Tuesday, December 31, 2019

You Gotta Be on Your Game To Cash

The last at the Big A today was an interesting exercise.

The field was pretty horrible, and the chalk was not worth anywhere near 4-5; in my view more like 5-2, so I thought I'd take a stab.

The 1,4 and 6 were plodding types that could hit the ticket, and the 2 and 8 were FTS's. I liked both FTS because of the dearth of talent. The numbers on the 8's trainer weren't bad, and the two horse showed he was a racehorse in his debut last March, and the connections removed the shadow roll all  these months later. The 8 was 10-1 and the 2 was 17-1.

Because I'm not really thinking, and just playing around, I created the following superfecta ticket.


The 8 won, the chalk came second, 5 third (at 80-1) and the 6 was fourth. It paid around $4,600 for a dollar.

Now, if I was on my game - a la playing regularly - I'd have probably done the following.


I'd have the FTS who I would choose to use as a win or out. I'd have my plodders to hit the ticket, and spray in all's looking for a price.

For say a ten cent ticket, I'd have spent around $30 and got back $460, which doesn't sound like much (just bet the 2 and 8 to win, right?), but I gave myself chance at a hell of a lot more; if 8-5-6-4 comes in for example, which it almost did.

Anyhow, when you're messing around, you're messing around at this game, and more often than not (with me) that means losses in situations like this instead of wins.

Have a great New Year everyone, and good luck at threading the needle to make some big ticket scores in 2020.

Friday, December 27, 2019

The Foot in the Door (& Kicking it Down)

The DraftKings RTO was made public this week in a $3.3 billion deal.

Of interest to me, was their investor package, page 17, as below.

The bar chart on the right is revenue (with 65% of the U.S. population being legalized to wager). Notice that the projected revenue for Daily Fantasy Sports is $0.3M or $300M. This is dwarfed by the $2.3 billion from sports betting.

As we all know, DraftKings started as a DFS company.

We've spoken a lot about the monetization of critical mass here on the blog. Namely, if you have a lot of people with a propensity to spend money with you, this group has a good deal of future value. DraftKings has leveraged their critical mass to build not a DFS company, but a gaming company.

This is not unlike Betfair's critical mass in the mid 2000's, with one million customers and $3B on account, with over 50% of their players engaged in horse racing. Nothing was done to foster this critical mass - not by lack of trying by Betfair - and that mass moved onto something else.

When people like me - and I'll caveat this with WDIK - talk about creating critical mass through lower takeout, this is kind of what we're getting at. If you have 200,000 people giving you 4% margins, it's a hell of a lot better than the current 20,000 or so giving you 20% margins. 200,000 people you can work with; with 20,000, you're simply focused on squeezing to meet revenue targets.

Have a nice Friday everyone.

Tuesday, December 24, 2019

Breaking - Racing's 2020 Christmas Movie Strategy is Now in Play

I got an email today from Cub Reporter with some hot news. I know that because he said so:

"PTP, I have some hot news," he wrote.

"Based on the success of America's Best Racing's strategy of increasing hat and alcohol purchases to grow the sport, racing has decided to hop onto the Christmas movie success train, popularized by Hallmark, Netflix and HULU," Cub typed.

"For 2020, Operation Racing Holiday Movie has been passed and all the big guns - Magna, NYRA, Woodbine, Keeneland, Mountaineer - are behind the project. I have a list of new movies that are in pre-production and I'll share them with you. But, once again I caution, they are super-secret so don't post them, " he said.

So, here's the list!

Christmas in Arcadia - Tim Ritvo (himself) is informed it might rain over Christmas, throwing the whole Santa Anita meet into chaos. Rather than installing something called an "all-weather surface", Tim summons Julie to fix the problem. She, along with hundreds of underpaid backstretch workers design a Christmas quilt that keeps the rain off the track, and the meet shatters handle records.

Holiday Hearts at Fair Grounds - In the Hallmark movie tradition of a high powered female executive heading home to find love over the holidays, Susan rolls back to Fair Grounds to run the track where she meets a handsome and scrappy track handicapper, played by Marcus Hersh. They fall in love, but CDI tries to nix the wedding because Marcus is employed by the DRF. Note - this project is not green-lighted yet as the producers feel a female racing executive might be too unbelievable for the general public. 

Sid's Horse Sex Christmas - Pedigree guru Sid Fernando embarks on a journey to visit horse sex farms across the south over the holidays. In Arkansas, a freak snowstorm hits and his Harley breaks down. He walks for miles and comes across a community center, heading in for warmth. Unbeknownst to Sid, along with baked goods, the center is home to a Christmas #MAGA rally. When the rally leader (Peter Rotondo senior) gets fed a link to Sid's twitter feed, the tension is palpable. But in the end, both Sid and the #MAGA's learn the true meaning of Christmas.

Whip Me at Christmas - Andy Asaro (himself) is protesting against PETA outside Del Mar on Christmas eve. His pro-whip protest sign catches the eye of a dominatrix who happens to be passing by and they fall in love.

Beem Me Up Christmas - This film documents track announcer Jason Beem's trek across America over the holiday season. He wows everyone he meets, including Magna's Sal Sinatra (in a cameo). Sal offers Jason Beem the full time Pimlico and Laurel announcing job and he's thrilled, but CDI (played by the voice of James Earl Jones) won't let him out of his podcast contract.

ITP's Holiday Giveaway - Inside the Pylons (himself) finds he wants to give back during the holiday season. ITP invites kids from a local elementary school for a ticket construction session, led by him. After the session, the kids are tested and those who pass get a $500 credit voucher, while those who do not are sent home with no Christmas, teaching them an important lesson that will last them a lifetime.

Pat's Christmas Fantasy - Pat Cummings (himself) asks the Santa at the local mall for one wish - that he could be horse racing commissioner. It's granted, and he wakes up the next day with full power; the grand poobah. Pat immediately enacts Category One rules. After the first week of getting slammed mercilessly on twitter by Gate to Wire, he returns to the Santa and asks for his old job back.

Gabe's #Senditin Christmas - In this holiday tale, Gabe Prewitt's #senditin catch phrase is noticed by a New York executive (Acacia Courtney), and she offers Gabe a job at her big toy company over Christmas. The two young, unbelievably good looking people (well one of them) make a great pair and fall in love. However, the heartstrings pull Gabe to his only true love - Pompano Park. Gabe returns home, and in a Capraesque final scene, Gabe learns that no man is a failure who has Pompano.

Have a wonderful Christmas, and all the best in 2020.

Sunday, December 22, 2019

Pitching the Chalk

If you follow Inside the Pylons on twitter, you'll often hear him talk about taking stands against any heavy chalk with holes.

This is tough for a lot of folks because often times that chalk (probably over 70% of the time) will hit the ticket and your tickets are toast. This is not even montioning (for casual bettors especially) psychologically it's hard to go against the crowd because of FOMO and prospect theory.

What warm and cuddly ITP will tell you though, is that if you do invest in such races, when you win, you can really, really get paid.

Last night we had a couple of these races, one at the start of the Mohawk card and one at the end of the Big M card.

In the first race, the very clever Ryan Willis noted to me that the heavy chalk at Mohawk - a brother to Warawee Ubeuat - looked rather odd on the far turn last week. He wondered why the driver let another horse look him in the eye, which is usually not a good strategy. It was a very minor thing, but it was something that perhaps foretold some gait issues.

The horse ran out at 1-2 because of those gait issues.

The tri with a 5-1, 6-1 and 10-1 morning line horses running one through three paid $1,700. The superfecta paid $7,000.

In the last race at the Big M there was another one of these nuanced pitches. Chris Ryder's horse bled last time and was adding lasix. His form before this was pretty poor as well, but the horse had massive back class. He was bet completely off the board to 3-5.

To wager the horse, we have to assume lasix is going to completely turn this horse around. This can happen, but often times this is a pattern seen in barns. So, when we check how well Ryder - a great horseman, but one not overly concerned with his win percentage - has done first time lasix, we see it hasn't been good at all. In fact, when I looked back I didn't even find a single horse who won first out.

He also ran out.

In this short field affair, with the three completely logical horses running 1,2,3, the tri paid a whopping $580. The super paid $2,400 for a buck. There was nothing remotely difficult in hitting both. You didn't even need to handicap.

We can't beat every chalk, but we can beat some. And when we have nuanced reasons to pitch one - like in the above two examples from last night - we have to take our shots, because if we're right, it can make the month.

Have a nice Sunday everyone.

Friday, December 20, 2019

Pirates or Partners

This holiday season I can't help but see Rakuten commercials, and I suspect you have as well.

Rakuten was formerly Ebates.com. When you purchase an item through them (at thousands of online stores), they give you cash back on your purchase. The business model is relatively simple: Stores give commissions for sales, and Rakuten shares their commission with you. This person earned about 5% back on his couple thousand in purchases this season.

Affiliate marketing is a partnership, because affiliates work to sell your products for you. Sure, a Rakuten user could go directly to Target and buy, and Target would make more money that way. However, affiliates like this one have critical mass, and is (as we see this Holiday Season on our TV screens) spending their marketing money (on your products).  As well, their members are hyper-engaged users who buy online, and have very good lifetime value. Despite giving up a bunch (sometimes the majority) of margin, the system seems to work.

If this sounds familiar to us, it's because it is. It's the ADW model in horse racing.

What's different is the response. Target is not withholding their products from Rakuten like a Sword of Damoclese signal deal. Target executives are not calling Ebates "pirates". We don't read articles on the Paulickshoppingreport saying Ebates has killed online purchasing and should be shut down.

There was a conversation this week on the twitter where a bunch of pretty sharp folks were talking about online wagering, mobile, horse racing wagering advertising, and assorted issues. There was a lament that racing has really missed the boat in the last fifteen years or so.

When we think about it - if you've long ago decided that someone selling your product for you is a pirate, how could it have turned out any other way?

Thursday, December 12, 2019

Racing's Cost-Benefit Choices are Pretty Clear

When we open the interwebs we can read much opinion on horse racing's current malaise when it comes to horse safety. In one area - whipping or not whipping - the opinion can reach a fever pitch. It's the #MAGA v old media, Cowboys versus Eagles, Pens versus Caps of this sport.

Why is it this way? I don't know; perhaps it's tradition, perhaps something else. But it's real. And I think it's much ado about nothing.

When any business or entity looks to make a decision on something - new investments, product changes, capex - they compute some form of Cost-Benefit analysis. We all know at its core this is fairly basic - costs are added to one side and they're analyzed against, or with, benefits on the other.

What are the dollar costs of whipping much less? Like most jurisdictions who have broached this topic and eliminated over-whipping, they aren't much of anything. Handle in Australia is up just fine, and in harness racing, the elimination of the striking of a horse was a big yawn.

What are the dollar benefits of underwhipping on business? Like most jurisdictions have shown here also, none really. It appears no one has said, "boy I really have to bet the third today because they will whip the horses six fewer times." Handle, entries, field size, all about the same.

Seeing the hard dollar benefits or costs are negligible on each side, then what's the big deal? Why change; why not just leave things the way they are?

I believe the biggest, most formidable cost to horse racing in the current climate (but perhaps since forever) has been the political risk component. This is a cost.

Entities use political risk all the time to make decisions, and at times, this risk can mean everything for pass/fail positions. The markets took a massive hit in Argentina last summer when the polls were wrong and the ruling party (partaking in reform) was surprise defeated in an election. Immediately, sovereign bonds fell 50% and business investment plummeted -  the political risk was far too high and it trumped just about everything.

In horse racing, political risk is in Spinal Tap eleven territory. When sitting senators or the governor of a state with a massive economy starts tweeting or dropping dimes about racing, it's true.

The problem with this risk - like the province of Ontario saw with slots, or Florida and others saw with dog racing - is with one strike of a pen, everything can go away. This is not incremental or something you can revisit and reverse course if you're wrong. It's not just a few barns, or one track, it's literally an entire industry going poof.

So yes, let's add up the costs, and add up the benefits with hard dollars on some of these issues like whipping. In the end we'll find the core, tangible costs are minor. We'll find the status quo very comfy cosy.

But when we add in the massive political risk, it's anything but comfy cosy. That's why, in my view, racing must move forward with many of these decisions. When the sport does nothing, the downside comes into play. And that downside is savage.

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