News: Cost Containment Could Cancel Conflict

Horsemen, ADWs and tracks seem locked in combat in an Associated Press piece last week titled “Racing struggling to divvy up growing Internet pie.”

“A potentially groundbreaking deal between Geary, horsemen and advance wagering companies on July 5 means there will be racing at Ellis Park this summer. But the kind of brinksmanship displayed by all sides is symptomatic of the industry's problems.

While the racing business has largely been stagnant for the last decade - the amount of money wagered on racing in the U.S. over the last five years has dropped 3 percent according to the Jockey Club - interest in ADWs has skyrocketed.”

“Yet rather than working together to find a way to pique interest in racing, tracks, horsemen and account wagering companies across the country are fighting over how to split the industry's largest area of growth. At times, the battles can be bloody.”

‘"I see horsemen not being able to pay their feed bills," said THG president Bob Reeves. "What happened is this has gotten so dag gone complicated, I think they realized they had to work together. We've got to get this thing fixed."’


Will higher purses pay more feed bills, or will they continue to be distributed among the usual subset of successful barns and simply make the rich richer?

Are feed bills the critical cost issue for horsemen, or is it the veterinary/medication bills that could be lowered through a drug-free racing policy?


‘"I'm taking a one-year sacrifice, it's a dice roll on my part," said Geary, who projects losing money during the meet, which will have 39 racing dates instead of 44 due to the late start. "But I'm optimistic.'

If the early returns are any indication, Geary may be right. The track had 96 entries for 10 races on Friday, and over 100 for 11 races on Saturday. That's far from the bare-boned five- or six-horse field Geary envisioned if he had to cut purses.’

Maybe field sizes will in fact nearly double at Ellis Park, but where were all those additional racing-sound, competitive horses coming from -- and headed for -- prior to the agreement?

‘Account wagering companies have their own expenses. TVG, one of the largest account wagering companies in the industry, runs a costly cable television racing channel. There are fees and overhead and investors to pay. Twinspires.com, owned by CDI, employs dozens of people and is constantly developing software to entice younger bettors.

Both also need to turn a profit to stay afloat. If they fail, racing's Internet boom goes bust.

"From our perspective, what Churchill Downs and Twin Spires is trying to do is grow the business and attract new customers," said CDI spokesman Kevin Flanery. "That's what we should all be talking about. Instead we're talking about how we're dividing up a diminishing pile of money."’

Can the millions CDI invested to create their own ADW operation actually increase their corporate share of handle from their tracks, or has their “double dipping” made them a target for resentment by horsemen and bettors alike?

Will CDI attract younger, new, internet savvy fans without lowering takeout -- either directly or effectively through rebates -- or will they continue losing them to other forms of gambling most can participate in longer; with greater enjoyment and reward?

Perhaps racing needs a centralized authority that can a) mandate uniform rules of racing and medication policy at all venues, b) effect cooperation among tracks to operate a single, cost-capped ADW operation for all tracks similar in concept to Equibase, and 3) independently of wagering handle, ensure the cost-effective availability of full-screen internet live video and replays for every race in North America -- offering the instantaneous choice of track feeds with live paddock inspections or pre/post-race commentary by industry “experts.”

“Rather than limit the track's signal through one or two account wagering companies, Geary reached a deal that will make Ellis Park races available across 10 Internet platforms.

It's the kind of freedom that could attract bettors, who are sometimes forced to use different Web sites to place wagers at specific tracks due to exclusivity agreements between the tracks and certain account wagering companies.”

Would enabling every on-line account holder to watch and wager in any pool for any race in North America from one account be sufficient to increase handle if other costs are contained?.

We think so, provided that the game once again offers an environment with a statistically greater opportunity for one to play more frequently over a longer period as one's skill improves -- through lower takeout.

This news piece and commentary was provided by a California member of HANA. To join HANA, please email us as explained in the "About Us" section of the website. Thanks for reading.