The New Year's Challenge for Horse Racing - Think Dynamically

Around 1800, Robert Malthus, an English mathematician, wrote a document called Essay on Population. The tome explored a theory that population growth inevitably causes all kinds of problems because there are limits to what the earth can provide, i.e. useable land to live, and in-turn shelter, housing and food. In effect, the more people alive the more misery there is because we'll run out of everything. 

This was the science of the day and it has been used throughout history, at times, in harsh ways. Famines were not stopped (it was culling the herd, mostly with poor people), right on through the basics of eugenics, which was embraced by not just the usual suspects. Today, some on the fringes of the environmental movement cling to Malthusian dogma. 

As we all know - for the most part at least - it was a load of crap. The world does not stagnate, it evolves and innovates. Wealth is not a static number; a plot of land does not hold static yields of harvest; today's world looks nothing like yesterday's. 

Over the years as you and I watch horse racing operate, it's not too out of bounds to proclaim that if the sport had a commissioner, his name might've been Malthus. 

The sport of racing has this pot of handle money - say $10 billion -  that never really moves, and every decision seems predicated on protecting it. If that anchor number drops to $9.9 billion, we wonder if  people have died off, or are sticking that hundred million under their mattress. If it's a hundred million over $10 billion, something wacky happened. 

The sport has thought like this since seemingly forever. 

Take the carve out for racing for Internet wagering way back around 2006. Twinspires was built to try and get a share of the ten billion, and so was youbet and everyone else. In fact, Churchill took over youbet to get their share of the ten billion that Churchill didn't have. 

When Churchill - not to pick on them, this is any large sized entity, really - saw an opportunity to get more of the static number, they withheld signals for say the Derby, or their tracks. Yes, let's not promote wagering properly to hungry bettors over the net so we can get more of that Malthusian anchor. 

In turn, horsepeople groups were upset that Twinspires was taking more of the ten billion for their internet betting arm, which paid them less than on-track. So they lobbied, withheld signing signal deals and were generally recalcitrant, trying their best for their share of that ten billion. 

Over in racetrack land, when someone created a jackpot bet, it was about getting a bigger share of the ten billion number. And in response, another track created a jackpot bet, to get a slice of the other track's slice of the ten billion dollar number. Others followed until they sliced and diced a number that is now likely less than they started with. 

Meanwhile, customers haven't in general terms fallen off the turnip truck and see what's been going on. And when that happens, this static ten billion dollar number the sport has been anchored to is not ten billion anymore. Why would it, they've been left behind. 

For 2022 and beyond, my wish for the sport is that it starts thinking dynamically, not in static, anchored terms. 

Pick a number, any number - $15 billion, $30 billion - and ask "how can this sport get there?". How can it grow wealth, not sit on its capital and argue over splits; how it can move from board meetings about the status quo, to those about what's possible. 

Malthus was a smart man, and by most accounts a good man, but it shows how blinkered thinking can corrupt us. When we think there's an end to the earth, an end to a universe, or the end of a customer base, we end up getting exactly what we plan for.  


F.W. Schumacher, a Real Life Santa Claus

I was reading about the Navarro sentencing like most of you last week, and I came across this gem - yes, the "juice man video". It makes one wonder, why are people built like this? The answer is, most arent. 

F. W. Schumacher was born in Ohio in the 1860's and became a pharmacist. Word is - you piece this together from lore, the man doesn't have a wikipedia page - he invented a few somethings that sold well and he made himself a success. On or about 1910, he read about an area that lay about 1,000 miles north of him in the forests of Northern Ontario, where gold was just found in potential abundance. An adventurous sort, he decided he'd take a trip to see what the fuss was about. 

While there he learned that a parcel of land set aside by the government was available, and remarkably no one was claiming it. In the spirit of legendary diamond finder/horse owner Chuck Fipke, he laid claim and got the land for a princely sum of $8,000. It turned out to be a wise move, as just a few years later he returned and sold the prize property for a reported $2 million. 

Mr. Schumacher returned to the camp several times over the years, making deals, and immersing himself in the community. In 1916, again as the story goes, he started to sprinkle around his good fortune, and one of his ideas was to give each of the kids at the newly constructed schoolhouse a Christmas present. In a new town, with no real running water or electricity, kids getting a pair of mitts or boots, or the latest item from a Toronto or Columbus department store was, well, like Christmas. 

This wasn't a one-off; Mr. Schumacher turned this into an every year event.  

Kids in 50's After Getting Presents at School
1950 getting gifts - Daily Press

Sixty or so years later I walked into school for the first day of class and saw a portrait of a white haired man in the foyer and said, "he looks like Santa!". Months later, as I was called downstairs to line up for a present, I learned I wasn't far off. I happily opened a wrapped gift - a hot wheels or a tonka truck, or later, even a remote controlled car - and brought it home to put under the tree. 

Although perhaps anachronsitic in the day and age where everyone is so much richer, in a boom bust town where unemployment could reach 40%, at times these were the only presents under the tree for some. They were bought by Mr. Schumacher, 30 or 40 years after his death.  


In 2021, 105 years after the very first set of gifts, the school - Schumacher Public School in the town now named Schumacher - is still there, looking not much different than it did a century ago. And 160 presents were purchased for the kids, K through grade 8. When the local fire chief (who purchases and wraps the presents) called to ask for a check for $6,000 to cover it, word is Mr. Schumacher's great grand-daughter said "is that all you need, we can go higher." I guess the apple doesn't fall far from the tree. 

2019 gifts - Daily Press
Mr. Schumacher did more than buy presents for over a century, he also donated money to child care, mental health and seniors. Throughout his life he did more on the philanthropical side outside of the town who holds his name. And, a relatively private man, he never once asked for anyone to know about it. 

This Christmas many of you are tending to a sick horse, or trying to find a way to add one to your rescue. You're scraping together a little added bonus money for a groom, or a fellow horseperson going through some trouble. You're heading over to a friend's who is holed up to jog their horses. You, like Mr. Schumacher, don't have a wikipedia page or shout it from the rooftops, but it's what you do. 

People like Jorge Navarro who seem to take joy from "we screw everyone" are not even a footnote in history. They will be easily forgotten. People who do the work of Fred Schumacher, and that includes many of you in this sport, tend to be always remembered. 

As noted, if you google Mr. Schumacher you won't find much. But if by some chance his family stumbles upon this little blog, I'd like you to know I remember your grandfather or great grandfather fondly. Not only did his land bear fruit - my grandfather worked underground for 30 years at the Hollinger, helping someone like me years later to go to university - but his good deeds each and every Christmas stick with me, long after receiving my last present. 

Daily Press photo

My sincere best wishes everyone. May you and your families have a wonderful Christmas. 


It's Tougher to Find Bets

Years ago - maybe eight or ten - I could download some files, or take a look at a few harness programs and almost always find four or five or six somethings I could take a shot on. That kind of feels like an epoch ago. 

Today, for me, trying to manufacture a bet is like trying to figure out the latest COVID stat. It's pretty elusive. You can still dig - look for that one little thing, whether it be an angle, or a hidden positive or something else - but the end result looks a whole lot different. 

Last Friday at the Big M I was searching for something to play in the pick 5. I found an amateur race, which is usually good if you can find a single (most people spread), and I thought I did. 10-1 morning line, and perusing the selections, no one had the horse in the top three. I keyed for a small amount, and watched the races. 

Come the third leg, my horse opens at 4-5, which is fine, because he'll probably go up and isn't used a lot in the pick 5. But, a half minute later, the pick 5 live money came up and the horse was ...... about 3-2. They were all over this horse. He got a nice trip, won, and paid $5. 

When I was chatting with ITP this weekend he said "it's smart people against smart people now" and he's right. The horse we think we find through accumulated knowledge and work, which years ago might be double digits, sometimes doesn't even pay $6. 

Barn money is usually not smart, but that too is exacerbated in the pools when it is. How did that Moreau horse a month ago at Mohawk end up 4th choice when she was a slam dunk key? How did the new Burke horse with mediocre lines open at 3-5 and stay there to win, while another with better lines opens at 5-1 and loses badly? 

Moreau and Burke ain't betting - they've got more important things to do - but someone is. And with so little public money in the pools it sticks out like a sore thumb. 

With all this, manufacturing bets takes time and effort, and there is an opportunity cost. Sooner or later the work doesn't equal the benefit. 

When I talk to seasoned players I get more and more responses like this one I got this morning, after asking a friend to run some numbers in his database for me. 

"Sorry, I don't collect data anymore. I have just lost interest. I play a few dollars for fun, but that's it."

The game has waned and I am not sure what can be done to improve it. Until then the old advice - pick your spots - is probably sound. 

Have a nice Tuesday evening everyone. 

Markets

For those of us who are more left-brained and think in systems, markets are a really nice thing. They allow us to anchor to baselines, provide us with a structure, a starting point, a framework from which to decision make; they establish order. 

And I think it's why we have such a terribly difficult time understanding horse racing. 

It's unclear how Woodstock in Ontario had $100,000 in purses a day with $15,000 handles and thrived, while Balmoral Park had million dollar handles and $28,000 in purses a day and failed. 

We can't fathom why a government auditor would have to ask this industry to post their prices. And we're doubly flummoxed when the policy is resisted. 

We wonder aloud how a horse racing business can (apparently) explore selling a horse racing business.

We don't understand the highest handle track in harness racing running amateur races to fill a card, while across the river all the good horses are at a half mile track with less than a third the handles. 

Come to think of it, we don't even understand why there are half mile tracks anymore. 

We don't understand, in this cutthroat gambling environment, how customers have to line up for past performances, or how a download can cost so much. 

We don't understand how a business who complains so much about having fewer customers doesn't even realize they're a reason why. 

It's like our old friend the market doesn't even exist. 

As we drift in this intellectual wasteland of slots and other things, perhaps our brains are doing us a favor; they're protecting us. Because when the market does exist things aren't overly pretty. 

Hollywood Park, one of my favorites and I know many of yours, is a football stadium. Arlington, a slice of history and a very viable business, is gone. 

Those two tracks weren't sold for real estate value and replaced with fancy new ones, like an arena or a Wal Mart. They just disappeared. 

When markets act in horse racing, things tend to just go away. And it destroys everything - places to hone our craft, places to play, places we grew up with - we hold dear.  It's completely unsettling. 

Back to our left-brained reality - despite many of us left completely confused over this business, it's still there, trudging along. With that comes hope for better, hope for growth. That, left brained or right brained, market or no market, is always a good thing to have. It keeps us coming back. 

Have a nice weekend everyone. 


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