Recognizing Market Moves in Racing Are Never Easy

Crunk noted the offshore pricing on Tarif in the Rachel Alexandra at FG a couple of weeks ago in an informative tweet; namely, the horse was never 6-1 like she was on the tote. 

Learning how a game is played in today's world is really important to our ROI and it's important to work on these things, in my view. 

But, it isn't easy, even if mediums like Betfair and others are available. Markets do all sorts of things, because in the end they're still a collection of opinions. 

Around 13 or 14 years ago when I was playing seriously, I would get ready every year for the Woodbine meet opener. It was a collection of 4.5 furlong affairs. 

Going through back data I found that pace figures worked because most races went gate to wire. You needed early speed. CJ's old pacefigures were a good input, as the Timeform ones would be in the present. 

I had a proprietary workout score - something @dennycaps talks about being important even today - and that was indicative of success. 

Last up, old trainer data was important, because some barns had their horses ready to fire and some didn't. 

It was a simple model, but it did work fairly well in previous years. The ROI was in the 1.20's if my memory is right. 

One year I handicapped and had the collection of horses I liked. I opened Betfair and started playing. 

Almost immediately the markets were really weird; unlike I've ever seen before. 

A horse I had as a slam dunk early leader that fit my criteria was 6-1 on the tote and 15-1 or higher at Betfair. Keep in mind there weren't rolling doubles or pick 3's to check pricing. Regardless, I wondered if I had done something wrong or if the horse was a dud. 

I started betting the 15-1's and the bots - a precursor to the CRW models of today - kept lining up offers. I took a few more of them and fought this market. 

The horse won. 

In the second and third and fourth races the exact same thing happened. The "CRW" bots hated my horses, and they won. 

I telephoned a friend who had a sizeable bankroll (over $500,000) at Betfair and told him what was happening. The bots were freaking out and I could get more and more money down, but I rarely overbet a bank. He could join in. Knock himself out. 

By the fifth race this was still going on. A filly from the outside which was my best bet of the day was 5-1 on the board - locals sure knew who was live. We got filled at 18-1, then 20-1, then 22-1. The bots just kept putting money up and we took it. The horse won by daylight. 

If I remember correctly, ten of eleven first call leaders won that day. I can't remember what I ended up, but I do know my friend talks about it as his first $100,000 profit betting day. 

We fought the market, we fought the CRW's, and somehow we won. 

Meanwhile, the bots and other sharps are never that bad. Something very weird was going on in this market and fighting it is normally almost impossible. Case in point - I kept track of my wagers religiously at this time. When I fought a market - outside this one time - in the exact same way (with CRW's lining up to take my cash) my ROI, which I quickly checked for this missive, was $0.52. I fought them, and they kicked the living shit out of me. 

We've all been at this game for a long time. In my view, in today's game, market moves to fade or hop on or ignore completely are some of the toughest decisions we have to make as bettors. 

As a rule I listen to the market more than I ever have. I check everything I possibly can. I'll never be an expert, but if I feel if I am not doing my homework to at least understand what's happening in the markets, I'm never going to be able to win at today's game.  

Thanks to Crunk for sharing his two tweets. There was a lot of wisdom in them. 

And ya, I bet Tarif even though I didn't like her much and had no intention of betting her. I had to abandon much of what I've believed over 35 years or so of betting to place that bet.  I listened to the market and that time it was right. 

Have a great day everyone. 

NFL Salary Cap Increases, Kinda Like Purse Increases, Not Really

They announced the NFL salary cap has ballooned to $255M in 2024, an increase of about 100% since 2014. It's staggering. 

This increase has its pluses and minuses. 

The good:

• Teams can spend more on their star players that were destined to leave, if they wish. If there's enough cap room to sign a Gabe Davis or Danielle Hunter who are very happy with their teams and city and life, Buffalo and Minnesota fans can be happy. If it adds to stickiness of rosters, it's all good. 
• Athletes can choose many sports to play. If growth is happening it means more opportunity. Growth is always good. 
• A rising tide floats all boats. Viewership up, ticket sales up, everyone benefits. The salary cap growth helps the $1M per year player, and the $50M per year player. 

The bad:

• Ticket cost has increased, TV deals are splintering the viewer landscape angering fans, player jerseys cost an arm and a leg. 
• The higher the labor cost the lower the spend on the ancillary, some of it very important. 

The bottom line with the NFL, however - things are growing, the ecosystem is healthy, and it's reflected in the cap. 

In horse racing, we've seen purse increases which many may think means things are okay, but these have not been driven by a healthy, sound business. 

Handle is not increasing; revenue from handle has gone down, not up. 

Outside the Triple Crown, the sport pays television to show it, not the other way around. 

We don't sell Irad Ortiz jerseys. The sport's popularity is not rising. 

Maybe we should just be happy purses are up, because they have to be doing something positive, right? I really don't know about that. 

On the low end, inflation has been deadly to the small trainer. They can't make enough money. Purses have not gone up enough, and sadly, if the purses do rise to high levels - say where a 5 claimer has a purse of $15k or $20k - the supertrainers swoop in, crowding out the small timer.

On the high end, how many barns with fifty or more big priced horses does the sport need? Clearly more than one or two. Hong Kong horse racing has barn caps for a reason. If horse racing was the NFL, and Todd Pletcher was Patrick Mahomes, he'd be making a billion a year, and Joe Burrow four million. 

The NFL has ended up with a growing business fuelled by revenue growth. Its foundation is not without problems, but it is sound. 

Horse racing has not put that money to good use, because the foundation is not sound. In some spaces it's downright unbelievable. 

Yonkers $35,000 race with a $19,207 handle.

— harnesstimes (@harnesstimes) February 23, 2024

The answer to all of this is beyond my pay grade. But, the NFL's model of revenue up purses up is what horse racing has to show some semblance of. Purses up handle down means the present is okay, but there is no future at all.

Bettors are Easier to Find When You Know Who You Are

Penn Gaming recently signed a deal with ESPN, booting the previously partnered Barstool Sports. Leaving aside the megabucks involved, it's appeared to have paid some dividends. 

Today, they announced ESPN Bet drove about 1 million first time sign ups in Q4, which is more than they budgeted for the entire year. If, and I don't know this, they generate $400 of lifetime customer value from each on average, it would be a $400 million dollar jump for one quarter, which seems not bad. 

Penn saw some value in the ESPN brand, and pounced on it. And I think it made at least some sense. ESPN and betting is closely linked. Probably more so than Barstool or others. 

Meanwhile back at the ranch, we continue to talk about the big branding story in horse racing: Alix with an i and Gulfstream. The tik tokker (I can't believe I typed that at my age) who reddit says charges $250,000 for a post, went to the track, and we haven't heard much about increased ADW signups or track visits, but I'm guessing we're not because they haven't happened. 

Honestly, how could they, with branding that shows Alix with an i losing all her money betting horses?

couldn't have come up with this level of marketing if I tried pic.twitter.com/PFE5sCR9g2

— Mayhemily (@EmilyOptixEQ) January 29, 2024

Horse racing is constantly confused as to what they are. 

Is the sport a day to look at the pretty horses and colorful jockeys or is this a gambling game that makes money that way? 

Some people say both stories should be told, but without unlimited money, and a sport that seems to focus worse than a dude after a three week meth bender, at some point you have to pick one. 

Penn Gaming picked one, and it seems to have started out well. 

For those waiting for horse racing content like a Youtube show where a horse bettor teaches Daniel Negeanu how to wager a mathematically perfect pick five, I think you'll be sifting through a whole lot of Alix Earles before then.

Have a nice weekend everyone. 

There's a Place for Sharp Bettor Education, Sharp Money and Sharp Action

Back in 1998, when the online sportsbook boom was in its nascent stage, Pinnacle Sports was created in Curacao. This online sportsbook was different, because it didn't push signup bonuses or anything flashy, it simply decided to offer high limits and good odds. 

For a hundred or more years -110/-110 odds were commonplace, and in most of the betting space it's the same today. It's not uncommon to see football games priced at -108/-108 or baseball posted even lower at Pinnacle. 

And over time, despite zero advertising, everyone knew the place. 

In a long ago episode of the Sopranos, Tony overhears someone that got a great bet down for $50k on a boxing match. Surprised at the good price, Tony asks where he got the bet down. "Pinnacle", said the bettor, much to Tony's chagrin. 

Interestingly enough, as per a conversation on twitter yesterday with Crunk, ITP and others, Pinnacle is the place that, despite these great lines, wants you as a bettor to get better, not worse. 

They have articles like this, on if you should bet volume or edge, discussing EV, right in the limelight. There are many of them. 

Pinnacle works on high volume, low margin. It educates customers of this. It offers the lowest prices around. There are no, or few, gimmicks. There's no promotions. There's no fancy hat parties. There's no ABR bus. There's no barstool guy drinking beer, eating pizza and swearing at a receiver. There are no pick 6 tickets with ABC's. 

If they wanted to why can't horse racing achieve this type of medium, when their system - pari-mutuel - doesn't even have bookmaker risk?

The reasons are numerous, and they are nothing new. Too many fingers in the pie, a lack of willingness to accept price as an important variable, to name just two. Even when they're handed a medium for high volume-low margin, like betting exchanges, they're sabotaged with high hold and lack of a push. 

But in my view it's probably more than that. 

As Rufus Peabody today scribed on the twitter, sportsbooks are corporations. They are burning through cheap money, hiring everyone everywhere, and are 100% focused on growth. With growth comes same game parlays and casinos and high vig and everything else. 

And as Rufus notes, bloat is normally associated with big government, but it works in today's corporations as well. Bloat is so inexorably tethered to inefficiency, a place like twitter can fire 75% of its staff and ostensibly work the same as it always did. 

Horse racing betting, like the firms Rufus references, works similarly. They aren't nimble. They can't experiment quickly and pivot, offering things quickly like Pinnacle can, or eliminating them when they don't work. 

It's at least partially why we're stuck with one-week takeout experiments, or countless meetings to offer bet $200 get $200 promos. Even those simple promos seemed to take a decade with horse racing corporate owned ADW's. 

There's a place for sharp money, sharp bettor education and sharp action. But it has to have certain characteristics. Those traits are at a place like Pinnacle, and for horse racing it remains elusive, and in my view, probably always will be. 

Have a nice Tuesday everyone.