Tuesday, June 28, 2022

The Importance of Being Earnest

What are things that are paramount in 2022 with regards to equine athletes? 

Horse deaths, wastage, sending out horses to race that probably should not have be sent out to race, to name but three.

For much of human history - any epoch really - humans were incredible killing machines. When we hunted and gathered we killed indiscriminately. When we settled Australia 70,000 years ago we wiped out dozens of species. When we moved to North America thousands of years ago, we killed everything in our paths. 

Even as recent as one hundred years ago during the exploration of the Arctic - when we began to be more sensible in countless matters, and were starting to be educated en masse - we still killed virtually every animal in front of us. Killing an animal was a feature of humanity, not a bug. 

In the last forty or fifty years - a tiny, tiny slice of humanity - remarkably, this feature has been completely flipped on its lid. An ingrained part of our DNA and culture is now found by most to be taboo. We can't imagine ever doing what "they" did, and we might rename a school or street for those who did; even though we probably would've done the same thing, because that's all we'd have ever known. 

Just this month a report on horse deaths at Santa Anita was released and the news was good. The reforms, hoped for by some, joked about by some others, seems to have worked pretty well. The pressure is off, it appears, until perhaps a next crisis. But kudos to California racing for stepping up to the plate. They said they were going to do something, and they did it. 

HISA is another brick in this new wall - the wall that modernizes human's use of animals because we aren't killing machines anymore. Like any new policy (check laws in congress or the House of Commons for reference) it can get blown off course, or bastardized. We talk more about HISA and lasix than keeping the eye on the prize, which is, of course, protecting the safety of the horses. 

But this organization - like it or not - is very important. 

The sport has to be honest with itself, and lead with conviction. Horse safety, wastage, doing better by being better stewards of the horses is not something we can address with lip service, or do it only when someone is looking. It's reality. The importance of being earnest is now the feature, not the bug. 

Have a nice Tuesday everyone. 

Friday, June 24, 2022

Watching Replays

DeRosa, and others, are talking about the importance of watching or not watching replays to handicap. It's a discussion I always find interesting. 

Like almost everything in this game, to me this is a matter of personal preference and what works for us. If we believe watching a replay makes us play the game more profitably, go for it. If not, and our time is spent better on other things, then we probably shouldn't. 

Do we have to watch replays to win? Absolutely not; players who play solely on performance or speed figures, along with pace scenarios or whatever else, do win. Conversely, people who watch replays can win as well. I believe, like a lot of things in handicapping, it's about knowing what we're good at, and knowing what we're doing. 

For newer players in the Thoroughbred game, replay watching is wading into a deep pool. We could see a horse look terrible in the last sixteenth, but the race was at 6 furlongs and this horse needs to be stretched out. Smart replay watchers discount this and wager, while others just see a dead horse. Sharp players (sharper than me!) can decipher a horse's action on a replay, with style and surface. For newer players this is like reading Latin. 

I respect those who put in the time to watch replays. Smart players like Chris Larmey or Mike Maloney (and many contest players) can make scores the sheets and the numbers don't see well. But trying to emulate them is pretty darn tough, in my view. 

Over to harness racing, replay watching is somewhat different. The race is one standard mile, the horses race each week, and trip can be just about everything. We can see who is live or dead, and especially for young horses, we can see how the horse paces or trots. 

Someone asked me today who I liked at the Big M, with their complete set of two year old races tonight. I can see who I like on the form, and these horses might win, but I don't have two hours today to dive into replays (luckily this blog piece took ten minutes).  I want to ensure my horse was not all out, was pacing or trotting like a good horse should, that the driver was confident. I won't dive into these races, for example, without a replay. 

A caveat of course, like with the Thoroughbreds, this doesn't mean one can't win without watching replays. The teams can and do. And if everyone is watching a replay and see that horse locked and loaded, is it worth 7-5 this time, or is the horse overbet because of replay? Again, that's simply a numbers game, and the numbers guys and gals are good at it. 

Have a nice Friday everyone, and whether you watch replays or not, good luck this weekend at the windows. 

Wednesday, June 22, 2022

Stewards Scorecards? How is it Even Possible.

There's quite the brouhaha today on last night's White Sox Blue Jays game. The umpire had a bad game. 

How do we know. Well, there's an accuracy card. 

None of us like getting judged at work, but welcome to the real world. We all do, albeit less publicly.

Now, MLB deems this worthwhile because of the "integrity of the game" and probably to a lesser extent, sports betting. They don't derive much revenue from the latter, but it's a reason. 

Meanwhile, back at the ranch, let's fire up our stewards and judges scorecard for horse racing. A sport that does depend on betting to survive. 

We can't even make a scorecard. What state, what track, what jurisdiction? They all seem to have different rules, and a different way to judge. We have no baseline to judge a judge. We can't score something that's un-scoreable. 

We talked about the importance of institutions this week. This is a prime example of why they are important. A proper institution, whether in a game with independent contractors like golf, or a league like the NFL or MLB, would at the very least have a set of rules everyone adheres to. 

I think this is another instance exemplifying why a group like HISA has support, even though many can see its shortcomings. The business - for hundreds of years - can't really even come to grips with a set of rules that everyone follows. It seems like such a basic thing, yet in horse racing, with its disparate, ad-hoc structure, even the basic is elusive. 

Have a nice Wednesday everyone. 

Monday, June 20, 2022

"Putting on a Show & No Off Book Money" Has Tied Racing's Hands. It's a Load of Hooey

I was doing some reading on the revenues and spend for sports betting companies, and they certainly live in a world we're unfamiliar. 

The sports betting industry is unique in a very important perspective - customer acquisition is just about everything. And these companies are investing in customers in mind-boggling amounts. 

As reported today, Fanduel spent $5.5M on just promotional credits in May in Pennsylvania. This does not include a penny on the copious commercials we see on TV, or in-print. Estimate on the low-end is that 30% of each dollar in gaming revenue is a promotional credit. 

We often hear sports betting companies don't "put on the show" so they can afford to spend this kind of money. But that's not true. They do put on a show - to the government in taxes. And some of these tax rules are incredible, leaving only crumbs when the dust settles. 

For example, in New York in January this year, handle was $1.6B, gross gaming revenue was $113M. 

After fed taxes, GGR dropped to $109M.

After 51% tax rates, revenue dropped to $52M. 

Further, these companies that spent 30% on promotional credits still have to pay tax on this phantom wagering, because it's wagering. That would bring the effective tax rate to 77%.  

That's worse than "putting on a show". 

One of the reasons these companies can do this is because of how cheap it is for money is to be raised (well, it was before inflation hit), and they are operating at a loss. But if we're being honest, horse racing had the exact same thing for many years - it was called slots. 

Peeling off $X for promotional credits or lower takeout is what could have been done in the exact same fashion. But of course it wasn't. Something as basic as a bet $100 get $100 credit was not seen on the retail side of this business for years. 

If this business, which has seen billions upon billions of money from slots, spent 30% of that revenue to acquire customers, guess what - we'd have more customers. 

Horse racing complains a lot about a couple of things with sports betting competition as a reason it can't compete: That they don't have to put on a show, and they use money outside a profit and loss statement to acquire customers. I'm sorry, it's a load of hogwash. 

Horse racing's customer acquisition trails others because of one simple fact - acquiring customers, even with decades with billions in slots, preferential tax treatment, and a de-facto online monopoly on gambling, was never a priority. 

Have a nice Monday everyone. 

Monday, June 13, 2022

Jock & Driver Bettors, Big in OTB's, Less-So Elsewhere

I don't know how many winning players I talk to who say, "I am not really a big jockey or driver guy". 

In my years playing and modeling thoroughbreds I tend to agree. I could not find much actionable to play or not play with jock numbers (as much as I tried), and most of what I thought I found was statistical noise. 

And, logically, why wouldn't it be noise? If you've proven yourself as a decent jock, the market is using you, and there's only so much a 115 pound human can do with a 1,100 pound horse, especially when they all have preferred running styles. Also, when someone truly is better than others, the jock is bet more, because again, the market isn't stupid. This is why many top jocks have terrible ROI's, and a mathematical case can be made to fade them, not bet them. 

Over in harness racing, we saw on Saturday night what we often see, but what many seem to not want to admit.  Sarah Svansedt, an amateur with only 63 career drives, pointed her fast colt to the lead, parked everyone out and trotted 150.2, a national seasons mark. 

The driver of the horse last time? Yannick Gingras, who could only muster a 151.3. 

Fast harness horses win races. Fast horses, when pointed to the lead where fast horses get to show their stuff without troublesome traffic, win races in fast times. In this case, whether driven by an amateur or arguably the best driver in the world. 

Now, clearly we don't want to list Sarah tomorrow on every great horse in your barn. Experience matters and you want a top person driving your horse, just like we want a capable driver driving our bet home. But I don't think we can ever forget that important lesson. 

In harness - and this is unlike the thoroughbreds in many ways, because that breed's horses are generally ready to win when popped in the box - I follow a few simple driver rules. 

A "big" driver change, say from a trainer or 2% guy who has been unwilling to try a horse, to a top ten driver is massive. Not because the new driver will yell at the horse any different, as we just witnessed from Sarah, but because the top driver will put the horse into the race. It's a positive intent sign. 

A driver change - for example a Doug McNair with a couple choices in the race - is probably a good lean, even from an outside post. He didn't book off one to go to the back. We'll get an effort. 

Lateral changes, i.e. capable to capable, are to be mostly ignored.

An aggressive driver (even one without gawdy win percentages) - Mark Mac, Jonathon Drury, Jody Jamieson for example - hopping on a horse who hasn't been tried can be an excellent wager. They will give the horse a shot if it looks like he's been finishing, but has not been in position before to strut his Sarah Stuff. 

Drivers that show they are not afraid to mix it up can and should still be bets if we like the horse. We get prices on these types. Who has the best ROI on horses over 5-1 at the Meadowlands the last five years? Journeyman Victor Kirby. Vic's even batting 50% on chalk; with a pretty good minus 10% ROI in a limited sample, which compares favorably as we try to make money betting guys like Yannick with -32% ROI on chalk. 

We saw this a little just last week at Mohawk. James MacDonald had the choice of two horses who looked to be even in ability. He took the 8, the other went to Anthony MacDonald. James was overbet at 4-5 and his brother won at 5-2. The spread was too much. The driver change did not make a difference.

Jock and driver betting tends to display a whole lot of survivorship bias. We remember when a driver or jockey change converts, but don't notice the many, many times it doesn't. Thankfully, the numbers standardize this in a disapassionate way and works as a bias removal tool. When we run those numbers - and because the game is about making money - we don't tend to see a whole lot, so we have to rely on subsets of the data. We have to pick and choose; to be smart. 

In a pari-mutuel game, I don't want to bet with the OTB crowd where a jockey or driver change is considered the Holy Grail of handicapping. By the numbers it isn't, so in a lot of cases, please give me the other side. 

Sunday, June 12, 2022

Playing With Confidence and the Winning Anchor

Several years ago the Denver Broncos were reeling. Their HOF quarterback was still hurting, had lost his fastball, and at halftime in week 16 or 17 they were trailing a division rival. Their back up QB, the venerable Brock Osweiler, was not doing the job. The line was missing blocks, the receiver's routes were not crisp; the running game non-existent. 

At halftime they rolled the dice and started their beat-up, hurt QB. And a funny thing happened. 

The blocks were made, the line played great, the receivers were energized. They moved the ball methodically down the field, like an army unit on the march. Peyton Manning threw few passes, none over ten or twelve yards that I remember, but they scored. They went on to win the game, and a month or so later, the Super Bowl. 

Playing with confidence in sports is a remarkable thing. 

In racing, or gambling in general, I believe it's the same thing. 

When you have faith in your process, you play with confidence. You don't completely change your play when you lose. You don't take more action bets, you don't chase the last race of the day. You don't overbet or underbet. You don't try and get even when down, you don't open up your selection process, because you know things will come. 

The problem, and wrench in the plan is - to get the confidence, we need a taste of winning. 

This is why, I believe, winning in any subset - betting win, a pick 5 syndicate, betting low takeout carryovers only, whatever, is vitally important. Having that anchor - a Peyton Manning getting the snap - breeds that confidence. For newer players who have never had it, my advice is to do the work, find out what you're best at, and stick with it to achieve it, even if it's for a shorter period of time. 

I have not played super-seriously for some time, and lately I have been stinking pretty badly in the pools (at best treading water) but I do often fall back on my past success for a reminder. I currently am betting tiny exotics, selectively betting win bets, and trying to get back to making a little scratch. 

Maybe it's different for you, but finding confidence, I think, is vital to making money at this game. It allows us to march down the field again, instead of wandering aimlessly, looking for a winning ticket. 

Have a nice Sunday everyone. 

Wednesday, June 8, 2022

The Money. It Works in Other Sports

The LIV golf tour is in the headlines as the Saudi backed enterprise is starting to get what they want - more and more PGA players aboard the fledgling venture. Dustin Johnson walked out on The Canadian Open (and his deal with RBC, which sponsors the event), and now others have followed. Today, it appears Bryson DeChambeau and Patrick Reed have committed to the Portland event. 

And of course, we have the grand pooh-bah, Phil Mickelson, (quietly?) leading the charge. 

Despite apologists and some participants pissing on our leg and telling us it's raining, this is basically about money.  And frankly, from an EV perspective, isn't it worth it for these golfers to pursue these kinds of paychecks?

They can play for a year on the PGA and maybe earn a couple of million. They can play on the new tour for a year and make 5 times that. They can - even talented youngsters like Talor Gooch - in one or two years set themselves up for life. 

The downside (leaving aside the whole Saudi thing) is they are suspended from a Tour that they are not even playing on. And if the new Tour folds, which it may at some point, the PGA will (after suspensions and grumbling) have to accept them back at some point anyway. 

Money, for people who need it, people who want the security of it, or for people who gambled it away is a pretty strong attraction. 

Moving over to horse racing, I am summarily stumped. Purse money does not seem to attract talent as much as I would think. 

We've got 5 horse field Acorns for a half a million (this has been a pattern). The Just a Game, usually a great race, has 5 horses. The Met Mile, which was moved from Memorial Day years ago (because it could attract top fields on the super stakes Belmont Day) drew 5 for a cool million. 

Over on the harness side, a million dollar purse for a North America Cup drew 17 horses, some of whom we'd never even guess would be good enough for the richest pacing event in the world. The Armbro Flight, eliminations are not even needed. We will see short fields all year for megabucks in stakes. 

Part of this is because of the nature of the game. I'm not attracted to buy yearlings much, because the best are concentrated in top barns and I feel I don't have a shot. On the thoroughbred side this does not feel dissimilar. There are lasix issues, and drugs and the high cost of buying a horse to get it to a point where you can enter an Acorn. 

But it is confusing to me. Large purses in golf attract golfers. Large purses do not seem to attract horses. 

More than that, large purses on the LIV tour attract golfers, but the golfers they attract leave the PGA Tour, allowing spots to be open for players to fill that funnel. And parents and kids see the money involved, and their boy or girl may choose golf over another sport with less opportunity. The ecosystems all shines based on the fundamentals. 

No one seems to be rushing out to buy horses, despite these same fundamentals. That probably says more about horse racing than it does about golf. 

Have a nice Wednesday everyone. 

Tuesday, June 7, 2022

DKNG's is Just Another Corporate in this New World

Draft Kings CEO Jason Robins caused quite the stir yesterday with his comments to analysts

That he told investors looking for higher returns (on a stock that is completely beat up) he will deliver higher returns is nothing too exciting. But the fact he brazenly told the audience his company does not want winners and would look at increasing holds to generate profit was eye-opening. 

For a company sinking so much marketing money into getting people to play with them, then telling them they only want losers and at some point prices will go up to make you more of a loser, doesn't seem to be the best tag line to me. But maybe this is all part of some master plan little people like us can't figure out. 

This seems to be indicative of the space with the corporates, from what I've seen over the years. There's so much invested to be big, getting big is the easiest part, but being big in online gambling does not mean controlling a market. You're just big with other big companies. Low margin and high volume that comes from big (think Amazon) is replaced with nickel and diming, and squeezing your customer base to meet an EPS target. 

What's worrisome about all of this is the lack of innovation and invention. With larger and larger companies squeezing a lemon, we tend to see what we see in horse racing. Very little is spent on making the customer experience better to grow the entire business. It isn't like that, either in the past, or with new private companies. 

Betfair, for example, was not created by a corporate, but by a few people that liked to gamble, and were interested in tech. It won tech awards, both inside and outside gambling. The company hummed along beautifully until it hit similar snags. When it was taken over it already had "premium charges", and almost immediately the new corporate bosses were shuttling users into the regular sportsbook. 

One of the greatest gambling innovations of our lifetimes was relegated to an afterthought. 

Business books and studies (I think even Prof Betts linked a study to this on her twitter feed) have delved into this phenomenon, and it's not just with the DK's of the world. The private sector has done less and less in the way of innovation, and is more concentrated on hitting a "street" target. History books might not look kindly on this part of this era, but often times with hitting that target, the consumer benefits through lower prices and uniform access. In the sports gambling world, this somehow (how, I do not know) perversely means higher prices and less access. 

A few weeks ago, Racing the Rockefeller Way, was written for HRU. In it, Rockefeller's business strategies were examined. One section not touched on was his creation of a medical research group - the first of its kind. His mission statement was to be curious, innovate, discover new things, be proactive. It was a Bell Labs for medicine. The research saved millions and millions of lives and exists to this day (running certainly profitably, if need be). I wonder what it would've become if its benefactor's initial KPI was an EPS target. 

Most of us want to see gambling on sports and horses to grow, to innovate, to get better, to offer more access at low prices to achieve that every day huge volume. That to us is a sound business. I think that's why most of us are so confused when the business seems to wish for the opposite. 

Have a nice Tuesday everyone. 

Thursday, June 2, 2022

10 Things

Here are a few things (ten of them!) people who have blogs tend to do when they're taking a break from work and want to write something. I hope you like maybe four or five of them. 

Note - This is *not* a Derby Top Ten list. 

1. The Big M is partnering with Insideharness.com to get more information out to the betting public. This probably stems from some serious to-the-back-with-chalk racing we've seen at times lately. I like it and have been calling for this stuff for a long time, Chip seems more perplexed than when an official calls a Penguin for an obvious trip. 

2. I went to the track for the first time in a long while a couple of weeks ago. This track - Mohawk - reminded me what it's like. The food was good, the setting nice and I had a great time. Going to the track is underrated. 

3. I saw a tweet yesterday from Ed from Los Al. He said something about the importance of accurate morning lines to the betting public. He's right. People like David Aragona need a raise; others, I know it's hard but please do better. 

4. I watched a little of the Mountain the past week or so, and I was pleased to see Mark Patterson hosting the show. The insight, the stories, the analysis were all presented in a perfect Mark way. It was nice to see you again Mark. 

5. Horse racing has a ton of variables computers pick up and it makes them effective. However, the nuance of the game still leads us into places computers can't go. In hockey tonight it feels similar to me. Goalie Mike Smith could not stop an 18 inch Chicago deep dish last game, and if they put him back in I I am supposed to bet Colorado and the over. But, the narrative in the dressing room he is no good right now, and often teams get super defensive in this type of outlier situation to protect the netminder. Should I bet the under? I think so. 

6. In 1900, the richest country in the world was the U.S. Today, almost every country in the world is richer than they were. Don't say this on twitter, but capitalism rocks. Getting out of the way and letting things roll has worked wonders. In 1900, the juice in horse racing was 5%. Why didn't you people just get out of the way?

7. No bets on the Ontario election tonight for me, because it's a foregone conclusion. The economy hasn't been awful in my home province, COVID responses were not off the charts bad or good, and people seem relatively happy with Premier Ford. Plus, it's super hard to ditch someone after only four years up here in the Tundra. 

8. I read this week that 117 million of the 300 million or so guns in the states are owned by collectors, representing 3% of the population. I collect comics and old programs. 

9. I am a fan of Rich Strike and his connections. I hope they win the Belmont. 

10. Have a very nice Thursday everyone.

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