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.