Racing Businesses v Our Businesses

There was a post today that I read with someone talking about how tracks raise revenue. He gave two options:

1) Raise take
2) Raise Signal Fees

For the raise in take or signal fees, this example was given:

"If a track has a $1 million handle with a 20% takeout rate, the takeout is $200K. Rise the takeout to 23% drop the handle to $900K and the takeout is $207K. One reason why the takeout is so high, is time and time again it has been profitable for the tracks to raise the takeout."

That gentleman is correct. This is racetrack business right there. Raise the cut, lose some customers, but gain a little bigger share: Poof, more money. It is the way this business has been run for a century, for the most part (takeout in 1906 was 5%, it is now 22%).

Conversely, you have to go into work tomorrow and you have a meeting on growth strategy. You would like to continue growing and you have 20 clients, but would like to have 25 at the end of the year. That is your goal for growth.

If you walk into your meeting and say "I have a plan. We can raise our price to our 20 clients 20% and we would grow", your associates would think you have been taken over by space aliens.

Clearly if you did that, you would lose at least two clients, and as time goes on you would lose the trust of more and more of your clients - they would be wondering if you are really out for them, and it would breed badwill. The two clients lost would tell others your company is too expensive, too, and you would find it harder and harder to gain new ones because of that. In addition, by raising your price, it would be harder to gain new business, even from whom did not speak to the ones who leave, because you are overpriced.

At the end of the year you would make more money - the bump in revenues would cover your loss of two or three clients. But the fact would be apparent: Your business's future would be in peril.

Jack Nicklaus said "Tiger Woods plays a game that I am unfamiliar". For many of us racing is much the same.

Some Large Bettors Say No To Santa Anita

I received an email Saturday night around 10. It was from an acquaintance on the left coast who is more than likely one of the largest individual bettors in North America (one never knows for sure because they are notoriously quiet) asking me to ring him. I had not spoken to him for over six months, so we had plenty to chat about. The conversation at one point was about the California takeout hike and the loss of betting handles there since the meet began. I called him today and asked if I could write up some of our conversation, and he said yes.

"They really have no clue the damage they have done to the gambling customer there, do they?" was the immediate response.

This bettor told me that he has not played a cent into the track this meet.

"I have not even watched a race - actually no, I have watched two races because friends owned the horses in them but that is it."

He went on to relay that people in his craft (he has been betting for a living since he was 18 years old and other than owning horses, makes all his money from the races) are equally annoyed with the sports direction in the golden state. As you might not know, larger bettors tend to know each other, are friendly, and (a good book on people who bet for a living and their relationships is here if interested) share views.

"Out of the guys who I have told you about before, two are just dabbling nickels and dimes at Santa Anita, one is betting much less, I have stopped cold turkey along with another. The last guy is looking for a new circuit to bet and tells me he has been studying for that. It's unlikely he'll come back, unless something changes there. The ones who are still betting obviously operate on very thin margins so if they see their day to day results dropping [e.g. with the higher takeout], I'm sure they'll quit and just go for carryover pools and I'm pretty confident that will be the end result."

It is always difficult to estimate what's a "nickel and a dime" to large bettors like this, and it is not proper etiquette to ask, but from knowing the culture for many years, I would submit it is somewhere around $2000 to $4000 per day. Estimating the yearly betting volume from these individual bettors is also hard to guesstimate, but somewhere from $4M per annum to $10M or $12M each is probably a good guess. It is extremely stressful to bet any more than that as an individual bettor and stay on top of things.

As for him, racing not only in California is bothering him - although he calls the takeout hike enacted by the CHRB there "pure insanity" and it is the reason he is not betting - it is the whole industry structure. He believes when a track exec here speaks, they don't speak his language; they might as well be talking to him in Swahili.

"There are some circuits I bet, certainly, but more and more I wonder what to do. Hong Kong is something I am looking into. Big pools, nice horses and proper takeout where I might be able to make 2 or 3 points if I work hard. They [management] seem to know what they are doing there, but it is a lifestyle change as I would have to live there, and it might take me six months of studying to prepare, so I don't know."

You can tell a lot about the health of a gambling game by looking at how many pros there are. In poker there are hundreds of thousands and they promote that game for them. In sports betting there are many thousands. At those gambling games, takeout hikes do not, nor ever have existed. Your neighborhood bookie in 1920 knew when juice goes up, players do not play because you tap them out, so at the grassroots level (minus any fancy degrees, just pocketbook smarts) they have maximized revenue by maximizing customer satisfaction and turnover. The rake on sports betting is the same (or lower) today than it was a hundred years ago. In horse betting there are very few pros (some estimates say "250" full time players who have stuck with it, not just done it for a year or two, or "think" they are winners), and that says a lot. As time goes on, the number seems to be shrinking, and that is no good for anyone.

Whatever the case, it seems that the early results at Santa Anita are not a mirage, or an aberration, or just due to "whiny $2 bettors". They reflect a systemic problem that needs to be addressed. A change to 4 days a week at SA where year over year comparisons might look better, double carryover days like today making things look not as horrible (carryovers are takeout reductions, which is maddeningly ironic), or headlines saying everything is fine might make us feel good, but feeling good doesn't pay the bills.

Gamblon Horton & His Friend

"Gamblon Horton made it to 37 today. In the last year, he has developed cataracts and his hearing isn't the best, but he is doing exceptionally well for a horse his age and physically looks really good."

On January 1st almost each year, that post is made on a chat board, and people love seeing it.


It is from horse owner Keith Gamble. Keith is not a trainer, did not win the powerball or anything. He is a regular guy who keeps his retired racehorses near him and gives them the care they deserve.

It has been a tough year with his horses. Recently 26 year old Gamblon Jazzy passed and he was worried how Horton would take it.

"The first week of December, I went out to the barn and found Gamblon Jazzy dead in her stall. She was Horton's girlfriend for years and I wasn't sure how he would be, but he took it in stride. He has seen a lot of horses die." he wrote via a private exchange (which I have gained permission for).

In addition, Horton's pal Gamblon Sambo has had a tough run too.

"The next week Gamblon Sambo [another old boy] got colic and things were not looking too good for him. After a couple visits from the vet and about $1200 later after trying just about everything, we put him on some medication for ulcers and knock on wood he has seemed okay for the last week. It looked for a period of time like Horton was going to be the last man standing. I keep my fingers crossed that Horton goes before Sam so he will always have a buddy in the field, because he likes company where Sam couldn't care less."

As for Horton, Keith tells me that he still has some spunk, but feeding is a bit of a chore:

"He still does a half ass gallop when he gets excited and he is a little harder to feed now with few teeth left but I soak his hay cubes all day so they are like a thick soup and his grain I mix with apples, corn oil and hot water and turn it into a porridge. The vet was out a week ago and said Horton looks fantastic."

Gamblon Horton has now outlived several of his human racetrack connections. His racing lines are a walk down memory lane (I remember seeing old programs with him in them as a young fella). And he is alive and well for another New Year.

Keith is a tough as nails - a friend says "he has a rough exterior with a huge heart" - but toughness and kindness are not mutually exclusive.


It is often said that your strength as a person shows when you do something honorable when nobody is looking. Keith does not want anyone to know about what he does. In fact, I pointedly asked if I could even use his name in this story, because I know he wants it all to be about the horses.

For years upon years he has spent time, money and probably shed a tear over his retired racehorses not for a medal or an award, but because it is what good people do.

Character and honor are two things I hold in high esteem, and Keith Gamble has them.

Happy New Year to Keith, and Happy Birthday to Gamblon Sambo and Gamblon Horton. I hope you know lucky you are.

If you would like to help retired horses find their way, and are a standardbred lover like Keith is, please see our feature on New Horizon, which we wrote about a couple of years ago.As their website says ""There is no greater form of self
revelation than to look in the eyes of a
rescued horse."