Friday, November 30, 2012

Gural Ups the Ante at the Meadowlands

Jeff Gural, multi-gazillionaire owner of the Meadowlands, has decided to turn the screws another time in pursuit of a good racing product. He's requiring a signed waiver which will allow a racing investigator to enter a barn and out of competition test. Testing - at his expense - will likely be done in Hong Kong, with supertests. If you want to race at the M, you sign, or you race somewhere else.

Some folks have said that this might hurt entries, and it's KGB-esque. They might be right.

One thing though: It is certainly not groundbreaking.

A few years ago Woodbine wanted a similar waiver, backed up by the ORC which does OOC testing. It's really the same playing field that Ontario currently races under. Interestingly enough, when Woodbine required this, it triggered a (very poorly attended) strike at Woodbine by the then horsemen group on record, the OHHA.

It seemed - despite the bluster - that the rank and file at Woodbine didn't have too much of a problem with it. Not long after, a new horsemen group took over (COSA) and racing went on just like it always had.

Since 2008, Woodbine has been fairly healthy, with little labor strife. Handle has been up, and field size has been good for punters. The horsemen group and Woodbine have worked together on several items. It's clearly not perfect - that's pie in the sky - but it seems to be a good relationship.

I have a feeling that similar may occur here. This because horsemen groups underestimate the willingness of regular horsemen that generally agree with the policy.

And customers don't mind this a bit. Go take a look at Ray Paulick's story about Oklahoma tracks accepting entries from Frog Juice trainers. The chances of that happening under this policy are a flat-out zero.

Gural's comments (as usual) pull no punches. You can read Bill Finley's interview with him today at Harness Racing Update. It's a pdf file.

Thursday, November 29, 2012

The NFL And Horse Racing's Ecosystems

NFL Football is a $9.5 Billion dollar business. If you're like me, that sounds low. Racing, from feedmen to racetracks and venues, ADW companies, horses, farms and all the rest certainly has a lot more money than that invested into its sport, yet from the demand side it seems so small when we compare it to the NFL.

However, the NFL "Shadow Economy" one of betting, office pools, and fantasy football shows that the $9.5 Billion number is low. The spin off effects are dazzling.
  • The amount wagered in Vegas on NFL games: $1.34 Billion
  • The amount wagered offshore on NFL games: $380 Billion
  • The number of people playing fantasy football, a form of wagering: 33 million
  • The number of people added to fantasy football each year: 2 million
  • The amount of money spent on fantasy football: $800 million
  • The amount of money changing hands for fantasy football leagues: $1.18 Billion
Those numbers don't include the money spent on office pools each year either.

All in all this so-called "$9.5 Billion dollar business" attracts (conservatively) $400 billion in wagering, and another several billion in hard revenues. 

One might wonder why they don't try and "get more of that money" and do it all themselves; open up their own casino, ban fantasy football unless you sign up on, and all the rest. It's because that money is drawing eyeballs to the sport, selling jerseys, and adding to TV revenue. They're fine with these "soldiers" working for them on all the marketing front lines. It's a part of the ecosystem that keeps everyone employed:
  • Gambling is a shadow industry that operates independently of the NFL but relies on football games to bankroll casinos and its gamblers. In turn, the NFL benefits from the intense fan interest that gambling helps to generate. Many fans have far more riding on this weekend’s game than regional pride.
    “The NFL knows a meaningful part of their fan base is interested because they can bet on the games. And if they can’t they would be far less interested in getting tickets, going to games and buying merchandise,” says Finn.
Racing does not seem to feel the same way about its "ecosystem". You'll often read from insiders like Fred Pope or the TOC that ADW companies "don't pay enough". You'll also read racing should have its own exchange and crush betfair, it should block its races from youtube under copyrights, video should be behind paywalls, people making their own past performances for sale should be sued....... racing should protect itself at all costs.

With gambling the number one revenue driver, by a mile, there may be some merit to those policies. But racing can't complain that the fan base is dwindling, and betting is falling, while those anti "top line" growth policies are embraced. 

When policies are brought forth that hinder ADW's from promoting the sport to new customers, betfair is hindered in doing similar to the world, and your "mavens" in the media world are not allowed to innovate and resell, you are not allowing the ecosystem to flourish.

The NFL's ecosystem is alive and well and it is helping that sport thrive. Racing, although a whole different ball of wax in terms of a business model, hasn't seemed to figure out what their ecosystem even is, let alone how to properly exploit it.

Wednesday, November 28, 2012

Super 8

I found the Australia newspaper story linked on HANA this morning so interesting. The 8 steps he believes racing must take to get better address the problems there, and they are the problems here. Please give it a read as it is very well written.

Tuesday, November 27, 2012

Leaky Funnel

Here's a good old fashioned sales funnel. You start with a swath of potential customers, and end up with a customer who buys something. Success.

Horse racing's sales funnel to turn a new visitor into an every day horseplayer is unlike many others I've encountered, especially in the Internet age. It's pretty leaky.

Your potential customer comes to the track has a nice time and you want him back. Maybe he saw an ad in the paper. Maybe he came with co-workers for a employee outing. He's the type of guy that comes to the track for the first time. He represents no real demographic.

He finds racing too complex. Leak.

He finds it too expensive: Parking, program, racing form, food, $6 beer. Leak.

He compares it to his time in a casino, or at that neat NFL game he went to last year. Leak.

That's enough for him to not come back, or come back once a year. Failure.

How about if we pre-qualify him? Like racing should be doing.

He's 40, he has money, he has no kids, he bets football and baseball, he has an online poker account, he plays the stock market, he likes sports, he enjoys a mental challenge.

Prime customer!

He enjoys his time at the track, and the gambling, but he isn't fighting traffic each day to go, so he asks to sign up for an ADW account, but finds out in his state he can't bet, or can't bet the tracks he's taking a shine to. Leak.

If he gets past that hurdle, he finds out no matter what he does, he can't win enough to stop re-loading his account. He's tried everything. He's hitting a lot of winners, but he can't stop losing. It's nothing like online poker where he can play for a month on one deposit. He finds out the takeout is huge, the track he likes just raised it on him for good measure......  and a light bulb goes off - back to poker. Leak.

He still wants to keep things going, though, because he wants to follow racing. One day after not playing for a month he goes back to his ADW to watch the races on a Saturday, because it's Travers Day. He learns his free program is gone and he can't get video anymore, because he is below the month's betting threshold for free video and PPs. Betting the baseball game tonight has no such issues. Leak, this time maybe for good. 

To become a long term customer of racing - one where you get to the point where you can gripe about pick 4 rules in New York, lasix, drugs, and everything else we do each day - there's a whole lot of leaks.

Like any business, racing must plug the leaks the best they can. In an environment that is so fractured and so detrimental to speedy change, it's one tough task. I feel for my friends employed in marketing in the sport. They're really up against it.

Nothing Proprietary, Debt And Three Year Olds

Gulfstream Park today announced a 10 cent pick 7 to be guaranteed with a mandatory payout for Claiming Crown day. Some peeps on twitter are asking if it's a new bet for the meet. I would imagine it is.

If it works, expect to see a 10 cent pick 7 coming to a track near you.

Racing wagering, unlike other entities or businesses has not much proprietary about it. If something works in the pari-mutuel pools, it will likely be copied next month by a bunch of other tracks.

When the Beulah Fortune 6 began there was some serious buzz. Little Beulah had a monster pool brewing and it drove some news, and some handle.  Some people might have actually learned where Beulah was.

After that success, Gulfstream added a "Rainbow 6" which was the same thing, and off they went. Little Beulah went back to being, well, little Beulah.

This stifles innovation in horse racing. If a smaller track, for example, spends hours and hours thinking up a great bet, spends money on it and it becomes a hit, they don't get any long-term benefit. If the drug business was like this, blood letting would probably still be the rage.

Innovation comes from other places in racing, namely with things like betting exchanges, in-running betting, conditional wagering and the like. Those things are primarily out of the hands of racetracks. But they are in the hands of the bigger organizations, but they've done little with them, while letting the true innovaters (like Betfair) innovate.

Usually businesses like this maximizes revenues by working together.  It's ironic that a business that can't compete with each other is fractured.

It's an interesting business, and as we've opined before, one which should be studied in B Comm or MBA textbooks for generations.

Remember when you were a kid, even if you grew up in the 1990's, and big numbers we could not comprehend were always illustrated, like what's a trillion? A trillion inches could go from the moon and back 4 times. If you could spend $1,000 every second, you'd have to spend for 30 years to use up a whole trillion dollars. These are all making a comeback with the debt over $16 trillion in the US.

I've got a new one.

I read on Drudge that the federal government borrowed $24.3 billion on black Friday this week - $24.3 billion or $1 billion an hour. To put that in perspective, by 10AM on Friday morning, they've borrowed as much as will be bet in 50,000 races, at 80 or so racetracks, with hundreds of thousands of horses, in one year. Now I understand!

Interestingly enough, when I was a lad in University, I would equate my horse racing winnings to cases of beer. It was about $25 a case. If I made $100 at the track, I made four cases of beer. Conversely, spending $25 on a pick 4 would mean I am betting a case of beer. And you wonder why I'm a betting geek 20 years later.

Heston Blue Chip lost his elim of the Matron on Sunday. He got a weird trip, that's for sure, however, he is certainly going to have a race on his hands this weekend. If he loses I think the industry meme of him winning 3YO of the year needs to be looked at. He will only have one major stakes win for 2012: The Breeders Crown:
  • If Thinking Out Loud wins the Matron that would give one big Open win (NA Cup) and two smaller ones (Matron & Bluegrass). He'll have made more money than Heston as well.
  • A Rock n Roll Dance has three big wins in 2012, during the most important time of the year, historically. Hempt, Meadowlands Pace and the Battle of the Brandywine. Ditto on the more money vibe too.
People in the turf press have short memories. What happens in the summer always takes precedence to what happens in the winter. Discounting a horse like Thinking Out Loud, who is on the cusp of doing the unthinkable - winning the June North America Cup and December Matron - for another who came on at the end of the year is not wise, in my opinion. Forgetting the most dominant horse in racing this summer, just because he's cooled off late in the year with some thirds and fourths is equally not wise.

Have a great Tuesday everyone!

Monday, November 26, 2012

Racing Can Learn Something From the Grey Cup

Yesterday the Championship of Canadian Football  - the Grey Cup - took place in Toronto. It was the 100th edition.

I watched it, like I usually do, because it is an interesting game and it is part of a culture. The game itself is unique, it's niche, it's different. But it's Canada and it has a history.

The CFL has had a resurgence the last half dozen years or so. TV ratings are up, attendance is up. This is very impressive for one reason, mainly: In the 1990's the league probably had a 30-70 chance of surviving.

If you think racing is "dead", it is probably much healthier today than the CFL was.

Numerous things occurred that helped pull the league from the doldrums, but there was one old axiom of marketing that led the charge: Be yourself because you can't market what you aren't.
  • Until a few years ago, the CFL existed apologetically. It wasn't the National Football League, wasn't American or glamorous. That it also was neither profitable nor especially stable fuelled the CFL's inferiority complex. Sorry the field was wide. Sorry there were 12 players. Sorry two teams in a nine-team league once had the same name. Sorry it was so Canadian. 
  • The CFL was uncomfortable in its own skin. "I 100 per cent agree with that," CFL commissioner Mark Cohon said Thursday. "When I came in, I looked on our website and the first thing I saw was the old ad campaign 'Our balls are bigger,' because the old CFL ball was bigger than the NFL ball. I thought: Why are we comparing ourselves to this league south of the border that's a $9 billion entity? We need to celebrate what's great about us.
Their marketing moved on that meme. Canada's railway system linked the vast country together and was a major reason it became a country. The Grey Cup marched on a train tour across the entire nation. People touched the Cup and got to know it. It paraded up and down Yonge Street. Horse's from Calgary did too, adding more to the zeal of the event. The league didn't apologize for what it was - it markets what it always was.

As for the game itself, traditions that some might call "cheesy" - like the Governor General's ceremonial kickoff - were not buried, they were front and center. Interviews from polticians like PM Harper were not staged events, they were done on the field, and they talked about the game and its history as a part of the country's fabric. The PM even sat in the cheap seats, not in a plush box. New immigrants come to Toronto each day and they see a PM sitting with everyone else enjoying a uniquely Canadian event? Welcome to the Grey Cup.

That doesn't mean you don't go after new demographics, because you have to, especially when all eyes are on you. Justin Bieber did the halftime show, while the demo in the stands probably have never even heard one of his songs.

I was at Keeneland a couple of years ago and spent some time with horseplayer Mike Maloney. A good guy, great player who loves the game. We shared some racing stories over dinner one day about what it means to be a player, horse owner, and lover of the game. At one point he said "why do we try to out-casino a casino? Why do we try and be something we're not? We can't compete."

I think he's right.

Racing does much better when it's just itself. It's no surprise the Kentucky Derby is a staple today - they'd fill the joint if twenty 5 claimers were racing on the First Saturday of May. We're a sport where people get together to see if my horse is faster than your horse. We're a gambling game that's a puzzle. We're as old as the day is long and we have a tremendous history.

Embrace and celebrate the history. Embrace and celebrate the handicapping puzzle. Embrace and celebrate what we are. Like the CFL, racing will never be a major sport like the NFL. It'll never be the Bellagio or Caesars Palace. We need to learn from them, market what we are, and never run away from it.

Sunday, November 25, 2012

Happy Sunday!

The cool air has returned in my part of the world, after a nice 13C/58F day yesterday. What's also returned is Harness Racing Update, after a storm related hiatus post-Harrisburg.

In today's edition,  the opine is looked at why giving an end of the year award to a sires stake pacer is not optimal. It's kind of simple really - if Heston Blue Chip & Michaels Power were sired in Jersey (or Maine, or Florida) they would've been forced into open events and won fewer races and less money. They would've had to compete every week in tough Open events. Then we'd see how they would've done. Giving awards to sires stake horses with good looking win loss records, who win a couple of open stakes, is not what the end of year awards are about, in my opinion, anyway.

The best article of the new issue, in my opinion, is not an article at all. It's a letter from long time owner Jerry Glantz, who talks about his horse (so cooly named) "Keemosabe". It's worth reading, so please have a look (pdf)

Yesterday's action:

I thought Groupie Doll won. Hell, she deserved to win. Maybe I was just wishing she did? Great race.

Overanlyze was 8-1 at Betfair. I wish racing would uncouple like they do. Customers want it and that's why Betfair uncouples. Enough with the two and three horse entries.

I was reading Derek Simon's twitter feed yesterday. Derek looks for spot plays and executes them based on his fair odds as a pass/play. If you are not grinding away in the pools like most professionals do, this is the way to play. Don't get mad if one of your spot plays falls below your fair odds and wins. Don't get upset if three or four plays you had as borderline potentials go out and win and all pay $20. Just keep plugging, knowing at the end of the year you might grind out 10% or more and have a fun time at the game.

Conversely, I was not going to play yesterday. I decided I might take a few bombs and play the Derby Wars contest.  But I didn't feel like working, and figured what the heck. What a day. Plenty of near misses, ups and downs in the bankroll. The dreaded "second place" streak that happens so often when you bet win only. What a roller coaster. I can't believe I did that five days a week for a number of years. Props to you guys who grind out a point to pay the bills each year, and who've been doing it for a decade or more.

Harness racing reaches the doldrums this time of year, but tonight's Matron Stakes elims are worth watching. There are a number of good colts assembled.  It's on your ADW dial via Dover Downs.

Have a great Sunday everyone!

Saturday, November 24, 2012

Writers, Bettors, Sport, Game. All of the Above?

A few headines today show what racing is up against, and the juxtaposition it faces.

Belmont showed an increase in wagering of 11% from last year, while attendance got walloped 14%. This makes perfect sense. Slots allow for a few things: To increase the number of races (344 vs 334 last year), increase field size, and put on a slightly better betting product. As well, we had a takeout reduction year over year and we had a shift, with more bettors playing with NYRA rewards. A lot of these folks get a rebate to play, adding a little bit to churn. On track they get none. 

So: Handle Up.

Slots don't do much for on-track attendance, because, well, they don't. Unless there are some massive giveaways, giving the casual fan something to make the trip for, you'll likely not see much.

In addition, with tracks that have slots on-track (this would not pertain to Belmont as they don't have slots), there is a reverse cross over. Pari-mutuel wagering falls 21%, while horseplayers juice up the slots by 13%.

Today we also saw an article in the Paulick Report about the fading number of turf writers and the lack of column inches in newspapers. Newspapers, Bacon argues (I think correctly), helps get out a key demographic to the racetrack and without entries or stories in local papers, they can't get information.

If we look at the Belmont numbers, maybe we'd say "who cares about newspapers?".

Well, on track handle is important for the obvious: The track gets a bigger slice of on-track handle. But it's important for more than that. Casual people, visiting a town looking for something to do, people who only go to the track once or twice a year and so on, represent part of the "funnel". When they are on-track they can be marketed to, they can be signed up for NYRA rewards accounts, they can be shown a good time, too. Some of these people are new, and racing, like any other business, needs new customers to convert to regular customers.

For those of you who market on the web, you pay attention to your "new visitors" and subset them. You might use the google content network, where despite a higher bounce and lower page views or conversion rates, they provide value, especially through remarketing. In print, and on-track, it's not dissimilar.

I have always thought it extremely important for racing to have a strategy with newspapers. The entries, handicapping info and all the things we saw in the 1970's have to be there. If a paper drops entries and picks, like they have, I think it makes sense for racing to pay to have it included. It's a market that needs to be covered.

In the end it shows how many markets racing must touch. Its edge, as always lies in the fact it's a gambling game, and customers can come from in many demos and forms. But they're all potential customers. And all potential customers need gambling information, whether it be on the web, or in print.

Friday, November 23, 2012

Racing Knows Low Rake Matters. They Just Can't Do Anything About It

I did a quick scan of the twitter line and noticed Lenny Moon's post on takeout and transparency resulted in some interesting chatter. There are some industry insiders that believe takeout doesn't matter much, and use examples like Laurel's one meet takeout experiment years ago, or a promotion at a website, where changes to rake didn't make handle go through the roof. Others who play with lower take, or play daily and fight the rake vehemently disagree. It's fascinating.

On the outside, the industry trots out a company line on takeout, but I firmly believe actions speak louder than words. And data, of course, rules the day. Takeout matters a lot, but the industry doesn't have the foggiest how to do something about it to grow horse racing.

In the 1990's people like Ernie Dahlman and David Cuscuna were betting big dollars, but paying full boat. Then along came the low rake ADW's or phone services. Once they found low take, their betting exploded. More and more people flocked to the low take avenues and their handle went up, as well. Tracks knew about these avenues but the industry hoped they could wish them away. These places were driving so much handle, though, there was nothing they could do about them but keep quiet about it. Some folks tried cutting them off, some tried yelling about them, calling them names. Nothing worked. The power of low takeout was huge. They were here to stay.

Fast forwarding a dozen or so years, these ADW's with low rake supply handles (some with only a handful of clients), greater than the behemoth does.

Does low takeout matter? You bet it does and that's all the evidence you really need. Ask these players to pay full boat in or TVG, or HPI and they hit the exits. Handle would probably be $5B next year.

Not long ago there were, and are, moves being made. Even the big boys have relented and are trying to gain these higher volume, low take, clients. On twitter or in industry press they might say one thing, but their actions say another. The market in the 1990's was telling them what to do, but like a lot of things in horse racing, it took many years to respond to it.

This policy is simply shuffling the deck chairs, clearly. It's a fight over existing clients and it's an example of racings short-sightedness, in my opinion. They know low rake matters, they know people's handle's explode when they win, but they can't or won't do anything about it but try and land a few whales for themselves, to scrape out some high volume, low margin handles for the P & L.

There are some tracks trying to do the right thing, but they're up against it. Balmoral Park, Tioga Downs in harness racing are two good examples. The success of Tampa Bay since 2001 is another. But it's very difficult. They are swimming upstream against a tremendous industry current.

The biggest problem that has faced, and is facing horse racing as a viable gambling enterprise, is the juice. Racing knows low takeout is important, but they have not tried to bring the everyday player into that low takeout regime. The new Ernie Dalhman's are not cultivated.  We simply sign them up, charge them 21% takeout and hope they keep betting.

And guess what? They don't keep betting. They get tired of losing and leave, or play $50 a weekend. Why, because takeout matters, yes, but delivering low rake to potential long-term betting customers matters almost as much. The industry grudgingly has accepted the former, but has been a dismal failure on the latter.

Thursday, November 22, 2012

Thursday Thanksgiving Post, Kind Of

Another Thanksgiving is upon us. This holiday is a weird one for me, like most of them. I work with US and Canadian companies. I don't seem to get the day off in two countries. Cry me a river.

What I do want to do, though, is wish all my US horse racing friends a very happy Thanksgiving. It truly is a wonderful holiday.

Off we go.......

- I am not sure horseplayers realize it a lot of the time, but we're dealing with horses, not a souped-up NASCAR. When a horse shows signs of not racing well, or is off form or worse, we think the trainer has all the answers. Sometimes we label the horse a slug because it runs a couple of bad races, or Beyer figs.

Al Stall mentioned this about Appealing's return win at Churchill:
  •  “That was the most nerve-wracking win I’ve had in two years, it seems like — the fact that something happened to her that we can’t figure out,” he said. “I didn’t know what to expect."
This happens more often than not. The conspiracy types - most who left horse racing and are at the slot parlor anyway - seem to think trainers are Nostradamus, but they're not. They aren't trying to put one over on anyone - sometimes they are just stumped.

- I have had several conversations with people in Ontario about horse racing of late. The current narrative from some is all about getting slots back, and keeping the status-quo. "If only we fight" many seem to say. Perhaps they are correct, but Rod Seiling, the Chair of the ORC, seems to wants to quell that thinking. Yesterday in a notice to the industry:
  •  To be blunt, the Panel and Minister McMeekin have “won”, as it relates to the horse racing file. As the result will mean less racing in Ontario, I acknowledge it is not what you hoped for.
He also notes it's time to "stop throwing hand grenades". I feel horse racing should heed his advice, and the advice is sound.

- Thanksgiving pop quiz!

Question: What do horseplayers, trainers, drivers and industry insiders agree on?

a) Peyton Manning is an ok quarterback
b) The sky is blue
c) Somebeachsomewhere is a pretty decent sire
d) None of the above

The answer is d), which makes the Odds on Equules decision even more curious. Out of 24 comments on the Standardbred Canada site - from trainers, drivers, insiders and horseplayers - 24 disagree with the call. 

Crowdsourcing is a good way to come up with an opinion. If crowdsoucing is right, the Kentucky Commission better reverse this call.

-  What do you get when you cross Baffert, Joe Drape, Todd Pletcher and a few others? A fake Facebook chat that's what.

- Horseplayer Lenny Moon asks a great question.
The industry has always - and I mean always - tried to run their business through hoodwink. We need a change in that mindset.

- One thing we can all agree what we are thankful for in racing: The Horse. I try and give each year to a horse related charity. I will again this year. Without horses there is no horse racing, and we need to ensure they're taken care of.

Have a great day everyone. 

Tuesday, November 20, 2012

It Makes You Wonder

Our parents taught us at a young age to not judge people without knowing all the facts. I don't think we know them all in the Oliver betting case in Australia, where the jock bet a rival horse and today was suspended 10 months. But we do know enough where it makes you wonder.

You have a decent career, which can be a very short one. You have to do a lot to stay on top of the game and continue making money.  You know you can't bet another horse in the race because  you'll likely get caught. But you do it anyway.

All for a $10,000 bet on an even money shot.

This isn't Lance Armstrong where if you succeed in breaking a rule, you can make millions upon millions of dollars. This isn't Ben Johnson. This isn't even a trainer trying to break in, going to the dark side and building a career as the win percentage rises and the barn suddenly gets full with owners looking for the next print-money supertrainer.

I don't know. It just makes me wonder.

More wonderings.......

I wonder about the three year old pacing colts. Who will win horse of the year?

I wonder about Hurrikane King Cole, who went from a speed flash, to flat in his few most recent outings.

I wonder how Michaels Power, when sharp, can't break 149 and change on a big track, but off form, wins in 148.1 in bad weather, running a monster top.

I wonder how little Northfield, who has a $40,000 pick 4 guarantee tonight, does such a high handle with cheap purses.

I wonder how long it takes Standardbred Canada to find Darth Vadar pictures of anyone against slots at racetracks in stories.

I wonder how it possible that Baltimore did not blow out Pittsburgh with Byron Leftwich running the offense.

I wonder how Bullet Train feels now that he's going to stud after having to be a rabbit for Frankel.

I wonder why we play the game when we see stories like yesterday's video about California racing, but I remember that we like horses and it's the humans that screw everything up.

I wonder when an ADW will have a big Black Friday sale, with huge rebates and free play.

I wonder if California will mess up exchange wagering.

I wonder if a microscopic spec of blood after a work will not mean a horse is put on lasix.

I wonder if I am now tired of wondering, and if you are too. Have a great Tuesday everyone.

Monday, November 19, 2012

A Far East Salvo

I expected I'd hate it, but I didn't.

The half hour CCTV expose on horse racing in California was not overly sensationalistic. It was nothing like I expected. To those who have followed racing for a long time, nothing was overly surprising either. The funniest part of it, I guess, is that it came from a Chinese television show, not from anything this side of the pond.

From the California track vet who is retiring because the protective nature of the sport fills her with dismay and malaise, from the "deep throat" trainer who tells us what many already know, from the pageantry of racing on the front side, to what happens in the backside in some instances; all of it was interesting.

I read an Aussie report recently and it said:

As long as there have been races, people have found ways to beat the field and cheat the system.

Since the days when Gai Waterhouse's father, Tommy Smith, was one of many who built a career on anabolic steroids before they were banned, trainers with the best biochemists have stayed ahead of the game.

Privately, racing people know this is true. Publicly, many stay silent or deny it. Some are loyal to a fault - like cycling officials, riders, team managers and sponsors were before the Armstrong scandal was finally lanced after years of festering "rumours" that proved to be true.

The romantics among us, of course, would rather not know. Just like the nice folk in Texas who still can't believe good ol' Lance did more drugs on tour than the Rolling Stones.

With stories like this seemingly behind every corner, with no geographical bounds, it's becoming more and more difficult to be romantic; to 'not know'.  That's probably a good thing. The more we're educated about the business, the fewer people there are to apologize for it. The fewer defenders the indefensible has, the easier it is to enact change.

Lasix Games

There has been much chatter regarding the use of lasix in racing of late, spurred by the decision by the Breeders Cup to disallow the drug for their juvenile races.

Like most things in racing when it involves big change, arguments - often times tangential or hyperbolic - are brought through a special interest lens. This muddies the waters enough where detractors or supporters dislike the other side enough to ask for the status-quo as a reprieve. Then everyone breathes a sigh of relief.

It's generally what happens in a fractured sport, or business.

Paul Moran, writing on ESPN, uses Australia to make his point about lasix.
  • Everything is better over there. No Lasix. No bute. Nothing except hay, oats and water. They're just better than we are and, of course, no one colors outside the lines. 
  •  On the square, that is, except for the use of EPO-type hormones and other "go-fast" drugs, the widespread use of which has been alleged by a group of Australian trainers and veterinarian sufficiently concerned for their safety and the threat of official retribution that they insist upon remaining anonymous while embroiling the sport in a tremendous scandal. They suggest that not only EPO but a variety of opiate-based stimulants are in wide use including Etorphine, also known as "elephant juice." They also claim that the practice of "milkshaking," delivery of a solution of bicarbonate of soda.
This is what we expect with arguments, to a "t". Sarcasm, followed by a condemnation of their drug use.

No one has ever said "everything is better over there". That's hyperbole. We all know that without race day lasix other things are used to stop bleeding in some form. We also know, with ITTP, EPO, CERA and a pile of other nasty drugs, they will find (or have already found) their way into racing; here, there and everywhere. An antagonist downunder might retort "ya, but you have tree frog venom, take that!"

And milkshaking? Well, that's been going on forever. The Kentucky Derby winning trainer has had a high TC02 something like four times over here. Oh sorry, it was a bad test. Plus he swore on his kids eyes or something.

The lasix debate is simple. Race day drugs are an issue in this sport. It's not the wild west anymore and the urbanization of the American public does not stand for animals being prepared to race with drugs. That's not made-up, or an opinion - it's fact. Racing, and many other sports are living with it right now. Sports like rodeo (prodding a cow with a buzzer so it bucks; are you serious?) lived with it many years ago, which is why they aren't on network television every Saturday like they used to be. No matter how many articles we write about it, or how much we complain about it on twitter or the Paulick Report, it's a problem that will have to be addressed.

So, what should racing do about it? I don't know. I'm not that smart. But we can't have an adult conversation when that conversation is filled with fear or hyperbole. It's time to move on and find a solution. The status-quo has left the building and it's never coming back.

Sunday, November 18, 2012

Gotta See a Man About a Horse

A bath, after a workout
I received an email this week asking if the stable wanted to up their slice of an Ontario sired yearling that we have. It seemed one of the other partners got some cold feet or something, so it was available. It was a modest number so we said "sure" and off we went.

With Ontario racing in such dire straits one might think buying or upping ownership in anything here is crazy. But we buy a horse to do hopefully one of three things - break even, win a race or two to have some fun, or to have a nicely bred horse that has a chance to be really good. We don't need an accountant to approve it.

This is old school and anachronistic and I realize that. It's not the way things should be done, apparently. It's just not being a modern horse owner. So people say.

Frankly, and respectfully, I think "those people" are the ones who have it a little bit backwards. Horse ownership was never meant to be a business for owners. It's meant to be a hobby, an aside, an escape, entertainment.

It's meant to be having dinner at the track and visiting your charge in the paddock with friends. It's about bringing your son or daughter or nephew to the farm with a bag of carrots. It's the excitement before post time. It's about the exhilaration when you win, no matter what the class. It's about the emails after a good race with your partners, or the commiserating after a poor one.

While reading The Story of Dan Patch, the author spoke about a trade paper, where a 1905 story spoke about a survey of horse owners which showed one out of five hundred made money. The other 499 were in it, just to be in it. It's what the history of horse ownership is, and I feel those of us who buy horses for old school reasons are not bucking convention, we are conventional.

I don't belittle the situation in Ontario. There are many people who are losing their livelihoods, there are those who have fifty yearlings who need that revenue to stay afloat. The Ontario governments' handling of the situation makes pork-barrel stimulus packages or Solyndra investments look like good government in comparison. But if we had more people seeing a man about a horse and asking not how much money he will make or what his profit and loss statement will look like, but how much fun he may have, I think our industry is simply returning to its roots. And our roots are not too bad.

Friday, November 16, 2012

Where's the Edge?

Every customer needs an edge, every business needs an edge. An “edge”, or a margin that leads towards a profitable outcome, guides just about everything we do, as well as what happens around us.

There was an article today about Wal Mart workers planning to strike on Black Friday. Wal Mart is certainly not going to like that, nor will they stand for it. Not because they are evil vulture capitalists, but because if their prices move up even an inch, their edge is totally destroyed: The Dollar Store will buy up Wal Mart stores quicker than a Magna horse racing exec is shown the door. Prices guide Wal Mart, and they’re its edge. Destroy the edge, they have no business. This is why they fight any increase in costs.

Costco’s edge, similarly, is having tight margins, but with a volume component. If they can convince you that you need 874 boxes of Cherrios, they’ve won; they have their edge.  If one day, you, me, and the dude down the street decide we don’t need all that product, they better change and change fast or they’re toast, because their edge is gone.

In terms of gambling, the edge comes in many forms. For slots it’s the ability to get treated well while losing your money over a long period of time, but knowing you have a shot to hit a big one. For poker it’s about capitalizing on low rakes, and your opponent’s poor play. Craps, roulette and any other game of chance is similar. If you can play a long time, have a good time, and have at least a chance (psychological, or otherwise) to come out ahead, you have a game you want to play.

This is why casino’s are so reticent to raise takeouts. A 1% rise in poker take can clear the tables in a hurry. Their edge, like Wal Mart’s, is like walking a tight rope.

What about racing's edge?

Is it win betting? We’ve always heard you should pick your spots, only select races you have a strong opinion on, and bet win only. If you do that you can come out ahead.  That’s probably sound advice. But with 16 or 17% win takeouts how many can actually win? How many even want to try? You study the form all evening, you plan your bets, you wait for your odds – all for a 4-1 so you get $10 for your $2 investment? And let’s not forget, with an ancient tote system you are likely to bet something at 3-1 at post time and see him or her drop to 9-5.

It’s clearly not an edge for racing to exploit or that it has exploited, because if it was, betfair would not exist. Betfair has two components of an edge that racing does not have – fixed odds and low takeout. They, not racing, made the win pools, fun, profitable for some, and exciting, by turning it on its head.

How about place and show betting? Well that’s a non-starter. If you can beat that rake and breakage in those pools you should be working for NASA.

 I believe racings main edge is in a pretty simple spot:  Large pool horizontal and vertical bets. Where else can you use some skill, have a little bit of luck and make a huge, monster score, other than racing? I can’t think of any other game that allows you to.

I took this ticket last week at the Breeders Cup to try and hit the pick 6. 

I bet you've taken, or had a result that was similar. It does not take much to be close, or to hit a $500,000 score. And it's not a lottery - you get to pick your strategy, your ticket or tickets, and have the joy that that brings if you succeed.

There are of course a couple of problems with racing pushing these bets:

 i) You cannibalize your existing customer base and break their bankrolls. Over time, they leave. For this to succeed long term, you need new money each day, or week. Your everyday players need low takes to keep them around.

 ii)  If the target market you are selling these bets to can not make the bets easily you are marketing in a vacuum. NFL pools work with newbies in office towers because they're easy to join and play. Racing makes it extremely difficult for people to consume their product (state by state rules, charging for past performances etc)

 I believe racing can grow these bets with organization and forward thought. In Canada in 2009, one of the planks of the Racing Development and Sustainability plan was getting these bets in corner stores, just like a lottery. It didn't get done, nor was it even tried, mainly because of industry infighting, but they were onto something.

If we bring horse racing's edge to the masses, I believe it can succeed. Huge pool skill bets, marketed to the right people, in the right way, with proper distribution, could give this business a massive shot in the arm.

Saturday, November 10, 2012

Breaking News: New Santa Anita CEO Named, Details Future Plans

It's official, a new Santa Anita CEO has been named.

"At about 8:15PM last evening, Frank Stronach called and we shot the breeze for a little while. We spoke about our love for Austrian flat taxes, strudel, and horses" said PTP. "Not long after, and before we both knew it, we shared a Frank's Energy Drink and toasted our new future together."

"He has a one year contract, that could be shortened to a week and a half, " said the auto parts magnate. "I see the team he's bringing in and I expect him to last many, many years, though".

The team, and new ideas announced are eye-opening. Here are a few of them.

The new liaison between the Thoroughbred Owners of California and management will be Ray Paulick.

"I'm happy to welcome Ray aboard. We get along famously, agree on almost everything; we're the proverbial two peas in a pod. Ray has been a big TOC backer in the past, and word is that they singlehandedly paid his entire Paulick Report team with advertising for something like five years. Anyone that has that kind of pull with them should be on the new team. I am delighted he said yes", noted PTP.

"I am thrilled to be on the team. As you all know the TOC was borne in the mid-1850's from the "Protect Steam Engine" movement and there are still elements of that which remain in the organization," said Bacon. "It is my job to work with them to embrace our vision of great racing, deep fields, lower takeout, and severe penalties for cheaters. I think we have a real shot because they are very open-minded. I'm more excited than the time I ran from Lexington to Louisville in 1982 shorts and tube socks."

We're proud to announce the new Director of Publicity is: The DRF. 

"The DRF is a big racing paper and it's been around for at least 30 years" said PTP. "Almost every story I read revolves around their love of dirt, so I figure hey, we got dirt, let's roll"

"We don't usually take a position with one racetrack, but if we do well here we can spread the love of dirt all across California," said DRF. "Golden Gate, Del Mar, good luck after we're done with you."

We are pleased the new Music Director is Brad Cummings. 

"This was an easy choice, and we are so happy Brad said yes." said PTP. "I had him slated for several posts because he's a winner. As he mentioned about 187 times, he ran some wing of the Kentucky GOP, and if you notice what happened last Tuesday, the GOP took Kentucky by a huge margin. I've been to Kentucky and I know how liberal it is. To win with that kind of margin was clearly all Brad."

"I am surprised and happy he called me" said Brad. "I didn't have the heart to tell him that he mixed up Connecticut and Kentucky, but that's what Canadian's do from time to time. I'll be running the mixes in between races, and it will be dependent upon the clientele that day. Looking over the demographics, some of the bands I want to start spinning are Perry Como, Doris Day with some early Elvis to shake things up."

Special Advisor to the President (who is me!): Joseph Drape.

"One thing we need in racing is more mainstream press. Joe works and writes for the New York Times, so that has to be good" said PTP "I have not read what he has written about horse racing but a lot of people in the sport seem to talk about him a lot. You can't go on twitter without seeing 'Joe Drape this and Joe Drape that'. You can't buy that kind of publicity. Welcome aboard Joe."

"I was a little blown away being asked, but I accept. I can't wait to have my free all access pass to the backstretch so I can do some great promotion." said Joe.

"I need a horseman who respects and likes our customers, so in an very easy choice, I have enlisted the services of Jeff Mullins as the new customer service manager. I am so happy he said yes."

"I don't really know why he asked me, because I think our customers are insane, but he's paying me 50 grand so what the hell" said a very happy Mullins.

New Marketing Director: Gene Simmons

Just kidding, that's silly.

Wish me luck. I won't be writing much here on the blog, so if you have any complaints, please email Jeff Mullins and he'll get right back to you.

Thanks for all your best wishes and we hope to see you at the winter meet!

Thursday, November 8, 2012

Horse Racing Modeling & Datacapping

There is a really interesting discussion going on in the World around us about datamodeling. The "geeks" are having a fun time extolling the virtues of modeling since the Presidential election returns came in. Those models, which many of us have been following since the 1990's, took a bit of a beating in the media in 2000 and 2004 (some were wrong with suspect polling data), but they were back with a vengeance this year. Most did really well - Sam Wang of Princeton and Nate Silver being the most popular - and if you aggregated the aggregators you got an even better result. For the record, the best result in terms of EV predictions for polling modeling was Drew Linzer of Emory University.  There's a sharp fellow.

Yes, the real clear politics polling average was correct for everything but Florida - which they had close to a tie -  so a guy with a grade 4 education and an internet connection could make a solid prediction, but the accuracy based on the excellent polling data this year by the modelers was very, very good. No one, not even the harshest skeptics, can deny that.

It should be noted it is different as a bettor though, and there are limitations. For example, Sam Wang had a 74% prediction that the D's would take the House in late September. This was way off, and betting markets did not bite an inch on that prognostication, never really making it a more than 25% chance.  Models are only as good as the data that goes into them and if you want to bet pure percentage chances, beware. When you lose, you lose big (it happens more often than you think) and need a lot of wins to make up for it.

In horse racing, data modeling has been the poor cousin of pure handicapping for a long time. They're geeks, and geeks don't watch horses workout, or get a "feel for a race". Geeks are discounted.

Betting models and the geeks are doing some very good things, though. They seek value, I would argue, in a much better (and more profitable) way than a human being can.

For a betting model to work in horse racing it is focused less on prediction value and more on betting value. If we want a prediction model we have a very simple out, of course: Crowdsource. The tote board is the best model there is, and it's been this way since horse racing allowed betting, or probably before. If 740 people out of 1000 in the grandstand in 1895 in a small town in North Carolina liked a horse to win, that horse probably won more than any other piece of data we'd use.  But if you use predictive value to guide your bet, I am pretty sure you like the ATM.

I have used Jcapper as my data "geek" program for many years now. I have also used Dave Shwartz's HSH (another good one that I have not tried is Ken Massa's HTR - I have several friends who use it who are impressed). One thing you will notice about Dave, Jeff and Ken, is that they are 100% focused on value. Value is all that matters when they model.

Jeff, for example, weights 700 plus factors in some way shape, or form. But his overall rating is not based on how great they are at predicting, but how great they are at showing signals something will be underbet based on the horse's chances. If a factor has a good predictive quality, but has a great value quality, it goes into the box.

This is why a Jrating might have a hit rate of 28%, but it has a much higher ROI. The rating seeks horses that look off form, or in some cases terrible on the form. One factor, for example, actually scores horses which are really ugly, but they're fast. They don't win as often as the chalk, but when they do they pay.

This is something that traditional horseplayers have trouble with. Ours is an old game and it's based on feel, or angles, or what we've always done. I don't know how many times I look at a highly rated Jcapper or HSH horse and see running lines, or an overall profile I hate. The horse is sitting on the board at 6-1 and I may say "he should be 15-1." based on what I know about horse racing.  But then the horse goes and runs well. You've seen these horses too. "How did he win, he doesn't have ______" where the blank is something we look for in the form, as it is ingrained into our horse handicapping subconscious.

It's the halcyon days for election modeling right now. Horse racing "datacapping" is far behind. But make no mistake, while you want to be wary using election modeling to bet serious money, in horse racing you can, and you do want it. Betting on horses via a model gets rid of the noise yes, but they do more than that. Horses with hidden factors win, and when they do, we want to be on them, because it's one of the few ways to beat the rake.

Churchill Making Some Online Moves?

With a near monopoly on online gambling in the US the last five or six years, we've often wondered why horse racing has seemed to not capitalize, or position themselves in it very well.

No matter what you think of the ideas, Churchill Downs Inc has begun to at least try.

Last month they announced "Luckity" a completely goofy game that is played online, (goofy, if you're a horseplayer, but people love dumb games).  Time will tell if it works or not, and if it is legal or not, but at the very least they are trying to explore this edge that horse racing has. Online gaming is a gazillion dollar business as we all know.

Yesterday Greg Hall dug up a note alluding that Churchill Downs is looking at exchange wagering.

It is difficult to innovate by funding new initiatives in horse racing, and it is fairly easy to see why. If a company like Churchill does something, funds it, and it works, down the line everyone and their brother (horsemen groups, government) wants some of the money it generates, because it's "horse racing" and that's the way it is, and always has been. Conversely, if they try something, fund it, and it fails, they're on the hook for the losses alone. Horse racing innovation, in many ways, is like the country of Albania, pre free-market reforms.

But, it seems Churchill has decided to take the gloves off, throw some caution to the wind, and explore the comparative advantage they have in online gaming. That is probably long overdue, and win or lose it is what the business has to do, and needs more of.

Wednesday, November 7, 2012

Election Betting Recap

A wild and wacky election betting night is complete.

I say that because the betting, the odds, and the angles were surely wild and wacky, even though the election ended up being perfectly formful based on polling. This was not 2000 when it closed up dramatically, 2004 when at 6PM everyone was calling the President "Kerry", when bookies were left scratching their heads, exit polls were freaking everyone out, and modelers were wondering what was going on.

For bettors you don't particularly need a close election to try and make some money. Last night there were several opportunities, and most of all, there were several opportunities to learn some new tactics for next time.

First, a tough lesson for me was on display early. At 6PM you can get a sharp gauge on how things are going in a closely polled election. Suburban counties are the mom's and pop's with middle class jobs who usually decide elections. They voted for Bush, they voted for Clinton, they voted for Obama in 2008. In Indiana they were breaking for Romney, and it was a pretty stout swing. The rural counties were also breaking very hard. This is election betting 101, and if you weren't looking to bet Romney at that time in the general election  - at huge odds keep in mind - you were not leaning on your experience and doing your job.

The 309 or less EV count Obama was a long at 1.6 for sure. Florida and Virginia looked like solid longs. North Carolina looked like an absolute no brainer for the challenger.

Fortunately an out came only about 40 minutes later. Virginia, a swing state, battered with millions in negative ads, was not complying quite like Indiana was in the Burbs. Betfair bettors were confused, but in my opinion, this looked like at least a 2% edge for the President. You could probably - with some certainty - say that Romney had very little shot in the general and close out some positions. Virginia swung about 8 times from Obama favorite to Romney favorite in running. You could trade that by shorting the Romney tops with some confidence.

Florida closed soon after, and was particularly confusing - unlike anything I've seen there. Like Indiana, the suburban counties were flipping to Romney - some as much as 5%, where he was winning them in a similar level as George W. Bush did - which would portend a nice win for the challenger. The working white middle class was leaving the building. However - and this is the strongest lesson of election 2012 in my opinion - the inner cities were voting in bigger numbers from 2008 for the President. This is a complete reversal from history and has never happened since I've been watching the county vote. There used to be two voting Americas - urban and rural. That shifted somewhat to urban core versus urban outlier for last night's vote.

Florida whipsawed several times like Virginia did and is still being counted. Regardless, about ten minutes after the polls closed there you knew for certain that Romney was not winning the general. On betfair before the night started Obama was 1.25, and I expect a pretty big overbet, at that time he was 1.17 and a huge underbet. It's why you should not - other than to trade - take a long position in the betting markets early.

The early betting really screwed things up. Ohio, which looked to be close and was, counted the early vote first, and Obama had a big edge. With that there was no whipsaw, and little ability to trade. However, you could've shorted Obama at 1.05 about a half hour after the polls closed and you knew this was probably an edge bet. Once the race tightened (3 hours later Romney was ahead) you could probably trade things out for a 300% or so profit. Fox called Ohio early, and you barely got out with a double, but fading Ohio at 1.05 was a good, sound bet. Ohio like other states was showing the same characteristics, interestingly. Lake County was taken by Romney, and if you would've told anyone in politics that a week ago, they would've bet every penny on Romney. Just like Missouri is not a swing state anymore, historical bellwether counties are not bellwethers anymore either.

The other states you knew would not be close fairly early - PA, WI, IA and CO. You could still bet Obama in these states at somewhere near the odds they were at before the polls closed. Once again this was the way to play it. You are betting while the voters are telling you what is going to happen, not what pundits or polls are, and you are gaining a monster edge.

I work hard at election betting each four years. I analyzed it poorly in several instances. Not recognizing the voter shift in historical counties to urban ones was not very bright. As well I called buying Romney on dips way too early (late August) and I should've known better. Negative ads work and just three years earlier in Canada the Conservatives used some dastardly ads effectively against the Liberal. Obama spent $220 million of them on Romney - most of them making the ads up here look like child's play - and it worked well. I should've seen that would be amazingly effective. The Storm screamed a long on Obama last week, but he was just too darn low.

My best move was using those ads to my advantage, though, so maybe it was not all bad. For that I can thank twitter. In previous years I have gone to right wing and left wing blogs to see narratives. This year for the left wing, all I have to do is be on twitter - it's young, it's urban and it's left. People were retweeting things I know they were believing in these ads - things I knew didn't pass the smell test. Going heavy long Romney before the debate was smart. When I went on twitter the after the debate people looked like they got steamrolled by someone they thought they knew. At that time you had to buy more. A week later Romeny's price had tightened from 5-1 to 8-5.

All in all it was an eye-opening, eventful betting evening. But it was draining and very difficult. Early voting is really messing the bet up, and the change in demographics was pretty amazing. Each time you took a stand, which is vital to make big money, you ended up having to hedge ten minutes later. This year the polls were right, and the RCP averages were good. Next time if we have a 50/50 type election there will probably be more of an edge to fade the favorite. People will probably overbet the polls. They tend to only remember the last time, not previous close elections.

Regardless, if you bet I hope you had a good time, and if you are an Obama fan, congrats for another four years!

Have a nice Wednesday everyone.

PS: A note about models. A couple of people emailed me and asked why I don't just bet the polls, via a model like Nate Silvers'. It's a simple answer. In 2000, if you bet a model in the Iowa election markets you bet Bush with over ~80% certainty to win the popular vote at 1-5. In 2004, you bet Bush with ~75% certainty to win the EC at around 2-5. In 2008 you got a cent on the dollar to bet Obama at 99% certainty. If you bet that you received a negative ROI in just three elections. There are a number of other examples in elections, like Sharron Angle over Harry Reid, which Silver had at an 84.3% likelihood that failed, Obama over Clinton in New Hampshire at pennies on the dollar, Clinton over Obama at a penny on the dollar in Missouri. As well, with swings, you could bet George Bush twice - in 2004 and 2000 - at higher odds than were given before the returns came in. It's a non-starter. In elections with polling +/- 2%, you always want to look at the markets, odds and judge and bet accordingly, just like if you are at the racetrack playing your favorite horse. You only need to hit one longshot to make everything worthwhile, because longshots in political betting can be 500-1 or more with fair odds much lower than that. They happen more often that you think, and certainty and groupthink usually provides an edge on the fade side, just like they do in horse racing. 

Monday, November 5, 2012

Election Betting Final - Waiting For Returns

Well, the long and sometimes very annoying election cycle is winding down to a number of hours. I figured we'd have a look at some betting strategy. As we've talked about before, election betting can be lucrative and fun. With millions matched on betfair, the world outside America is captured by it as well. When there are liquid markets (pay attention harness racing!) people will come.

I wish I had a valiant prediction, but at the present moment I don't. I won't be making a move until the numbers start to come in and I will tell you why:

In 2004 George W Bush was ahead in the polls by about 1.5%. He was ahead in the states by similar margins - FL 1%, OH 1.5% ...... NM, CO, NV, IA all ahead. He was also very close behind in places like PA and MN. He looked like a formidable chalk.

At Betfair his price was about 1.50, or 1-2. 

In this election we have the President ahead by about 0.4% in the national polls - which is well below where Bush was - but like President Bush, slightly ahead in almost all the key battleground states he needs for 270. He too looks like a formidable chalk.

His price at Betfair is 1.28, or 7-25.

I do not know why I am seeing such a discrepancy in the odds. It could be twitter, it could be facebook, it could be the media narrative (a lot of pundits in 2004 were calling Kerry, but few are today calling Romney), it could be path to electoral victory, it could be Nate Silver dominating the headlines. It could be the "Sandy Bounce" we're seeing in very good Obama polls over the weekend. It could be simply that George W. Bush was such an overlay in 2004, that his odds were way off, but Obama's are right on.

I don't know.

All I do know is that I'm not biting on something that looks overbet (Obama).That's simply because I'm a bettor. Just because I think Rachel Alexandra with tactical speed and a push button would beat Zenyatta in a match race, doesn't mean I'd bet her at 1-5. 

But, I'm not biting on something that looks underbet (Romney), mainly because I can wait. It's 2012, and we have in-running betting now. There is no reason to stick your neck out.

A few things to look for in both early returns and some exit polling where one may make a move (beware, exit polling like in 2004 will likely be garbage unless you look at trends):

Party ID (Turnout). Scott Rasmussen of the Rasmussen Reports has been good at predicting this number, which almost every pollster sucks at. He has a massive R turnout edge this year.

If he's anywhere close to right - and it is a probably not that skewed - Romney will win at long odds. If we're looking at a ~D+4 (like most of the polls are using, and a strong argument can be made for), one can look to Obama pretty quickly, because everything you are seeing in the real clear politics averages, and on Nate Silver is being confirmed. If it's in between (like a D+1), then the media is right and this is probably a true toss up, close race.

White Vote: The white vote is projected to go 60-40 Romney. If that holds, Obama can be bet. The Obama campaign thinks they are going to get at, or over 40%. If it is closer to 35% or 36%, Romney is a good bet .This might be shown in exit polling, with some caveats, to get the jump on other bettors.

Early Numbers: If Romney is not up by a nice amount in FL or NC, the turnout numbers that people like Michael Barone are using is not likely happening. The focus at that time will probably be not only if Obama is going to win, but how much is he going to win by.

Exits: In 2004 the exits for Kerry were huge.... and very wrong. He was actually a favorite at Intrade during the day. Currently the Obama campaign is warning its supporters not to be demoralized if the exits come back bad. This is because Romney is likely to win election day handily. If the markets swing tomorrow, keep it in mind.

Whatever happens early, there are markets to play.

If the polls are right on and Obama is closing in on a huge win, you can bet the electoral count market (eg over 309, etc). You can also bet the states (some states will be close regardless if it's a blowout or not), handicap markets and Senate races. Ditto if prognosticators like Barone are right.

Most of the states, like in the general, are really overbet based on current polling. Mostly leaning Obama. It's hard to find any value on the Obama side. The following of course is my opinion, and please, no wagering.

Ohio: Currently 1.28 for Obama.  I'd normally ignore get out the vote poll, panicked releases like this, but one of the best pollsters in the business confirms it somewhat today with a good sample bellwether poll that few have reported (standalone). For any bettor worth his or her salt, this is a fade right now. You're getting the best of it no matter what happens.

Nevada: Currently 1.14 for Obama. I think Obama is going to win this state by 4 or 5 points. 1.14 is too low for me to bet, though. This is a weird state with a huge union vote and a lot of machinery for the D side. Nate Silver predicted Sharron Angle to win this state in 2010 beating Harry Reid with an 83.4% certainty. Reid won with his special interest machine. Uncertainty + Bad Odds  = bet something else.

Colorado: Currently 1.72 for Obama. I think he will win Colorado. But the odds are not quite high enough for me to go long the President (1.90 and I'd bite).

Florida: 1.55 Romney. I don't want him at those odds. That's too low for me. I think he takes this state, though.

Iowa: 1.34 for Obama. This is a fade for me. I think this state is no gimmee, based on early voting and the trends. All four major newspapers in the State flipped from Obama to Romney. I think this goes right down to the wire, and that is going out on a limb if you read the news media.  1.34 is good value.

Virginia: Currently 1.64 Obama. That's too low for me. A fade. Unless the D+4 number happens with turnout, this state is a toss up.

Wisconsin: Currently 1.20 Obama. I dislike Romney here by quite a bit, but so does everyone else it seems. 1.20? Way overbet for this kid, considering the polls were terribly off for the recall election for the Democrat and some polls have this even anyway.

North Carolina: 1.31 Romney. I tried to find a reason to fade Romney here - Obama's early vote is ok. Black vote is up. There are some positives for him. I think that's close to fair odds though. Obama won this by 14,000 votes last time, and he's down in early voting via party ID by about 4%. I can't bet Romney, I can't bet Obama.

New Hampshire: Not really interested in anything here. New Hampshire is a strange state with polling. Up to the day of the Primary in 2008, polling had Obama winning by 9 points in the Real Clear Politics average. Hillary Clinton won. I stay away from this state each cycle.

Outliers: PA, MI, MN. You can bet Obama and take some free squares if you think the polls are all good. If the early voting goes one way or another, you can probably bet them with some skill. None of them really interest me at the current less than ten cents on the dollar. Unless something crazy is happening.

Predictions from scouring the data? Will it be a blowout for Obama, or will it be close? Almost all of the time the narrative wins elections. This time the narrative (a bad economy) does not match the polling numbers. If I can't get both to match up, I've learned long ago to not have a strong feeling on anything. I think there are a number of potential scenarios, just like in 2000 or 2004. With that, I respectfully punt.

Regardless, good luck if you're playing. And if not, good luck to whichever candidate is of your choosing.

The Big L

The Daily Racing Form reports that three horses, via scope or otherwise, have reported to have bled in the Breeders Cup:
  • Trainer John Sadler said both Capo Bastone and Monument, third and last, respectively, in Saturday’s Breeders’ Cup Juvenile, bled. Trainer Mark Casse said that Spring in the Air, who finished fifth in Friday’s Juvenile Fillies, also bled.
If that's correct, that means 3 out of about, what, fifty horses showed blood?

One wonders how 98% of horses get on the drug if only 6% showed blood in a non-lasix event. However, that's probably hyperbolic and not reality.

The reality is a lot of horses may bleed (or show specs of blood via endoscopy) at some point, so North American racing has used Lasix as a cultural phenomenon. A catch all. A preventive measure. The thing we "just do".

Removing it makes it the thing to not "just do", of course. Change the goalpost, change the culture. Other measures, just like in Europe or Australia, will be used instead. I am pretty sure the world won't end.

However, American racing has to decide if it's ready to take away the diuretic. If the fact that three horses in all of the Juvenile races this weekend bled scares people that much, the status-quo will probably end up winning. If the sport sees it as being a small price to pay to change a breed, a culture and a sport, it will lose.

Sunday, November 4, 2012

Breeders Cup Recap, Live From Daytona

In 2009, visiting a chat board before the Breeders Cup you'd hear some laments about the event being held at Santa Anita.

"The Classic is boring. We have Euro's and turf horses and Zenyatta, but it is not our Classic because of the fake stuff"

"There are some jockey races here, because you have to be tactical"

"It's not dirt, I am not betting"

Yesterday you got what you wished for. The Santa Anita track played like Daytona Speedway. If you wanted to ride tactically, or had a closer, you should've never even showed up.

Fort Larned and Mucho Macho Man played ring around the rosie. It was 7 lengths back to third.

The Juvy was a barnburner. 22 and 45, with splits of 23, 24 and 27, with a cavalry charge that never materialized. 144.58, with horses looking so tired it looked like the Marathon, not a mile and a sixteenth.

A Dirt Mile with the speed of the speed winning easily at 15-1. If you expected a closer here, the best you got was an even inside trip for the aptly named Rail Trip to come second.

A wonderful performance by Groupie Doll. She was wide and a few lengths off, which might be death for some horses on this track, but she got the job done. She might've been ten the best to do what she did.

You might think I am here to slag Santa Anita or complain about the results as a handicapper. I'm not. Just like in 2009 where my response to any complaints was "adjust your handicapping", the same applied yesterday. I have always been of the handicapping mind that horse's could run on cottage cheese and we'd watch the way the cottage cheese was playing, and then go bet. I enjoyed the day as a bettor just fine, and bettors will bet the big pools and deep fields of the Breeders Cup no matter what.

However, as a fan, I do see a few problems.

Will any Euro horse show up to race in the Classic at this track? Could you imagine if somehow Frankel was enticed to come, he laid back about six off the pace and was defeated by Fort Larned on a biased track? "Perfect record screwed by the American Dirt Cowboys" would be the headline.

No wonder they said when they saw the race on dirt they weren't coming, for certain.

Did the best horses win the races yesterday for Eclipse voting, or did some horses who might've won on a fair track race poorly?

We'll never know, but the Breeders Cup has tried (I would argue successfully) to be a world wide event, with world wide talent. This event at Santa Anita, I believe, set that back some.

Many people will say "who cares" and maybe they're right. Perhaps an event on a dirt speedway with speed horses going like a quarter horse and staggering home is what American racing is, and what bettors want. If that's true, give a gold star to Santa Anita - they succeeded.


Handle was down quite a bit yesterday. If anyone wanted to use the track as an excuse for handle, they can. I think it had more to do with the lack of buzz and the weather issues..

There were no "tragedies", stretch drives of the two year old races were not pictures from a Lon Cheney movie, the red cross was not called for horse transfusions. Although Mark Casse reported one of his horses bled, since she raced so poorly and apparently was a "3", she probably would've bled with lasix, too. You'll probably hear more about "specs of blood" via scope, but that's expected even in some races with lasix being used. Much ado about nothing and the chicken littles were showing their bias for the status quo, not talking reality.

I'm still lost on Dullahan. He is so fast, and has such a huge move I can not believe his last two races. He was being asked at the 7/8's again yesterday and that's not him. If over the next bit they find a small hairline or something on this colt I would not be surprised.

Groupie Doll was awesome. Nuff said.

George Vancouver, the highest fig of the Euros was third choice among them. I find that curious.

I hope TVG is back on the track feed soon, or the BC smartens up and let's both networks cover the event.

Betfair in running was bet fairly heavily and there were some opportunities. Perhaps the most interesting was Shanghai Bobby who looked done in the middle of the lane before coming back on. A friend who plays professionally at Betfair took a bath on that.

Overall the interest at Betfair was good. Almost every race had a tight, interesting array, with plenty of volume. The bias with the Euro's showed, not giving Wise Dan too much respect.

Bob Baffert wanted a dirt track to replace poly. He wanted a rider switch and replaced Chantal with Bejarano. He got both. Ironically, Game on Dude yesterday got either i) bit by a speed track or ii) got a bad ride. Irony.

Animal Kingdom is a hell of a nice racehorse.

Speaking of Wise Dan, does anyone want to see him race Frankel after that at a mile? Count me as one.

Have a great day everyone.

Thursday, November 1, 2012

Thursday Notes

Some news that caught my eye today:

Jack Darling, writing on Standardbred Canada, spoke about this week's OMAFRA report, which highlighted some plans to help the business transition, post slots:
  •  I didn't like the tone of this report. Instead of an independent, open minded panel working with our industry to develop ways to save and even improve the horse racing business, they sounded like unfriendly government representatives dictating to us.
I have also read meme's that talk about "we need to negotiate better", "we can't be spoken to this way" and things like that. I honestly don't understand it. Racing has nothing to negotiate. That OHRIA and others have gotten racing to this point - the point where the government actually wants to transition better - is a victory. They achieved it without a leg to stand on.

The Breeders Cup has lacked serious buzz this year. There is no Zenyatta, no Derby winner, no horse on a streak, no super-outstanding two year old to get the blood pumping. The race of the two days might end up being the filly and mare. The more I go over it, the more I move towards Questing. She's fast enough and I think she bounced last time on a weird track.

Election betting update: With a swath of positive polls, O has moved downwards in odds virtually everywhere.I agree the methodology of some of the polls is odd, or almost impossible to rationalize (like the National Journal poll, where they model the electorate being like 2008 instead of something less than that), but the totality of them looks good for O. There are still some states where value may be had if you are one to trade them on Betfair, and have some sort of strong opinion, either way.
  • VA - trading in O's camp, but early vote turnout in cities is down by 20%, portending a close race
  • CO - trading in O's camp, but early voting shows a 3% R edge, versus a 2.8% D edge last time
  • FL - trading in R's camp, but some polls have placed the vote as even
  • Places like MN, PA and MI have some on the bid at around 10 cents on the dollar if you think the race is trending O's way. 
  • NC looks like a longshot for O to carry, based on early voting. There's a whack to own at 1.30 there.
If the polls stay as they are today, I am of the mind you'll be able to gauge quickly what's going to happen election night - perhaps soon after FL and VA close -  because you'll know which poll's turnout models are correct. It can be profitable. In 2004, for example, the networks were loathe to call Florida because of 2000, but with even a bit of common sense you knew Bush was at least an 80% favorite 15 minutes after the polls closed in the Sunshine State. Betfair traded Florida at 1.76 to Bush at that time. 

For longshot bettors, keep in mind Betfair can really mess things up in real time. Hillary Clinton, for example, traded to 1.02 (98% chance) to win Missouri in the Primary in 2008. An hour later Obama won.

Cal Expo opens Friday night and they will honor the recently passed Alan Kirshenbaum.A lot of you followed and chatted with Alan over the past few years on twitter. Chris Schick is running Cal Expo and he's a bettor. While the TOC and other groups look to squeeze more out of your wallet in California, Cal Expo has done the opposite, lowering rake on several bets. Check them out, the racing is quite good.

Congrats to Jason Settlemoir for getting the GM post at the Meadowlands. He's a good guy and works extremely hard to try and move the sport forward.

Have a nice Thursday everyone.

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