Thursday, July 30, 2015

The Ol Phantom Purse Hike. Kids Do Get Into Handicapping.

There's mucho consternation about the new-found $750,000 for a Haskell Stakes purse bump.
  • With the William Hill Haskell just four days away, Monmouth Park announced a $750,000 purse increase for their signature race.
Hey, for that extra $750,000 I will enter my horse.

Hold it, entries are closed?

As Jessica pointed out, this seems to have been the case all along:
I realize getting a Triple Crown champ to a track is a sausage making exercise, but this, in my view (and reading SM I am not alone), is not in the spirit of the sport.

Brian DiDonato was interviewed in this month's Horseplayer Monthly (read it here, it's free). Brian got into handicapping about 10 years ago, and is now the Racing Editor of the TDN. One answer, about tools of the trade, shows just how cool handicapping the horses is.

"Breeding just isn't as well understood by the wagering public, and good pedigree information is somewhat less accessible and also moredifficult to decipher, so it's less factored into the market. Extended pedigree and sibling reports are key for me, as Itend to give more weight to the dam's influence. I also put a lot of emphasis on 2-year-old sales breezes."

There are many ways to skin a cat. Very few betting games, if any, have data points that can be exploited as there are in horse racing. If the sport concentrates on making this a better betting game, I have always felt the sky is the limit.

Brian is one of those newer players (I think he's under 30), who enjoys the game and has a pretty sharp eye. In fact, I probably owe him a beer. A few years ago I was handicapping a Derby card. I loved a horse in leg one of the first pick four and constructed my tickets. Derby morning I read Brian's thoughts - I just stumbled upon them - and thought they were really sharp. Lo and behold, in the sixth race - the third leg - he liked a horse in an inscrutable turf sprint that I was not going to use. At the last second I threw the horse in, he won, and I hit the pick 4. My $40 winner in the first leg, keyed, might've paid off (I used an all on one ticket) but would not have been anywhere near as lucrative.

Serendipitous, for sure, and since that time I have read Brian's thoughts and shared mine. He's a good follow on the twitter right here.

Give the magazine a read, and please share it via SM or email. The boys and girls spend time putting it together and the content, for free, is worth looking at, especially considering the price!

Have a nice day everyone.

Wednesday, July 29, 2015

Dale Carnegie

Churchill Downs Inc. made some news yesterday, in a couple of quarters.

  • All New York State Off-Track Betting Corporations announced today that they have severed their relationship with Churchill Downs Inc. (CDI), the owner of Churchill Downs and the Kentucky Derby, citing rate increases by CDI which result in losses for OTBs on every CDI race track. “The actions of CDI constitute nothing less than extortion,” said Western OTB President Michael Kane.   
  • Churchill Downs Inc. which operates the eponymous track which hosts the famous Kentucky Derby, will reportedly continue to remove more of the vestiges of horse racing from its South-Florida Calder Race Course.The latest plans call for the demolition of the track’s grandstand.
It looks like the next meet will go on, but you will have to bet from tents. Tents. To ensure you didn't read that wrong, or I typed it wrong, that's tents.

When we look at last year's issues with Fairgrounds, the takeout hike at Churchill Downs, this year's handle and racing issues with Arlington, it seems the whole win-friends-and-influence-people thing for them in horse racing has seen better days. 

Tuesday, July 28, 2015

Watchmaker & Industry Suicide

Mike Watchmaker - unbeknownst to him I imagine - started a brouhaha of a semi-regular variety yesterday with this tweet.

This spawned the usual responses; those with circular logic, memes that we all need to get along and knit peace quilts, and that those who agree failed sharing in kindergarten. But, brass tacks n' all, Mike is about right.

As a dude who had a 15 horse or so stable, with a few yearlings and racehorses, you learn this pretty quickly. Upon dispersing stock, the horses were all purchased and raced, the feed men still had horses to feed, the vets had horses to treat, my trainer filled the lost stalls with new horses. Trainers and grooms for those horses got paid. Our leaving did not upset the ecosystem. That's what happens when you sell assets. If you have a lawn cutting business, there is someone there to buy the equipment, or buy your book, and it's the same in racing.

If I was betting $10M a year, at say Kentucky Downs, I am contributing about $500,000 to purses for that track (along with another $500k to keep the lights on). Kentucky Downs races, what, about 5 days a year with $500,000 in purses per day? If I leave, one full race day gets cancelled, because I am not replaced. I have no book to sell, no asset to sell. Purses and profits go down, by perhaps as much as 20%, and much more if the place did not have alternative gaming. In fact, in that case, the whole meet might get scrapped if I left.

Unfortunately, these arguments get mixed up. If you say the above, it comes out that owners 'don't matter.' Of course we do. Owners are playing a losing game; they are not buying horses as an investment, because the ROI is terrible. They are playing the game at many levels for ego, the thrill, the joy, the entertainment of owning horses. This is why, I and some others, were annoyed with Churchill a couple of years ago at the Derby. These owners for that day are partaking in their Super Bowl. It's the reason they buy horses. That they were shuffled around, and (in their view) mistreated, they were saying, "I lose thousands and thousands of dollars in this sport and you're nickel and diming me?" It wasn't about rich guys wanting perks. It was about the passion of owning, which is not based on dollars and cents, being attacked.

Similarly, it is why I and others get so upset with takeout hikes or source market fees or ADW taxes to "raise a purse", promulgated by so many short-sighted alphabets and executives. Even if lowering payouts to horseplayers worked to raise purses (if it did, Italy would be the best place to race a horse on earth when they raised the trifecta juice to 41%; instead of imploding) that $5,000 extra for a MSW is meaningless. So, an owner loses 41% instead of 42%, with that bump. Whoop-de-doo. Conversely, what that does to the customer - like the guy or gal keeping Kentucky Downs in business above - is get him or her to leave, and he or she is never replaced.

Horse racing has a lot of work to do to increase ownership. It needs to be better run, to make the ownership experience - owners will always lose money in the aggregate, anything else is delusional - better and more worthwhile and fun. But it can never be made better at the expense of the betting customer. That my friends is industry suicide.

Monday, July 27, 2015

Lipstick on a Pig Ignores the Real Betting & Customer Issue

Darryl Kaplan wrote a piece at SC about the lack of organization in televising betting products at  OTB's. In this case, he speaks of the fact that at Woodbine, the televisions are all on higher bet simulcast products, instead of a Canadian product, and this hurts Canadian racing. This is not an uncommon thought; California Thoroughbreds often wring their hands about it, as does NYRA. Everyone wants you choosing their product.

But it's short sighted.

You could have every TV on the three tracks you want to push, it would make no difference in the long-run. No difference at all. The system, especially in Canada, is setup for failure.

Back in the 1990's. Ernie Dahlman was playing the races from New York, and scratching away a modest living. Higher and higher takeouts made the game harder and harder to beat, so he sought out and received a takeout break on his betting (in Vegas). Others followed and some sort of community emerged where you could beat the races, not only a race. That lower takeout environment was built on something that made perfect sense.

In Canada, this is not the case. Woodbine has started selling their signal to other ADW's in different countries, but as a condition of it, they have asked these ADW's to kick out all Canadian horseplayers. Horseplayers in the country, unless they are particularly savvy, have no choice. They can bet through the massive takeouts at HPI through Woodbine (sometimes being charged even higher takeouts from US host tracks), can quit completely, or bet offshore, in pirate pools. The environment to foster them as long term horseplayers - the one they were playing into for years - to keep feeding purses through betting each day, has been eliminated. For new players who might want to become long term players, there is no avenue for them to pursue this craft, like in poker or other games.

The great art of handicapping, the great goal of becoming a regular, everyday horseplayer, to possibly earn a living at, is now a pipe dream for almost all the country's 36 million citizens. 

Horse racing in Canada (with Woodbine's policies in particular) has created this. It's a grave error and one they should correct, but they won't. It's the way many organizations think in the sport, and with these organizations getting casinos, or slot parlors to subsidize purses, there is little hope things will change. In a generation they will wonder what happened. They'll just need to look into the mirror.

Friday, July 24, 2015

Culture, Part 19

There's a fascinating story on the Racing Biz, about a positive test for a horse in a grade I race, that no one seemed to know ever happened (don't worry, you didn't miss it. It was not reported).
  • Princess of Sylmar, the beaten 1-5 post time favorite in the July 12, 2014 running of the Grade 1 Delaware Handicap, came back with a post-race overage of the corticosteroid betamethasone, which under Delaware and Association of Racing Commissioners International model rules is permitted to a threshold of 10 picograms per milliliter of plasma.
  • But after a year of legal wrangling, the state will drop the inquiry and release the purse funds, Delaware Thoroughbred Racing Commission (DTRC) executive director John Wayne said July 23, “based on the advice of the deputy attorney general."
No one disputes the positive happened - a split sample confirmed it - but legal wrangling allowed it to be expunged. The owner gets the $150,000 for coming second, the horse owners and connections who finished 3rd through sixth are out of luck.

I am not going to argue about the merits of the case, either way. I understand the US is litigious and these things happen. But, it could not help but remind me of something I wrote last month, regarding PGA Tour Pro Scott Stallings.
  • Just this week this culture was exemplified with PGA Tour pro, Scott Stallings. Stallings was prescribed something by a doctor that he was told was not banned. He was tested by the Tour while taking it, and he did not trigger a positive. All’s well right? No harm no foul? No, that’s not the way it works with the golf culture. Stallings found out months later the drug he was taking was banned, so he contacted the PGA Tour and called the positiveon himself. He was suspended for 90 days. Some might say he should’ve kept quiet, appealed, claimed how unfair this all is; how he’s a victim who did nothing wrong. But, that’s not in the sports’ culture.
Sure the PGA drug rules are unclear, sure a doctor told him that it was legal, sure there was no intent, sure it was an honest mistake, sure they didn't even catch him with a test when he was tested. But he's suspended.

We've seen this same thing with millions upon millions on the line in golf. The "unclear" rules at the PGA Championship in 2010 about waste areas certainly cost Dustin Johnson millions. But there was no griping. It is what it is.

I'm not a good person to ask about "overages". I think a lot of the overage penalites are at times very penal, and somewhat silly. I am not one to ask about fairness because state by state there are not uniform rules on this sort of thing. However, it does strike me as odd that in one sport the culture is set that the rules matter. In another, they're something to hire a lawyer for.

Wednesday, July 22, 2015

Without Emotional Star Attachment, Horse Racing Needs to Stay Event Driven

There was an article on the Golf Channel website yesterday.

"In golf, like those other individual sports, a player must give you a reason to care. Most athletes, even some of the most fantastic ones, just don't have that extra push, they just don’t quite enthrall us like that. We admire them, applaud them, even root for them. But they never quite grab us emotionally. We don’t quite love them."

Jordan Spieth, the 21 year old golfer from Texas, has begun to do just that for the game of golf. Ratings for the Masters, US Open and British Open were all up.  Ratings for smaller tournaments he is partaking in, are also sky high. People want to watch him play, follow his young career and are emotionally attached to him. 

The above is not ground-breaking, or not much more than obvious, of course. It's like that in any individual sport and it's common sense.

I received an email recently from a student taking a horse racing program overseas. She asked about horse racing marketing the "stars"; how it could be done, and if it will move the needle, say like a Jordan Speith does. My answer to that was, it's difficult.

Horses that the general public have an emotional attachment with don't come around very often. Zenyatta, a poster-horse for such attachment, didn't hit her groove with the general public until start 14 or 15, in year three of her career. That's when ESPN gamebreaks started showing the streak. At start 19, her zenith in terms of popularity, she was on 60 Minutes, watched by 14 million. Then one start later, her career was over.

Zenyatta was lightning in a bottle. She was once in a generation, in terms of popularity. She moved the needle, but it was extremely difficult.

To capture emotion, horses need to i) have something about them that resonates, like a Jordan Spieth, ii) need to win at a high level iii) race frequently, and iv) race for a long time.

That's not modern Thoroughbred horse racing. It's round peg, square hole.

This is why, I believe, horse racing is always, and should always be, event driven.

The Triple Crown series works because of the Triple Crown series, not who races in it. If the Kentucky Derby field is filled with future 10 claimers, 150,000 will show up to watch, 15 million will watch on TV. The event trumps the stars.

The Breeders Cup is not dissimilar. Although it's the poorer cousin of the Triple Crown series, the event itself is the brand, not who races in the Juvenile Turf.

It's nice to hope and wish for horse racing's stars to capture the imagination of the public. In some cases it happens - Zenyatta did it, American Pharoah's next couple of races will be well-watched - but not nearly enough to move the needle for the sport.

Horse racing is a gambling game, or "gambletainment" as my friend Eric calls it. It, to me, is much easier to place hopes, marketing money, and a push to increase revenues from that end of the sport. It's head-scratching how the sport seems to sabotage this path-of-least-resistance avenue at almost every call. However, from the fan side, it's much easier to focus on marketing events, what they mean, and how they resonate, rather than a horse. Events can happen every year, good horses who possesses the characteristics to move a needle don't come around very often.

Have a nice Wednesday everyone.

Tuesday, July 21, 2015

18 Feet

There are two massive stories in Thoroughbred horse racing this summer. One, the most obvious, is American Pharoah's Triple Crown win. The other, not as obvious, but (from insiders anyway) just as interesting and talked about, is the revolving story of California Chrome.

The two parallels are the best of times, the worst of times, the age of wisdom and of foolishness, where everything was before us, yet nothing was. And most of it hinged on 18 feet.

California Chrome - since tearing his hoof and two length loss in the Triple Crown - has been through a whirlwind. He, to maximize his net worth at stud, had to try turf, was shipped to Dubai, then shipped to the UK, then shipped back to Chicago, again to try turf. Then, after a bone bruise was discovered in an examination by a stud farm, was turned out. There have been public grievances between owners and trainers, and one of the owners has been bought out. To (once again) maximize his net worth in the shed, a new chapter might be written as it looks like he will return as a five year old, if his body and attitude cooperates.

After all that, one hopes he may stand in Kentucky for $12,000 or so, and get a nice full book of mares. 

Meanwhile, American Pharoah didn't run into a bearcat, he didn't tear a hoof wall. He didn't flip a palate, or scope sick, in the Belmont Stakes. He came and conquered. He won. This win suddenly allowed him - if the deal that was structured, wasn't structured as it was, or completed - to happily ride off into the sunset and never race again, with wild (and possibly accurate) stud fee approximations in the $150,000 range. If he has a bad race - say like California Chrome had in the Pennsylvania Derby coming off his hoof repair and regrowth - he will be retired "on the spot", with a similar Frankel-like valuation.

No harm, no foul. No Dubai or Ascot to 'prove himself'.

This dichotomy is much more than about bloodlines, or connections (we all know American Pharoah would stand for a higher fee than Chrome if both lost the Belmont by two). It's about selling the sizzle. One horse needs to rekindle that sizzle with Dubai World Cup wins, beating the best turf horses in the world in million dollar races, and now a five year old racing season. The other will still be sizzling if he scopes sick in the Haskell and loses.

18 feet might as well be 18 miles when it comes to the path of these two horses. Thoroughbred horse racing, and the business of it, is never not fascinating.

Monday, July 20, 2015

Racing Has Fans. It's Never a Bad Thing. Even if They're Nuts

I remember being on a chat board many years ago now. A fan was voicing his opinion on a harness race, talking about what he thought was a bad drive. An insider (I think it was a trainer) came on, admonished the new fan with, "have you ever sat behind a horse? No? Then shut up."

Silly, yes, because that same trainer might be going to a sports bar that night to watch a hockey game. When a player missed an open net, he might say "what a goof. How did he miss that? It was an easy bury.". Unless the trainer was a high draft pick with NHL hockey experience, he should admonish himself.

Racing, heavily insider based, has a lot of trouble with fans. And it doesn't make a whole lot of sense.

California Chrome will hopefully be racing next year, and we all think that's great. There are many fans who hope he doesn't do a Dubai-Ascot double next year, there are some who want him in dirt classics, not turf. There are some who want turf, or Dubai, or hell, maybe even the Melbourne Cup. Maybe someone on facebook (those folks are a little crazy, mind you) wants him to race on Pluto.

The response from some quarters: "Stop trying to manage this horse. He's not yours." Or, "if you want to manage a horse, go buy one."


Sure, some criticism of rides, or trainer moves, or a hundred other things might be wrong. The facebook stuff regarding Chrome is borderline delusional. Fans might not know a certain horse was sick last race, or has a sore suspensory, or whatever; this is an insular sport, where keeping things a secret is a method of operation. But who cares? If it's a sport, it's a part of sports. 

Sports radio, fantasy sports, calling [insert name here] a "choker", are all about fans "managing" their teams. It's all about being a fan. It's an intrinsic element of all sports around the globe. The manager of the Yankees would never say "go buy your own team if you want to manage it." There would be a revolt.

If you want to be big league, embrace it, educate, discuss and be a part of it. But for goodness sakes, don't tell them to put a sock in it. Horse racing needs more fans, not fewer.

Wednesday, July 15, 2015

The "Big Question" Not Only For Racing, DFS Survey Results Show Trends

"Purses are at record levels, but participation has been falling. What do you think we need to do to get more people - especially younger people - to participate?"

That was a question this morning..... on Golf Channel, to Gary Player.

Golf, like horse racing, has seen good TV ratings for their big events. Sponsorships are excellent, purses are good. This week, 21 year old Jordan Spieth is trying to pull an American Pharoah by winning the British Open after winning the first two legs of the Grand Slam. The game is on the front pages.

But fewer people are playing the game. Golf courses - with ball and club technology - are becoming obsolete, and the vast cost of creating (or lengthening courses) doesn't make much sense. They're talking about big changes - playing nine instead of 18 to speed up the game, changing the ball so it doesn't fly as far, etc.

The discussion going on in golf is very horse racing. However, with a few cooks in the kitchen, that all seem to be working on the same recipe, it's likely they will make progress before horse racing does on these type issues.

The results of a comprehensive Daily Fantasy Sports survey were released yesterday.


DFS is primarily young, fairly affluent, and male.

If poker and sports betting were legalized, a large percentage would not leave DFS.

The betting handle curve per player is skewed not unlike horse racing. A small percentage is playing a lot, but most are playing small. This is why these companies (quite well I might add) are looking at ways to cultivate their customers. Encouraging them to play better, and win more.

It's growing rapidly.

And, Draft Kings is right to be going after poker players.

It's the last one that is a little worrisome for horse racing. As Cal Spears, the owner of an online poker community website said, both poker and DFS players are “critical thinkers with expendable income and an affinity for skill-games.”, and they are coalescing around the two games. There is only so much time in a day, and if those players are spending time on poker and DFS, it's problematic.

What this demographic shows is that they're there because of data and a love of being able to beat a skill game. Those are two things that horse racing has trouble with.

Have a super nice day everyone.

Tuesday, July 14, 2015

Racing Summits

The USTA had a summit yesterday, where around 40 insiders shared their views about harness racing, and what can be done to improve it (in several areas). There were a great many takeaways from the meeting, but one thing struck me as very interesting - the summary, based on news outlet.

Read these in order - the summary via US Trotting and the summary via Harness Racing Update.

There's not only a chasm on getting people together to fix problems in racing, there's also a chasm on how the problems are even reported. In the US Trotting summary, Mark Ford (who made a solid point about why many of you stopped buying horses) is not even listed as being there.

Harness racing will never move forward unless the business is honest with itself. It doesn't need cheerleaders, it doesn't need decisions based on feel, or not wanting to hurt someone's feelings.

There's an old line in racing: When you don't want to make a decision, form a committee. I understand your frustrations with these meetings (this is a sport that cannot even seem to agree if kicking a horse looks bad or not), and I share them. But let's hope this summit does more than just put another mountain to climb in front of the sport. It has enough of those already.

Sunday, July 12, 2015

Wiggle it Jiggle it Better Than the Beach? JL Cruze, and Jeff Gural Is Up Against a Culture

Good morning racing fans!

The Meadowlands Pace eliminations were front and center last evening at the Big M, and they delivered one sparkling performance, and a few good ones.

The story of the night was Wiggle it Jiggle it, the division leader. After getting off sixth in 26.4, he came his last three-quarters in 120.2, with a back half of 52.3, and he had to do it overland, scoring in 48.4. Wakizachi Hanover is a pretty good horse in his own right, had a jump on the big horse, but still could not hold him off. Pretty remarkable.

In the first elim, in what might be a first, all horses came home in sub-26, the most sparkling of which was the race winner In the Arsenal and second place finisher Dealt a Winner (recently moved from Hart to Silva). I believe this crop has some pretty good horses, but with Wiggle It in the mix, it feels like they are simply a cut below. It's a horse race, they will all be gunning for the big prize next week, but it should take an off race, or traffic trouble for them to slay the son of Mr. Wiggles.

JL Cruze has taken the trotting side by storm this year and he is clicking on all cylinders. It's tough for trotters to stay sharp for an extended period of time, but right now there is no beating this four year old. His time of 149.4 was clearly amazing. Shake it Cerry, with Takter in the bike almost ran him down and was impressive in her own right. 4 year old pacers like Doo Wop Hanover and Luckbewithyou, along with four old trotters like Cruze have been showing the older horses they not only belong, but can beat them with any decent trip. It might be tough for him to sustain this sharpness, but he looks like he has a great future in this game.

Last night's Super High Five, at 8% juice, paid over 500% more than the chalk superfecta (at 20% rake). I know Super High Five's are a newer bet, that takes time. I know they are not supported much, other than 'throwing a few bucks' at a jackpot bet, or emptying the bankroll on carryover day. I know $10k is a decent pool size for the bet, and I've seen your comments about hard-to-hit bets getting most rake reductions. However, if you're going to spend money into the 5th race superfecta, because you are comfortable with it, you might want to rethink that. 8% juice payoffs are going to be pretty lucrative by filling out one more slot.

The Big M handle last evening was over $3M. 

George Teague said he believes Wiggle it Jiggle it is probably better than Somebeachsomewhere. I don't think he's blowing smoke. Have you seen a three year old since him that even close to compares? I have not, but Wiggle it looks to be in that conversation. Like Beach, who had to face and beat great horses like Art Official and Shadow Play, Wiggle does as well. And he, more often than not, makes them look bad.

Gural's up against a culture that is hard to change (page 3 pdf).
  • “Whenever you do good everyone wants to give you horses” he [Elliott] said. “They think you have the magic drug. That’s the way this business is. I had an owner call me and he said he wanted to give me some good horses. He told me ‘you got the stuff. ‘ I said, ‘really, what’s the stuff?’” In harness racing there’s a belief from some owners that if ‘you got the stuff” (i.e. a nice way of saying you’re cheating), I want to do business with you, and I’ll give you a barn full of horses. Winning begets more horses and more horses. It’s a vicious circle. And it’s been going on for a long time. 
Have a great Sunday everyone. 

Friday, July 10, 2015

Hoarding Just About Everything, Takeout Notes, & a New World With Whip Rules

Good morning racing fans!

ESPN's strategy ongoing has been heavily focused on mobile, and sharing stories and media via various social media avenues and platforms. They are looking at leveraging top content the best they can, and have moved away from 'niche' content, including horse racing. Very interesting read.

I found one part that really rings true in horse racing:

"ESPN could follow the example of other legacy media companies and selfishly hoard their best content—video, audio, and text—while praying that younger audiences learn to watch and pay for ESPN just like their parents did. Instead, ESPN seems impressively open to learning how the digital generation clicks on and watches ESPN."

Hoarding signals (sometimes not selling them to everyone, which angers customers), charging for race replays, past performances, and "praying" the audience keeps paying high takeout to consume the sport the same way it did in 1960, seems to continue to be horse racing's method of operation. I don't know if another one would be better, but the old models really don't seem to be working very well.

It's a good edition of today. Finley has a look at the fair racing in Indiana (mainly the Amish), racing different breeds and distances. Pretty fascinating. In other news, a story I had not heard - the "King", George Anthony being let go at Pocono - gets elaborated upon. According to George, the straw that broke the camel's back was apparently a cheap room rate for driver Brian Sears. Worth a read.

The Big M goes to 8% takeout for their 5th race Super High Five for the rest of the meet. It's not been heavily promoted, and it is a harder to hit bet, but it's something players need to look into. If you are a superfecta player, you probably want to stay out of that pool in race 5 (20% juice), because you will make more money when you hit the bet.

 The Calgary Stampede - the world's biggest rodeo - has disqualified a participant for  abuse of an animal
  •  "The six judges, along with Calgary Stampede officials, unanimously made the decision to disqualify Cooper after seeing him repeatedly and aggressively using his rope on his horse during the run," said Kristina Barnes, a spokeswoman for the Stampede, in an email."The Calgary Stampede takes its animal care protocols very seriously and enforces them among anyone who handles animals on Stampede Park, whether its staff, volunteers or competitors."
Yes, they might be livestock and commodities, and it's the way cowboys have always done it, but alas, it's a new world. With horse racing being so intrinsically linked with the state, whip rules, meds and general treatment of horses are items that will, and need to be dealt with, and there is just no way getting around that.

Canterbury Park issued a press release when they lowered their pick 3 takeout to 14% a few years ago. This year they raised the pick 3 rake to 23%, but it appears they didn't tell anyone. How the state, or provinces, or the CPMA in Canada, allows tracks to raise hidden fees (takeout is a hidden fee, it's why people don't notice right away) without blaring it across the airways - their track feeds, programs, etc - is beyond me. Maybe the state just doesn't care? They should, because we pay taxes for them to protect consumers.

Meanwhile, Laurel has lowered some rakes - Super High 5, Pick 5, Pick 6. All harder to hit bets, but there is a Pick 5 carryover today. Maryland racing has bad branding with horseplayers, but this is a good first step for them to start to win back some goodwill.

Have a great day everyone.

Wednesday, July 8, 2015

A Positive That's Not a Positive, Converting Customers (Like a Restaurant?)

The big news out of Golf the last day or two has been about Scott Stallings. The 30 year old tour pro was feeling a wee bit out of sorts last year, so his doctor prescribed a supplement for him. The drug contained something that was on the PGA Tour banned list, unbeknownst to him. He was tested, and the test came back clean. However, as he dug into things a little deeper, he noticed the drug was on the banned list, and called a drug positive on himself. The Tour gave him a three month suspension.

Golf pros are independent contractors, just like a horse trainer.

I am not hang 'em high, hang 'em higher when it comes to inadvertent positives and overages in horse racing. However, when a trainer does get an overage or make a mistake, it is a mistake that has consequences. Running to the press to say I didn't do anything wrong, or appealing endlessly when a mistake is made is the polar opposite of Scott Stallings.

As much of a problem some might have with this, the policy probably does the job it intends to do. Other Tour pros see Stallings with an "overage" and it makes them vigilant regarding substances like this. I saw a doctor interviewed on Golf Channel, and he said he tells all his players to call him first if they are taking anything at all - even a cough drop.

Horse racing policy of "trainer responsibility" does similar. Some people, with four, five, six, or eleven overages should not be protected, they need to be fined and suspended, because they, like PGA Tour pros who get nabbed, are not doing a good enough job with their stable management.

Regardless, the chasm between the culture of golf and the culture of racing is pretty stark in the Stallings case.

OK, you hold a big promotion for your restaurant by paying big money to field a food truck at a Super Bowl tailgate in Jacksonville. You're giving away $1 burgers and 9,000 people eat your fare. They love it, they want to tell friends how good your burger was, they pop and twitter and write about those juicy burgers. Local news covers the story.

But, your restaurant is not down the road, it's in Chile.

The chances of some of those 9,000 customers coming to visit you are nil. Local news is no help.

In the TDN today, the ability of soccer to convert customers who watch an event (in this case, the 1994 World Cup held in the US), into paying consumers of future events, was looked at, and it's pretty remarkable.  That view was juxtaposed with what racing is doing to convert the 20 or so million people who watch the Triple Crown every year. Can it do something to serve new customers seamlessly?

Have a great day everyone.

Tuesday, July 7, 2015

Dumbing Down TV Coverage, DFS Innovation, Inflation & Big Days

Good morning folks.

On Awful Announcing, columnist Matt Zemek tore a hide off ESPN for what he thinks is the dumbing down of tennis coverage. He also skewers the network for something very familiar to horse racing fans:

"Casual sports fans and TV viewers might not be able to appreciate this, which is perfectly understandable, but let it be known: The serious tennis fan wants to see the close, competitive match between journeymen or second-tier players over the lopsided (or just-beginning) match involving a superstar in week one of a tournament. Similarly, the serious tennis fan would much rather see live tennis — if live tennis is going on — instead of anchor-desk commentary."

Zemek praises the soccer coverage in the US since the 1990's for not talking down to the audience.

"A discussion of the televised coverage of tennis, or any other niche-sport product in the marketplace, is best advanced by pointing to the rapid growth and improvement in the coverage of soccer in the United States.

"Soccer coverage — not just availability of matches, but discussion and intelligent treatment — has increased over the past decade because TV networks have taken soccer seriously. To be more precise, they have covered soccer the way soccer fans would want the sport to be covered.


"In the coverage of any sport, any outlet should strive for nothing other than treating the subject matter intelligently, the way fans expect their sport to be treated. It’s that simple."

I think a lot of horse racing fans would agree. I don't watch national TV coverage of horse racing because it does dumb things down. I understand the thought process with niche sports, but I think the column has some merit.

The world of daily fantasy sports is a little different than the world of horse racing (when it comes to the customer and gambling side, that is). The competition is real, with new entrants, and legacy companies (if you can call them that - they started in and around 2011) are not standing pat.

Draft Kings has not only sponsored the Belmont Stakes, but is also at the WSOP and has sponsored a building - Madison Square Garden. Both of the big two have invested heavily in mobile and have concentrated on the user experience. I have long been impressed with Draft Kings. They were number two (and still are), but their UI is excellent (especially with mobile) and they have been experimenting with golf and MMA. I believe they are really closing the gap on the industry leader.

Draft Kings - also at the link above - is expanding into the UK. I imagine DFS soccer is the main goal there.

Handle in racing was down in June, but it really wasn't too bad. Gulfstream's signal has changed the measurement of handle the last couple of years, Hollywood Park is closed, higher handle tracks like Del Mar are racing more. Woodbine's 2015 handle is inflated with exchange rate changes. It's become a little apple to grapefruity. However, as costs continue to rise for horse owners (probably well above the inflation rate), and tracks, horse racing needs to grow handle at the very least with population growth and inflation. It needs to generate 2% or so handle growth each year to break even. It's not and that's worrisome.

The big days continue to do fairly well, however, and I think in many ways they have grown with inflation and population growth. Networks are paying more for big events, the must see events have been growing (e.g. the Mayweather fight or the women's World Cup), and it appears to be a trend. As well, horseplayers who wait in the wings for a decent card to bet have been pouncing on some big days with their handle.

Often times insiders are quick to use big events as a barometer for the health of the sport and I think that's a bit of a red herring - the sport of horse racing runs on average daily handle, not one off handle. But, it's still good news because they are putting on cards to hold some interest for those ground down by high juice, and/or lack of bettable fields. The Hong Kong Jockey Club's VP of Wagering once presented to the Asian Gaming Summit how important it is to keep bettors engaged. When you don't, they leave and many stay away forever. At the very least, the big days keep people engaged.

Have a good day everyone.

Monday, July 6, 2015

Horse Ownership, Not Really a Business

Since the purse element has been spoken about so often of late, here's an article I wrote for HRU. 

“Horse racing is a business.” “If you want a pet buy a dog.”

 This line of thinking has permeated the sport. When we see partnerships or factory claiming stables, it’s always about making money in horse racing “as a business”. It’s been going on for some time now; probably since slots have dotted the landscape and one could buy a horse for $5,000 and race him next week for a purse of $8,000.

Although in theory it sounds good, it didn’t help horse ownership (in any tangible way that I see), and there is a strong argument that it might have hurt racing overall (the ORC in Ontario had to write rules to stop the “rent a horse” phenomenon, for example, several years ago to protect the horse).

 I don’t think horse racing ownership is a business; I don’t think it ever has been, and the numbers bear this out. It’s been estimated that in Thoroughbred and Harness racing, horse owners collectively lose up to 60% of what we put in. It’s not because your trainer doesn’t know what she’s doing, a driver made a wrong move, there were a few bad claims, or we all can’t add and subtract. Horse ownership never was, and never will be an index fund. Capital Asset Pricing Models, and everything else you might’ve learned in business school fits horse racing like a square peg in a round hole. We as horse owners are dealing with a negative expectation game and always have been. We all know that going in.

I was chatting with a few sharp horse racing friends and foes about that very topic this week. The “Horse Racing Ownership Demand Function” is one unlike any other model or curve I’ve seen. While the components of such a curve for a stock, or buying a new car, or what have you are pretty easy to comprehend, one for horse owners is quite complex.

A break-even point for a horse owner is not just about purses, and if this were not the case no one in his or her right mind would ever own a horse. Purses are clearly a large part of it, because you can only lose so much per year before you say no mas, but in a game with aggregate returns approaching nowhere near dollar for dollar, other parts of the curve are apparent. Here’s what I think besides a dollar rate of return drives the sport, and will continue to in some way, shape or form.

Entertainment value: You can spend $50,000 a year on trips, restoring cars, or anything else for a hobby that has a negative expected dollar return. The hobby or enjoyment part of the equation has to make up the difference of the lost dollars. The same goes for horse ownership. Like playing golf where that one good shot keeps you coming back to pay that $100 green fee, fight traffic and waste a day, that one win, that one trip to a Sires Stake race, that one family outing or the morning’s at the barn, that one time your horse started in a Breeders’ Crown race - it made it worth it.

The Home Run Ticket: A lottery with a $40 million prize pays out about 35% what it brings in, so people collectively lose just about what a horse owner does. That does not stop people from buying a ticket. In horse racing, the “Home Run Horse” is all of our goals. We could own a He’s Watching for $3,000. We could’ve been the one to buy Foiled Again. Chasing that is a big part of the sport.

Ego Value: I was speaking this week to Mike Dorr, a friend who is a racing nut who is a Director of Pricing for a wireless firm. While discussing this topic, he told me Soccer Clubs are started from a grassroots level in the UK, and they can become major players. The failure rate is high and from an investment perspective it’s absolutely bonkers. The ego drives this dream just like you and me trying to get a nice Muscle Hill this fall – who like many others in the ring with him, may or may not even be able to trot - for the low, low price of a fully loaded Cadillac Escalade.

So, I believe the function of a happy owner consists of the above: Some sort of rate of return through purses, the entertainment value of being an owner, the home run horse (where there is a chance to make a whole lot of money), and the ego value of being an owner and competing against others.

What can racing do better in this regard? Well, we can’t do much about purses other than asking for more slots, or gaining more handle. The structure or allocation of purses by class can be discussed and moved forward, but generally purses are what they are. The chances of getting a home run horse are always small, but they’re there and at times this is completely random.

That leaves entertainment and ego. I think racing and racetracks can move the needle with those two parts of our utility curve.

 I was reading Charles Hayward’s Thoroughbred Commentary website  and a story was posted about York Racecourse in Great Britain. In the UK, the money realized from the purchase of horseflesh is even worse than here across the pond, but they really do things well to try and make the ownership experience pleasurable.

From the article: "Racehorse owners are often taken for granted, but not at York. Significant capital investment has been directed at those whose runners make the whole show possible. Since 2011, owners with runners at York have enjoyed the use of a dedicated lounge and dining room, with unobstructed views of the racecourse and parade ring. A recently completed building was also set aside to congratulate connections of winning horses. They instantly receive a USB stick with a still photograph of their winner, together with a DVD of the race. Within a week, winning owners are sent a photograph of the happy occasion within a silver frame. And celebratory glasses are raised not just by winning connections, but by those owning the second, third, and fourth horses home. It’s the sort of experience sorely lacking at other racing venues, and York is committed to extending it to owners beyond Britain. "

Yes this is Thoroughbred racing, where ego and home run horse mean much more than your average fourth race winner at Scioto. But let’s not pretend we as horse owners do not appreciate such perks. Everyone, no matter how big or how small, likes to be appreciated.

 I remember not long ago having a horse in partnership race in the Confederation Cup at Flamboro Downs. The $600,000 race was a big one on the purse side, but as a small horse owner, the little things, not the purse, made this day one I will remember. Chris Roberts, the GM, who is now running the dual Thoroughbred and Harness facility at Northlands Park in Edmonton, tried to do his best in making the event as special as it could be. I remember speaking with him during the week. He mentioned that he was trying to get saddle pads done with all the horse’s names on them, so the connections could bring them home if they wanted. They created a nice spread in air conditioning comfort on a hot day for owners. Everything was done so well from top to bottom and you really felt like a part of something big. Although food spreads are not my thing (I spent the day at the rail with a beer) I loved the fact this little track was going all out.

Our horse came 7th or 8th, but I remember the day fondly (as do my fellow owners), and a lot of it had to do with Chris.

 I don’t want to belittle the efforts of others. The Meadowlands does a great job with this. The Breeders’ Crown makes things special. In fact, I remember attending a post-Breeders’ Crown party at Woodbine one year and brought a friend who owned a claimer or two, but had never bought a yearling in his life.

“This might be a reason to get a Western Ideal next year”, he joked.

So, good things do happen in this vein across the sport. But can the sport do better? I think it can.

 In the end, horse owners sink almost everything they ‘make’ (I use that term loosely) back into the sport. The sport, I believe, needs to sink back more into them. When you are spending hundreds of thousands on yearlings, or hay, or feed, or vets or whatever else comes in the mail with your name on it, you deserve to be paid back with more than a purse check. What can your track do better with its stakes races or overnights to make the event more special to the horse owner? What can the industry do better? Those, in my opinion, are two questions worth exploring.

Friday, July 3, 2015

Slots Incentives, Handle Disincentives

The first week of slots play is in the books at Plainridge, just south of Boston, MA.

"Plainridge Park Casino, the state’s first casino, raked in $6.1 million in gambling revenue in its first week of operation, enough for the casino’s owners to declare themselves “pleased” with the results and for one industry specialist to call it “a great start.”

Of that $6.1 million last week, about 9% or $567,000 goes to horse racing (mostly to the track and purses). The racino is pegged to do over $200 million this year. The net to horse racing: Somewhere around $20 million.

Conversely, let's look at handle. Let's say Plainridge does $100,000 in handle per card. At a low signal fee, let's set revenue at 5% of that handle, which would mean the track and purses would drive  $5,000 per card in revenue.

If they race three cards a week, that's $15,000 in revenue.

$15,000 from racing, $567,000 from slots.

Let's say you and I have a plan to grow the bet, with giveaways, marketing, social media, takeout reductions and seeded pools and we bring that to the track.

"This would raise your handles by 20%" we say. "It will only cost you about $2,000 per day to achieve this."

Well, handle goes to $120,000 (a great success) and revenue goes to $6,000. And it cost them money.

When you are getting $567,000 from slots, handle is inconsequential. Do no work, make $567,000+ $15,000 a week from betting, do a lot of work to grow the bet and attendance, invest money and time, get your hands dirty and get $567,000 + $18,000 a week from betting.

Wow, a 0.51% increase in revenue from investing in your racing product and working your tail off.

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