Wednesday, June 27, 2018

Fake Racing News? Talk to People

Yesterday we had an article about how great sports betting was at Monmouth, and how it was probably helping racing because handles were increasing. Crunktathol sent a tweet with some facts.
It's good to get facts, if you're not so entrenched to accept them. Monmouth has been stuffing the entry box and not having a great result; before or after sports betting.

And notice he didn't make some cemented conclusion about the numbers, he just presented them. No one knows exactly what's going to happen with sports betting over the next few years.

That's the way open discussion is supposed to work.

Meanwhile, we saw a tweet today with someone sharing an opinion (since deleted).

"Betting will ruin the sport because racing is not about betting, it is about the jockeys and horses... "

That tweet might've been about gun control or abortion, because the reaction was about the same as we see on twitter most days. The responses weren't Crunkian..... for the most part.

But someone set a high bar - our very own POTUS.

POTUS speaks truth (I can't believe I typed that), and he did it in pure un-Potus like fashion.

Everyone knows that racing is tiny and small without betting. Those of us who enjoy watching horses race would not be able to see it very often without the couple of billion dollars in revenues to the sport from betting. Even overseas, the future of the Dubai World Cup probably depends on us not buying solar panels and electric cars.

Answering with facts with an absence of pure vitriol is so uncommon nowadays it sticks out, and in racing we had a couple examples of that. I think it's why most of us stay around the medium - a nugget or two of decency and truth make navigating the noise tolerable.

Have a great day everyone!

Wednesday, June 20, 2018

Be Like Mike - PED Use in Racing is About the Least Surprising Part of it

Mike let fly on the twitter today --
Mike often talks about the past (and sometimes current) use of illegal drugs on horses in the sport. He gets worked up why some people believe everyone is as pure as the driven snow and would not risk performance enhancing for financial gain, while in other sports it's common.

Leaving aside any specific trainers, past or present, in the broadest sense, I think he makes a very good talking point.

In Scorecasting, the authors studied drug use in baseball from various angles. Although they concluded there are many reasons for using drugs in the sport, one stuck out - opportunity cost. If the player had little recourse in his life, he was more likely to use banned drugs. If he had other opportunities, he was less likely to.

This argument was buttressed with PED use stats from minor leaguers, many of whom were from other countries far less rich than the U.S.. They found the country's GDP was directly correlated to PED use.
So, these kids and those looking to make a buck through them put stuff into their veins at a higher rate to make it. The risk is worth the reward.

In horse racing (this at least theoretically) should be the case (pardon the pun) on steroids.

Not only does a trainer not fear reprisal (these things can take years to adjudicate, and finding blood builders in a test is very difficult in the first place), he or she does not have to inject something dangerous into himself, herself or another person, it's into a horse. An animal.

If he or she is caught, well, what's the big deal. Most of the people caught with EPO already who were given six figure fines never pay them. If they took care of their money they're sitting by the beach at the lake house.

Is it fair to think everyone will act like economics says they should? Of course not. Is it fair to say we're naive to believe at least some will act like economics says they will? I think so.

Have a great Wednesday everyone.

Monday, June 18, 2018

Horse Racing Attendance Facts,..... or Myths?

Monmouth was humming on Father's Day with attendance up over 5,000 from last year.  The prevailing reason given - and it makes sense since the lineups were long - was the introduction of sports betting.

With all those people with stuffed wallets looking to wager, it's supposed to be a good thing for horse racing (an on-track handle did have a little bump). But, overall handle was down over 28% per entry. 

Meanwhile, over at Churchill, Triple Crown winner Justify was paraded on Saturday. And it was reported the attendance - 21,053 - was through the roof to see him. However, on the same evening last year, the attendance was 20,669.

20,000 people at a hockey game is good. 20,000 people in the Arkansas Derby infield are a different kettle of fish. Their net worth is not from $100 seats; it comes from what they wager, and they don't wager much.

The 500 extra people (let's be generous and say it was 2,000) to see a Triple Crown winner at Churchill Saturday are, sadly, not worth a heck of a lot. The extra 5,000 or so people at Monmouth there to sports bet aren't worth much either.

It's curious to me that horse racing places so much stock in attendance numbers, and tries to develop policy based on driving them, rather than focusing on what does bring in the most money - more betting.

Thursday, June 14, 2018

Protectionism Doesn't Work in Horse Racing Either

Flipping on to twitter in this day and age and you'll see classical liberal economists up in arms about protectionism. It's not like they don't have a point; wealth is created when we do what we're best at. It's not 1930 anymore.

It's more than that, however, because protectionism breeds more protectionism, and this exacerbates the issue time and time again.

We saw some evidence of this just today, in horse racing.

Woodbine's Clay Horner wrote the following on Facebook:

This new protectionist race is in response to Donald Trump being a protectionist. 

But hold it, Donald Trump was complaining about Quebec farmers who are protected through a supply management subsidy and are allowed to charge Canadian consumers 270% more for milk and dairy products. (This despite a "free trade" agreement).

So, and such is the case with protectionist policies, we have a bit of a puzzle. 

Canadian farmers have protection, so someone outside the country complains and slaps on protectionism of his own. In response, a horse racing executive wants to create a race and not let Americans compete for the money to protect Canadian farmers with another brand of protectionsim. 

Are you keeping track of all this? 

The North America Cup - Canada's million dollar race - is a huge success. It's the biggest pacing race in the hemisphere (I'd say the world) and it represents the jewel of the harness racing season north of the border. It drives the most handle, television coverage and owners and trainers from everywhere want to win it. In fact, it's named the North America Cup for precisely that reason. There's no reason to mess up a good thing because someone in another country likes some goofy 1930's economic policy. 

Have a great night everyone.

Monday, June 11, 2018

Restoring Hope & Discounting

The controversy (if you want to call it that) about the race riding in the Belmont has entered the mainstream press. This, unlike the 2016 Sword Dancer, happened with more mainstream coverage, so the industry finds itself having to talk about it. But make no mistake, they don't want to talk about it.

I have no strong opinion on the Belmont. Sure, maybe the horse was a blocker, but maybe he wasn't. It's not something we have not seen 1,000 times before, if he was. And the public knows that, because they believe - and its been ingrained to them in popular culture since forever - that in horse racing, funny stuff happens.

Although our left brain suggests to us that this presents a barrier to growth  - and it likely does - it's just the way it is. The public discounts this stuff for the most part. 

Flipping over to another situation:
This - the state of Lebron James' hand - presents a problem as well. But will the new sports betting mainstream press and public take it sitting down like they do with horse racing?

They have thus far - the shadow markets are driving dollars - but who knows what the future holds.

Both horse racing and sports betting drive handle in the many billions, and with the spotlight on them there's a chance they can drive more. Will either sport address these issues for the modern betting public? Or will they just conclude that discounting happens and it is what it is. In the short term I think it'll be the latter. 

Sunday, June 10, 2018

This One Small Ruling Explains Why Betting "Integrity Fees" Are a Mugs Game

OMG! A trainer bet her own horse (hat tip to Peter) --
  • BONGIORNO, JENNIFER L MANALAPAN, NJ YOB 1990 Fhld on 11/18/2017 FINED: $350 IMPROPER BET Ms. Bongiorno placed 3 wagers to win on horses thet were trained by her.Nov. 18, ’18, $2.01 was wagered to MOONLIGHT RANSOM in the 4th race at Freehold Raceway. Jan. 12, ’18, $10.04 was wagered on ALGEBRA in the 2nd race at Freehold Raceway. Feb. 3, ’18, $10.01 was wagered on at Freehold Raceway. Although these wagers were made in compliance with N.J.A.C 13:71-2.4, the wagers were placed through Betfairs Exchange wagering platform. N.J.A.C 13:74c-4.10(C) prohibits trainers from wagering through the exchange on races in which they have horses competing. For the first violation, Ms. Bongiorno received a formal Warning. As a result of the second violation Ms. Bongiorno received a fine of $100. As a result of the third violation, Ms. Bongiorno received a fine of $250.
Now, Jenn isn't exactly a master criminal, unless you think her betting $10 on her own horse is a crime (it isn't). The difference is, it was on an exchange, and horse racing thinks that's a different kettle of fish. She wasn't "in compliance" and received a small fine.

How did the authorities find out about this terrible, awful crime? Because at Betfair there's a paper trail, unlike in the parimutuel pools where trainers have been making bets (some on not their own horses no doubt) for over 100 years. Legal wagering over the internet brings this out of the shadows and into the spotlight. It's the way progress and technology works.

The sports leagues are currently asking for a whopping "integrity fee" from wagering providers (and like most business taxes, the consumer will pay, not William Hill) because they're worried about corruption. I believe that this is always been a cash grab, not about integrity because the market and its systems ensure such a fee is not needed. And I think the above fine proves it.

For over a hundred years sports betting was done in the dark corners - offshore, at a local bar, through websites in the far east - and there was never a paper trail. There was no way to find out who was betting what, through who. Now, with wagering legal, there is. Logically, sports leagues should probably be paying the books a fee for introducing integrity into the system, not the other way around.

Thursday, June 7, 2018

Betfair, Gural - Smoke Em if You Got Em

Gural and Betfair pulled the trigger on a deal today where Betfair will provide infrastructure and know how for offering sports betting at both Tioga and the Big M. This comes on the heels of the NJ government voting unanimously to legalize this form of wagering at casinos and racetracks.

I suspect Tioga will take some time (sports betting is not passed in NY yet) but the Meadowlands should be up and running fairly soon, I would guess. And that's clearly the big prize. Its proximity to NYC has always been an edge - in fact, that was the edge that made slots so wanted for so many years.

How well this does or doesn't do is beyond me offering a logically strong guess, but I think it does have potential. Along with the previous geographical first mover advantage:

i) I had some dealings with Betfair (before the merger) and it struck me that their strength was in their technologies. They were always a tech company ahead of a betting company. That expertise is an asset, because betting companies over the next half century will differentiate and thrive on tech, not on a new bet, or super jackpot parlay card that everyone else can copy.

ii) The Meadowlands is in a very tough spot when it comes to the marketplace. Right now it's teetering at an inflection point, where even a small bump in purses can do major good for their long term revenue outlook. This could provide that.

iii) Paddy Power, as per the release, says they took $15B in sports betting wagers last year. That's more than all of thoroughbred and harness racing combined. They know how to take bets.

Gural, quite frankly, hasn't got too many breaks when it comes to the Big M. If this does work out well, and the overnight stock (as well as the betting menu, which clearly needs some work) improves, maybe he's finally on to something.

As for Betfair, I wish them well. They invested time and money to reach this moment in time. They deserve to be rewarded for that.

Regardless, the landscape is about to change in Jersey. It'll be very interesting to see how this shakes out.

Sunday, June 3, 2018

Post Drags & Problematic Opportunities

Dave Briggs wrote an extensive piece about post dragging today. Dave, always a good interviewer, got various execs to open up about the practice, and it's well worth the read.

After reading it, Tom LaMarra on the twitter said, "it tells me there is no desire to fix the problem."

When I read it, I had a similar thought, but when I thought about it even more, they weren't talking about post dragging as a problem, but an opportunity.  This, I believe, happens more often than we like to think in horse racing.

Post drags, not a problem. It's not a problem that with them, scheduling races systematically and for maximum reach is virtually impossible; that an industry shares revenue from all bettors, so shuffling them around doesn't grow the pie, it splits it up differently; that it angers customers. It's 'we can make a little more handle than that track if we keep our clock on zero for forever.' Opportunity abounds!

This is nothing new. Takeout hikes in this sport - a sport where for dozens of years people have talked about takeout being too high and sub-optimal for revenue - are never presented as a problem. It's always, "New York's exotics are 25% so we can raise ours to be 24%", "purses will explode", "we can make more money." Takeout hikes are an opportunity!

We're a cross between Baghdad Bob and PT Barnum.

This is a big reason why horse racing's problems never get addressed. The sport doesn't fix problems, they frame them.

Speaking of problems (and not addressing them) and opportunities there's a piece in HRU on the Mel Bount Rule that the NFL implemented in 1979 to open up the offense, and this was looked at from a racing perspective. There the NFL saw a problem (passing offenses were becoming horrible) and fixed it to provide opportunity. Go figure.

Jim Gaffigan, I don't know who you are, but have you met Michelle Beadle? For those who have not seen the comedian making fun of horse racing, here you go.

I didn't find the piece overly funny, and I expect Jason Beem could've done a better job making fun of this sport. But then again, the BARN invites would go unanswered. Jason would probably end up like the PTP Blog - a sad shadowy place read by only a few mistanthropes and Crunk.

Have a great day everyone.

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