Where is Handle Going in 2014?

2013 handles are in the books. There was a decrease in racedays, a decrease in field size and flat handles.  Purses, which generally have little to do with overall handle, were also flat.

Like we've seen over the past several years, the decrease in racedays causes handle to fall. A decrease in field size causes handle to fall. The other main driver of handle - the price, or takeout - has generally been falling, because rebating has not been a bad word like it was early in the decade.

What will happen in 2014? Well, we are likely to see a further reduction in racedays. With slots revenue falling, as well as handle stagnating and foal crops receding, we aren't pulling out our pocket Kreskin to make that proclamation. Some tracks have finally concentrated on field size, like Keeneland, and made it a go-to metric, but overall (see NYRA or So Cal), short fields continue to be something this business seems to crave and cling to. I can't see that going up either.

The last metric - takeout - is probably going to be a big determinant the next year or two, and right now, this does not look pretty for customers who bet.

Lower takeout through modestly rebated handle is becoming extinct for the mid sized and smaller horseplayer. In New York and Pennsylvania, many rebated players are being shuffled into high takeout regimes, and signal fees are being increased. Right now as I type, some tracks are withholding selling their signals to smaller ADW's who rebate, with the hope that players don't care about price and will continue to play in their systems. They won't. This will not happen.

As Mike Maloney noted in this interview: "All we’re doing when we raise takeout is driving away people. The regulars are coming less often or they’re coming just as often but getting ground down. People within the game still don’t understand how destructive takeout is." I think that's true and I we'll see this hurt handles in 2014.

So to sum up: If field size continues to fall, if racedays continue to fall, and if takeout is hiked as we've seen happen the last month, (along with making it harder and harder for players to conveniently bet the game by stifling choice via resellers, via higher signal fees), it doesn't take a rocket scientist to predict handles will be lower in 2014. If all three main determinants of handle growth are negative year over year, handle can't go anywhere but down, no matter how much racing tells you otherwise.

Integrity, Western Fair, Short Fields and a Little Football

Hello everyone.

In HRU today, a second look at the phenomenon of "not trying in a race" with a well-bet horse was examined, via some reader comments. (pdf page 4)

The NFL supplies perfect information to bettors so they can handicap and decision-make, based on a spread. In harness racing this does not occur. A “no try” or “try” effort does not occur with such perfect information. It simply occurs based on the connections view of the race, or a driver’s decision making before, or right behind the gate. Did you know for sure Market Share was going to the back on a speed favoring track at 2-5? For sure? Of course you didn’t. But you did know the Chiefs were sitting their best players. Industry insiders like to say “well, its buyer beware and that’s why they call it gambling.” That’s nonsense. You’re not running an industry where customers have to guess if a magician is pulling a rabbit out of a hat, or if a little spinning ball will land on six, it’s a betting skill game with statistics, and impact values and past performances."

It kind of amazes me how - in a 2 billion a year betting game - things like this are kind of glossed over. If you do this in the stock market, or any other gambling game, it's taken very seriously.

Western Fair did $539,000 in handle last evening with about $70,000 in purses. Simplistically, at 20% takeout, that's $110,000 in revenue. If we add a $30,000 charge for putting on the show, the betting in a  way, paid for the night's costs. In previous slots fed years, $100,000 in purses were paid for at a place like Woodstock Raceway, with $7,000 in handle. It's a new world.

A quick note: A special kudos to Western Fair. They've worked the betting angle hard since Blanchard got there and I think it's paying off. With Grand River lowering rakes and having a good meet, a few harness tracks in Canada are really trying hard.

Woodbine took a brief break and I am not sure that's a bad thing for bettors. On Monday they have carded each race with ten horses and also eligibles. That's a deep card.

Other than rebated handle, overall handle has been getting killed the last ten years. One reason why? Short fields. O_Crunk showed that in 2013, one of every four races had fewer than seven runners.  In 1991, only 12% were. Short fields make the high takeout even more punishing. This business rarely understands that. In the UK, 15 horse fields with 6-1 chalk, with takeout rates of 5% or less on those short shots allows for a beatable betting game. Five horse fields with 16% rakes are impossible - not almost impossible, but impossible - to win at in the long term.

Anyone taking a punt on Super Bowl champ? If you are, you might want to read this: It's an article that shows what a team make-up looks like which succeeds in winning the Super Bowl. In this day and age where the media focuses on individual player narratives, most inside who play the game talk of a team concept.

It's striking, because it feels like picking a Super Bowl champ is not unlike picking a Derby winner. Is he fast? Sure. Does he have talent? Sure. But does he have the pedigree, the soundness, the connections, the tractability, the demeanor, the luck and everything else it takes to win at a mile and a quarter in May?

 The conclusions in the article are pretty neat - no team with a suspect pass D has won a Super Bowl in 23 years. In addition (beware yet again Manning fans), the number one offensive team tends to suck in winning the big game, with only one over the last thirty years (the Rams). If you do believe defense and balance win the big game, you are a Seahawks fan.

I think we might see the Seahawks and the Colts, because they seem to have the best balance. I will bet accordingly. However, I would like to see Denver win, because Manning probably deserves two Super Bowl rings. It might get the NFL Network media ninnies off his back for at least a year, when they move the bar again to ask him to win three championships instead of two.

Have a great weekend everyone!

Gladwell Shows Dumbing Things Down Has Its Merits

In the second chapter of David and Goliath, the new book by Malcolm Gladwell, he presents an interesting view on university choices young people make each year.

Most of us who have chosen a school at a young age tend to lean to going to the best school we can, because well, that's just what's done. Gladwell hypothesizes that this might not, for many, be the right approach and his thinking is pretty sound. He believes that a star in high school who attends Harvard, for example, might cheat him or herself out of a chance to be the best at what they want to be. For example, if you are good at math and want to become a physicist, you could find yourself at the bottom of the curve at a competitive place like Harvard, and fall to the bottom of the class. This can discourage you (I'm not smart enough to compete with these people) and you switch majors, moving to a less competitive and challenging arts degree. Conversely, at a lesser school where you are a "big fish in a small pond" you can graduate near the top of your class, and choose your path through graduate school or whatever else floats your boat.

He shows, with hard-data from SAT scores, that the big fish scenario works rather well.

In racing handicapping, we often feel similar. If you go out to dinner with a group of seasoned players along with say, their non-horseplaying spouses, those non-players can certainly be intimated. It's like we're speaking another language. Adding to that, we all know how hard horseplaying is to succeed at, even for short periods. You are a tiny fish in a big pond.

"You won't understand it, you'll feel left out, and even if you do try, you won't win."

That's a great advertisement to newbies eh?

Conversely, look at poker. I barely know if a straight beats a flush, but I can play at a 10 cent 20 cent table and have some fun. If I want to bet the Saints this weekend I can go bet them without understanding swahili. Sports betting and poker have gateways that say "come give it a shot you might like it". You may not be a big fish, but you can feel like one.

In horse racing, some jurisdictions do better than others with this phenomenon.

Betfair is a good example. Buy a horse at 5-2 and sell him at 2-1 and you have an edge. See a horse at 8-5 on the tote, but he is 4-1 on the exchange, so take a small punt. If you are doing either of those things you are understanding the game, and cashing often.

Other avenues try to make the game easier for some, like Timeform, who graphically depicts their PP's. Whatwins.com, Dave Vicary's baby, is another that makes betting to win easy.

What the UK has over us is a reliance on win betting, and that win betting is done at a much lower rake than in North America. There is no doubt in my mind this is why the UK, with much more competition for the betting dollar than here, has continued to glean decent revenues over the last fifty years for horse racing. Over here we rely on exotics of all types. These are hard to hit and they're bankroll killers. Even if you use Whatwins or Timeform to pick a winner, the tracks are blaring "screw that sissy win pool stuff, play our Pick Six where you will lose your shirt today and maybe not come back tomorrow" through their virtual betting loudspeakers.

Dumbing things down is very important - a new player has to feel like a fish in a pond with a chance, not feel like they're fish food. However, with our current system in North America, it's very tough to make it a gateway like other gambling games. I think it's a huge reason why racing fails to increase newbie participation.