Hayward's Racing's Betting Business Story is Good, But it's Missing the Plot

If you've ever wanted a pretty complete history of the betting space in horse racing, you could do far worse than reading former NYRA CEO Charles Hayward's commentary today

Leaving aside the one very questionable, in my view, opinion regarding bots 'seeing into betting pools' for jackpot bets and the like (addressed nicely by the comment on the piece), it's a good read. 

Charles' and many others point regarding primarily the rebate space is nothing new. One point he drives home that others don't very much, however, is the inflation on pricing for the regular player that rebates cause. 

The thinking is: X% of people get a lower price and because it makes them profitable (or more profitable) it sucks money out of the pools and this paradigm raises takeout for the every day player. Although I think his estimates of a 3%-5% to Average Annie is too high, the argument and math is logical and sound. This happens. 

The fix for this is always, without fail, doing something negative to any group or individual who is getting an advantage of a lower price. It's usually framed as populist rhetoric - us against them; stick it to them; raise their prices too. 

But it's, in my view, all noise. Racing is not the first business who has had a pricing and operational change in a business to consumer space, brought about by over-the-web or in home offerings along with new competition. It just seems to think it is, and often whimsically yearns to sell CD's for $18.99.

It amazes me that this business argues constantly about fixes to a pricing or betting pool, while addressing a symptom, not an underlying cause. 

This would be like a government taking over the auto insurance industry and seeing prices creep up to $5,000 a year per user.  The result - trucking companies are going out of business left and right, and the transportation system is having trouble delivering goods to market. To fix it, Peter Politico introduces legislation to rebate $200 per policy to a trucking company and to keep the budgets set, increases everyone else's insurance cost to $5,020. And in every newspaper, congressional update or blog, people are focusing on the $20 per policy increase, instead of the fact that car insurance should never have cost $5,000 in the first place. 

I'd once, just once, like to see someone in power say they'd like to really address this issue. Forget about creating bogeymen, just offer through every ADW in the nation, everyone a 5% rebate. Mandate it, and do it for two years. Study the results. Instead of complaining that people don't want to play into a system that can't work for them, do something about it. Lower your damn prices. For everyone. 

Have a nice Wednesday everyone.


Racing's Skin in the Game

Good morning everyone. I hope 2021 is treating you better than 2020 did, and since 2020 was bonkers, maybe there's a good chance it's happening. 2021 is probably treating me better because I was finally able to get a procedure done that I had been long waiting for. It was fairly easy peasy, so that was good. 

But, one part of it made me acronymically SMH. You see, there are fees on most things medical up here in the tundra, and this one was no different; I owed $260, and my bill showed up in the mail. I have no problem paying the $260 of course, so I opened the invoice and looked for a way to pay. It doesn't mention online banking where we can pay just about everything, so I log into my bank and look for this payee. It's nowhere. 

Lo and behold you can't pay this online; in fact you can't pay by phone, or even by carrier pigeon. You have to put a check in an envelope and mail it out. 

The medical treatment was pretty good, but we're apparently still in the bloodletting phase of invoicing. 

How could this happen, considering so many have to pay for services? I suspect it's because the health services organizations get billions from governments and happily work those budgets; this $260 is a smaller part of it. Where a private company needs that revenue to pay salaries, and has to ensure they have an easy pipeline to get this revenue (i.e. letting you pay online), the government does not. Without my (and others') timely $260, everyone from the docs to the nurses to the hospital administrators still gets paid. There's no downside, there's no penalty. 

There's no skin in the game

In horse racing we've lamented similar over the years. 

You've often read this blog where we've postulated how much better the industry would be funded if it wasn't priced by margin, but by net profits. Online sports wagering as new states come on board - where we see TV commercials every six minutes it seems - has exploded as private companies chase profits, not margin. When you let companies chase profit, the consumer wins because they get the best products at the best prices, the company wins because they get to enact policies that help them - they have the skin in the game. And finally, the licensee (the state, or in racing's case the racetrack) wins, because they get more money. 

Perhaps the best example and more apt to my outside racing problem above is clearly slots. When you are going to get $1B per year for doing absolutely nothing, where you have no skin in the game at all, you sit and collect the $1B, and let everything else (like handle) go to hell. There's no downside when you have no skin in the game; there's no penalty; no one is getting fired. You're asking users to lick an envelope and send you a check and no one cares. 

Racing's system is entrenched. Uniquely so. And until it gets unstuck, until it thinks of new paradigms to fund itself based on incentives to grow handle and in-turn grow purses, it seems we'll all be licking stamps for some time.  

Have a nice Thursday everyone. 


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