Friday, January 30, 2015

What Will New York's PETA Investigation Say?

Good day everyone!

New York's PETA report is due out very soon. Will it point to the future or just deal with the present?

New York is in an interesting position, and to change racing (hopefully for the better) they are a jurisdiction that can certainly, and probably has to, lead. The Aqueduct issues, politics; things are very real in New York State. It's an opportunity to move forward.

Here are a couple of things I hope happens:

The first thing I did after the Kentucky Report was published was congratulate Steve Asmussen's lawyer on twitter. As has been my opinion from the beginning (and as much as I am flamed for it at times), this episode has nothing to do with Steve Asmussen. He does not need to be "made an example of" and it's an injustice if he even serves one day for being the fall guy for the sport. He's had to hire lawyers, go on TV (where he was clearly not at home), and some owners have questioned him. All for a video where you have to extrapolate, guess, or nitpick to find a violation. Enough is enough. Take down the Horse Racing Most Wanted posters and let him go back to work.

The Life At Ten episode was something this sport had to go through. It's brutal that a 110 pound jock has to make a decision about a horse on the track, with no consultation with a trainer and the horse's owners, while readying for a $2M race. It's a situation that there was no SOP, in need of an SOP. That investigation was not about "convicting" anyone, but about the future, and that made the investigation worthwhile. I hope we see that here.

As for new policies, with vets, meds and all the rest, I suppose that is left for another day. But in this report it is a fine time to springboard towards discussion of that kind of reform. New York has some fair minded, smart people - vets legislators and others - who are clearly capable of navigating the minefield of reform. I hope this is not the end, but the beginning of the discussion of new policy to make this better for our owners, investors, and most importantly the horses.

I fear not long after the report is released the focus will be on Steve Asmussen, because, after all, that's what the report is dealing with. But I think that's missing the entire point. The last six months were about horse racing, not one man. How the sport moves forward - beginning with this New York report, which I hope deals with big issues, not micro-issues - will tell us a lot about the sport itself.

    Thursday, January 29, 2015

    What Kind of a Game Does Horse Racing Want?

    PETA has filed an appeal request of the KHRC's report in Kentucky today. As I noted before, the whole "exoneration thing" is troubling on a couple of counts, i) exonerated of what exactly? Asmussen was not jacking horses with rocket fuel or beating them with a stick; he did nothing wrong, and was just playing the horse racing game and ii) the giddiness inside the sport with the "exoneration" was so short sighted and so horse racing, it was once again an excuse to embrace the status quo.

    It's the latter that most of us seem most concerned with.

    Case in point, which I have not heard from anyone is untrue (although, that might not matter, this could be in almost any stable. Regardless, please let me know if this is challenged and I missed it): Teardrop (it's on page 6).

    Teardrop was an Asmussen trained two year old filly who seemed to be having lameness issues. June 18th, Blasi says the filly is lame. June 20th, she is walked the shedrow and lameness seems to be there too on video.  Despite that, she's put in the Debutante Stakes at Churchill, and two days later passes (Kentucky) vet inspection and comes 7th by 25 as the 2-1 race favorite. You don't have to have a phd in animal science to surmise she raced lame.

    That, according to the KHRC, is some sort of "exoneration".

    The horseplayers who bet her down to favorite, don't feel they had a fair shake. In fact, the "she's trained nice since her maiden win" quote in the DRF would've told them everything is hunky-dory.

    Teardrop, presumably raced lame, probably doesn't feel like she had a fair shake.

    If she broke down, it would've been an "unfortunate occurrence" and someone would've filed several stories about how polytrack might've saved her.

    If it was in Hong Kong, it would've never even happened.

    With the Kentucky report filed (and New York report pending), this business needs to understand that this has nothing to do with someone's Hall of Fame ballot, or if they should be working with horses, or in turn get some massive suspension. This has absolutely nothing to do with Steve Asmussen. This is about what kind of game horse racing wants moving forward. It's about the way horse racing always has done business versus what it needs to do in modern society to remain relevant (and to keep the slot money rolling in). It's about the horses, the people who work with them, and the future of the sport itself.

    Wednesday, January 28, 2015

    Hey Bartender, When Even Necessary, Losing History is a Bad Thing

    "How are the kids", Mr Black Box?
    It was reported today (h/t to the Paulick Report), that Churchill Downs is stocking 16 owners suites with a contraption that serves mixed drinks. Its name is not Phil or Patti, but, well I don't really know. It's a big black box, that (presumably) doesn't talk.  There's no word if this spring the owners will be watching Trakus chiclets underneath hologram Twin Spires while sipping their gin and tonics. But maybe that's in the works.

    I am a bit of an enigma when it comes to history. I think we lose it far too fast, and it's not a good thing, yet I work and admire disruptive technologies that make our lives better, more cost-effective, and our society more efficient. I think we might've gone too far, and forgot where we came from.

    Sure it's only the age-old bartender-customer relationship that's no more at Churchill, but it's just one example of many. The scenes between Richard Dreyfuss and Robbie Coltraine in Let it Ride which exemplified the customer-bet taker relationship are now replaced with a chat with your computer screen, mobile phone, or a machine at the track that our tickets get jammed into. Hell, most of us don't even go to the track any more.

    The racetracks themselves are becoming newer and have lost a lot of what they were. Downtown racetracks like Greenwood in Toronto, where you jumped off a jammed streetcar with hundreds of others, getting yelled at by tip sheet sellers is long gone. Greenwood Raceway is a housing development now. Beantown is one of the US's great cities. Working class, true, and historical. Their racetrack is gone. These tracks are summarily replaced with "racino's", some in places where racing has about as much history as a One Direction fan.

    Many of the racetracks that have no history, are trouble with the fan or bettor, too. I don't know too many that even look at Chester (I think they changed the name) in harness racing, which once gave away over $2 million in purses in one day, yet barely cracked $300,000 in handle. It's more than just their awful takeout rates that fans are not embracing.

    This is an age where the venerable and historical Maple Leaf Gardens was closed and renamed after an airline. The Forum in Montreal, where my Bruins would get throttled throughout most of my childhood in the playoffs, is now the "Bell Centre". That's named after a media conglomerate, one which I was on the phone with for hours last year - to a guy I think in Costa Rica - because they could not get the horse racing channel on my TV menu.

    If they rename Fenway Park to Yum! Brands stadium in the coming years, it's probably time to call it a day.

    In the big picture, Churchill Downs and other gaming companies have to run their businesses for their immediate shareholders. End of year bonuses, stock options and everything else rule the day. That's the way the world works and they don't run a charity. But in horse racing, when we lose history, we lose a little bit of who we were, and are. And to me anyway, it just doesn't feel very good.

    Monday, January 26, 2015

    UK Racing Is No Longer Doing What it Does Best

    What do you think of when you hear the words "a UK horse race"? I think of big fields, and being able to bet a horse with a decent shot at 6-1. Maybe you do, too.

    For what seems like forever, the UK racing product's space in the market was win betting - whether at a bookmaker or exchange. When you picked up a book like the excellent Dave Nevison's No Easy Money you read about his replay watching and his "tissues", where he would be focusing on one thing and one thing only: Win betting. No exactas, or scoop sixes, nothing of the sort. 500, 1000, 2000, on the nose please.

    If you study marketing, you learn that being first in a prospects mind is most important. For others, doing what you do best very well, is a way to stand out in a crowded market. For horse racing, slices, not the mass market is most important, simply because of the variety of gambling games offered, especially in Europe. Horse racing will not outcasino a casino. The UK racing fixtures, with win betting and big fields, with low juice, were a big winner for that sport. It was first in any racing prospects mind, had been for generations, and offered gamblers a solid product to bet on.

    Since then, these very things that make UK racing UK racing, are being attacked. And it is not going well.

    The pink line is the UK. On the left, the number of races have grown fairly dramatically, on the right, we can see the quality of these races were poor, where average wagered per race sunk like a stone. Field size - a big draw for bettors - was close to 12 horses per race in 2001. In 2012, it was a shade over nine.

    Fewer racedates does not automatically mean lower handles (don't let the US racing media tell you this; Australia cut dates and increased handle in 2007 and Canadian harness racing is in year two of the same thing. It's used as an excuse in North America) . Conversely, more races does not mean higher handles. The UK proves the latter; handle has been down and continues to be.

    What is bothering the UK is the same thing spoken about regarding the NFL and horse racing in the TDN this weekend. They have lost their way. They are in the process of losing their entire edge with customers.  The UK does not need to diversify into exotics like they have, nor do they have to keep expanding their offerings. They need to remember who they are in the prospects mind.

    In the 1950's Pepsi was getting slaughtered by Coke, earning less than 20% of the entire share. There was not much they could do, so they thought, but they developed a new strategy. This entailed not going after coke but going after a slice of the market - teenagers. This strategy began to work, and using 80's pop icons like Michael Jackson it continued. After one generation (no pun intended) Pepsi closed the gap where coke's market share was only 10% more than Pepsi's.  At that time Pepsi pivoted again, going after the mass market. That backfired.

    It's this writers opinion that if UK horse racing wants to earn back gambler market share, they have to return to what they were best at. They're not going to win trying to sell higher rake exotics. They're not going to win racing more races with shorter fields. They're going to win being the best at what they've always been best at: Win markets, low rake, and big fields.

    Upstart, Relaxed Horses, Dez & the NFL

    Good morning everyone. Here are a few items that caught my eye.

    Upstart was a very handy winner of the Holy Bull on Saturday. This looked like a really nice horse last year, but after his tough Juvy and time off, you just never know how sound and happy they come back. As his trainer said "They need to leave horses at some point, and he kind of did that yesterday". I'm a big fan of this horse but I can't help but think last week's 40-1, which looked like an overlay, this week will be an underlay.

    Upstart got a good trip, moved and separated when asked,  ran a good number (a 107 TFUS number), did so willingly and like a good horse should, and looked sound afterwards. There's simply not much not to like. 

    With some closings on the east coast, GP's handle on Saturday was good. 

    I was very interested to read Don Swick's comments in HRU (page 7, pdf) this weekend. Don, a long time harness trainer, moved to the thoroughbreds as well and now trains both. Harness horses are constant work - rigging, shoeing, equipment - and keeping them sound because they race so frequently teaches one to be a damn good horseman.

    On what's more difficult about training Thoroughbreds: "Reading the condition book"
    On their soundness: "Their ankles can't handle it [hard training]"

    He also has some fantastic comparisons to how thoroughbreds are constantly , "clamped down" rather than relaxed like is so important with harness horses. "Vets and blacksmiths are amazed how that within two or three weeks in my barn they act like normal horses, not Thoroughbreds".

    A trainer training horses to be relaxed, happy and "normal". Sounds like a harness trainer.

    In HRU Friday (page 5, pdf) the judges in other sports versus racing was looked at. Racing's are better.

    Story in the TDN this week looking at how serious the NFL gets regarding anything that weakens the fan link when it comes to integrity. It went on to compare how racing did not stick to its core principle (a gambling game you can win at) and has suffered for it. The NFL, a violent sport, in a society that is hell bent on weather warnings, safety seals, and tearing up monkey bars in playgrounds, continues to buck convention by thriving; $17B TV deals, in a sport that does not have a world stage to fall back on. The NFL has been teathered to the modern American sports fan like no other sport this side of the pond. It took a long time to do that.

    Flipping over to racing, one of my favorite dudes on the twitter (Dougie Sal) often posts racing links from 1912, or 1918, or 21, regarding the gamblers of the day. Tim Mara took $2,500 he probably made from booking the card at Belmont and bought the New York Giants (how is that for irony today), pros were alive and well, earning a living at the track.

    One sport went from very little to everything, and one sport went from everything to very little. It has a lot to do with "KYC" - know your customer.

    The NHC winner pocketed $800,000. Congrats to Mr. O'Neil. A little bird told me Mr. Dinkin will be writing about the NHC in this month's HANA Monthly emagazine. That should be out this week.

    Have a great Monday everyone.

    Thursday, January 22, 2015

    The Judges Do Things Right

    In tonight's Harness Racing Update, there's a column looking at how our judges judge, and how other leagues do things wrong. You can read it here 

    Also in what I thought was a very good edition was Gural not allowing Traceur Hanover to race in the Meadowlands Pace, and news on Maven and her quest for a Prix D'Amerique.

    Wednesday, January 21, 2015

    Fascinating #DeflateGate Racing Parallels

    I must say I am having a hoot reading the media (and social media) regarding DeflateGate - the fact/rumor that the New England Patriots (illegally) deflated balls in their last game (they are easier to grip and throw).

    What's making it extra-special is that the stories and tweets sound almost exactly what happens in horse racing when some winning trainer gets nabbed. It's uncanny.

    The Washington Post today has some prose up that could be on the Paulick Report or the DRF.
    •  “The Patriots are suspected of cutting so many corners, their home field should be an oval,” -  (aka "pushing the envelope")
    • But numerous coaches said they don’t trust how the Patriots go about their business — complaints that go back to the beginning of Belichick’s tenure as head coach in 2000. - (we can't catch him, but we're pretty sure)
    • Belichick, for his part, claimed he had misunderstood the NFL rules. “The rules are very, very clear,” former Tennessee Titans Coach Jeff Fisher told the New York Times in 2008. “There is no need to be more specific or clarify any rules whatsoever.” (the kicking, cut off times, overages, rules are unclear, I had no idea I could not bring Air Power into the detention barn!")
    • The Patriots’ reaction to such allegations has been to chuckle. Other teams are just grasping, the thinking goes. They’re just jealous. (aka he's just jealous that I win)
    On social media we see similar.

    After a dude gets a soda positive, often times, it's "the horse didn't even win" defense. In this case, the Pats won by so much, they didn't have to cheat to win, even though they probably cheated to win. This is a form of social media and chat boards' NYRA-Apologist Disease ® where they might've done something wrong, but it does not really matter:
    Then we have the classic horse racing line "Everyone does it!"
    And, well, neither here nor there, but kind of witty, I thought. I suspect the biggest difference between this Deflategate and horse racing is that 1) The investigation will be over in 48 hours and 2) if found "guilty", the punishment will be done quickly, and hurt quite a bit.

    Have a nice Wednesday everyone.

    Tuesday, January 20, 2015

    Paging a Leader

    Someone needs to get a hold of this industry and lead, or everyone will be racing for ribbons.

    Read more

    Mid to Low Range Racing Stock Ownership Sets off Alarms

    I was reading a little bit about gross horse betting turnover, both in North America and abroad recently, and noticed an interesting article regarding Irish racing.

    "In 2014, the number of horses in training fell by 6.4pc, owners by 6.2pc, entries by 12pc ..."

    This is occurring in tandem with increases in prize money: "What was most galling about the 2014 figures is that the contraction at the industry's core continued despite an increase in prize money of 6pc, with another 10pc extra due to be pumped into purses this year on the back of a 25pc increase in Government funding."

    In addition to that increase in gross purses, there has also been a decrease in races held: "Despite real activity - including field sizes - plummeting, the number of fixtures has swelled by 16pc since 2004 to 355."

    More money to be raced for, more horses earning checks with smaller field size, more government help, but fewer owners.

    This has not been noticed on the high end, however: " bloodstock sales, which was up 19pc."

    In North America we see similar in horse racing. In fact, almost every time a takeout hike is considered by a horsemen group, it's to somehow "raise purses" because if that happens, all will seemingly go swimmingly by increasing ownership.  That doesn't happen.

    At the high end things seem fine. With QE number 44 (not sure what number we're on), Apple up a gazillion percent and high end horse buyers heavily invested in the markets, this makes sense. However, the ecosystem can't survive in its present state without the lower ends having some success. You need a secondary market to buy outcasts from the top end, and offer them a chance at profit. That profit is not there.

    This is occurring with more and more slots revenue to dozens of "B tracks" both in harness and thoroughbred. It's occurring with more and more government help.

    Currently, higher ups policies are very top-end driven - eliminating race day drugs, lasix, diverting more and more purse money to Grade I's and stacking stakes - so one wonders if the middle to low end issues will ever be addressed. However, that day might have to come, because if the low end continues to be hampered, the top end will feel it, sooner or later. It's just math.

    Monday, January 19, 2015

    Plenty of Buzz

    Good day racing fans.

    Paulick - as he often does - has an energetic story with a battery of comments that's creating some buzz (see what I did there?).  Jockey Roman Chapa, twice banned for buzzers, is under investigation again. This set off a usual firestorm from those who want the business to tackle its issues a little more forcibly. It also highlighted (made people remember) a lot about the PETA tape last year, which has kind of been swept away this past week. Chapa was mentioned on that tape, and the Asmussen stable knew about his history, yet has no problem (it seems) happily using him on their horses.

    I think the public's reaction to this is expected because horse racing seems to rarely deal with issues where they show they actually believe that cleaning things up is a priority. Overages and the like are stuck in legalese, there is a grey area. But with buzzers, there is little grey area. Either you have one and are caught, or you don't have one and aren't. "The vet came late and told me the cut off was 72 hours" is a fine and well-used excuse for poor stable management. What's a jockey caught with a buzzer say, "I found this device in the parking lot and was returning it to a friend who uses it to make sounds that make his kids laugh at Chuck E Cheese during birthday parties." "I don't know what it is, but some jocks carry a rabbits foot for luck, I carry this." "The batteries just fell in there."

    The culture of racing seems to lead everyone to believe that people who break the rules like this, end up getting more mounts. And I don't think they're wrong. People skirt the rules so blatantly, I think, because the penalty (suspension) is more palatable than not having horses in the barn, or not having mounts.

    Conversely, it will be interesting to see how the NFL deals with "Inflate Gate", where it appears the Patriots Coach Bill Belichick (this is shocking I know), deflated footballs for the AFC Championship game yesterday. The NFL takes these things seriously, so one would expect (if confirmed) we could see one of the highest fines in NFL history, along with the loss of draft picks.

    One sport's message says "the spirit of the game is beyond reproach". Another's says "if you ain't cheatin' you ain't trying." Because the latter deals with defenseless horses, I think it stinks.

    Yesterday's NFL games were quite interesting. The Seahawks, after playing 90% of the game in miserable fashion, ended up winning. With about 3 minutes left in the game they traded at 400-1 to win the Super Bowl. Four minutes of game time later they were 4-5. As a bettor, the game teaches us a lot about probability, and is a lesson that it's not about picking winners, it's about making good mathematical bets. While the Hawks had about a 3% chance to win late, 400-1 at that time to win a game in a week was a bargain.

    I was on the other side, with around 5 minutes to go I expected about a 9% chance, yet I was getting longer in-running to fade them. I kept hammering because (from my numbers in low scoring games) I felt I had a good edge. When literally eight or ten separate events - a DB going down instead of running after an INT, conservative play calling, missed coverages, dropping an easy onside kick recovery, a 2 point conversion hail mary, and the loss of a coin toss to name a few - needing to happen, I was comfortable. Easy come easy go.

    I had a little fun digging through some stats last night. Seahawks quarterback Russell Wilson ended up having one of the worst games you will ever from a winning playoff QB. How bad was it? Third worst according to @fbchase.

    Scouring through some other dismal playoff games, you wonder just how needed a QB is when a team wins some games.

    David Woodley went 9 for 21 for 87 yards and two interceptions. The Dolphins beat the Jets 14-0.

    Joe Flacco has had a few, but one stands out that made me lol. Against New England in 2009, he went 4 for 10 for 34 yards with one interception (you'd think he got hurt. No, he played the whole game, even chipping in 6 yards on the ground on five carries). Baltimore won 33-14.They rushed for over 200 yards.

    Have a nice Monday everyone.

    Friday, January 16, 2015

    Assmussen Cleared, But We're Not Sure of What

    The big news in horse racing land today is signal impasses, lost handles, infighting, fewer owners, that the Steve Asmussen "investigation" has been wrapped up. For a good read about it, the TDN had a good article.

    For those of you wondering what he was cleared of, well, I am too.

    Unless butchering the english language is a crime, the PETA video and expose didn't show any rule breaking, as far as I could see. There was no magic potion, devlishly being injected at post time to snare a big cash and laugh all the way to the bank. There were no mob contacts, trips into dark shadow basements to buy the latest synthetic EPO, or meetings with shady figures.

    There was a stable doing every day business.

    Big stables nowadays - I believe this, but it might be naive - do not deal in magic potions. Asmussen, and those like them, run large enterprises and make a lot of money doing it. They'd have to be nuts to risk it all. What they are doing - and this is what rubs everyone the wrong way in some form - is running a business.

    As shown on the video regarding unloading a "rat" to trainer Rudy Rodriguez, patch them up, jam them, get rid of them and replace them, is the business-mantra of the modern large stable. That's the way the game is played. That's the way, in 2014, owners are attracted to buy more horses.

    Yes, there are still many horsemen who would rather wait on horses, nurse their lesser stock back to perfect health, and play the game that way. But the problem is: They're the ones that don't have owners.

    I think some people that want to see racing changed at a fundamental and cultural level - to better protect animals, and to make the game better for new investment - were in some strange way hoping that the commission and others found some sort of smoking gun; as the now Chicago Mayor once said "never let a good crisis go to waste". But that's not fair. Steve Asmussen did not create the modern horse racing stable, he is simply filling a demand driven niche, and he doesn't deserve to go down for the failings of an entire industry.

    Horse racing has many, many issues. Good investment is on the sidelines. There are too many  stables that treat animals like commodities. There are those who think a racing license and a few dollars in their pockets gives them a right to be in the business, rather than a privilege. That will have to change to forge a new, vibrant investment model, and perhaps one day it will. But that day is not today.

    Thursday, January 15, 2015

    Reasons to Switch, and Eaves Steps Down

    Bloomberg Business Week produced a comprehensive look at Daily Fantasy Sports gambling today. For those looking to educate themselves on the demographics, growth rates and strategies, it's a very good read.

    For a gambler to "switch" from game A to game B it takes some sort of impetus, or catalyst. For a poker player featured in the article, who needed something to do after Black Friday, he chose DFS:

    "Max Steinberg, 26, is a Vegas-based professional poker player with career winnings of more than $2 million. So like a lot of online gamblers, Steinberg is now into daily fantasy sites such as FanDuel. Steinberg works with his twin brother, Danny, and their older brother, Aaron. Together they wager about $75,000 on hundreds of contests each weekend during football season, and an additional $3,000 per night on basketball. When baseball starts, they’ll spend about $10,000 a night, and more than $1 million over the course of the season."

    DFS sites offer a gambler reasons to switch. An ability to make money, sign up easy, and compete in a game with a possible positive EV.

    Racing had hoped to get online poker players after Black Friday, but that never happened. Let's look at the impetus for Mr. Steinberg to switch to racing, right now, this January.

    1.  He can bet a higher priced game than it was in 2011 - Signal fees have gone up, rebates have gone down. The largest criticism by gamblers regarding horse racing is that takeout is too high. In 2014 and 2015 it's gone even higher.

    2. He might not live in the right state - Source market fees, killing every day players edge's, have come in, or are active in New York, Viriginia, Pennsylvania. In Michigan, good luck betting over the net on racing, and ditto Texas and Arizona.

    3. "Impasses" - Tracks are fighting over what's left of betting handle, shutting out customers. Oaklawn Park opens today, and a half dozen of my serious betting friends who are trying to make a living at horse racing can't even bet it at their ADW's.

    4. Field Size - Field size is down, making the races harder to win at.

    Why would anyone switch to horse racing? This has been going on for years, so the next time you see someone in racing's braintrust say that "game X has been outlawed, so it should help horse racing handles" make sure you remind them that racing's issues are not competitor issues, as much as deep-seeded fundamental issues within the game itself.

    Nick Eaves stepped down as Woodbine head today. Nick was a thoughtful CEO, able to juggle politics and business quite well. Woodbine is much more player friendly today, than it was five years ago, and that has been reflected by handle increases. They have a long way to go, but he changed Woodbine for the better.

    PS: If you want to try Draft Kings you can with a referral link. If I can't beat em, I might as well join them.

    Monday, January 12, 2015

    How Much Has DFS Hurt Racing's Betting Revenues?

    As is usually the case, conversations with Crunkster have got me thinking. With regards to the effect Daily Fantasy Sports (DraftKings, FanDuel etc) handle has had on horse racing revenues:

    This is a completely dicey question; not only with racing and fantasy sports, but right down to the age-old question about how much that new McDonald's has hurt my downtown burger business. It's hard to quantify.

    Here are the numbers.

    Draft Kings - the smaller of the big two DFS sites - has "soared past $200 million in prize payouts" as of December 19th. FanDuel, the larger of the two, paid out more than $500 million in 2014, and have guided the VC street that their revenues will be over $50m. o_crunk gave us a link on the twitter box which said the CEO of FanDuel estimates revenues near $100 million industry wide. Using the industry analyst rule of thumb, dividing total revenues by 10% (about the average takeout) leaves us with total betting handle on DFS in 2014 of approximately $1 billion. 

    Projections for 2015 have both FanDuel and DraftKings reaching $1 billion in handle each, but that's a far ways off. However, industry CPA's are in the $68 dollar range, so there is massive growth potential at that cost per acquisition.  They just might reach that.

    Regardless, that is neither here nor there right now. How much of racing's losses can we attribute to DFS growth in 2014?

    Clearly some. Racing has the same demographic as DFS, and it takes time (upwards of 10 hours per week according to industry surveys), leaving little for other pursuits. In addition, I don't think for a minute that increases in sports betting that's being seen in Nevada and elsewhere the last two quarters is not attributable to some of these DFS coattails. I have bet more sports since November than I have in years. It's not by accident.With competitors like DFS out there, some in the funnel leave, and those who might enter the funnel are poached.

    Having said that, I feel Daily Fantasy Sports has a long way to go before it captures a high percentage of racing's market share. First, they have a business strategy of harvesting the 40 million or more Fantasy players to bet small amounts. Unlike in horse racing, this does not translate to every day players playing large amounts, e.g. it's easy to bridge from a $50 a day horseplayer to $500 a day, but much harder in DFS right now. Second, the quick action of horseplaying (this industry constantly tells you slots, not it has quick action, but they are mistaken), is something that DFS can not match. From a velocity of handle perspective it's much easier to be a large horse bettor than to be a large DFS player.

    I don't think anyone knows how much of this year's handle losses are due to DFS, but I do feel they are tangible. There is only so much skill game gambling time in this world - it's zero sum in many ways - and when people leave racing (for even a week) and get a taste of DFS, some of them won't come back. In addition, when you handicap DFS players, you are handicapping games, making it more likely you will bet on the Toronto Maple Leafs tonight as you start Kessel, Kadri and Booth. The threat to the horse racing market's pull on gambling fixes is real.

    Where DFS goes from here is anyone's guess. I know racing in some form will be around forever, but DFS will cause it to lose customers. There's no way around it.

    Tough Jobs and Monday Musings

    Good day everyone!

    Yesterday was an interesting day for football fans, primarily due to officiating. In the Dallas-Green Bay game, Dallas appeared to convert a 4th down with a chance to go ahead by 2 or 3 points, only to have the call overturned on replay. This caused quite a controversy. For the uninitiated, if a player gets both feet down with control of the ball, makes something called a "football move" with intent to do something and the ball comes free, it's a catch. If a player does not make a "football move" and the ball comes free, it's not a catch (when the ball hits the turf it's the Calvin Johnson rule). From what I read, about 50% think it's not a catch, and 50% think it's a catch. Some like Howie Long and the NFL Network's Rich Eisen are flummoxed because they think he was reaching out to the end zone, most officials are pretty sure they got it right and he wasn't really reaching out to the end zone (a football move).

    One thing for certain: It's interpretive (Mike Florio explains it better than I could if you are interested). 

    Meanwhile, in the sport of horse racing, this is nothing new for us. Old hat. An old shoe. We live for interpretive. My view on NFL catches with replays, and in the sport of kings with replay inquiries, is consistent. I hate seeing things overturned with even a little bit of supposition. I want the horses, or the players to decide games, not some man or woman in a booth somewhere.

    Football and horse racing judging are different in one huge way, however. In racing you are dealing with a race with ten thousand or more pounds of horseflesh, with ten or more living people on their backs. Clearly a football catch is not dangerous like horse racing can be. If a jockey or driver forces his or her way out in a dangerous fashion, and wins by 5, the best horse won and that's great, but it can't be let stand.  I trust that the stewards in horse racing have to protect the participants and that's where they need to be interventionist.

    It's a tough job.

    The NFL will surely review this process for its sport for next year. A wide receiver taking three steps with a ball, and at least attempting to score, having his forearm go down and a ball popping out for a nanosecond will most likely be a catch in the future; simply from a walks like a duck common sense perspective. Horse racing on the other hand will have herding called one way in one state and a different way in another. Such is life in horse racing land.


    Rich Berthiaume speaks about the cobalt readings his horses received at the Breeders Crown. Most folks are centering a bit on the fact that he has given Mr. Johnson piles of horses while only meeting him "once". It's not like the old days, that's for sure.

    Tom Charters clears the air about his comments regarding the affair. 

    In HRU, the cobalt readings were released and were over 50 ppb. In Indiana this is a positive test, in Hong Kong it's 5X over what they use. Currently, a horsemen led study is recommending 70 ppb to "be sure", so it's under that level. Because Mr. Gural's offsite test does not constitute a suspension, or purse redistribution, the 70 level, nor the 25 level doesn't mean much one way or another.

    Peyton Manning apparently has been dealing with a torn quad that no one has told anyone about. He has been terrible since week 9 (his red zone completion percentage is 39% since then, after having the highest red zone completion percentage in NFL history before then), so maybe that's not a surprise. But the NFL is a gambling game, so I bet there's some hell to pay about keeping him off injury reports. I bet small on the Colts yesterday, and I don't think I would've changed that bet if I knew one way or another, though. When a high octane offense looks that horrid for so long, something has to be wrong, and I don't care or need to know.

    Have a great Monday everyone.

    Friday, January 9, 2015

    Cobalt Positives Rock Harness Racing

    In today, Bill Finley reported on the cobalt positives at the Meadowlands. Two of Corey Johnson's horses - who raced in the Breeders' Crown; one of them winning - tested "about 5 times" too high (the threshold set in Indiana, of 25 parts per billion is what I believe the Meadowlands uses to trigger a positive). Mr. Johnson was already making news before the Breeders Crown, because one of his horses tested with a high TCO2, a week before the big race, and he was in the process of being suspended in Canada.

    Right now the purse money will not be redistributed, because the New Jersey commission does not test for the drug, and has no policy in the matter. Gural, as most of you know, sends samples to Hong Kong to be tested.

    Breeders' Crown head Tom Charters comments:
    •  "There is no consensus among scientists, the scientific advisory committee of the RMTC, and I am on that board, the USTA, and state regulators. This is something with a lot of moving parts that's being looked into. I don't think you can call this a positive or even an excess of cobalt. It's all speculation. I have seen a report from the lab but it raises many questions. There are a lot of different scientific opinions out there, including a study funded by the USTA with Doctors Maylin, McKeever and Malinowski, and I'm not sure they would agree that this constitutes an excess.
      "I admire Jeff's attempts when it comes to integrity in the sport, but I'm not sure... To say this constitutes a positive test is way overreaching."
    Those comments set a bit of a firestorm on social media last evening. And, when we look at the numbers, the comments can be classed as curious.

    The study Mr. Charters is alluding to, is a horsemen led study, reported on by Matt Hegarty in October.
    •  The study, which has not yet been released for review, is recommending that the threshold for cobalt be set at 70 parts per billion, nearly three times the 25-ppb threshold adopted recently in Indiana and, for Standardbreds in New York. The latest study, which was led by Dr. George Maylin, the head of New York’s Drug Testing and Research Program at Morrisville State College, was funded by the United States Trotting Association, which has a strained relationship with the organization leading an effort to reform racing’s medication rules.
    Without knowing the levels these horses were tested at, but by using simple math, "five times" the level Gural uses would be 125 ppb, which is over the 70 ppb that's recommended by the study Mr. Charters has referenced.

    Regardless, this is another black eye for a sport not in need of one. It's high time harness racing decides what it wants to be, and how it wants to conduct business, and enact some sort of plan to clean it up. The sport - its participants and its horses, not to mention the fans - simply can't take much more of it.

    Thursday, January 8, 2015

    Racing's Vision is its Achillies Heel

    I finished an enthralling, comprehensive read recently: America's Game, A History of the NFL. I am a fan of pro sports, and the NFL in particular, but it's more than just about the game. The machinations, decision making etc of a sport, from inception, through competition, disruptive technologies and the like, are pretty fascinating to me. This book left no stone unturned, and was a wonderful read.

    Being a lover of pro sports, and also a bit of a business geek in real life, I have always been amazed at a common thread that most, if not all, successful entities possess: Vision. Using a set of guiding principles, and doing what one does best has been waxed poetic upon by people with fancy degrees, so little old me can't add to it. But it's an immutable truth that exists.

    Pro football in 1930 was not like it is today. Tim Mara bought the rights to the New York Giants for $2,500, college football was the flagship of the sport of football. Stadiums were a quarter full, revenues were weak, teams folded quicker than a 4 claimer that gets headed. What changed?

    The building blocks of the business of football were tethered to a business system that leaned on a few main pillars:

    1. Competitiveness: In 1959, Commissioner Pete Rozelle and all owners believed that when a league has haves and have nots, it can never succeed, because a sports fan in any city has to believe his or her team can be Champions. A competitive balance needs to be assured, so that a team from Cleveland can beat a team from New York on any given Sunday. Revenue sharing and the like adhered to this vision. This was the ultimate in pure meritocracy, in a country that had been bound by that concept since before 1776, and resonated with virtually everyone. It was a core NFL principle then, as it is now. This weekend, teams from tiny Green Bay, Seattle and Indianapolis will play for a chance to continue their march to a Super Bowl.

    2. Owning your marketing, your message and your properties, and acting in concert: From the book's epilogue, a poignant excerpt:  "The tipping point for pro football's eclipse of baseball may well have been the creation of NFL Films and NFL Properties in the mid-1960's. At a time when the sports world was working in provincial sensibilities, the NFL began a broadly and unified set of promotional and marketing initiatives. These were not created to maximize profit, but to increase the league's prestige."

    Some might say the above is easy in retrospect, but it was not. Al Davis - owner of the Raiders - long had seen pay per view for his club as a way to increase revenues. There have been teams that have moved for better deals, infighting and all the rest, but they were thwarted by committees and owner votes, always keeping an eye on the prize: Parity, fairness of execution, and control of the properties; even if in the short-term, they were revenue drags.

    Racing in the 1930's, 40's, 50's and 60's had it all. As Tom Ainslie put it in his fine works, it was the number one spectator sport; and talk about controlling a property: It was the only legal form of gambling allowed.  Owning a racetrack was like owning a money press. You could be the dumbest person in the room and still succeed.

    Despite that, sticking to the building blocks and investing back into the sport never occurred. Good competition is a cornerstone of racing, too. Racing never built or adhered to it. Horse's retired for short term gain in breeding sheds. Short fields that were unbettable popped up everywhere. The core of the sport - remember this was the number one spectator sport for decades - were never fostered, cultivated or listened to. Horse racing's edge as a gambling game was that it was beatable. Pittsburgh Phil wrote about it in 1903 and others later on did too. Instead of working with the 5% takeout framework at that time, to ensure they stayed low and horse racing continued to be believed beatable by the masses, rates went up and up and up.

    Today, short fields, poor racing, no stars and high takeout is not looked at as the destruction of the game, but more a function of increased competition for a gambling dollar. That's simply not true. It's an excuse in a sport that's filled with them.

    Racing never held to any vision with regards to owning one's properties either. Despite massive revenue there was no NFL Films to "not create maximum profit, but to increase the sport's prestige." How sad has that been for this sports' history. I was reading the "Top 40 Moments in Harness Racing" this week, and one of the races linked was that of the legend, the Pacing Machine, Cam Fella. This storied horse's retirement race (his 28th straight win) was placed on youtube recently, but not the race itself. It was some ancient clip from a news story. This seminal moment in the sport is curated from a handheld video off someone's VHS tape.

    The Thoroughbreds are similar. Try finding some historical races on youtube sometime. Most don't exist. It's like the grand history of the people, the horses and incredible performances never even existed.

    Along with not tabling a grand sports' history, statistics and other means to an end were not created to ensure growth, but were used as short term way to get more money.

    Later on, back in 1970's, the lack of vision reared its head again, with the Interstate Horse Racing Act. There was no plan or vision; it was simply used as a means to an end to garner a few more short term dollars. Ditto the online exemption for horse racing in the UIGEA in 2006.

    It's easy to blame this lack of vision on states, or disparate racetracks, but that's missing the point. The NFL had and still has the same issues, but they never wavered from the building blocks they prescribed in the 1940's and 1950's. They stuck to their guns and worked with it as a set of guiding principles, despite myriad reasons not to.

    When you are watching the games this weekend in the NFL, remember that you are not watching them by accident, but because 60 years ago there was someone minding the store. At the same time when you are seeing a short field at Gulfstream, with incredulous, penal takeout rates, that you may or not even be able to bet on the Internet, remember the exact opposite: No one with vision has ever minded the racing store, and its a big reason it's where it's at today.

    Wednesday, January 7, 2015

    Drib Drab Handle Drib Drabs

    While infighting, higher juice, fees, squeezing the lemon economics and more are consuming the sport of horse racing, Daily Fantasy Sports continue to show potential.

    New York Business Journal looks at ESPN's potential foray into the market, worried about ad revenue cannibalization:
    • On Monday, The Sports Business Journal reported that ESPN executives are weighing all options for how the media giant can get a foothold in an industry expected to process $31 billion in entry fees by 2020. For now, ESPN benefits primarily from cashing FanDuel and DraftKings' checks for their massive advertising spending on its cable channels and websites.
    $31 billion in entry fees - if realized - would be close to 300% what horse racing currently does, and in 2011, there were fewer than 1,000 daily fantasy players. 
    Meanwhile, Cangamble - who is playing more and more DFS (he sent me an NBA team last night that scored the highest point total on Draft Kings in several tournies) - sees a bit of a dam break:
    •  It is bad enough that handle keeps falling, even a red cent, from year to year, when you take into account that the majority of people in North America can now bet on the majority of tracks at any time from the convenience of their own home, 7 days a week, 18 hours a day (though many need multiple online accounts to get their best bang for the buck and full content).  Lets not forget about factoring in inflation and population increases when putting horse racing's numbers in perspective.  Nor should we forget about the online poker ban either. Something is very wrong, and hint: it has nothing to do with lack of technology or people not exposed enough to the majesty of the horse.  Nope, it stems from realizing who the customer is, who the potential customer is, and most importantly, catering to what the customer wants. 
    I played a game last week. And I see more and more people named like player number 88 is.

    Have a nice day everyone.

    Monday, January 5, 2015

    Where Is Handle Going in 2015?

    I started to write another prediction handle post, like I have other years. Interestingly, I went back and looked at my "Where is Handle Going in 2014" post, and realized...... I barely have to edit it. So, I have striked out a few things, and left it exactly where it is.

    Horse racing is Bill Murray. It's groundhog day. It's its method of operation.

    Anyhow here is my new post, with a few strike outs. Easiest post I've ever written.


    Like we've seen over the past several years, the decrease in racedays causes handle to fall. A decrease in field size causes handle to fall. The other main driver of handle - the price, or takeout - has generally been falling, because rebating has not been a bad word like it was early in the decade.

    What will happen in 2014 2015? Well, we are likely to see a further reduction in racedays. With slots revenue falling, as well as handle stagnating and foal crops receding, we aren't pulling out our pocket Kreskin to make that proclamation. Some tracks have finally concentrated on field size, like Keeneland *, and made it a go-to metric, but overall (see NYRA or So Cal), short fields continue to be something this business seems to crave and cling to. I can't see that going up either.

    The last metric - takeout - is probably going to be a big determinant the next year or two**, and right now, this does not look pretty for customers who bet.

    Lower takeout through modestly rebated handle is becoming extinct for the mid sized and smaller horseplayer. In New York and Pennsylvania***, many rebated players are being shuffled into high takeout regimes, and signal fees are being increased. Right now as I type, some tracks are withholding selling their signals to smaller ADW's who rebate, with the hope that players don't care about price and will continue to play in their systems. They won't. This will not happen.

    As Mike Maloney noted in this interview: "All we’re doing when we raise takeout is driving away people. The regulars are coming less often or they’re coming just as often but getting ground down. People within the game still don’t understand how destructive takeout is." I think that's true and I we'll see this hurt handles in 2014.

    So to sum up: If field size continues to fall, if racedays continue to fall, and if takeout is hiked as we've seen happen the last month, (along with making it harder and harder for players to conveniently bet the game by stifling choice via resellers, via higher signal fees****), it doesn't take a rocket scientist to predict handles will be lower in 2014 2015. If all three main determinants of handle growth are negative year over year, handle can't go anywhere but down, no matter how much racing insiders tell you otherwise.

    * - The post was written before Keeneland went to dirt, and field size fell appreciably, as did handles.
    ** - The post was written well before the Chuchill takeout hike in April, where they suffered double digit decreases in handle.
    *** - Many of these new rules are being instituted for the first time January 1st of this year.
    **** - Signal fees have been under severe pressure for horseplayers and this has gotten worse with the conglomerates like Monarch, CDI/Troutnet/Tracknet etc. The environment for everyday customers started to get very bad in the summer of 14, and has gotten worse since then.

    Friday, January 2, 2015

    Out With the Old, In With the New, In With the Old

    Happy New Year everyone! The blog post title may be cryptic, but horse racing is cryptic, so take that.

    Gulfstream recorded $1.2 billion in handle for 2014, which is up from $826 million in 2013. They raced more days and rejigged the whole schedule, to maximize their handle.

    GP President, Tim Ritvo: "We believe with no head-to-head competition this coming year our commitment to grow the sport of Thoroughbred racing in Florida will produce even greater results."

    That may be true, but little birds tell me that source market fees may enter the landscape in 2015 in the Sunshine State.  We've been through SMF's on the blog about as many times as Britney Spears ends up on TMZ, so no need to rehash it, however, if Florida does embrace them, the short term gains they're seeing will certainly be lost in a matter of years.

    Gulfstream really rocked the Casbah with handle, though, so that should be good news for overall handles, should it not? Well no.

    Crunkbase ® reports that handle for the month of December in the US was down about $60M or 9%. The number of races were down, as per usual. Remarkably (for some, since this was the Churchill Downs spoon-fed pablum earlier this year for their handle losses) field size for the month was up.  Shivers.

    Overall handle for the year looks to be down in the 3% range. Early in the year - sans Churchill - handle was okay. Buoyed by decent big day handles, and a Triple Crown try this year (which probably added $50 million or so alone), things were looking solid. As Crunkbase ® reports, the losses started piling up in September at a greater rate. My spies tell me that one of the teams began scaling back at Del Mar and that continued. Most mid-range larger players ($3M-$6M) have gotten pretty destroyed by the new fees and higher signal fees, but from what I see, they've been leaving in drabs. You can't get a straight answer from the powers that be, so it's often speculation. However, I suspect that's a major reason for the declines.

    First time gelding reporting chatter has been going on for like, eleventry gazzilion years. Even though the movie reported that Hidalgo was a gelding, you just never know. The industry itself, policed by their own with about as much respect for accurate PP's as Ted Cruz has for the Prez, never seemed to care either. Recently, Jeff Platt of HANA and Hank Zetlin of Equibase started pushing the reporting of geldings into the news with changes to the Equibase system (geldings are listed on Equibase, and now in PP's like at the DRF and TimeFormUS). Clearly not ideal, racing at least looks to be giving the new system some respect, in some quarters. Today, the DRF reported that a So Cal based trainer has been fined for not reporting a new gelding correctly.

    Change in racing moves at a snails pace, and often times change never occurs. With first time geldings, I do sense some movement. Perhaps in a year or two when they are reported, we as customers can actually believe what we're reading is true.

    There was a carryover in the Super High Five in Cali yesterday, and bettors plowed about $1.7 million into the pool. How does a carryover of only $300,000 or so encourage that kind of new money? It's  takeout reduction, and no one cares about takeout, so we hear. Go figure. 

    I am reading an interesting book, "America's Game, The History of the NFL". Much of it is long on business, which is pretty fascinating. I will probably write more about how the league grew from its infancy, but I read an interesting chapter last night I thought I would share. Back in the late 1950's, football was having trouble getting column inches, and the sport was viewed more as one of brutality, rather than skill and strategy. Pete Rozelle wanted to change that. After changing a few rules - things like piling on, scrums, late hits, etc, were all taken more seriously, and punished - Rozelle moved on to the stats. He enlisted the Elias Sports Bureau to be the statstaker for football, created a bunch of new stats, and distributed these new numbers to newspapers everywhere.

    Soon after, these statistics were at the forefront of everything NFL. Bookies and customers used them, stats geeks who liked them for baseball found them interesting. In one anecdote shared by former player Pat Summerall, Richard Nixon, then Vice-President, walked into the Giants locker room before the Championship game in 1958. He went to each player, introduced himself, said their names and talked about their stats. Summerall said "he knew everything about our play who we were and our complete statistics." The sport was not even on television, so Richard M, like everyone, got them from newspapers. Rozelle was a pretty sharp fellow.

    Have a great weekend everyone. And Happy New Year.

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