Horse Racing's Massive Big Tent

I was chatting with a friend recently about success we may have had betting a particular meet, and one meet immediately came to mind to me - a meet around 15 years or so ago, Sunland Park. 

I was playing regularly at that time, and I used to download every racetrack (there were many more then) and for whatever reason I decided to run numbers at Sunland to maybe take a crack at it. 

As I started to play, I noticed some interesting patterns. There appeared to be a strong bias, where in sprints, the outside speed would stay wide, then open up at the head of the lane, and rarely was beaten. It was like clockwork. After further investigation, it appeared the wind blowing down the back had a lot to do with it. Handicapping involved trying to find the horse (and jock) who would get this trip. It was remarkably consistent for over a month. 

I had no idea where Sunland Park was. I didn't know the jockeys. I knew maybe one trainer, Justin Evans from Turf Paradise, but dammit, what was my favorite race meet; the Spa, Ascot, Arlington, Del Mar? No, Sunland Park. 

Meanwhile, the day many focused on at Sunland was Sunland Derby Day. Prep season was in full-force. People were watching and talking about the Fountain of Youth, The Rebel, The Louisiana Derby. Some folks were posting workout videos of Derby contenders; some were posting pictures of trips to these tracks that they were especially making to cool the winter blues. 

Then came Keeneland. The poly was installed and again the bias was at times real this time for outside closers. I found the cheapest races on the card were the most beneficial to find a horse. Many were hoping to see the Wesley Ward firster or who'd enter the Shakertown. The entries would open and I was hoping for a claimer, trying to find a S or P horse with poly experience, and outside post and a standout late pace number. 

Either this year, or the year after I visited Keeneland where I found another big tent. The U of K kids dressed up nicely were everywhere. They probably couldn't afford a downtown Lex bachelor pad like the great Gabe Prewitt (waterbed odds, -180?), but they sure looked like it. They were not there for a Wesley Ward firster, and I don't think they knew a late pace figure if Professor Marshall Gramm explained it to them. But there they were - everywhere having a wonderful time. 

This game talks to everyone, and it caters to everyone. The fan has copious enjoyment, the bettor has just about everything to choose from. And I haven't even touched on the horsepeople who wake up every day, some since before they could walk, to care for the horses. To feed them and jog them and work them; to get their feet trimmed, braid manes, or give them rounds of Legend when they're off their feed. 

Horse racing has a ton of problems. We all know that. But attracting people from diverse backgrounds with a breadth of intentions wider than the Grand Canyon is not one of them. It's probably the biggest big tent sport the world has ever seen. 

Have a nice Thursday everyone. 

Finding Value in Racing is Tough, but it's There

I found Chris's latest pod with Dennycaps interesting for a number of reasons; one of which was the dive into what pools at what track might be more valuable to look at. 

Last night at Mohawk the pick 5 pool in race was stout, approaching $100k. For most of the betting, including using the exotics, there were two contenders in leg one, the four and the six. Implied odds suggested the four would be around 7-5 and the six around 2-1. 

At the gate, the six was 9-2 and the four was 4-5. Expecting things to correct, the overlay on the 6 appeared not real. 

But it was - in the win pool at least. He won and paid $11.90. 

Just how much of an overlay was that in the win pool? The horse took about 25% of the pick 5 money (suggesting about 2-1 odds in multis). And get this, this $12 winner kicked off a daily double with the winner of the second race that paid $8.90. 

On bad field nights at Woodbine the overbets can be really overbet, and the underbets underbet. 

This pick 5 had a mix of both. A $12 winner onto a $3 winner onto a $3 winner onto a $13 winner onto an $18 winner only paid $440. It could've - on other nights - paid three or four times that. 

According to multi leg wagers the first race winner was a massive overlay. The 4th and 5th race winners were, too. $20 to win on each of those got you back $430. Spending $60 on pick fives and locking them up gets you back $264 if you hit it for 60 cents. 

With the late odds usually highly correlated to multi-leg wager payoffs we might've expected these horses to pay much less. So it's still really hard game. And yes, the pools are fairly efficient. But as Denny noted in the pod, they are not perfectly efficient. Last night at Mohawk sure proved that. 

Have a great weekend everyone.

Where's the Nuance in the Public-Private Horse Racing Space?

I've been reading the narrative on twitter (from some thoughtful observers) that the space has gone from one end to the other. Namely, several years ago you would be flamed or doxxed for saying something negative about wokeness even if it was not the least bit controversial; now if you state an opinion that's even remotely positive about a slice of DEI (or what have you), you receive the same vitriol from the other team. 

That's social media and not the real world you may say, and I suppose you're right. But when it comes to horse racing, I think the same exact thing is alive and well. 

How does a track go from flush with slots money, living the high life, to "decoupled" like Pompano Park?

How does Arlington go from a jewel of horse racing and million dollar races to a parking lot, with nothing to replace it?

How is it, as we appear to see now at Gulfstream, that the track goes from running a bazillion races a year, supporting an entire industry in a state, to what seems to be nothing?

There's no either/or - it's flourish, or deader than a doornail. 

I don't particularly understand the Gulfstream issue. As you see in the Bacon Report and in other places, the supply side of the sport in Florida is strong, and thousands of people are employed in the business (and the track does handle). Why are we either/or here? Where's the nuance to protect that industry in at least some form?

I'm not a big corporate welfare fan, but transitioning money is important for any industry when the rug gets pulled out from under it (whether than be for real estate money or slot money).  Where's that plan? 

Some jurisdictions have done things with nuance. 

Ontario for example went from high on the hog to having the slots at racetracks program cancelled, and that completely could've killed an entire industry. Because the government and racetracks worked together, a plan was consummated. The King's Plate and North America Cup and breeding programs across the province were saved with an influx of capital. In return, several tracks were shuttered, or remained slots parlors, adding to the government's coffers. 

This program was signed-on for the long term, so owners, breeders and trainers and jocks were able to have some sort of certainty. 

We often complain that the industry didn't do enough with its good fortune when they had good fortune, and that's very true. California might've had the nation's biggest and best betting platform when exchanges were given as a monopoly to them. Kentucky Downs is flush with cash and raises takeout for some god awful reason. Pennsylvania slots cash came into the billions and they still had 30% juice. The list is endless. 

But when the good fortune gets pulled, most industries are granted some grace. Horse racing, through its dearth of leadership, lack of foresight or whatever, doesn't seem to live under that same policy.  Like we've seen on twitter the last five years, it's one side thriving or dying. There's no in between. 

Does Racing's Revenue Response Ignore the "Little Things"?

I read a story on Dave's Hot Chicken recently, and it more than just made me hungry (I've never heard of Dave's Hot Chicken before). 

The brand was started by four friends in LA, and a quarter of their 270 stores reside in the Golden State. As many of you likely know, California raised their minimum wage to $20/hr, and Dave's and other fast food brands had some choices to make. 

They set up emergency calls with all franchisees and went to work almost immediately. They had to cut costs, and find ways for customers to spend more money (because they had to raise prices, and higher prices mean lower sales).

Here's what they came up with, in almost real time, with all of these changes implemented within months.

On the cost side:

• They invested in automatic dishwashers instead of cleaning dishes by hand
• They contracted out cleaning work
• They shifted prep to contractors
• They installed grease systems that were automated and were able to reuse grease

On the revenue side they did increase prices (8%; to counter an $8M labor cost increase), but they did quite a bit more than that:

• They implemented self serve kiosks, and found out customers ordered more when ordering for themselves, upping spend per order (in betting parlance, churn). 
• They created "Hot Boxes" and new packaging to increase order size, and gross sales
• They created low-cost menu items like single chicken orders for $7. 
• They added new products

The CFO said "there's a lot of little things"; the CEO added, "We can't just raise prices, we have to get better."

All of those "little things" (absent price hiking) has increased the bottom line per store by about $200,000 per year (guesstimating here based on my knowledge of that vertical, that's about 5% of gross sales). And it happened with lightning speed. 

Over in racing, the response to falling revenue has been primarily twofold:

• For the vast majority of players margins are increased (from 6% in 1905, to 21% now; ironically, CAW's are the only ones getting 1905 margins). 
• More alternative gaming is asked for

Some racetracks, like the Meadowlands which relies on handle, have cut costs the best they can. They run two nights a week for a reason. 

On the revenue side, as noted in part in HRU this weekend, has the sport even tried to increase in-store sales by maximizing the track feed? We still see races raced over top of each other, why? Where are the coupons and discounts to every day customers to encourage wagering and wagering stickiness? 

If Dave's Hot Chicken can spend money on kiosks, letting customers choose their meals, why can't customers get access to better tools to allow them to bet better or bet late like CAW's can? Hell, can we get a system to the point where a customer knows what the final price is? Where's the single wallet? 

Jim Collins' seminal work - Good to Great - noted how companies flywheel to grow. They do a whole lot of little things. 

Dave's Hot Chicken received an $8M kick in the ass that could put them out of business and in response immediately did those "little things". Our sport seems to get hit over the head with a plank on a yearly basis, and I don't get same vibe. 

Have a nice Tuesday everyone.  

Poteck on Racing Wagering Trends in Canada & CRW Wagering

2024 marked the first year ever that Woodbine Entertainment did not put out a year end press release detailing their annual and year over year handle numbers. 

It had me wondering why so I reached out to the Canadian Pari-Mutuel Agency to request the numbers.

The charts below detail Ontario and Canadian historical wagering for the past 19 years and for the last 6 months of 2024. 

Woodbine represents ~70% of the 2023/2024 Canadian handle. The numbers are not very pretty.

Chart 1 Above (click to enlarge charts) - Canadian customers wagering more on U.S. tracks, less on Canadian tracks. International customers making up more and more handle (in 2024 making up more handle than domestic outlets) 

Chart 2 - Ontario wagering only since 2006.  

Chart 3 & 4 - Local wagering on Canadian tracks falls the second half of 2024. 

A couple of things jumped out to me. 

The amount Canadian's wager on Canadian tracks has decreased significantly over the past 19 years, down about 60% when not accounting for inflation. Clearly Canadian Horseplayers are not pleased with the product. 

I am not sure what happened the last half of 2024 as Canadian wagering plummeted 12% on Canadian tracks, 6.5% overall. An aberration or a sign of things to come? 

The amount Canadians have wagered on foreign tracks has remained stable when not accounting for inflation. However foreign customer wagering on Canadian tracks has approximately doubled over the past 10 years. 

The increase is likely due to expanding the signal distribution and the growth of CRW's. The strength of the US dollar has contributed, as well. Hypothetically, if CRW's represent 30% of Canadian wagering then they account for upwards of half all foreign wagering in Canadian dollars, yikes! 

The question going forward is, has the signal expansion and CRW volume maxed out? And if so, how steep will future handle declines be? 

One interesting question: Is a takeout hike in the offing? 

The CPMA’s sole source of funding is the 0.8% levy placed on all wagers made in Canada. In 2006/07 the levy took in ~12 million. In 2024 it was $8 million. The CPMA can raise the levy to 1%, which is the highest they can go without receiving legislative approval. It will be interesting to see if they do increase the levy, and if the tracks absorb the 0.2% increase or if it will be passed on to the Horseplayers. 

One must wonder what these numbers would look like if Woodbine was not bestowed a Canadian online wagering monopoly where they take advantage of Canadian Horseplayers with the unprecedented scheme of increasing the takeout rate on American racetracks. 

A big thank you to PTP for sharing this information. And in the spirit of the blog, “have a great Monday everybody!”

Eric Poteck is a long time industry watcher, presenter at race conferences, horseplayer and general watchdog (aka pain in the butt) of the Canadian pari-mutuel business. He can be followed on twitter @Epo13.

Monday Racing Notes & My Horse Racing Twitter Tariff Riffs (This Kind of Rhymes)

Hello everyone, and Happy Monday. 

I've been playing the races, lurking, and not tweeting a whole lot (since I have very little to say of importance). But thank goodness for the blog where I can type in Twinky-form with impunity. 

Here goes. 

First off, I had a nice plane ride listening to part one of the Dennis Montoro Bet with the Best pod, but somehow I missed part two was released. It's here and I'll be listening to that tonight. Dennis provides insights on the pools that you won't hear in a lot of other places. 

A quarterhorse trainer really got nabbed last week, as reported on the Bacon Report. One of the drugs was not approved by the FDA way back in 2010. Seriously. So how is it around on a backstretch (allegedly, of course)? When people on the twitter complain about exotic drugs and get shot down like they don't exist, I think this is why they have that opinion. 

Despite takeout and all the rest of the bad, bad things, horse racing can be the best bet in the history of the universe. How can it be any other way when we analyze the late pick five at Gulfstream on Holy Bull day?

Leg one was Mike Maker, going a marathon distance off the claim. 

Leg two was Todd Pletcher with a surface switch going first time dirt, second off a layoff who opened at 5-2 (so someone knew something we should've been able to see). 

Leg three was a Eurton mare that was my best bet of the day. And I'm no Pittsburgh Phil. 

Leg four was a horse liked by many sharps, including Gallo on the Sport of Kings pod, and the great Marcus Hersh from the DRF/NFL.com.

Leg five was a key for me (I hit the pick 3, yay me), so I am sure it was a use for everyone. See leg three. 

This assembly of very logical winners paid around $80,000 for 50 cents. 

I hope the people who run this sport start doing some good things because that kind of value on the mind-bending yet scrutable chess board should never, ever die. 

As most know, Donald J. Trump did some serious tariffs on us poor souls in the Tundra last weekend. Our dollar sank, cold Canadians booed the U.S. National Anthem at hockey games, substituted US booze for Canadian booze (spoiler alert, you end up with the same hangover) and probably cranked a lot of Rush in the minivan. It was a wild weekend. 

For those that don't know much about tariffs, you've come to the right place because this is what PTP was built for. I took economics classes in the 1980's. Here's what it all means. 

Those of you with US betting accounts (how dare you, Benedict) just got a raise. It's like getting a rebate without being a CRW. 

Woodbine handle is about to go up. Tundra Dollar down, US dollars in, more handle. We'll see if they report the good news by attributing it to marketing. 

It's been reported that it costs 25% more to read Swifty twitter rants. Apparently Tinky is in the EU this week, so his 34,874 word tweets about the breeding of this new Chilean horse racing at Gulfstream in the sixth can be read by Canadians at the same exact price as it was last month. 

CJ and his lovely wife are about to take time off making speed figures and make more trips north, probably to the Curling championships. Bundle up my Oklahoma friends, it's been a cold winter. 

Speaking of speed figures, word is, all Canadian races that were scheduled for a mile are now only 0.66778 of a mile. And you guys complain about run up. 

ITP is about to release his new e-book titled "It's More Important than Ever for Canadians to Listen to Me Over Andy Serling About Ticket Structure."

Ray Cotolo is taking advantage of the strong Yankee dollar (like the rest of Hollywood, he's gone corporate) and he's making a new film in Vancouver. He plays a drifter who spends the entire Kentucky Downs meet underneath a trackside tent that they raised takeout to pay for. The film is only slightly less confusing than 12 Monkeys, and he did a good job making Hastings Park look like Kentucky Downs. 

There's a rumor Philadelphia Park has found a way to increase the takeout for Canadians based on the new tariffs. Starting tomorrow, when you hit a superfecta at the storied Pennsylvania oval you will owe them money. 

Everyone on the twitter knows I built a new shed in the back a few years ago after mispunching a superfecta and scoring a couple of K ($CDN). I've invited Bucky and Beem to come up this summer and they accepted at the low price of $1,000 CDN shed rent for the week. I'm happy to report that I just photoshopped the original email and changed the currency to $US and I'M FREAKING RICH. 

California horse racing is short on horses and short on time. On Friday they signed a deal with Canada to import racing stock to get those field sizes up (and possibly find Baffert his next Derby winner). Now the horses cost way more, and border security is holding them until things become clearer. Lisa Lazarus just held an emergency meeting and it looks like the Kentucky Breeders Fund might have to step in. 

Well, late breaking news - the above could all be knee jerk. The Donald is apparently meeting with Trudeau today, which is kind of weird since JT resigned because of approval ratings that were lower than Belinda Stronach's. But if something comes out of it I'll report the good news. 

Which reminds me, I better get that $1000 US from Bucky and Beem right now just in case. 

Have a nice Monday everyone.