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Thursday, August 28, 2008

How About Uniform Payout Standards Throughout The Racing Industry?

By Cangamble

Track payouts are just another example to show how disconnected the racing jurisdictions are to each other. How do we expect universal drug laws from an industry that can't even set payout standards?

What do I mean by payout standards?

Just peruse the results of various racetracks and try to find some consistency when it comes to exotic payouts.

Note: Base does not mean minimum bet, it means how the payoff is shown on Equibase and at ADWs.

Woodbine uses $1 base for Pick 3's, Pick 4's, and Supers, while using a $2 base price for triactors.

Ellis Park and Saratoga use a $2 base for all exotics.

Monmouth uses a $1 base price for all exotics (excluding doubles and exactors) except for their Pick 5 which uses a $0.50 base.

Del Mar (California main circuit) uses a $1 base for most exotics, including exactors (almost every other track uses a $2 base for exactors), except they use a $2 base for doubles, quinellas, and the Pick 6.

Mountaineer uses a $2 base for everything. But they call exactors "perfectas" (there has to be a Pulp Fiction joke in there somewhere).

I think I'll stop here. I've made my point.

The main problem I have with all this is when I view probable payoffs or results that don't have the base amount next to it. And this happens a lot. I have to take an educated guess many times, and sometimes I'm wrong, and even if I'm right, it sometimes needlessly hurts my brain.

Maybe HANA can get the industry to at least fix this.

Then maybe we can get uniform drug rules too, and maybe I'll win a giant lottery too.

Thursday, August 21, 2008

Horseplayers to Pope: It's Our Game Too

In the Paulick Report’s “POPE TO OWNERS: ‘IT’S YOUR GAME,’” Ray Paulick described Fred Pope’s 16-year effort to unite thoroughbred owners, and wrote, “[Jess] Jackson is a powerful individual whose written testimony before the Congressional hearing in June included a lengthy article written by Pope.”

A transcript of that testimony is located here (a pdf) and Pope’s “Change the Law – Engage Racehorse Owners” appears on pages 13-29.

I found Pope’s arguments there to be as thoughtful and compelling as those from his Blood Horse articles “A Level Field Within” from 2005 and “Breeders' Cup to Lead Way” from 2006

It’s not hard to see why disgruntled owners might embrace his ideas just as dissatisfied bettors are now considering reforms advocated by grass-roots horseplayers’ groups. Pope’s vision for racing as run by owners is based on their “forming a major league like the PGA Tour.”

“While there are many stakeholders in the Thoroughbred industry, the racing segment had only two stakeholders; racehorse owners and track owners.

Sports marketing is successful when the players, or owners of the talent, acquire the rights of the facilities where they play, then package and present the sport to the public.

Every sport operates that way, except ours. In Thoroughbred racing, the owners of the talent (racehorse owners) give away their rights to the facility (racetrack) where they race. …”

“At one time, the golf courses controlled professional golf tournaments. The golf courses jerked the players around the country for low purses and low attendance. Then the professional golfers engaged, pooled their rights and adopted the major league model for the PGA Tour. … “

His discussion of what went wrong with simulcasting and why is insightful.

“The business model for pari-mutuel wagering started with a deal between … the tracks and the racehorse owners. With each stakeholder having a significant investment in putting on the show, they agreed to a 50-50 split of the after tax takeout from wagers. The 50-50 split of on track wagers netted and equal 8% into the purse account and 8% to the host track putting on the show. …”

“Simulcasting has grown from nothing to where about 90% of racing handle is made off-track today.

… the percentage of off-track wagers going into purses has decreased form 8% to about 4% today.”

“Why is this $540 million (4% of $13.5 billion) in off-track wagering leaking out of Thoroughbred purses? The culprit is an insane business scheme that the small tracks and resident horsemen devised, giving the lion’s share of the money (18%) to “where the bet is made”, instead of “where the show is produced” (3%).”

“When simulcasting started, “where the bet was made” was at either a host track or a receiving track.”

“The tracks and horsemen are so addicted to the large margin the make on imported races (about 18%, versus 3% going to the host track) that it has blinded them to the amount leaking out. The only way to bring change is … to establish a new off-track model that will allow the host track to make a profit and insure a fair amount goes into purses.”

“… the current model rewards the tracks with the least live racing.”


His case for change is focused on restoring the $540 million from off-track wagers he describes as “leaking” from purses; which I’ll abbreviate as LEAK.

“Although commercial breeders are not one of the two stakeholders in the racing segment, they … should be very concerned about … [LEAK]… because racehorse owners wanting to purchase new racing prospects could reinvest a good percentage of that money.” Today none of … [LEAK] … is being reinvested in horses.”

“… the majority of the generation born since simulcasting started in 1978 does not have a favorable opinion of Thoroughbred racing.”

“Is it any wonder the tracks and horsemen are at each other’s throats? They are literally picking at the bones and trying to establish new business to go after the …[LEAK].”

"Currently the horsemen’s groups are fighting with the account wagering companes to start putting more into purses. But, the amount they are asking for from account wagers ($30 4o $40 million) pales in comparison to the …[LEAK] ...”


His proposed solution will not be popular with track-partnered ADWS.

“If racehorse owners develop a two-tier pricing model at the host track, we can continue a favored distribution system through other racetracks, while closing the leakage that occurs with other bet takers.

… The first tier could be … half of the takeout goes to the host track and the other half goes to the receiving track. That should keep 8% in purse accounts when tracks trade signals.

The second tier … should start with a license fee of close to 8% going to purses at the host track.”

“When this change occurs, we may lose some distribution as off-track buyers adjust. If some current outlets are lost along the way, technology will allow bettors to continue wagering with the host tracks.”

“Who will lose when the leaking is stopped? The only people who will lose … are those not involved in live racing. … [or] doing something they should not have been doing. TrackNet, a joint venture of Churchill Downs and Magna Entertainment, wants … ADWs it owns to pay 7% to host tracks (3 ½% to purses), then a wild mix of “source market fees” and 2% to 3% of handle to the television company they own. For the areas of the country without a track nearby, all the rest of the money goes to TrackNet. That means the purse account at the host track would get 3 ½%, but their partner tracks would get upwards of 15%. That doesn’t seem to fit the agreed upon split of 50-50 does it?


A contrasting, but consistent approach appeared earlier in his presentation.

“In the real world, the Lottery organization pays the convenience stores only 5% for punching in the numbers and taking the Lottery “bet”. (YouBet.com has said they can make a profit with just 5% of the off-track wager). If … bet takers receive 5% for taking off-track wagers, there will be little or no [LEAK].”

In his Thoroughbred Times article, “A billion-dollar mistake” from 2001 Pope wrote, “What is a fair and equitable rate to pay bet takers for placing bets into Thoroughbred racing's pari-mutuel pools?

Lotteries across the nation have settled on 5% commission for retailers taking the bet. Some states pay a little more, some less, but 5% is the working average. The demands of selling lottery tickets are not dissimilar to selling pari-mutuel tickets. It requires about the same effort and technology.”

A lot of racings ills might be cured if -- rather than concede 5% to independent bet takers -- track-owned ADWs were to offer a 5% rebate to all their customers.

Despite his impressive presentation, Pope’s vision, in my opinion, lacks one critical component. He is either overlooking or ignoring a stakeholder in what he refers to as the racing segment of the industry. They are called bettors, and it is unfortunate that Pope’s passion isn’t likely to be harnessed in a partnership with horseplayers.

Unlike the PGA, very few people would watch races on or off-track without being able to wager on them. And since it is the bettors whose competition with each other pays for the purses for which the owners compete, Mr. Pope and the THG should consider a course which will keep existing players supporting those purses while attracting new off-track bettors to grow them.

The role of racing fans is substantially different from that of other "major league" sports fans in that most racing fans have virtually no experience “playing” the game as a jockey, trainer, or owner; even at a less competitive level. Even their rooting interests as displayed on the odds board are out of synch with the “home team” support by owners.

The fact that an independent third party is required to guarantee neutrality in conducting, officiating, and policing the parallel competitions that take place between owners and between players for most events suggests that the parallels he draws with the PGA and MLB have questionable merit. Pope and Jackson want trainers to be removed from the IHA, but players and tracks might prefer to see owners also be required to take responsibility for proper medication of their horses before that should happen. What perhaps the Feds could add to the IHA is that every horseplayer in America, regardless of the State in which he/she resides, should be able to wager on-line in the privacy of his/her home.

I can understand Pope’s finding fault with TrackNet’s approach, but how is the latter’s predatory policy toward owners any different from the TOC’s policy of allowing rebates to high-end bettors, but not low-end ones? By supporting only the highest-volume 1% of all players who reliably generate 10% of handle (as was demonstrated by the selective signal suppression during the negotiations between horsemen’s groups at Calder and Churchill Downs), the horsemen are catering to a static source of handle rather than nurturing one with enormous growth potential.

It seems to me that if the owners were to attempt implementation of Pope’s proposed changes without also agreeing to lower takeout for all customers -- either directly or else indirectly through rebates -- they will be unable to grow handle, and will still wind up scrambling for purse money at venues not subsidized by other forms of gambling. If the owners are serious about lowering the costs of off-track bet taking and televising races, they might succeed if they also make sure all bettors get a fair shake as well, and that customers are provided with the product(s) they actually want.

The main flaw I see in Pope’s plan is that -- despite recognition by many that takeout is too high to keep existing players in the game much less attract new ones given today’s competition for the gambling dollar -- his model retains those rates while making purse accounts the sole beneficiary of change. Another is that he doesn’t address the problem that there are already too many races being run with too few contestants too frequently at too many tracks with too little attendance except to imply that a 50-50 split between host and receiving tracks will result in survival of the fittest.

Jackson complained that purses don’t match expenses, but winning and losing are what the game is all about. The owners are supposed to compete for financial reward – just the way it is on the wagering side. Expecting players to continue funding fashion-inflated bloodstock prices and medication-inflated veterinary bills while the size and quality of fields are diluted by excessive racing suggests either arrogance or ignorance; neither of which can be tolerated any longer.

The owners do have the power to improve the game, but to improve it for themselves, they will have to improve it for everyone. What will implementing a uniform medication policy -- with all the testing being contemplated -- accomplish if handle keeps shrinking because fewer people are interested in playing the game.

This opinion was submitted by a California member of HANA.

Monday, August 18, 2008

Keeneland: A Player Friendly Model

Keeneland will be starting soon. I had never been to Keeneland, but I was fortunate enough to visit for the first time this year. Why? Because it is Keeneland and they seem to love players.

For my trip I needed to do a few things, mostly get familiar with the new poly and the track itself.

I decided to check out the website to see if they offered anything neat, peruse the web for some info on the meet and do some general due diligence.

What I found was surprising: They are what a racetrack should be.

First, check out the website. It is simple, navigable and nice to look at. Now click around. Here is what I found when I did:

1. Handicapping statistics, archived. Trainer stats, post position stats, trainer stats by horse age (important), ROI figures and more.

2. Free Video, yes free video. Some tracks lock their video up like it is Fort Knox, for some bizarre reason. Not Keeneland.

3. Race Replays, in a partnership with racereplays.com; and archived results.

I don't know about you guys, but if they consider the bettor a nuisance like some in racing seem to, they hide it pretty damn good.

Now, how about distribution of the signal? Well, Keeneland - one of the largest track's in the world, and perhaps the most respected, has signed with player-friendly Premier Turf Club and numerous others. If bettors want value, and want to play it from virtually any account, they can bet Keeneland.

Lastly, do they respect us as bettors and offer us fair prices? They sure do. As Cangamble noted a blog post, Keeneland has the lowest takeouts in North America.

As for the Poly debate, well Keeneland does not take it for granted that some players will not play the fake surface. Recently I opened my inbox and there was a Keeneland survey asking about poly, what people like or dislike and how they can make the experience better for the horseplayer. They know poly is not a panacea, and it does not stop them from trying to improve the surface for us - the bettors.

There you have it: A great website with handicapping info, free video, free race replays, ability to bet through many ADW's, a true respect for the customer and finally, the lowest prices in North America.

I thoroughly enjoyed my trip this year. I was treated like a king, and all I am is a horseplayer. I am playing Keeneland this year and would love to make this fall my second trip.

Thursday, August 14, 2008

Shhhh! Be Very Very Quiet: Tracks Don't Like Disclosing Takeout Rates

By Cangamble (also posted at the Cangamble blog)

Some other thoughts regarding horse racing and disclosure, a topic I touched upon over a week ago here:

Why is it that when you visit a racetrack's website you can't find information on track takeout? It can't be that it isn't important, the DRF has a page devoted to each racetrack and takeout information is shown. Just one page per track, and takeout takes up around 20% of the script.
Check out the DRF description for Woodbine.

Now try to find takeout information at Woodbine's own site. Thousands of pages are there, and not one that I know of, that gives information of track takeout on their own product. I even tried to do a "takeout" search there......no luck.

Does this mean that a track can change the takeout, and if it escapes the media, the player may not be aware of it for months? The answer is yes. Hardly one peep was mentioned when Woodbine changed their takeout back on Win 4's back from 14% to over 25% a few years ago. I didn't realize it for at least 6 months.

I'd figure, in Canada especially, that racetracks would be REQUIRED to disclose takeout information on their websites. Does anyone give a hoot about the consumer anymore?

Lets move on. What about thoroughbred suspensions and fines. If not at the Woodbine site, where again, I can't find any links to recent fines and suspensions, how about the ORC (Ontario Racing Commission) site? They do have a pretty good resource called the Officials' Lists where one can find the Vet List, Stewards List, Procaine List, and the Cryoanaesthesia and Nerve List. But where can I find recent suspensions and fines?
I tried, I really tried. But I came up empty.

Apparently, they are shown in the Racing Form, and the on track programs. But we are in the information age. Why can't we get this kind of information by just making a couple of mouse clicks? I don't want to depend on the media to inform me of whipping or drug violations. I recently read that Chantal Sutherland was appealing her 4th whip violation of the year.

The fact that I didn't even know about the other three is a big problem.

Wednesday, August 13, 2008

Great Articles in the Blogosphere

We ran across two wonderful blog entries today, coming from opposite ends of the industry but making the same point: Customer Service Matters.

We think this hits right in the center of why a group like HANA is so important both for us and for the industry. By banding together to speak with one voice we can be sure we are heard. Emails from HANA will get responses, phone calls from HANA will get returned. And if they don't, we can make sure everyone hears about it. Please take a moment to sign up with us today.



Turf Luck retelling of her on again off again relationship to Mountaineer in: "Love's Labor Lost"

But hey, Mountie scorned me and my little labor of love, so in return: No pre-race cheerleading before WV Derby Day, no linking to those hidden past performances for the undercard, no mention of those lovely articles Bill Mooney wrote leading up to the Big Day, no highlighting the visits from big name trainers and jockeys as a reason to maybe visit the track or place a wager.

For a librarian, it was hard to see all of the web visitors that arrived here looking for "West Virginia Derby past performances" only to find my Derby post from last year, which as of this writing, is still comes up first in a Google search. Mountaineer may not be looking for a girlfriend, but golly, I think they could learn a few things about customer service from a librarian. Think I'm wrong? Send an e-mail to your library tomorrow, and see how long it takes them to reply.

What's sad is the impact that tracks like Mountaineer may have on racing in general. While longtime fans may see differences between NYRA, MEC, CDI, etc., for those new to the sport, the brand of "horse racing" generally equates to "the track I visit" and (of course) the Kentucky Derby. If I had visited Mountaineer before going to Belmont, well, it's quite possible I wouldn't have gone on to visit Keeneland, Saratoga, Pimlico, Presque Isle, Penn National, Meadowlands, Philadelphia Park or even Belmont. It seems to me, that in many ways, the brand of "thoroughbred racing" is only as strong as the nearest track -- and sadly, I think I've been dating the weakest link. (cont'd at link)


followed by

Jeff Klenner's "The Little Things Still Count"

It is my belief that today’s racetrack executives are prone to treating patrons as a commodity. They don’t honor the fact that fostered by familiarity and memories of days gone by, most fans have a strong identification with their local tracks. This attitude is not unlike the allegiance that fans often have to their local sports franchise. However, it is a double-edged sword, since the same fans may, at times, be harshly critical and vocal about the problems suffered and mistakes committed by such entities.

Such criticism is not, in itself, a bad thing. Anyone who has studied modern management principles will tell you that customers who complain are your best friends—because research shows that the majority of people do not bother to report their unsatisfactory experiences. Meaning that most patrons instead become ticking time bombs—if you disappoint them, they are more likely to just not come back rather than bother finding someone to whom they should voice their complaints. (cont'd at link)

Tuesday, August 12, 2008

NTRA Withholding Reform Bill

There has been much in the media recently about the Withholding Reform Bill that has just recently been introduced in the House of Representatives. If you're not familiar with the current withholding law, there is a current 25% automatic withholding of any payout greater than $5,000.

Reform would clearly help the players by leaving more money in their pockets after a big score, and help the tracks, ADWs, and horsemen by leaving more money available to the wagering pools throughout the year.

We'd like to ask all HANA members and readers to take a minute or two to follow this link, where you can quickly send off a message to your congressperson in support of the bill.

Sunday, August 10, 2008

Cost of Entry too High?

A beginning horseplayer made the following observations on the horse racing message board PaceAdvantage.com that we thought worth featuring here at HANA. The industry has been slowly increasing the availability of the things he's talking about, but they need to do a better job of making these things more easily accessible, and more widespread.

As I'm sure is obvious, I'm new to horse racing. I live about two hours from the nearest harness track - and even farther from a thoroughbred track. Needless to say, it only makes sense for me to use ADW.

The biggest problem I've noticed with horse racing is the cost of entry. The industry is really shooting itself in the foot when it comes to enticing new players.

Nobody wants to start big. With an online poker site, you can play for free or for extremely low stakes. Other than your gambling capital, it costs nothing to start playing. If you don't want to learn by playing low stakes games, you can learn by observing other players. There is no fee for this.

Now let's look at horse racing...

No beginner should be betting every race at a track. But the programs... they're going to cost you. If I want to bet $5 for a horse to win in just one or two races, is it really worth $2-$4 for a program. Nope. I suppose I could get an unlimited subscription, but I'd have to make several hundred dollars worth of bets each month for that to make financial sense.

I want to learn. I want to see how my picks worked out. I want to see the race, rather than just infer from a chart. Live video? It's spotty at best, and if you're a low level bettor, it's going to cost you. Hello subscription fees!

Do you want past performance charts? Pay up!

I have no problem with companies making money. The DRF deserves to turn a profit. However, there should be some sort service given to people who are just starting out. EVERY track should offer free video. EVERY track should offer free programs - maybe not with as much content as a full program, but at least enough content to make a somewhat informed bet.

As it stands now, if you want the tools you need, you have to go in full bore. This discourages a lot of casual players that would someday become something more than casual.

The tracks are using a 1970s business model in an internet world.

Compare that to internet poker/casino sites, and you can see why the tracks are struggling.


Of related interest on this topic is an interesting Wired article cited in the discussion following his comments, Free! Why $0.00 Is the Future of Business

Friday, August 1, 2008

Track Report Cards

One of the things HANA has talked about doing is maintaining a set of report cards for the different tracks in the U.S. and Canada. Hopefully this would have 2 benefits: educating players, to hopefully steer them towards friendlier tracks, and to educate the tracks. They need to know what's important to us, and hopefully if they find themselves near the bottom of the list they might think about trying to move up.

Doing this right is a pretty big job. And more so when everyone is going to have slightly different ideas about what should be included, and to what degree. So I imagine this will be somewhat of a constantly evolving process. I think we need to rely on primarily objective factors, at least to start. If we can come up with a way to include some sort of subjective "vote" as a piece of it that we think works well, we can do that too.

Some of the possible (~objective) factors to rank tracks on would be:

For on-track attendees:
Parking Fees
Admission Fees
"Players Club" of some kind

For Everyone:
Takeout
Average Field Size
Bet Selection (rolling doubles, pick 3s, etc)

For at-home bettors:
ADW Availability
Video and Replay Availability


What are some other quantifiable things about a track that are important to you? What are the most important?

Has the "Sport of Kings" become the "Business of Klingons?”

I grew up in the ‘50s overexposed to television on Saturday mornings long before I ever bet on a horse on a Saturday afternoon. So whenever I want to poke fun at something, I drag out old cartoon or sci-fi characters to fit the situation.

When I did get started, there was no Sunday racing in New York in the course of a nine-month season. There were only two-horse exotic wagers, and every bettor had the same opportunity to come out ahead if he could pick a reasonable percentage of winners with positive performance records. Reward was directly proportional to risk.

Racing was then a gambling/entertainment business based on a sport, with a monopoly on legal gambling outside Las Vegas. Every player, however, still had a sporting chance. There have always been a minority of winning players that are simply smarter, bolder, better-informed, and more skillful than their competition, but back then, many casual bettors like myself were able to keep their bankrolls intact from the middle of March through the beginning of December.

Today’s higher takeouts have lowered payoffs, and even though opportunities for greater financial reward have evolved through multiple horse exotic wagers, success with these more complicated types of bets generally requires one to risk more than the average casual player's comfort level allows. Some days when a Trifecta or a Pick Four eludes me, I wish I could return to those days of yesteryear with a hearty hi-yo Vigors, away.

In the popular future-based TV series called "Star Trek," space-travelling earthlings encountered an unrelenting warrior race called Klingons who developed a technology known as cloaking that made their space ships invisible. Ever since I was a kid racing has behaved like Klingons; cloaking themselves from viewing on television and now making themselves virtually invisible to on-line bettors. Even when racing can actually get somebody interested enough to bet on-line, there's a good chance he won't be able to bet all tracks he wants from a single ADW account, or be able to view a given race live.

What is also invisible to some who bet for entertainment today is the competitive edge enjoyed by the highest volume bettors who -- win or lose -- get back from between one and twelve cents on every dollar they wager. Rebating this 1% of bettors who generate at least 10% of the total amount wagered is frequently characterized as simply "good business practice" on the part of tracks, ADWs, horse owner groups, and these bettors of at least $1 million per year known as “whales.”

In my opinion the most insidious aspect of the game is the high takeouts imposed on all players. Giving only very preferred players a slightly lower takeout while the rest of the players struggle seems far less than ideal to me. Small players can become big players, if given the push that rebates provide. The practice of rebating cannot continue to be restricted to high-volume bettors. An extension of this situation occurs when tracks and whales join forces to keep Pick Six winnings out of the hands of the small players by maintaining a $2 minimum for each combination. Racing should be a big tent with alternatives for all players; not unrelentingly stacked against the little guy.

Some HANA members are now questioning whether lower direct takeout for all is actually attainable and, even if rebates are made available to smaller players by all ADWs, whether they will match those to whales. HANA’s existing priorities were predicated on the idea that racing's popularity and share of the North American gambling dollar would increase by enabling more people to fully participate on a level playing field.

HANA wants and needs feedback to be sure that our unified voice mirrors our membership. Let us know what YOU think.

This opinion was submitted by a California member of HANA.