The Pull of Risk Aversion Is Super-Strong

We've written about Prospect Theory here before. In general terms, it's a human element that involves putting a greater emphasis on not wanting to lose something, even when the decision making is not mathematically sound. It's the classic birds in the hand idiom, even though you can have more birds in your hand with a little bit of risk taking.

It's a powerful cognitive bias, and we see it in all walks of life - coaching decisions, betting decisions and elsewhere. In one of my favorite examples, professional golfers are more effective on putts of ten feet when saving par rather than making a birdie. Bogeying a hole is more painful, so apparently their subconscious grinds more.

I was reading about Jeopardy champ James Holzhauer today, and Prospect Theory rears its head in his run as well. Washington Post columnist Charles Lane is one of a number who believes Holzhauer is a "menace" because of the way he plays the game.

"I have nothing personal against James Holzhauer. What I am a little concerned by is the application of, kind of, database-probabilistic optimization to an innocent game show like Jeopardy."

Think about that for a second.

Charles Lane, a former Jeopardy contestant, is mad at James for playing the game right.

Holzhauer is not some sort of alchemist. He's betting optimally, choosing categories at a sequence that maximizes his chance to win, but he isn't doing it the way we would ...... he isn't doing it to minimize risk! That's the way everyone plays the game. They ease into categories, wager daily doubles with the thought of the pain of what happens when the question is missed, not gotten correct.

Even these smart Jeopardy folks use Prospect Theory, and it's so powerful that when someone doesn't use it, it sticks out like a sore thumb.

The warm and cuddly Inside the Pylons - when analyzing ticket structure on twitter - often displays anti-prospect theory: Why use the favorite if you don't like them, because it's mathematically unsound; and other assorted principles. His view is James' - the pain of missing a 4-5 chalk and losing a bet is too much for a lot of people, and if he wants to win, and bet right, that's irrelevant.

It's a lesson we all have trouble with in wagering. But if we want to increase our bankrolls, it's something we have to get a hold of, no matter how hard it is.

Have a nice Tuesday everyone.

That's Why They've Been Loathe to Pitch a Derby Horse

The Preakness viewership numbers are in, and a surprise to probably no one, they were down by a lot

"Saturday’s race segment of the Preakness Stakes earned a 3.4 rating and 5.41 million viewers on NBC, down 29% in ratings and 31% in viewership from last year (4.8, 7.90M) and down 26% and 28% respectively from 2017 (4.6, 7.54M)."

We've heard quite a bit the last few weeks about, "letting the horses decide" versus "a foul is a foul is a foul" when it comes to big races like the Kentucky Derby.

Let's see what the latter choice involved --

• $1.86 million in purse money changed hands
• Syndication, stud value was changed because a "kind of Derby winner" isn't a Derby winner
• Tens of millions were flipped around in the betting pools
• The Preakness Stakes viewership was killed, and it's not small potatoes because that number could be used as leverage for future television rights negotiations, potentially costing the business a lot of money

This was decided by three people in the judges stand. 

This is probably why we see the Ferdinand's or Better Talk Now's or Goldikova's of the world get left up after murdering other horses - as maddening as that may be - while a "foul is a foul" at other tracks, for lesser races. 

The butterfly effect of a Derby pitch is not the same as your average Wednesday at Delta Downs.

Have a nice Tuesday everyone. 

We Can Only Wager On What They Offer (& Sometimes It Kicks Your Style of Play in the Butt)

I was pinged today by Mike on the twitter website about a couple of bomb golfers he liked for this weekend's PGA. I replied offering two bombs I bet at huge odds - Scott Piercy and Pat Perez.

And that got me thinking.

Pat and Scott have, I think, sneaky good form, buttressed by a recent ability to go really low. But, when you think about it, are Scott and Pat likely major winners, qualitatively come Sunday? Absolutely not.

The mindset I have with this angle was borne from the tools I've always used to wager to scrape out some profit.

Playing Betfair from 2003 on, with their deep exchange where I could trade in real time, I didn't need a winner to make money. I needed overlooked bombs who can simply carry their play to the weekend. At that point, if I wished, I could start trading out and going green. It's not about winners, it's about betting a stable of players who are playing well that the public feels aren't potential winners.

That opens up a completely different gambling mindset. Without a tool like Betfair, I probably should not be playing Perez or Piercy outright. But it's a hard habit to break.

The lesson, however, for the growth of betting is not lost on me.

Match-ups, head to heads, group betting - a staple of the modern betting landscape - encourages more play as we see offshore each Derby season.

I might not love a horse in the Derby, but I sure like War of Will to beat Maximum Security (go cash!).

I love a certain pace scenario, and sure I'll bet supers because of it, but why not bet a closer over a front runner H2H to take advantage of it?

I certainly don't like Patch, but he's 100-1 in the markets, should make the Derby, so I'll play and I'll likely lay that off at 30-1 with an exchange right?

These are the exact same questions people have who bet other sports.

Garett Skiba, yesterday on Shapiro's Bet America podcast, noted a couple of head to heads he liked for the PGA this weekend. He didn't go through 10,000 data points or fancy math, he spoke of one factor he uses for head to heads, and it was very simple.

Answering these questions in horse racing does not take a massive learning curve, or a download of 1,000 different betting products, or microscoping a 20 horse field with 10,000 data points either. It just takes some gambling acumen, which, as we see with massive sports betting handles in Jersey and elsewhere of late, is not rocket science.

Churchill Downs - and others - have not embraced offering us this type of play and, in my view, they should be. You can't make a tent bigger if you don't pitch one.

In the end we all have our styles of play, but they key is, it's our style of play. It's troubling in this day and age that we may have to pivot from our styles because the powers that be won't offer us a chance to use them. That's on them.

Have a nice Wednesday everyone. I'm off to cancel my Piercy and Perez bets.

Racing Should Probably Ensure Nobody Wanders Off

Working Tuesdays in the high school and university summers as a kid was fun. Tuesday was mine tour day and instead of a 12 hour shift of bad things, I'd be getting paid hardhat wages to be a junior guide. My main job during the tours -  according to the salty underground mine vet leading them - was pretty simple:

"Make sure no one wanders off."

The 3,200 foot level was older, wider and fairly nice (as far as gold mines go) for tour goers, but there were a couple red flags. At one point there was a hole in the drift wall with only a few four by eights blocking it. On the other side was a 1,300 drop to the 4,500 level. Later, there was a down drift that I'm pretty sure led to China. My job was to follow the group and "make sure no one wanders off". That was probably sound advice.

Of late we've seen horse racing more and more under the microscope and it's been big news; especially big for a sport so dependent on the public and governments for its funding. And I don't think I'm telling tales out of school to note that the responses have not been optimal. Whether on social media, through press conferences, or with media contacts, it feels like the sport is flying around in a hundred directions. Everyone is wandering off.

This issue is a microcosm in a sport with disparate factions. There are a vast number of fiefdoms, and some of these factions see crisis as a Rahm Emanuelesque opportunity (lasix anyone?). Horsepeople and others have their own issue of the day when something happens.

It's left to track management to steer the ship through the waters, and not only are they different from place to place, how are they supposed to handle something like this well?

Michael Beychok noted, not long after the Santa Anita story broke, that his firm - a crisis management joint - was available to help. He was confused by much of the strategy.

I saw seasoned observers like Jessica Chapel speak of the unfocused (and sometimes unavailable) social media response during the same period, and she made some good points.

Michael and Jessica were both right, in my view.

If a crisis situation happens in Louisiana, or New York, or California or Kentucky, the sport needs a playbook; it needs to ensure nobody is wandering off. I believe the sport needs someone who knows crisis management to craft this strategy before its needed, not after. It must follow a social media response playbook, so an employee stops wondering if he or she should ever hit send.

I don't know who'd pay for it, or run it, or what umbrella it'd fall under; I certainly don't want this to be yet another "we need a central office" thing. But there's clearly a better way than what we've been witnessing. Someone out there should be able to make it happen. I'm sure Mike and Jessica are easy to find.

Have a nice Tuesday everyone.

5 Ways to Fix the Preakness

There's been a lot of hand wringing lately about the Preakness. People are worried about soft fields, trainers who need a small epoch to have their charges ready to run back, and other things.

Fortunately that's what I'm here for.

No, I'm not going to focus on moving the race out a week or two, that's first level stuff. You come here for deeper, heavy, high-brained thought and I'm going to deliver.

Here are my 5 ways we can bring the Preakness back to the glory it deserves.

1. Move the Race to Gulfstream - The Stronach Group owns both racetracks, so this is easy. Plus, it seems Gulfstream is so popular they needed to buy a western Gulfstream track so they can run even more $7,500 claimers.

The celebrities will be better in Florida with local residents like Tiger Woods, Donald Trump and the guy who overacted all his scenes on CSI Miami. All Baltimore has for famous residents, really, is Larry Collmus and he'll already be there.

Florida also has medication rules where you are pretty much encouraged to run on something, so there will be no bad press with positive tests. And they have a big ass statue of Pegasus, who is not really a horse, but most casual fans don't know that.

The time for change is now.

2. Major Suspensions for Kentucky Derby Winners Who Don't Come to Pimlico/Gulfstream - We all saw Country House this past weekend. His stirring stretch drive where he dug in to beat everyone except the winner was spine-tingling.

Bottom line - We want Country House - no we need Country House - in the gate at Gulfstream or Pimlico.

From now on, I propose that when a Derby winner (even a kinda winner) doesn't show up for leg two of the Crown, his or her trainer is suspended a month. And this is not one of those suspended a month where they were planning a family vacation, it's a real month. As well, paper trainers like Todd Fletcher or Dick Rutrow aren't accepted in their place.

3. Two words - Keg and Asus

4. Make the Races Easier to Handicap - I know what you're saying, "Keeneland has already done that", but let's unpack it a bit.

The races are on national TV, we're going for a new audience and we're selling our sport. For the love of Pete, take away the larger fields that are impossible to study, and all those complex bets no one can ever hope to figure out. We need fields with only a few possibles, racing roulette and some over/unders.

You know what they say, pole vaulting is hard, racing should not be.

5. Bring Back the Infield - One of the worst things the Preakness did was try and make the infield safer. I mean, seriously, these are kids who eat Tide Pods, they're not exactly doing calculus.

I'd go with cheaper booze and more urinals for them to jump. I'd go with $5 admission so they spend more on gambling and booze, just like we want them to. I'd even look at charging 50% juice on those infield machines. It's time to bring back the infield to its rightful glory.

Those are 5 very achievable, high brow ways to make the Preakness great again. I'm sure you have more ideas of your own, and if they're as good as mine, I'll post them here at a later time.

Have a nice Friday everyone.

The Reseller Betting Ecosystem

Reselling, affiliate selling, whatever you'd like to call it is alive and well in pretty much every free enterprise business. This was on display yesterday as Fox Sports inked a deal with an existing gambling company to provide a betting app under their huge name brand.

This will be one of the first visible impacts of the FOX Bet-Stars Group deal. https://t.co/0sQQaKTgW0

— Dustin Gouker (@DustinGouker) May 9, 2019

This, and other deals, are important to the underlying business - in this case, simply "sports betting" - because you have dozens and dozens of companies competing for the betting dollar. This means ads on Fox Sports' events and talk shows (targeted to specific states of course), TVG pushing the Fan Duel product, and your average every day online betting site pushing offers and enticements.

This is exactly what we've - and the wagering community - spoken about for a long time regarding the ADW space in racing as it has shrunk.

Crowding out ADW's have snuffed out advertising dollars, lower takeout and enticements.

Increasing signal fees or adding source market fees - something this sport loves to do - stops competition. And stops rebating for the small players (rest assured, the big players are okay!).

Other gambling companies know this, for the most part, and this system works as planned. It's one reason why they're winning customers, and racing continues to struggle.

Have a nice Thursday everyone.

If it was a #PetaDerby It was No Way to Do It

Andy Beyer in the Post today went through the machinations stews normally go through when deciding if they're going to place a horse back. It was a piece talking about what regulars know all too well, but for newer race-watchers, it was pure gold.

One section caught my eye, and it's been alluded to a few times the past week --

"What purpose was served by disqualifying the winner? If it was to make a statement about the importance of safety in race-riding......."

There's been no secret that the Santa Anita situation has had reverberations. In fact, PETA showed up at a CDI shareholders meeting recently and had an audience with the gambling giant. It seems, of late, jurisdictions - certainly publicly - are walking on eggshells about these horse and horse safety issues, and don't want to step in it.

What Beyer alludes - the stews making a call based on a statement about safety - is pure speculation. But there is some evidence it could be true. If it was, and there was a bias to change something that looked dangerous that wasn't there last year, or 144 other years, I think they sure went about it the wrong way.

A regular business, or sports league, in my view, would do something like this (and I know this seems obvious) -

On Tuesday, at a Q and A, the track and commission said "the Derby is a roughly run race, and we'll be keeping a closer eye on things this year"

On Friday, at the jocks meeting they told them, "careful out there, because we're watching for interference."

If something like that did occur, the DQ on Saturday would not even be a story. The Wests would've expected it, just like everyone else would've. There'd be a shrug.

I think it does resonate, because horse racing is often reactive, rather than proactive. I don't know if it's the lack of a central office, proper and good PR, or what. But it's always in the back of our minds when something like this happens. I don't think that changes anytime soon; confidence appears to me to be lower than ever right now.

Have a nice Tuesday everyone.

Change the Derby, the Crown. Sure, Be Nimble

On Saturday, Multiracewagers on twitter made a pretty neat point.

Not that I expected any different..... the biggest golf tourney of the year moves tee times up 4 hours to finish ahead of weather. Biggest horse race of the year? Let's wait until weather hits and turns the track into a sea of mud.

— Skibasher (@MultiraceWagers) May 4, 2019

As we know, the Masters shocked us by moving up leader group tee times to 9:20 eastern, going off in threesomes, and throwing the entire tournament out of whack on a whim. This was to get the tournament in on Sunday for fans and players, in seamless fashion. The logistics of it must have been stout.

And this is supposed to be an event married to tradition, and everything else.

Meanwhile, the folks running the Derby saw the radar and shrugged.

Who knows, does Maximum Security get messed up if the track is fast which it would've been if they moved the race up?

Sloppy tracks, especially with twenty horses, can cause serious issues. We "love our horses" right?

Regardless, it wasn't even apparently discussed. Tradition, money, something.

Today we saw chatter (if you have these words blocked on twitter, I don't blame you) that the Triple Crown races should be changed.

In recent years, and again this year, with horses' connections talking about skipping the Preakness like it's a starter allowance at Canterbury, why not talk about it.

Moving back to old, traditional, never-change golf, the PGA Championship goes next week. The event, branded as "Glory's Last Shot" is held in August, and has been for a gazillion years...... until it wasn't. They moved the event up to have four golf majors on the calendar in four straight months. They think it will help the sport.

I love tradition. I'm all for tradition. But that doesn't mean we can't progress.

Running a Preakness when a full field of great horses can meet, moving a Derby from a 6:35 post time to 4:40 to ensure a better and safer race for fans, bettors and horsepeople, should not be simply be shrugged off.

Change, and being nimble is sometimes a good thing.

The Kentucky Stewards Have Some Splaining to Do

Hey, did you hear? There was a DQ in the Kentucky Derby...... of the winner. I feel like typing that again, because I am sure you were as shocked as I was.

In the vast history of the 145 year rough and tumble event - where you can find a foul probably four times a year if you look hard enough - there have been a grand total of five inquiries (not a typo). One was allowed (a fourth, placed fifth) and the rest were let stand, including a 1933 claim where the jockeys were trying to beat each other up down the lane.

Why has it always been like that?

I spoke with a newbie about it, where she asked "it was a foul right, so he had to come down?". I told her a simple story.

It's the last play of the Super Bowl, millions of dollars and glory are at stake; millions are watching on television. The Hail Mary occurs and the ball floats to the end zone.

I asked her, "is there pass interference?"

She said, "yes, really bad interference. It's laughable"

"And it's not called, because.... "

"They don't want to change the result."

In modern Thoroughbred racing, this occurs in a lot of big grade I races. My personal favorite was Goldikova in the '11 Mile, where she wiped out almost the entire field and was left up, but there are many, and I'm sure you have a favorite or two of your own. It's maddening because oftentimes it is dangerous, but they let the horses decide.

Much of this was covered in an excellent book called Scorecasting. It's just the way it is.

This year, the stewards, for some reason, decided to inject themselves into the outcome. And I, for one, am left wondering why.

Why did they do something they've never done for an in-race infraction, ever? That is, DQ a winner who was pretty clearly much the best?

Sports - with both participants and customers - is expectation.  We expect a mauling on Hail Marys, and we expect half the field to get mugged in the Kentucky Derby. When the officials call things differently, they enter the spotlight, and it's inevitable - they'll have a lot of explaining to do.

Have a nice Sunday everyone.