Chris, who has run racetracks for years, summed it up on twitter:
This entire 18% rake reduction debate on DD is amusing. They act like something is being given away.If you don't quite understand his point, maybe the head of the California Lottery can help. They lowered their takeout percentage on scratch tickets and ended up making more money:
— Christopher Schick (@jogburger) July 13, 2014
"Increasing the prize payout percentage improves the product's value to the consumer, provides us with a powerful message that gets consumer attention, and gives us a tool to drive sales and profits. A relatively small increase in prize payout percentage can be leveraged into a much more significant increase in top-line sales.
Although the increase in prize payout percentage leaves a smaller percentage to be transferred to education, the total dollars going to our beneficiary goes up. And at the end of the day, you can spend a dollar, but you can't spend a percentage. So these changes have resulted in increased funding to education and that's what our constituents care most about and the reason the Lottery was created in 1984."
In horse racing, because it has lived with a pricing mechanism that is not only average cost priced, but worse than that, arbitrarily set at false levels, when a margin goes up, horsemen and others believe that they will make more money. When in fact, they are probably losing more money.
Chris's comment hit that right on the head.
There is a ton of talk about the Dumb Ass Partners doubling down with their requests for appearance fees for their horse, California Chrome. Although this is much ado about nothing, in my view, this is what a lot of people have been clamoring for in the business - more revenue outside purses and stud fees for the stars of the game.
Everything, also in my view, comes from the lack of structure in horse racing (or a structure built for another time). In the NFL, appearance fees and memorabilia etc from active players is run out of the players association. Some of the revenues go back to help the sport, and the players. In this case, the owners of the horse take the insurance and shipping risk, but the racetrack attendance benefits. Of course one can be altruistic about this, but if there was a proper system set up for appearances by star horses, I think everyone would be better off.
Speaking of systems, horse racing business is led by an act created in 1978 - the Interstate Horse Racing Act. Owners don't like it much because it gives too much power to trainers, and horseplayers don't like it much because it is a barrier to lowering takeout, or getting more customer centric things done for them. I agree, it has to be scrapped and something new has to replace it, like this opinion states.
There was a letter to the editor to Harness Racing Update this week from a Pet Rock fan who didn't take kindly to the hype of Captaintreacherous last season. The writer does make some good points, primarily, when you race a restricted crop, it depends on the year you're born a lot of the time. If Pet Rock was a three year old last season, or in other years with the lack of a deep crop, he'd probably have won a lot of races, and been hyped himself. Conversely, if the Captain raced in the super deep Pet Rock year, the world's worst handicapper could tell you he wasn't going to win 90% of his races.
The owners of ILuvthenitelife felt similar last year, and I agreed with them. Their filly was a monster, but because the Captain was racing and winning races, she was an afterthought. When we look at this season, we see how things have worked out and look at it through a different lens. ILTN was beating up on Shebestingin and Somewhereovertherainbow like they were not in the same species. This year those two fillies have done well in the older division. It's likely, barring injury, she would be a four year old superstar against some tough older mares. She was a quality animal, like Pet Rock, but because she was overshadowed by a winning horse, she got little respect. It was not her fault, it was based solely on circumstance and the year she was born.
This is why I feel it's imperative horses race longer. We get to see who is a great horse and who is a good horse. Restricted divisions can make some look like good horses who are actually great horses, and some look like great horses who are actually good horses.
Have a nice Monday everyone.