswered. Jason would probably end up like the PTP Blog - a sad shadowy place read by only a few mistanthropes and Crunk.

Have a great day everyone.

Beating the Leagues at Their Own Game

In this hyper-political world the great art of argument can get lost (just read some of the takes on the NFL Anthem thing today for evidence of that).  But, sometimes something pops up that makes you smile.

Today, Senator Steve Sweeney of New Jersey proved he's got some major chops.

Strong opposition to sports leagues' request for sports betting fees from @NJSenatePres: pic.twitter.com/ELwsCN8V1O

— David Payne Purdum (@DavidPurdum) May 23, 2018

Arguments that involve a virtuous commodity are usually pretty difficult to combat, because if you come out against them you will be labelled as some sort of misanthrope (thanks Santa Anita).

Politico: "Children under 18 should be required to wear hockey helmets while walking the streets of New York. Data shows that severe head injuries will be cut in half."

Other Politico: "That's just dumb"

Politico: "What do you have against protecting our children?"

The sports leagues - smartly - have done similar with their wish for an integrity fee. If you are against giving them money, you are for corruption. It's wonderful framing by them, and it's a tough row to hoe for those taking the opposite side.

Someone in politics who clearly plays chess, not checkers, though, is Senator Sweeney. He's turned around the argument beautifully and made everyone think differently about a previously cut-and-dried subject.

And, as an added bonus, he's probably right.

If 89% of the money line action is on the Patriots and a call goes the Patriots way, does the public think a league that benefits monetarily from keeping 89% of the people happy had something to do with it?

Probably not. Hold it, now that I think about it..... maybe they did?

I think the way the leagues have approached sports betting has been insular, and not based on the pragmatic. Now, predictably, as they've lost the first argument they've moved on to regulatory capture and asking for a slice of revenues. One politician ain't playing that game, and is willing to offer arguments a whole lot of rational people can get behind.

Does the public really want the leagues to get a piece of betting action, when for the last 40 years they've been talking about how bad underground betting is for the integrity of the game? Or would they rather have revenues exempt from them, and centered on the companies and providers who have offered this service in an above board, integrous way for decades overseas?

Nice work Mr. Sweeney.

Snap Trends are a Horseplayer's Bread and Butter, Other Betting, Pffft

Half my timeline went bonkers today. The GOP took over the lead, according to Reuters, in the generic congressional ballot polling. This is pretty shocking (although the trend has been better for them) because the D lead in such polling has been in the teens, at times, over the last six months. And everyone knows the party in power loses seats to a pretty stout degree in mid-terms.

With the medium term trends, and this tightening, we'd expect a big change in the wagering, correct? Well, no. The market didn't even move.

We see this often in political betting, or long-term sports betting, and it is a wonderful, perfectly rational anchor in an irrational topsy-turvy twitter world.

Political bettors know the trends matter, but cohort changes that drive polls and polling in general are rarely trends, and are most-often noise. This is not even counting the concept of discounting, where an Access Hollywood tape means little when the person on the tape is saying exactly what you think he'd say.

Conversely, as horseplayers, we are opposite creatures. Short term trends or silly polls aren't there to be discounted, they're there to be acted upon.

That track bias you noticed in the first two, buttressed by your data and smarts regarding wind, or drying out Tapeta? Get off your ass and bet it, because it could mean a five figure day. If you're wrong, you'll lose a couple of races. So what, we're used to doing that.

When Woodbine trainer Richard Moreau was setting the world on fire in January and February of this year, winning at well over 30% with everything, you were probably firing.

One day he got cold, and well, he's never cold. So you, as a horseplayer, not a political bettor, paid attention and started fading everything.

He went 3 for his next 66. It might've made your month.

If you're a horseplayer, your bread and butter is betting trends; trends that happen in almost real time. There aren't a whole lot of betting games where that works. We should embrace it.

Ah, the NFL - Free Market Types, Until They're Not

We've spoken quite a bit about regulatory capture here on the blog. It's a relatively simple concept that has grown in importance over the last whatever years. I think we saw a little of this rear its head today (h/t to @racetrackandy), from the NFL Commissioner.

In "asking Congress" for betting regulation, Roger Goodell states four goals that are needed.

1. There must be substantial consumer protections;
2. Sports leagues can protect our content and intellectual property from those who attempt to steal or misuse it;
3. Fans will have access to official, reliable league data; and
4. Law enforcement will have the resources, monitoring and enforcement tools necessary to protect our fans and penalize bad actors here at home and abroad.

If you chuckled at a couple of those you aren't alone. I did too.

Leaving aside that current law, and its framework, takes care of most of these items (it's not like this hasn't been running in Vegas already, to the tune of $5B in handle a year, run by the same companies that will be running sports betting) there's some extra self-serving claptrap that's super interesting.

"Fans will have access to official, reliable league data," might make you scratch your head some,  because, simply, we have that already, and, in fact, much more than that. There are scores of companies who have mulched and chopped data; who have increased data flow, some making it an art form.

Why would something need to be regulated that has worked this perfectly for consumers, the NFL and the betting ecosystem?

In my view it's not a hard question to answer - the NFL wants to be Equibase. They're trying to put a whole lot of competitors out of business, and they're asking for the feds help to do it.

Sports betting, exchange wagering and DFS have all gone, or are going through this right now as we speak. It's why, say three or four years from now, it is anyone's guess what the landscape looks like. If you're hanging your hat on big revenues and 10 cent lines like they're a done deal, you should probably wait a little while. The leagues, wrapping themselves in some sort of consumer protection cloak, have a willing audience ready to do their bidding.

Preakness

Preakness Day is done, and yes, ever since Kegasus was pushed off the infield urinal there's always a tinge of sadness about the day for us all. But Justify got the job done, thrilling the crowd (and Chris Kay).

There's quite a bit to chew on.

The weather was sad. And this always annoys me, because despite being an outsider that people on twitter who work inside the game block at times, I feel terrible for them. The work that goes into these days from our friends in the business ..... they deserve better.

Not sad was the handle.

Handle at PIM today not all that bad considering. Down 4.3% (-$4.3M) on 32 *fewer* betting interests. Per interest up 28.5% (+$223.5K). Handle on the Preakness itself up 2.9% (+$1.76M) despite 2 fewer horses this year.

— o_crunk (@o_crunk) May 20, 2018

Big days are cray. People were firing it in on short fields that had more chalk than a crime scene at a Tarantino movie, but fire it in they did. I'm guilty, hey, it's Preakness Day.

I don't know how to type that little guy shrugging his shoulders that all the kids know how to type, but if I did, the announced attendance was over 134,000.

In this week's "TV Ratings For One Off Triple Crown Races Have too Much Noise and are Meaningless So Don't Pay Attention to Anything But 5 Year Trends" file, ratings were up 12%!

Justify - the win was fun, but as an added bonus we got to see fans and bettors argue on social media.

Bettor: Not the way I want a 2-5 shot to win.
Fan: He's had a bunch of tough races, and he beat last year's Breeders Cup Champion!
Bettor: Sure, but I'll fade him if he goes to the Belmont.
Fan: He's the first horse since Apollo to win the Derby without racing at two. He's not seasoned yet. Great, amazing horse to accomplish what he has in his career. And he did it off "Hoofgate".
Bettor: Sure, he's a good horse, I'm just not sure I want to bet him in his next race after that.
Fan: I don't know what personal issue you have with this horse.

Twitter is a great place to argue things......... where often the two sides are arguing two completely different things.

"The Ride" on Good Magic is causing great dismay it seems. Leaving aside we talk about rides way too much when they don't work, I see both sides. It was a speed favoring track and the odds board says it's a match race, so make it so. And, that's not Good Magic's game, and he was inside the speed on that track, which could cost him a length or two or more.

Whatever happened, the field caught up to those two because they both arguably regressed. There was just no Keen Ice to pick them up. And, frankly, the result between the two was formful, no? Isn't Justify a few lengths better than Good Magic right now?

I hope everyone enjoyed the day, despite the weather. There are few things in the sport better than a Triple Crown Day. We'll do it again in a few weeks.

Have a nice Sunday.

The Dichotomy of Gambling Pricing

Good morning everyone.

I caught a tweet this morning which says:

.@WilliamHillUS plans to offer same lines, odds and betting menu in New Jersey as they do in Nevada. Betting will begin over the counter only, until gaming enforcement and legislature sets regulations for mobile wagering.

— David Payne Purdum (@DavidPurdum) May 16, 2018

So, that seems to tell us New Jersey means business. Unlike jurisdictions with government run sports lotteries, like y'all from Ontario know all too well, there's no funny business with double the juice. William Hill and Monmouth are saying, "the odds you are used to - the odds which have been set by markets in the private (underground) economy for over a century -  are the prices we're setting."

Let's contrast this to Betfair when the betting exchange was made legal in Jersey.

There, after consultation with racing, the juice was set at 12%, or about double what the market said.

Even in Australia, where Betfair is licensed and contributes to racing, the pricing was set mostly near historical.

Think about it - William Hill and Monmouth have a virtual monopoly outside Vegas right now. They're near 15 million or more people. They could set virtually any price they want. But they're going with -110 games.

They clearly want to make it work.

The argument against Betfair doing the same thing was the one we always hear, "horse racing is expensive". It is expensive, but the market doesn't care about how much hay costs, and because revenue is derived from optimal pricing it should not matter one bit. If Betfair makes the most money from 5% juice, racing makes the most money from 5% juice. That's what William Hill is doing, and that's how racing, in my view, must think if it wants to compete as a modern skill gambling game.  

Breaking News via Cub Reporter - "Emergency Horse Racing Braintrust Meeting Called"

Cub Reporter never fails to amaze all of us.

The throwback part reporter part gumshoe, just texted with some huge breaking news.

"They're meeting right now." he said.

"Who?", I texted back.

"Magna, Churchill, Chris Kay, Daruty, even people from California who never come to these things", he said.

According to Cub (not his real name) the recently released Robinson Cano news has them spooked. As most know by now, the Seattle Mariners player was suspended for testing positive for lasix.

"Everyone is freaking out. They think that if word gets around that like 99% of race horses use lasix, all hell will break loose. They're trying to build some sort of plan for Preakness Day, where upwards of 9 million people will be watching," Cub reported.

"Right now they're batting around a few ideas. One of the horseplayers invited said it was best if everyone is transparent, but he was immediately asked to leave," Cub relayed.

"Currently, they are talking about creating a better buffet so reporters hopefully won't talk about lasix in racing. America's Best Racing, Night School and other handicapping outreach programs have been instructed to "not to talk about the L" around new players. A dozen or so op-ed's titled, "horses need lasix" are ready to go to all the regular spots," he noted.

"Perhaps most of all, Equibase said they could write an algorithm that can be ready by Saturday that would change the past performances. I sent you the first iteration going around the table," Cub said.

Proposed PP change

Cub Reporter will report back on any findings and when I hear something, you will too.

Legal Sports Betting Brings Out Some Serious Hot Takes

Legal sports betting is upon us, as the Supreme Court says (this is not high-level legal analysis, I just bet horses) the old laws were bad, and because they were bad, they are kind of moot now.

The reaction to this has been, well, pretty interesting.

The first reaction, and we've seen this before, was "OMG everyone is going to be rich!".

We all get that the underground gambling economy is murky, but everyone - the feds, state governments, casino companies - is a lot of people splitting up a pie that no one knows the size of.

As Crunk's tweetstorm points out, the only thing that's assured is these revenue calculations are going to be incorrect. It's not a question of if, it's only a question of by how much.

The second reaction is from some in the sport of racing. There's a giddiness (and this could come from reaction one) that from all this money (OMG!) a bunch of it will filter back into horse racing purses. I get that ADW's might hop aboard, racetracks will offer some sports bets, but a windfall?

The only windfall racing will receive is if a friendly politico says, "10% of profits will go to racing", like they did with slot machines. And that's a Rick's Natural Star long shot.

Dinkin on the Twitter

My favorite take, though, is from over the top economics professors, like this fella this morning. There's a lot of chew on (masking IP addresses! Taking over a person's computer and using his betting account to launder money! OMG!), but it's good to know that all of my friends who gamble are dregs of humanity.

• "It is an unproductive use of people's time even though some people will be making money at it. We don't want to convert America to a people diverting productive time into nonproductive time studying sports in order to gamble on it. It's utterly wasteful."

When a law changes, or something new is allowed or introduced, the mercurial reactions come. It's almost as if the hottest take gets ink, and the most sensible doesn't; so sell clicks and stuff. Sports betting is no exception.

After the dust settles and things move forward, I suspect we'll see what we always tend to see, whether it be betting on horses, or sports; DFS or something else like it. The world won't drastically change for most. It's just another avenue to, if you're so inclined, place a little bit of your disposable income.

Horse Racing Wants to be "Mainstream"

We've all seen Mckinsey reports, the cash spend by the Jockey Club on social media and various forms of outreach; the big day push; NYRA and others spending a lot of money on televising big races, including many from the Saratoga meet.

All of that hard work, and that monetary and time outlay is to fulfill a wish for racing to become mainstream - to be noticed; to be like baseball or football or other pastimes.

The problem with that, as we see this week, is that it's not built to be noticed. And, frankly, I am not sure if some people even want it to be.

Bob Baffert did his duty on Sunday. He - underappreciated, in my view, for the time he spent with the public and media with American Pharoah to push the sport - wanted to bring his Derby winner out to show the world. Then things got messy.

The public saw the horse, wondered why he was walking lame, and received no information from the media on hand, and little from the trainer. That somehow morphed into stories about foot bruises, treatments, and ended with a horse racing media person blaming fans for even asking about it - horse racing's "deplorables" moment.

As a horse racing participant put it in a post at Paceadvantage, this is what horse racing does in situations like this; it's how it is built:

•  The rush to circle the wagons, in this case defend a horse being lame, is what this industry does best. What's really pathetic though is that the industry is so stupid they don't see how each time they circle, they just shoot themselves. Admit it, explain what the issue is and how it's resolved, and then make sure the public and handicappers are aware of whether it's resolved or not when he races next. It's not that hard, racing, to do things right. 

It's not like there's no roadmap on how to do this. For a relatively minor race we know what happened with this horse in the first a bit ago at Happy Valley. 

•  KIWI SUNRISE, which performed poorly, was examined by the Veterinary Officer who said at that time there were no significant findings. KIWI SUNRISE was again examined by the Veterinary Officer at the stables of Trainer C H Yip this morning. He said at this time he noted the horse to be lame in its left front leg. Before being allowed to race again, KIWI SUNRISE will be subjected to an official veterinary examination.

To me, that's a little bit better than being tongue tied, having the racing media see Kiwi Sunrise was lame and then wonder if they should tell anyone, or keep it quiet; and when the story gets bigger, have a track public relations person call everyone concerned about Kiwi Sunrise's health a fan who hates humanity.

Hong Kong racing is built for the mainstream. They embrace the mainstream, and they realize that being mainstream comes with a responsibility. They get it.

Racing in this part of the world is nowhere near that yet.

Horse racing in America needs to decide. If it wants to be the sport that trends on twitter, whose big races are watched by millions, it comes with a new paradigm where doing things the old way is unacceptable. If it wants to be mainstream there is no other way.

Have a really nice Friday everyone.

Twinspires Spends Some Money, But Is 2005 the Better Way?

I watched a little of the NBC coverage on Saturday; not because I wanted to, but because my ADW feed didn't just buffer like it was 1996, it functioned like it was 1986.

While watching that coverage I noticed the horseplaying information given was amazing Twinspires doing a heavy bit of advertising. This is smart business of course. They're using their strong brand and a network telecast seen by upwards of 15 million people to push their in-house product.

Not being privy to how many people signed up, but doing a little speculation, let's say the number of newbies - at Derby parties, watching alone at home or elsewhere - that were enticed to sign up and fund their account was formidable.

Let's also assume each single person deposited say $100 to try the service, and at Derby parties the hat got passed around to bet the big race, resulting in even a bigger bankroll.

Then let's assume that each person bet their bankrolls during the day - like normal bettors did - and churned some, but ended up betting someone other than Justify, losing everything.

Leaving aside the signup bonus, which is always a good idea with newbies, what do most of these new players with balances at $0 do now?

I'd imagine most don't reload until the next Derby, if at all.

Now, what if we roll back the clock to 2005. In that year there were a plethora of small ADW's that were the first to offer daily rebates. These rebates went to everyone, including small players. They're a takeout reduction, but they're given back as cash not in the regular session but in the next betting session.

On Sunday morning thousands of emails would go out telling these newbies that they lost everything yesterday, but their rebate came out to $47, or $82, or $24 and that money is sitting there to be rebet.

How many of those newbies return? Since it's free money I bet almost every one of them does.

When signal fees were lower and handle was moving forward, this is the way it used to be out there in ADW land. No matter how big or small of a player you were, you got something back and what you did get back, you rebet. How much was rebet in the aggregate was solely based on the effective takeout rate (e.g. with 7% rebates you'd roll over the bankroll about 7 times, at 20% it was less than 5).

It's not like that anymore. Now the business seems to sell the sizzle; they're selling money to be rebet into a carryover pool which bribes bettors with their own money, (with the small guy usually chum on these days anyway), or they're selling something tangential to get you back. 

I sincerely hope Twinspires and other ADW's have landed tons of new customers over Derby weekend. Our big events are important to bring fresh blood into the betting ecosystem. But bringing in new bettors isn't the end of the journey, it's the beginning. What you do with them next is what's vital to the future of the sport.

Have a great Wednesday everyone.

Dink - "Proper Gambling is More Important Than Proper Handicapping"

Dink's semi-annual twitter proclamation was proclaimed today.

I post this often but have not for a long time............ PROPER GAMBLING IS SO MUCH MORE IMPORTANT THAN PROPER HANDICAPPING

— alan (@dinkinc) May 8, 2018

Although it's never that simple, he makes a good point.

As humans we are blessed with some amazing tools. We can analyze thousands of pieces of data and come up with a conclusion. But, as humans we're also cursed with biases that can really hurt us. One of them is, a lot of us can't grasp the concept of chance.

Let's look at a game of coin flip. Most of us would think getting a long run of continuous heads or tails is something that can't happen, because of chance. In fact, 50% of the time you will get a run of 10 consecutive heads (or tails) if you flip a coin 710 times.

If you told someone you picked a pick 6 lotto ticket with the numbers 111111 or 22222 they'd look at you like you have six heads, when in fact the odds of that coming in are the same as the 693541 that they have on their ticket.

A horse race is a game of chance with each horse (even Rick's Natural Star, although that's as close to an example of "no chance" as we might find) having at least some chance to win. That's something, I believe, a lot of good handicappers don't assimilate well. But good gamblers do.

The tote board does more work for a good gambler than studying a racing form. It's remarkably accurate and has been very accurate since forever. The tote board provides an array of probabilities (chances) for them as a starting point. Then each horse is analyzed and the race is attacked as not one to find a winner, but one to extract betting value based on chance. This is why you hear so many good gamblers say so often, "I just play race by race" or "I don't play pick 4's". Most of them don't even handicap a race beforehand.  You can't properly analyze chance in a race three races ahead.

These differences are difficult for a lot of true handicappers to get their heads around, because they want winners. This focus can create a lot of bad gambling habits that are, in my view, insurmountable barriers in achieving long term success - overbetting a bankroll/improper bet sizing, overbetting or underbetting an opinion, or not getting enough value from a good opinion, starting with too small a bankroll, not paying attention to takeout rates, or not ensuring they get rebates.

If I had a chance to be a great handicapper and a good gambler, versus a good handicapper and a great gambler, I'd choose the latter seven days a week. The tools the latter gives me are worth their weight in gold.

Kentucky Derby Handle Up, Viewership Down. Does it Mean Anything?

The news is in, and Derby Day handle was up about 8%, with television ratings down about 13%.

Although there's a want to wax on about this apparent dichotomy, I don't think we have to.

Derby business - in fact, any big day business - has seen a strong increase in handle over the last half dozen years. I know a lot of people don't put much stock in branding (and often I agree), but branding big days might not work the first year, or the second, or even the third. But it does work. Your average bettor, big bettor, and bettors who have sat on the sidelines for some time all seem to download and play the big cards in big numbers. It has become a conditioned response, not unlike what we see from the underlying pick 4's and 5's across the sport. These serial bets (some very low takeout compared to others) have branded themselves, as well. We're at the point  where, "I don't really like anything, but I took a 50 cent pick 5," is a common phrase. On big days, serial bets are injected with rocket fuel.

Churchill Downs has not done particularly well since the takeout hike when they race outside Derby week (2013 handle of $322M fell to about $260M in 2016; since rebounded to about $285M in 2017). But their Derby week has been lights out for bettors, and there is absolutely no denying that.

As for television ratings, as we've written for a long while here on this blog, they are dependent upon a lot, so year over year numbers are not really very useful.

More important, in my view, is people are watching network broadcasts of sporting events less and less, in general, because they are finding many other ways to consume sports. It's kind of ironic that Twinspires commercials on NBC might attract thousands of new accounts, and those people can now watch a track feed instead of a red carpet. TV ratings down, but thousands of new punters..... which one would you take?

Horse racing is not in good shape. About 40% of its revenue is dependent upon slot machines; $11B in handle is a paltry sum, especially when we consider inflation; foal crops are leveling but people are racing for similar money with fewer chances to race. But for big days like the Derby it's all roses, and I don't think there are too many storm clouds on the horizon to put a wheel in the spokes of that trend.

Edited to add 2017 CD handles outside Derby week.

Churchill Downs Inc Denies Local Nun Derby Access

Just when you thought it could not get any worse.

"I don't know what happened," says Sister Martha, of St. Patrick's Church in west Louisville. "They just called and said I would not be able to attend the Derby this year."

Sister Martha, as most know, shows up at the Derby each year, selling roses on behalf of the under-privileged children of Greater Louisville. Although she usually raised only $20 or $30, this tradition dates back over 70 years.

Sister Martha and her flowers, in happier times

"I've been doing this since I was 25. I never had a problem before," she said. "I saw that nice Secretariat man got in trouble that one year, and I saw the news on the Brad Cummings Report that the lovely young and talented Caton Bredar had her credentials revoked, but I didn't think it could happen to me."

Sister Martha says she feels most upset for the children.

"They've done nothing wrong. It's sad," she said.

A Churchill spokesman, on condition of anonymity said although he feels bad for her, it was time to pay the piper.

Churchill spokesman (artist likeness)

"A few years ago we increased takeout on unsuspecting horseplayers. In Sister Martha's case she was selling flowers tax free. We simply asked her to give us 22% of the proceeds, and I don't think she liked that. Something about the "children," he said.

"This was just about leveling the playing field. It's nothing personal."

When asked what the proceeds of charging the children would've went for, the Churchill spokesman said they would still go to a needy cause. "The markets have not been as kind this year as in past years. We have to get our bonuses from somewhere," he said.

Reaction from the industry was mixed.

"When I was a young boy I sold flowers in Austria, so I have a soft spot, not only for the children, but for flowers" noted Magna head Frank Stronach.

"No comment," said a Keeneland spokesman.

Some in the industry have rallied around Sister Martha.

Mattress Mack has started a Gofundme. Toby Keith has begun to organize a free concert. Bobby Flay said he'll make a new drink for the Derby (with simple syrup) and all proceeds will go to Sister Martha. Todd Pletcher has donated locks of his hair to be sold on Derby Day.

Others tried and are there in spirit.

University of Kentucky coach John Calipari said he'd do something, but he's on day 3 of a 364 day recruiting trip and unavailable. Rick Pitino said he'd give a free talk, but no one seems to like him anymore. Ron Turcotte said he'd sign autographs for free, but he can't find a parking spot.

It appears that once again, Churchill has galvanized the great industry of horse racing, although perhaps for the wrong reasons.

That's all the fake news that's fit to print. We'll keep an eye on this developing story.

Racing's Power Brokers & the Uncanny Valley

The "Uncanny Valley" was a concept first coined in the early 1970's by a Japanese robot maker.

He noticed that when robots are clearly robots, they're embraced by the public, as cute or neat, or interesting. As the robot becomes closer and closer to lifelike, however, it reaches a point where it becomes repulsive.

This reaction was noticed (and talked about in Newton's Football) when the producers of Shrek focused group different types of animation to children. While the kids laughed happily while shown type after type of animation, one iteration caused them to instantly change the smiles to literal screams. That iteration was so lifelike it was considered so creepy it scared them. The producers immediately scrapped that version, went to the older one, never wavered by pushing the envelope too far, and made a pile of money.

This uncanny valley - the point where we become too uncomfortable with something - is seen in other mediums as well.

Back in 1905, Teddy Roosevelt, a lover of football, realized that sport was on the precipice. People enjoyed the game and it was growing, but it was way too dangerous. 18 players had died the previous year, and the uncanny valley for fans was palpable. The excitement for Shrek was fine when people knew it was a game, but when the real Shrek showed up, people were horrified.

Roosevelt called together all the football powers, and rules changes - like not allowing mass blocking with certain formations, a line of scrimmage and downs - were made. Many of these changes are in use today.

Horse racing has its own uncanny valleys, and you and I live with them each day - horses perishing on the racetrack. Your uncanny valley might be the Grand National, or a cheaper racetrack with higher than average breakdown rates. For casual fans, they dance around the uncanny valley often, exemplified when we hear "I love the sport, but that part of the sport makes me question myself."

Ten years or so ago it looked like the sport was smack dab in the uncanny valley; polytrack and other surfaces were being tested, safety measures were in their formative stages. But I am not sure it was.

I don't want to belittle the safety measures because they have done a world of good, but when a place like Keeneland reverses on poly so quickly for business decisions, it makes me wonder. I simply don't think the sport was as close to the uncanny valley as we thought they might be.

Perhaps that should be expected. 113 years ago when Roosevelt spearheaded changes, it was in response to people dying, and those people were sons of the upper class in football playing colleges like Harvard and Yale.

In 2018, although the public's attitude shift towards animals has changed measurably, it's not quite about that. They're still animals, and revenue keeps chugging. Maybe they aren't wrong.

I suspect racing's uncanny valley moment will come, however. There will be a day - maybe a generation hence - where if a track reverses course on a horse safety measure there will be dire consequences; where a politician forces change; where a city bans a racetrack, like many have banned a circus. But that day is not today.

Are Judges & Stews Biased For the Big Barns & the Chalk?

Good morning everyone.

Tobias Moskowitz is a Yale professor, and he's looked at some interesting data about bias in pro sports officiating.

In general, he's concluded that there is a bias towards primarily the home team, but also for other teams when they're the team that's expected to win, or a subtle bias for a team that a league might want to win a game.

One famous way this was illustrated was in major league baseball. Historically, for the home team, strikes and balls were called differently at crunch time. The home team had an edge, both hitting and pitching, and this subtle difference resulted in an extra 7.3 runs per season. This might not sound like much, but home teams outscore visitors by about 10.5 runs per season. In effect, he concludes about 70% of the home field advantage can be explained by the home plate umpire's bias.

Technology changed a lot of this of course, although it proved a supposition at the same time. Questec - the ball and strike technology used that we see on television now - was used quietly and behind the scenes for a period at some ballparks for some games. Umpires who knew the technology was being used cleaned up their bias; the next game, in a different park, the bias was back.

When we saw the Patriots get flagged for only one nondescript penalty against the Jaguars while the Jags got penalized six times (one of them a less than clear cut game changer PI), we saw twitter light up like a Christmas tree. It's easy to be conspiracy minded, because, well, the data shows that game would likely be officiated with bias - Super Bowl ratings could be down with an underdog Jags win (the officials don't want to rock that boat) and it's the home team (the Jags themselves get this bias at home, so why not the Pats?).

I'm sure by now you think I have a tin foil hat on my head, but despite me egging on @gregreinhart on the twitter about his beloved Penguins, I never really remotely believed this stuff. I encourage you to read Moskowitz's work. He covers all major sports, and in all major sports he sees the exact same thing, and he provides a compelling case.

Switching over to racing, I can honestly say I have not seen a bias. I see people on twitter grumbling about the chalk being left up because taking him down would cause a riot, and the stews would be disappointing a lot of people. I see others grumble about horses from big barns being left up, because, well, they're from big barns.

But maybe I'm wrong. Maybe we need to get the tin foil hat out.

If the Sword Dancer debacle a couple of years ago was a team-up, rabbit barn job by a 4% trainer with an owner like me or you, and not a high percentage trainer with stock from a massive breeder, do we get in trouble?

If mine or your Chuck Simon trained gelding wins a grade one race, and perhaps caused a foul, is he more likely pitched than a blue blooded stud for a big barn, where a grade one win can be worth an extra couple of million dollars at stud?

Is pitching a 90-1 shot because people have not bet much on him easier than a chalk?

With the absence of data (there should be data on this really, when we think of it) we'll never know. But from reading Moskowitz's conclusions across all other sports, human nature is human nature. It would not surprise me one bit if that's happening.  Maybe the yellers and screamers at simo centers and on social media have been right all along.

Have a great day everyone.

Give Bettors the Goods, Monday Notes

Good day everyone!

"Walk a mile in someone's shoes." It's sound advice. When you do, you have a respect for what they do, how they think, and your understanding about an assorted issue tends to grow.

In race 7 tonight at Woodbine/Mohawk, there's a horse with a 5-2 morning line that looks pretty good. But he's been off since March 8th.

Unlike the thoroughbreds, where a six week break is modelable and a horse may have listed workouts to make an informed opinion, in harness you're completely in the dark.

Because these horses need to race frequently to stay in form, this horse is a total coin flip. He could be 50-1 fair odds, or he could be 5-2. There's no trainer data. No one publicly knows. Even the track handicapper said "It's a guess."

This is the last leg of a pick 4, which will garner about $50 of $60,000 of handle. Casual players might say they'll spread to be safe, but at 25% juice they're getting their heads handed to them. Sharp players who know the trainer will feast on them like chum. Any player worth their salt will not bet this pick 4.

"Walk a mile in their shoes". Understand that you're whacking your customers in the teeth. You need to stop doing this stuff.

Why not field test some marketing and bettor outreach? I get the status quo is a safe port in a storm, and by trying something that could potentially fail is very hard for the business to get its head around. But as Jeff Bezos said once - "Companies overemphasize how expensive failure is going to be. Failure is not that expensive. The big cost that most companies incur is harder to notice and those are errors of omission."

I'm very interested to see how Kentucky Derby betting goes this year. I'm super impressed over the years how the brand has grown, along with the work CDI has put into it. I'm also wondering about the tax changes and how it increases churn during the day, with the simple fact that racing's "big days" are growing almost each and every event. With all things equal, I guess we should expect a nice bump. But we'll see.

I'll just leave this out there.

pic.twitter.com/A3VBNVcusM

— Jim Halpert (@Larkinsomnia) April 21, 2018

Have a nice Monday everyone.

No Matter What You Hear, or What the Sports Leagues Profess - Gambling Has Always Been Perfectly Acceptable

I think, with lotteries, slots, and Vegas, we can concede gambling is pretty mainstream. But for some reason when we talk about sports betting it is anything but. There's still - even though it will likely be legalized soon - a stigma that surrounds it. Hell, if you listen to some of the sports leagues, it's like the world will end.

That, in my view, simply is not reality, and never has been reality.

Let me share a little story.

Back in the 70's, my cousin Doug couldn't find work in Southern Ontario where he lived, so he came up north and landed a job at the mines. Needing a place to stay, he lived with us.

Doug worked in the ball mill and it was not exactly mentally stimulating, so he had a lot of time to think. He had bet some sports with a bookie in his town, and decided he should try something along those same lines to try and make a little scratch.

Doug thought that rather than offering single games with large bet sizes where he'd be chasing people all day to pay or collect, he'd create parlay cards with low denominations. Hockey season was around the corner and all he'd need to do was get the cards typed and copied, and sell them. For that he'd need a little help, by the way of my dad, because he had access to the tools needed to make the cards, at work.

"I'm wondering if you'd lend a hand," he asked him. My father, doing the dutiful uncle thing said no, that's gambling and it's bad, sure he would help out.

Then away Doug went.

He made the puck line cards for the big Saturday slate ("Vegas odds", said Doug, because "if people don't win something they won't come back") and began to sell them.

At the mine these cards went like hotcakes, both on surface and with the underground guys that he'd catch at shift change (and get double the business).

Doug would spend time at the old Empire Hotel on weekends. The Empire - built in I think the 1920's - was a rather bizarre place; maybe not so weird if you grew up where I did, but it was odd to any reasonable person. It was the biggest hotel in the region, and visitors would stay there, but it, well, had a disco bar on one side of the main floor, with a strip joint on the other. Doug became a regular (I think on the disco side) and if you wanted a parlay card, he was there around 6, right near the bar, sipping on a bottle of Molson Export.

Doug also had some family connections. One of our cousins was a sergeant on the local police force and he told Doug it was illegal and he'd put him in jail if he caught him selling parlay cards he'd sell some to the cops at work for him. The town's police force bought a pile of them each week.

After the bar on Saturdays, Doug would sit at the AM radio trying to catch a signal that gave scores so he could tally how the house did. Most weekends he would do pretty well. In fact, I don't think he ever had a losing weekend.

On Monday, he'd head out to work, pay out to a few boys at lunch and the ones who didn't win would talk about a late goal, or how they got greedy and chose too many games. I'm sure it was not too much different than a bad beat chat on twitter - except with people actually talking face to face.

The following weekend he'd settle up with the folks at the Empire, and with the cops. And everyone would do it all over again.

This was good education for a little six or seven year old kid. A year or two later it came in handy.

In January we were let out for recess, in the usual minus 30 temps, by teachers telling us to stay  warm, and to not lick any poles. I heard someone talking about the Super Bowl, which was rare - no one really watched or knew much about the Super Bowl in these parts. It was Paul, and he was holding court.

"The Cowboys are going to win! I'll bet anyone five dollars right now" he exclaimed, to a throng of shivering kids.

I shuffled over and said I'd take that bet. He accepted with a "you better be good for it", which was kind of frightening because I didn't have five bucks, and Paul was a tough fella. He'd have to go to other schools to find kids to fight, because there was no one left who he didn't already beat up at our school.

Fortunately I had Doug, and math. A few days earlier, my cousin told me the spread was the Steelers by seven. Paul didn't mention a point spread, so I was getting +100 on a big chalk. Pure freaking gold.

The Steelers won by four or five, I got my $5, and Paul didn't have to beat me up. Sadly, this represented a high water mark for me as a sports bettor.

Back to the present day, when you and me, who do gamble, see people like @dinkinc or @robpizzola or @insidethepylons on twitter, we think nothing of it. But, to many others, it's like they're doing something they're not supposed to be doing.

They're not. They're doing what the cops, and drinkers, and mine workers, and school children at recess were doing four decades ago. They're gambling on sports. It was a perfectly acceptable behavior then, just as it is now. The only difference is that in 2018, it will probably soon be easier to get a legal bet down.

Have a nice Monday everyone.