Detention Barn Follies Continue

As y'all know, Little Brown Jug week was a rather interesting one. From the inside baseball side of things, the story that won't go away involved the capturing of the Jug winning trainer's phone, and related text messages, two of which were:

“Where is the (stuff) for betting line?”

“Anytime between 830-1030 range when its clear to saftly (sic) get his treatments into him.”

The result was protested by a few trainers, because the detention barn is a place where, I personally as a horse owner, tried to bring in a can of diet coke once, and it was like I was carrying an uzi into a baby shower. You don't bring anything into the D barn. If you do, you're up the creek.

Although most thought the fireworks ended Jug day, it hasn't. Legal teams are now involved.

I am not a legal dude, but it seems trainer Coleman, who (according to the story) did admit to wanting to bring in a syringe (for yogurt, mind you), might end up having her words, not the texts, be the issue in this defacto appeal. Syringes in a D barn are worse than diet coke, no doubt, and even yogurt is a no-no, as Susie Kerwood at Woodbine can tell you. 'Wanting' and 'doing' are two separate issues, though, I suppose. We'll let the legal types figure that out.

Regardless, this will be an interesting story to follow.

Notes:

Story on Event Marketing and Racing today in the TDN. Chrome and Zenyatta are two of very few horses in Thoroughbred racing who capture the imagination of most everyone, over time. They're outliers, and the fact that racing places so much hope on horses like this coming around every year or so is not wise, in my view. Even current darlings like Tepin, or past ones like Wise Dan are a notch below the outliers. Because of the state of affairs and the structure of the sport, events > great horses, and I think it has to be that way. 

Pricci talks about a rider not riding a horse out and getting a $500 fine. I think those who find this odd have a point. In Hong Kong he'd have probably been escorted to the tarmac and put on a plane.

Enjoy your Thursday everyone.

Messing Up a Monopoly

I have heard from dozens inside racing for a lot of years that "we wish we were like racing in France." Everything is sunshine and lollipops in France, apparently.

France, of course, has a monopoly on pari-mutuel betting, which probably makes an argument about how we wish we were them a fairy tale.

But, even with a monopoly, racing is racing, whether it's in France or anywhere else.  And, when some simple laws are applied, it's no different than any other business: When there are product substitutes, and the monopoly does not use its edge to take advantage of its position, it's sub-optimal, and it can break down.

Breaking down is what we've seen for some time now in the land of sunshine and lollipops. The PMU has been losing revenue and market share, as talked about in "Where Does France Go From Here", in today's Thoroughbred Commentary.

The 'solutions' listed in the article seem fine, but they miss one main point, and it's the elephant in the room.

The PMU, last season, took 26.3 cents out of every dollar of betting pools. In the free world, this is the lowest payout rate in any major racing jurisdiction.

Ironically, the article states that they took over the German tote to try and fix that country's racing problems. The German tote, once one of the better places to bet in Europe, now takes 30.3 cents out of every dollar of wagering. No wonder they needed help.

Interestingly enough, even quasi-monopolies, or duopolies around the racing world take a different appraoch. Hong Kong's hold on wagers last year was 16.1%, Australia's came in at 10.4% (Intl Federation of Racing, 2015 Fact Book). Both of these jurisdictions are growing, even in the face of new competition; Australia's turnover from about AUS$12B in 2000 to AUS$28B in 2015, Hong Kong's handle has about doubled since 2007.

Monopolies are wonderful things (certainly if you are one), but sooner or later $2 per minute long distances charges sees the proverbial chickens come home to roost, and if your business is not demand-led, you're in serious trouble. For racing, and the PMU, you can't take that red box in the graph and not deliver along side of it a competitive gambling product and succeed. The world is too big, too connected, and there are too many other things for people to do, and spend their discretionary income on.

Have a nice Friday everyone.

Purses n' Purses and Wednesday Notes

Good day everyone!

I took a glance at the chatter regarding Yonkers adding two $250,000 invites to their International Trot card in October, on twitter, facebook and elsewhere. One point made by many, had to do with $ generated per $1 of purse spend.

Yonkers, as you know, has soft handle (about $420,000 on Monday), so some were questioning using $250,000 for a race like that, where the handle drawn from it will not be very high.

Rob Key, the man who had to argue vociferously for that very $250,000 number for his digital marketing and promo campaign for a whole year, responded on Facebook.

You can sense the frustration in Rob's words.

No matter how you feel about promoting harness racing, seeing $250,000 of purse money doled out like it is, versus how hard it is to get $250,000 for other things, certainly doesn't sit well with most. $250,000 out of the $420 million in purses is 0.05% of revenue. Companies can spend upwards of 10% of revenue for such things.

Coincidentally, I received an email this morning from Bob Marks, which showed the following stats for a Yonkers card in 1964.

That's a handle of $2.56 million, which in today's dollars is over $19 million.

On that same 1964 card, an invite was $8,000. In today's dollars that's about $60,000.

Yonkers opens go for about $40,000, or 67% of what they went for (standardized then).

Yonkers draws about $420,000 in handle today, or about 2% of what it did then.

Purses have not suffered much, but handle sure has.

That's the disconnect people complain about, and they have a point. Purses (the input factor of supply) have barely changed in real terms, while handle (the output factor measuring demand) has been absolutely decimated. This is the purses up, handle down phenomenon everyone speaks of, on crystal meth.

Notes:

Tonight the Big M turf meet starts with 15% across the board takeout. Emily and John at Optix have offered out free analysis for the card.

For those betting the election, this feels like a pivotal week to me. After the debate on Monday ("the worst debate I've ever seen" according to one on my texter machine right after it happened), where, by most counts HC killed the Donald, we would expect a stout bump in the polls for her - maybe up to 5% or 6% in the next 7 days. In my view, if that happens, we might be at a Gladwell tipping point moment where 1.35 is solid value for Mrs. Clinton. If it doesn't happen and we see her leading by 2% or 3%, she is, I think, in deep trouble, and fading her at 1.35 is a gift. I will be watching this and likely taking a position this week, or early next. I currently have no long position on either candidate, but have traded it since May.

I saw the Parx card this weekend had some nice numbers (about $9.6M, which is good for Parx) with the presence of Derby winner Nyquist and Songbird. It made me think once again, however, just how popular Chrome is, and was. The handle for his PA Derby, with a short field was over $10M. A Derby winner, the most popular filly in racing, along with minus pools, could not touch the big horse. Chrome solidified himself as a generationally popular horse that day at Parx, in my mind, and he's done nothing since then to make me change that view. He drives handle. He's special.

Have a nice Wednesday everyone.