Monday, April 18, 2022

Money in the Racing Industry Moves Rationally & Monday Note

If you're north of the 49th, you're suddenly hearing quite a bit about Canadian productivity; meaning, over the last half decade or so it's been particularly abysmal. There are many reasons we're 25% less productive than our friends down south. Rising taxes, increased regulation and other negative factors have decreased business investment wildly of late, and with firm size not being what it is in the US, we have issues. Even on a micro-scale it takes over three hundred percent more time to get a permit for a new building in Canada than in the US now, despite the litigious state of our southern neighbor. 

That people do less, work less and firms stop innovating and investing and pivot their money somewhere else is perfectly rational. It's why a lot of left-brained math folks like business. It's not twitter fights or politics, it's just well, business. 

In racing, as we all know, it's a different kettle of fish. A person investing in horseflesh is not looking at NPV's, or modeling risk; they know they're in a negative expectation game. It's probably why tax write-offs are so important. But people can only keep losing money to a point, mainly if the utility they receive is not worth it. 

And with the current state of the game - little direction from leadership and the absence of confidence or hope, large barns winning all the races, power concentrated at the top and other issues - like business investment in Canada, money moves somewhere else. Again, this is perfectly rational behaviour. 

From this blog's point of view side, it's exactly the same with the customer. As Crunk has pointed out on his twitter feed, the average ADW weekend warrior loses badly, and this also should not come as a surprise. This is a high takeout game and most of us know we'll lose. But the enjoyment, or the thought of winning keeps us going if the losses are minimized, and there's hope for change. 

With, according to his numbers, which I think are sound, people losing 39% in ADW's - that's a level of max pain few can overcome. Add the fact that field size is going down, the races are harder to win at, power is concentrated at the top, and takeout has not moved lower (even with massive subsidy), what's the rational move? To leave for sports betting or other pursuits, or bet less. 

I know harping on racing is not very interesting and it ain't click-bait (lucky I don't sell anything here on the blog). But I hope this explains why we do it. Without fixing the foundations and giving the supply side and demand side hope for a better day, a hope for change, a hope for new policies that will make the game better, investment will continue to decline. It's more than just dollars and cents, it's bigger than that. Without hope for a better day, better days can't happen. 


I watched the Pompano card last night and I'd be remiss not to mention what a wonderful evening it was, however bittersweet. The boys put on a really good show on track with aggressive drives and lots of entertaining races. And Gabe, as we'd expect, ended the track's history with a large carryover, which has been a staple of Pompano's resurgence as a wagering racetrack. The videos, the interviews, the races honoring long-time participants and employees were tremendous, and we all know it was done with virtually no budget. A hearty congrats to a track well lived. 

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