Monday, August 31, 2015

Mainstream Phun

I have purposefully not used 'ph' on this blog, unless I am talking about Philly Park - er I guess it's Parx now so I can drop it - or for American Pharoah himself. But I could not think of a better blog title.

Today on the Fox Sports website:

We see why athletes and politicos worry about things being taken out of context.

It reminds me of the Brett Coffey tweet:

For those reading the blog who are new to horse racing, Jose Lezcano was not trying to "hurt" American Pharoah by poking him in the eye, inflicting pain, or even giving him one of those delicious snow cones at the 3/4's so he had a brainfreeze headache. It was just race riding, or sour grapes, from whatever your perspective.

As for the ride by Jose Lazcano, well, Kiaran said enough for you to know:

I am not one for slamming jocks and drivers for rides or drives, unless it's obvious. We never know what happened in the race, or if the horse was no good, etc. But (excuse my language), no chit Sherlock. How the game plan could be "let's go after a horse who is much faster than us, at 10f, with decent closers who can probably pick us up," was a plan is beyond me. Maybe Jose saw AP was not right, or something, and decided to take a chance, but a game plan like that? I can't see it. That's Sham-like in the Secretariat Belmont.

Another "Phun" thing I saw (there I go again) Saturday, was the look of defeat. I know there are a lot of great photographers out there, and sometimes it feels Eclipse Awards are pre-determined. However, if you've seen a better shot than this this year, let me know, because I haven't.

Enjoy your Monday everyone.

Saturday, August 29, 2015

Digging Deep, Being Great

It was almost seven years ago. I was at Mohawk and the great Somebeachsomewhere was racing in the Simcoe Stakes. He didn't seem to be quite himself on the racetrack, but as per usual, he fired to the lead and then grinded to the 3/4's like a 1-9 shot should. But a funny thing happened. He was starting to wilt. As the finish line drew closer his margin grew smaller, but he reached it in time.

After the race the horse was immediately scoped. Something was likely amiss, and it was; his lungs were full of mucous. Some horses are so good, so tough, and so great, they win when they should not. They hang around when others would be long beaten. The Beach was one of those horses.

Photo Courtesy someone who loves horse racing
Today in the Travers Stakes, American Pharoah was beaten. It was his fifth trip across the country. He fought through a Triple Crown series, and in at least one of those races he certainly was not at his best. He had a relatively short break after his win in the Haskell. He was racing at the graveyard of favorites. Maybe this was expected. But how it happened showed us a lot about this colt.

At the half, Pharoah looked nothing really like Pharoah. Rider Victor Espinoza was starting to ask, with 6 furlongs to go. At that point I mentioned to my playing partner, "if Betfair offered this in-running I would bet the house against him". Four furlongs later this looked to be prescient. Frosted, the horse he was battling, the horse who he swatted like a fly when he ran at him in the Belmont, the horse who is nowhere near as talented, actually headed him. Game set and match.

Not so fast. American Pharoah rebroke.

My lock of the century fade in running, the horse who had to be asked at the half, suddenly looked like he was still going to win. Unfortunately for him, and his connections, he had to beat one more contender, and didn't have enough in the already empty tank. His ears pinned, his nostrils flared, he tried his guts out, but he was caught in the last couple of jumps.

People like to watch this game for many reasons. Some people like to wear hats, dress up, be seen. Some like to watch stakes races, claimers; some just like to be at the track. Me, I like to watch great horses. Today I saw one in American Pharoah, and the fact he did not win had absolutely nothing to do with it.

Friday, August 28, 2015

Horse Racing Needs Reinvestment, Cultivation For Growth. It's More Than About a Pen

The national advertising numbers for the last seven days just came in. Sitting at number 4 is a gambling daily fantasy sports site.

The $12 million spent is about 12% of this company's 2014 revenues. They are investing a lot of money to gain and keep critical mass, as they fight with competitors like FanDuel, and other gambling pursuits, like racing and poker.

Yesterday we looked similarly at Hong Kong horse racing, and specifically its handle and revenues since 2005-2006:

What this table shows is the Hong Kong Jockey Club's reinvestment in the customer base, not unlike what Draft Kings is doing. Handle, in 05/06 was about $59B in Hong Kong dollars, and that yielded $3.2B in revenue. Four years later handle increased to $67.6B, but if you check revenues, they went down, to $3.12B. There were no protests, nor were there groups upset about this, it was all part of a larger plan - to grow revenues long term through this reinvestment.

Five years later, handle was up to over $100B (a 76% growth) and all-important revenues were $4.42B, well above the amount just five years earlier.

Meanwhile, this is not happening in horse racing in North America, to any large degree. In terms of "marketing", in Canada at least, horse racing was estimated to spend 1.7% of revenues on "marketing", which is "in comparison to the huge dollars -- occasionally as high as 20% of revenue -- spent by casinos."

How about for bettors? With historical average cost pricing being attacked with the disruption of the internet, here is how "", an ADW monopoly handles reinvestment in its customer base. 

Further, via the 440 blog, regarding the microscopic player rewards:

"That's one of the biggest head scratchers in racing, to me. How can a customer worth about $110,000 in handle/year get barely any more respect than a customer worth $5,000 (or less.)? I'm not sure what a customer in racing has to do to be treated well by a track/ADW, but it seems to be quite a bit."

Ask a hundred people what horse racing's biggest customer problem is and you'll get a hundred answers, depending on the mix of letters in the fiefdom du jour. But, like survey's say from customers, it all hinges on disrespect. They are treated like lemons to squeeze, to serve the whims of a horsemen group or track; they are not invested in, to increase their churn, to better their lifetime value, to ensure they are betting this sport for years.

Draft Kings, the Hong Kong Jockey Club and others like them are trying, and in some cases succeeding. They are spending millions of dollars to increase the bet; to encourage and fuel their customer base.  Meanwhile, horse racing monopolies are giving out six figure players a pen. It's a big issue, and it will not go away until it's addressed.

Have a nice weekend everyone.

Thursday, August 27, 2015

Dysfunction is Infectious

Yesterday, the Baconater penned a piece on his site, "California Gets It Wrong On Lasix".

"I can’t in good conscience place any more bets on races in California – not after what happened at the California Horse Racing Board meeting last week. The CHRB voted 5-2 against the recommendations of its own Medication Committee that a trainer’s private veterinarian not be allowed to give race-day injections of furosemide, or Lasix, the diuretic used to treat exercise-induced pulmonary hemorrhage."

We have a policy that works in almost every other racing jurisdiction and has for years, a policy that is absolutely, 100% common sense, that was passed after due diligence, and it's voted 5-2 against?

Although some might say California has been the state or fiefdom with more dysfunction than anyone else, it appears to be clear there are others that orbit around the California sun.

We've seen cobalt in the news lately, with hard and fast rules set, in other countries and states. Despite that, Ohio decided it needed a cobalt "study" in April. Not to be outdone, the USTA just this week decided - you guessed it - it needs a cobalt study. It's great that there's so much money in racing for these things. Hopefully one day, every state, commission, horsemen group and alphabet can all do their own cobalt studies.

We see the same exact thing with whipping rules. State 1 studies it to death, and passes a rule. Two years later another state starts from scratch, studies it, passes a rule. And on and on. Just watch, there will be another state soon who does the exact same thing. What a colossal waste of time and money.

Further to this merry go round, we have states like Arkansas. Reading this story makes one's head spin in Linda Blairian fashion.

This dysfunction is not dissimilar to the broken window crime pattern. If someone gets away with it, we can, because there are never any consequences. Dysfunction is infectious.

This is why there is so much grassroots support for the USADA bill. People wonder how in racing there is this support. The sport is filled with rugged individualists who want little to do with federal regulation, want nothing to do with rules; it's a "hands off my horse" culture. However, with all this dysfunction, all this sometimes bizarre behavior, this clinging to the status-quo while Rome burns, these individualists have no place left to turn. Who can blame them?

Tuesday, August 25, 2015

Hong Kong Betting Growth

There was quite a conversation on the twitter about Hong Kong Jockey Club betting growth this early evening. Hong Kong, since 2006, has rapidly grown handles, and has been reaping the benefits of such growth.

"The record turnover this year is the result of a lot of hard work. Since the 2005-2006 season, turnover has increased 79.7%, which is testament to the successful strategies the club has undertaken in that time to revitalize Hong Kong horseracing," Engelbrecht-Bresges continued."

Via BH. 

Hong Kong's betting growth was spurred in large part, due to a change in policy in 2006, "Betting Duty Reforms". This change allowed the Club to pay revenues to the state from gross profits, instead of from a set amount of takeout. The club began trying to get back lost punters who were frequenting Macau (with lower takeout), investing more in the customer, through various reforms, and, in general, using good old fashioned business school metrics to increase wagering.

In effect the opposite of what is done in North America, where slices of the takeout are still looked at as a piece of the pie (that shrinks).

This is illustrated here.

Notice that during the increase in turnover (handle) from 06 to 09, margins to the club (profit) did not increase. This is 'taking a smaller piece of the pie, to hopefully increase the long term growth of the pie'. Then, handle grew enough where margins increased to a record $4.42B in 2013-14.

The HKJC was freed up to increase turnover, and that, in part, helped it achieve their goals, for their horsemen, their charities, their club and the government.

Will this happen in North America? No. Horsemen groups (see California and Kentucky at Churchill) along with racetracks are trying to take more margin, rather than take less. That, in this environment, decreases handles, and we are where we are.

Have a nice Tuesday folks.

Sunday, August 23, 2015

A Different View of Horsemanship, Lasix and a Beholding Opportunity

EL Titan with his trainer
I was chatting on the twitter box with Brad Thomas last week about the secrecy shrouded in horse racing. To find out if a horse has a cough is hard enough, let alone a physical issue; "none of your business" is a  mantra.  I noted to Brad that harness racing is a little different and we see yet another example of it.

In today's HRU, George Teague, trainer of three year old star Wiggle it Jiggle It, who banged off an impressive 48 score in the Battle of Bandywine last evening:

 "He's got a muscle issue on the back. You can't do much with him. He's raced, not trained."

We've often noted his little hitch, so maybe that was an ongoing issue. Regardless, you know what you're getting with Teague.

EL Titan, trained by Riina Rekila won the big invite, defeating JL Cruze last evening, also at Pocono. She had something interesting to say, about her star horse's early season schedule:

"He's had allergies too so he's not at his best in the summer."

Notice what's missing from EL Titan's program page last night?

Yes, there is no "L". Rekila, with a different kind of horsemanship decided to get the horse right, even though he was having lung issues. In a world where horses are given lasix whether they need it or not, this is pretty refreshing, and shows you can have a superstar that will make millions if you take care of the ailments.

This openness helps fans understand horses and that's not a bad thing. That horse who just raced flat in July? It probably wasn't the jockey's or driver's fault. The horse didn't get dirt kicked in his face nor did it "bounce". He or she is not a "rat". It probably had allergies, or a hundred other things. 

Further in HRU, "Things I'd like to See in Harness Racing" a column you might like.

Beholder won the Pacific Classic, beating a decent field last night and did so coming home in under 25, impressively. Hyperbole was at a fever pitch, however, and this could present an opportunity. The figure is sure to come back big, and will be an outlier, suggesting that it is not performance-level accurate. Bayern and Midnight Storm stopped like they were shot (a bad last and second last), adding to the visually impressive steam from the move on the far turn. We've probably got a perfect storm where if Beholder does race in the Classic, and we like a horse (especially if the race is Pharoah-less), we can take a shot for a score. Now I just have to find a horse.

Last night's Gold Cup and Saucer was cancelled, and it will be raced today, at 3PM. A quick storm went through the venue, causing a mudbath on the racetrack.

Have a nice Sunday everyone.

Thursday, August 20, 2015

Hayward Ain't Blowing Smoke

Charles Hayward wrote a testimonial in support of the USADA involvement in horse racing today. He typed:
  • I submit that the major contributing factor was lack of confidence in the integrity of races by the wagering public and by the owners of horses who subsequently left the industry. Some might suggest that the drop can be attributed to the foal crop decline or the financial market correction in 2008. However, while the handle was reducing in 2004 onward, the foal crop actually increased from 2002 to 2007, and double-digit declines in foal crop did not begin until 2010, long after the handle falls had started.
We can quibble with that, but I think it has a lot of merit, and using a catch-all like "integrity" is not hyperbole.

Super-stables, with satellite operations at many tracks - certainly those fueled by slots - win a lot of races. And in some cases, these wins are not on the up and up. At smaller tracks - most with purse levels allowing you to barely scrape by with a homebred, or modestly priced yearling - rely on some sort of normal distribution of purse money to enhance horse buying and racing.  When that normal distribution of 20 starts, 2 wins, 4 seconds and 6 thirds (let's say) is shocked with a 40% trainer, with a big stable, the whole system gets out of whack. At larger venues, when someone comes around who is clearly pre-racing on race day, or worse, it's even more of a shock. "Why would I want to buy horses to compete with these guys? To be made a fool of when they take a horse from me? To lose money? To run for second or third each race?" Losing isn't fun.

Not only do the bad guys discourage other owners from competing, this spins off to chalk laden six horse fields that no one can beat, ergo, no one wants to bet. 

It was not like this 25 years ago.

There are those, like Doc Fenger with her comment on Charlie's piece, who believe USADA involvement is about therapeutic drugs etc, and will have no effect on the status-quo by "catching cheaters". I, like Charlie I suppose, disagree. When using something on raceday - like a designer undetectable pain killer that's use needs to be near post time, or milkshaking which also can't be done the day before - is penalized, and when charges (possibly criminal through the USADA) are levied, it can have an effect. It can change this culture. Right now horse racing does not have that ability. It probably never will have that ability. It's too fractured.

Horse racing is not filled with "bad guys". That's nonsense. But what makes racing different is that "bad guys" can end up having most of the horses. They can have stables of 50, overnight. They dominate a box, they drop down horses with others fearing to claim them.  It messes things up.

Cycling wasn't filled with "bad guys" either. Only over time, by ignoring the issues did they become too large. The USADA did the unthinkable and cleaned up cycling. Horse racing is nowhere near as screwed up; nowhere near as 'corrupt'. This should be easy. But with an entrenched culture, it's not.

Friday, August 14, 2015

Oh That Smarty Jones

For those who have been around Thoroughbred racing for awhile, we all know the horses in recent history who competed in the Triple Crown. You could have not read about and followed Animal Kingdom, or Mine That Bird or I'll Have Another the last several years, on social media and elsewhere. Some of these horses, though, have captured the imagination of the public, and some have not done quite as well.

For the last few that have competed for the Triple Crown, i.e. in the box when the gate springs in the Belmont Stakes with a chance at glory, the google search stats are below.

The highest rated horse in terms of search interest is not American Pharoah, it's a horse who, of course, never won the Triple Crown, Smarty Jones.

Sometimes we forget the charisma, and backstory, the colt had.

He jogged in front of 8,500 - it seemed on the short side - at Philly Park, of all places, and at least part of this draw was his everyhorse status:

''I'm here for this wonderful Cinderella story,'' said Lois McKeown, who arrived at Philadelphia Park at 7:30 a.m. so she could get a nice location along the rail for Smarty Jones's public gallop. ''He is the Seabiscuit of our times.''

The above graph can be interpreted in many ways. But, regardless, it took me by a little bit of surprise. American Pharoah is everywhere in this internet world. The free column inches are humungous. He achieved what Smarty, and others, could not do.

But there's old Smarty, way back in 2004, leading the pack. The charismatic little colt with a backstory that people absolutely loved has a place in racing history, and will likely be remembered for a long time.

Thursday, August 13, 2015

Putting One Over On People

Sometimes some tweet storms are really interesting. This morning:

You can do a lot stringing 140 characters.

Horse racing - unlike anything really - rewards, and condones 'putting one over on people'. Unloading a claimer with a bum knee, with few starts left, is considered good business. Even the aggrieved party accepts it as part of the game, with the vernacular "he unloaded that rat on me." It's like some sort of strange badge of honor. This doesn't happen all the time, of course. I remember selling a horse once and watching the trainer explain how the filly's stifles were bothering her, that her ulcer issues needed taking care of, etc. To him, and others, that - not unloading one - is good business.

But as a rule, horse racing has always been the old west, and putting one over on someone is not frowned upon. It's accepted and it's part of the culture.

I really don't see that changing, unless there's a massive shift in the way horse racing does business. If you sell a house with a leaky basement you knew about, the deal can be rescinded, and in some cases the seller can be charged with fraud. This, through home inspections and the law, ensures a proper and fluid housing market. Horse racing in Hong Kong does the job, with vet reports, but the differences between Hong Kong and North America are as wide as the day is long. Claiming a horse will continue to be like a bizarre Christmas present that is not unwrapped until the scans and bloods come back a few days after you claim him.

And I have not even touched on the bettors. Betting is buyer beware in the utmost of extremes.

Sometimes I wonder if society even cares about this stuff in sports. They are desensitized that people cheat. Well, some sports. In golf if you doctored a ball's compression by even a small amount and it was uncovered, you would be banned for life and no one would come to your defense. If you doctor a football the same way, it's a reason for a court case, with minions at your beck and call in the media to protect and apologize for you. "It was kinda cheating, but everyone cheats. And we don't 100% know he knew, you know?" Two sports, two different cultures.

Without central control, a central office to set standards across the sport - aka things that will never happen - horse racing will continue to be buyer beware, continue to be a business shrouded in secrecy. It was like that in 1930, and it will be that way in 2030. It is what it is.

Enjoy your day everyone.

Wednesday, August 12, 2015

Everyone Wants Control, But It Doesn't Work That Way

Yesterday evening, Northfield Park in Cleveland had a $12,000 super high five carryover, and realized $151,000 in new money. This past weekend, the Meadowlands only received about $380,000 in new money on their super high five carryover of more than $231,000.

At the Saratoga Gaming and Law conference, the bill which would put the USADA in charge of much of racing's testing (and penalties) was looked at and discussed. Most of the horsemen lawyers at the event (and others in the sport) are against ceding control to the USADA.

A day earlier, at the Jockey Club Round Table, a partnership between Stats Inc and Equibase was announced. This will allow Equibase to offer other products so horseplayers can scour databases and check angles etc.

All three items represent horse racing wanting control of something that they probably have no chance of ever controlling successfully, or have never controlled successfully.

Signal fees are going higher at places like the Meadowlands, but controlling this signal often comes at a price: lower handle. Why? Because your price is not controlled by decree, by Barack Obama, or what you want it to be set at. It's set by the market. Northfield's price is fair, taken by all outlets and if you as a customer wants to make a bet, you will be able to make a bet. If I read "we need to take control of our product" one more time, it's gonna make me even more bonkers. The customer is in control through betting handle, just like any other business, not you.

Horse racing wants 'control' of its medication policy. Well, that ship has sailed. Racing has been in 'control' of this for a long time. In fact, that ship not only has set sail, it's banged into an iceberg once or eleventry trillion times. In 2015, there is no such thing as 'control' because states hold the purse strings with slot machine legislation, protection, subsidy, etc.

Equibase has always 'controlled' data in horse racing. It's how the company makes money, and it helps fund the Jockey Club. A 'new' partnership is probably not needed to do what they say they want to - packages like jcapper and HTR have done that for a long time. Further, as Matt notes:
  •  Given all of this data goodness (or, really, badness), forgive me if I'm skeptical of the Equibase-STATS partnership. Based on the current lay of land, I'm pretty sure we'll be presented with some dressed up data packages that still require horse players to shell out good money to access what that fan of any other sport can access for free: result
In all three instances there are principles being used that don't pass the smell test.

Vegas, with a monopoly for a lot of years didn't 'control' the price of a money line. Customer demand controlled what price they charged. Average cost pricing is for the Hoover Dam, not for Bally's.

Cycling tried to 'control' testing and penalties for a good deal of years, to absolutely no avail. Only when the USADA came in and used non-traditional means to catch the bad guys, were the bad guys caught. The USADA changed the culture of cycling.

The NFL and major league sports have not seen a cottage industry of fantasy sports totaling many billions of dollars by charging for box scores. They have not seen the subsequent gains in television viewership, fandom, jersey sales and the rest, through not telling people who rushed for over 100 yards on Sunday, or asking for $14.99 to find out.

Henry Ford said (paraphrasing) 'We don't pay the wages, we only handle the money. The customer pays the wages'.

The customer will tell you what signal fee to charge.

The customer needs a storefront to shop in your store, and storefronts that charge admission don't work very well in a perfectly competitive industry.

The customer of racing, when it comes to drugs, violations and the treatment of animals, is the public, through its elected representatives, not racing itself.

I realize the sport wants to control what they charge, what they sell, and want to regulate themselves. That might have worked one day. But it doesn't work that way anymore.

Friday, August 7, 2015

Newbie & Non-Newbie Things You Need to Know about the Hambletonian

The Hambletonian card takes place tomorrow starting at 12 noon. It's a 16 race affair, highlighted with the Hambletonian - and before that the Oaks - but there's much more on the card than just those two big tilts.

Here's a primer, especially for those who know little about harness racing.
  • The card has 16 races and about $10M will be bet. This is the highest bet card in harness racing, and perennially the best racing card in the world each year.
  • There's a free Trackmaster program for the card. Lots of past performances for harness racing big days are free. 
  • The last race has an 8% Super High Five with $231,000 already in the pool that will have to be paid out. Expect the pools to be over $1 million. Must bet, if you like betting. If you don't, skip it and watch a band. I think there's a band.
  • There's a pick 5 to start the card and everyone and their brother, sister, mother and mother's gardener will be keying Broadway Donna in leg two. She should win easily. For larger bankrolled players, or for those of you looking to take an extra fun money ticket or two, leaving her off will almost guarantee a huge payoff. 
  • The fifth race is the Cashman to be raced at 9 furlongs. You'll notice some horses coming from overseas in the trots. We generally know as much about them as when they come over from Ascot to race in the Million. 
  • The sixth race has 2013 Horse of the Year Bee a Magician. She's won 39 of 56 starts in her career. Yes, Standardbreds race a lot and we get to watch good horses often. She will be a huge favorite again, but I will be using the rail horse heavy. 
  • The 8th and 9th races are the eliminations for the Hambo. These horses will race once, then the top five will move on and race again with the winner taking all the chocolates. Yes, I didn't type that wrong. Harness horses are jogged daily and trained often. They love their work and they are a sturdy breed. In fact, it is not uncommon for a harness horse to train in 2:10 for a warm up mile an hour before a regular race, where he or she might go 1:54. That's like a horse for the Whitney this weekend going 9 furlongs in 1:56 at 3PM tomorrow as a warm up. The Toddster would want 31 days to do that.
  • Mission Brief is a filly, trying to win the Hambo. She could've went into the Oaks, but she went into the big one to race the colts. She's Winning Colors. 
  • The race is being televised by the CBS Sports Network.
  • Wiggle it Jiggle it takes on 8 others in the Cane Pace. The Cane Pace is the first leg of the pacing Triple Crown. Don't worry if you didn't know that, not many people do. I think Dealt a Winner is an excellent longshot bet.
  • The Hambo is the first leg of the Trotting Triple Crown.
  • I bet Centurion ATM last time - of course I did. If he is sound, and gets any type of trip, I think he will win the Hambo
  • My longshot choice in the Hambo is Workout Wonder.
  • As another longshot, I will be betting Obrigado
  • Donald Trump will not be there. I just typed this so search algo's can find my blog if someone is searching for Donald Trump. Donald Trump Donald Trump Donald Trump Donald Trump
  •  Other notes: There's a $30k pick 5 carryover at the Big M in race one tonight. Positive expected pool expected. 
  • There's a nice $12k carryover at Maywood for their super high five tonight. It will be another positive expected pool.
Have a super nice day everyone and enjoy the races.

Thursday, August 6, 2015


I stumbled upon a letter to the editor recently while looking for something else. It was in response to a TDN article, where the splits between ADW's, host tracks with other live venues, and OTBs were explained. The explanation was looked at from the demand (customer and handle growth, and determinants of handle growth) side, which tends to be rare in the horse racing industry press.

It looks self-serving to share it here, but alas, I think it shows something really important, so I do.

I often use the example that I don't know how to change a piece of equipment on a horse, I don't know when my colt needs Gastrogard, or Legend, I don't know what to do with a presumed bone chip, how to train the horse back, or what to do with a new feed on the market. That's what we, as owners, pay people for. We should never expect those people - those with a specific skillset - to understand Lifetime Value functions, churn variables, elasticities, return on ad spend, or seller-reseller dynamics.

The problem is, for horse racing, and betting on horse racing, that's who is in charge of understanding such things. They veto, or green light a Churchill Downs takeout hike, a California betting menu change, who gets and doesn't get a signal.

Jose's letter was something I found very interesting, and it made me smile. He, unlike some of the people who represent him and make decisions for him (in horsemen or owners groups) is saying "help me understand how we grow the bet, because I don't know."

Horse racing, and its growth or continued decline, will probably be based on policy change that is focused on demand factors. When those - owners, trainers; people a part of the IHA - have a better understanding of the issues, at least the sport has some sort of shot.

The next time you see a horseman say "I want to raise takeout to increase purses", or "we should charge 25% for a signal" remember, it's not their failing. It's the failings of a system.

Wednesday, August 5, 2015

Hambo vs. Haskell. Two Strategies, Only One of them Sustainable

This weekend, the Hambletonian is being contested, as part of a big stakes weekend at the Meadowlands. This is hot on the heels of another big Jersey weekend, where American Pharoah won the Haskell.

The Hambletonian, as a stand-alone event (much like say a Derby) will have a huge attendance and decent handle no matter what. If the field was comprised of claimers, the card was mediocre, there would still be a handle floor. Just send a couple of press releases out about the horses, and that's that. Most bettors would say this is exactly the method of operation in horse racing, and it has been for some time.

This year the Big M's first major press release didn't mention a horse. Or a driver. Or a Triple Crown winner, human interest story, or who won the race in 1935. It was about the bet.

"Great Betting Opportunities" was the title, and it talked about:

"Friday night kicks off the racing for the weekend and it begins with a bang, a carryover in the $.50 cent pick five of $29,460.76, covering races one through five on the program. Historically, a pick five carryover of this amount has resulted in well over $100,000 in "new money" into the pool which equates to a negative takeout on the bet."

As for the Super High Five mandatory:

"This pool will be offered at a takeout rate of just 8-percent (8%). This guarantees a negative-takeout on the wager on Saturday. For example, if $1 Million of new money were wagered into the pool, the 8-percent takeout would leave a net pool of $920,000 added to the carryover of $231,403.14, yielding a total pool of $1,151,403 despite only $1 Million of new money being wagered into the pool.
The scenario results in a net takeout of negative 15-percent (-15%). Historically, a carryover pool of this size in harness racing has resulted in anywhere from $1 Million to $3 Million in new money wagered on the day of the mandatory payout."

After years of tracks doing little of the sort, doing little about thinking of the bettors on big days (in fact, likely doing the opposite, as signal fees and other takeout rates have been hiked for "big days") more and more (smart) tracks are leaning towards thinking of customers. And trying to talk to them about the value in playing on that "big day", not just coming to get the kids' faces painted.

Hambletonian Day and weekend will set a wagering record, with little doubt.

Last weekend at the Haskell we saw things a little different. There was no carryover, or mandatory payout. But they had American Pharoah. Handle was up, as expected - a Derby winner drives good handle and a Triple Crown winner, on National TV sure should - and attendance was too. But that reported attendance of close to 61,000 (that may be fudged) resulted in an on-track handle of only $48 per capita, down from $70 last year.

Which method of handle generation is more sustainable? Which one might get someone interested to support the sport on a weekly or bi-weekly basis? The one where a newbie says they saw a Triple Crown winner and they'll come back to see another big race if it happens, or the one where a newbie says "explain to me this negative takeout thing. It seems like a good deal. Show me how to take a proper ticket."

There's always been a prevailing thought in the annals of racing: It needs a Triple Crown winner, it needs to be on TV, it needs to be in newspapers or on the cover of Time magazine. If only that happens, people will come to the track, come back, and the business will grow. Well, converting those people has been (and will likely end up being) cost ineffective, and small in number. It's like asking someone to enjoy the biathlon in the Olympics on TV and then start learning how to shoot and ski. It's hard.

What's not as hard is promoting what you are - a betting game. Give newbies value - attack the mindset that racing is for suckers and keep your money in your wallet - give them something to get interested in. The ones who enjoy mental pursuits, maybe bet before but got out because they never win, or have a general interest in numbers might just give the game a look.

This stuff doesn't need to happen every 37 years. It can happen every day if the industry is willing. 

Have a nice Wednesday everyone.

Tuesday, August 4, 2015

The Serendipitous American Pharoah Experience

By now you know, (unless you are on the blog by accident searching for pulled pork recipes, or were vacationing on Mars) American Pharoah won the Haskell on Sunday.

Before the race, some who called the race a slam dunk for the Triple Crown winner probably missed the fact that Keen Ice (he who raced sneaky good in the Derby and was moving well wide in the Belmont closing to be a good third), Upstart (an early Beyer sensation and quality animal) and Competitive Edge (the hot wise-guy horse for the Preakness that some thought would beat Pharoah at Pimlico if entered) were all in the race. Or maybe they just knew something. If you've seen a more impressive performance in a $1 million, $1.75 million race let me know.

After the Triple Crown, the narrative that AP would be retired to preserve his stud value - then, likely at its zenith - was making the rounds. It was not based on a deep dislike from fans for horses retiring early, it was reality. Fans are pawns for the breeding game and have been forever. But that didn't happen, due to an interestingly written stud deal where the majority owner of the horse for racing purposes benefits when the horse races. The breeding farm, who ended up getting a good deal, takes most of the risk.

This potential economic risk for Coolmore (Pharoah racing poorly, as happens so often in this game, reducing or holding his stud value) didn't happen on Sunday. Remarkably, that performance, so dominant, so impressive, so other worldly, so magical, probably enhanced his stud fee by ten, twenty, thirty or forty thousand. The value of the horse went up, by racing him in the Haskell.

Because of the stud deal, coupled with the soundness and durability of this glorious animal, it looks like he will race in potentially the Travers (where, as talked about by Sid Fernando, via the SI piece, it makes the most hard dollar sense for the owner), and the Breeders' Cup Classic.

This whole experience has been extremely unique, and very serendipitous for fans, and the sport itself.  It's one thing to have a horse win a Triple Crown, which is obviously extremely hard to do. But then, you have a horse who goes through that grind and comes out the other end good enough, sound enough and sharp enough to race again. Then, the stud deal was written in such a way that racing the animal makes the most hard money sense for the majority owner who controls his schedule. It's like knocking down three bowling pins at the State Fair that were nailed down. The above just should not have ever happened.

Horse racing has always been defined by having faith. Faith that somehow a yearling becomes a Champion. Faith that your horse will have the luck, that serendipity works its mystical magic for you, with the sports' fans along for the ride. This horse has had that perfect storm, and the sport - the column inches, the attendance figures, the buzz, the general enjoyment people have from watching great animals bred to race, not bred to breed - is being touched by it right before our eyes.

For fans, the owner, the connections, the stud farm and just about everyone else associated with American Pharoah, it's been a superfluous superfecta of good fortune. Let's all hope it continues.

Enjoy your Tuesday everyone.

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