Agreement at Churchil

CHURCHILL DOWNS INCORPORATED, KHBPA, KTA REACH ADW AGREEMENT AT CHURCHILL DOWNS RACETRACK

h/t to Ray Paulick.

HANA 2.0 - Like it's 1999

It was 1999 at a high-level meeting. Executives were taking a look at Napster, the online music sharing service. With a click of a mouse you could download music and land it on your hard drive. Sony was doing something the same, er similar..... ok, not at all similar, according to Steve Gordon, Sony's lawyer at the time: "What Sony was doing with digital in 1999 was offering two Mariah Carey singles for sale, and you had to go to the Sony Music Web site, then to Columbia Records' Web site, and then inside Columbia Records, which was owned by Sony, you'd find Mariah Carey's Web site -- and then inside that Web site, you'd find these two singles for sale, and they were both around (US)$3. For $3, you could listen to each song on your desktop, but you couldn't download it to your computer, you couldn't share it with your friends, and you certainly couldn't press a CD, or burn a CD."

After seeing just how swift and customer driven Napster was in comparison he said, "We all got the impression that we were in trouble."

So goes a story in his newly updated book, as told to the Ecommerce Times.

The interesting thing about this story is much of the music's industry's problems could have been avoided. Napster wanted to do a deal with Sony and other music producers to bring their product to market - y'know partner up and get that web synergy thing going. Of course, Sony could have chosen to compete as well and create Itunes before Itunes did. Both those ideas were quashed by an old business, in an old business model. They were going to charge $3 for a song, and make it as difficult as possible for people to buy them - come hell or high water - because that is the way things were done.

"Well, we didn't want to see the future." said Mr. Gordon. It turns out the strategy was to sue, not partner and realize the world changed.

We don't want to see the future in racing either. Will we end up like this, wondering what could have been? By all accounts, and with the way the business has moved the past several years, I think there is a high probability we will end up saying "we did not want to see the future."

We have a chance: Author an Internet wagering plan. Not tomorrow, not next year, now. Stop looking for court protection like Sony did or looking to sue your customers or partners; ask the courts and lawmakers for ways in which you can compete. Slash takeouts for Internet wagering now. Not by 2%, not by 5%. Cut them in half. We can not charge $3 for a Mariah Carey single, no matter how much we feel we are entitled to. Sink cash into this platform. Not $500,000 (a company doing business on the web can get $500,000 of angel financing for a basket weaving website) but big money.

The clock is ticking. Is there anyone out there who wants to try and beat the clock, or will 2009 be destined to be worse than 2008? Let's not end up like music. Let's capture a new market with a fresh new offering for customers. Do not worry about how much of the pie we each get, think about how much pie we will all get if it succeeds.

HANA needs your help. Please sign up on the right hand side of the page. We will not use your information for anything other than to contact you from time to time. There is strength in numbers. Please help us achieve a better game for the betterment to all of racing.

They're Tough Out There!

Jockey Eric Saint-Martin was suspended 2 months in Hong Kong for elbowing. For hockey fans, this infraction usually results in a two minute penalty, however hockey players do not ride 1200 pound horses.

You can watch the video here. This is the HKJC page. What a nice page for bettors and fans. Talk about giving us some good information! Hat tip to Equidaily.

There is a new site out on Racing Partnerships. It is a directory. If you ever wondered if you would want to take a shot at fractional ownership but do not know if one exists in your state, click here and check.

We have been harping on it here, and it is a huge reason HANA was formed - getting better prices for bettors so we can bet more and have a shot to win at racing. We believe that rebates should be for small players and big players, not just the big ones. Here is a post from a small player that used rebates to his benefit this past year. This illustrates that when you have a good shot to win you take the game seriously and your handle can be increased.

Editorial from KY

In the Louisville paper today (hat tip to Equidaily) the trumpets are blaring to do something to help racing in 09.

But the industry must act with unity and urgency, something it has rarely done in the past. Otherwise, as bad as 2008 was, 2009 might be far worse.

A Sad Time

Poignant to anyone who has lost a loved one during the year, or any year. Jockey Sam Thompson passed on today.

Horseplayers and horsemen, and owners, are all as one during the season, when something like this happens.

2009 and Beyond. Let's Hope to do Better

This game can grow; heck it can not get much worse one would think. For some evidence we can see exactly what can be done if we repackage our gambling product and sell it properly.

In UK betting's betfair's annual report they reported this:

Betfair is the only online bookmaker which has racing as its Number One product: most others rank football, tennis, golf and cricket above it.

I think that is fantastic. This is a great game to play when it is done right. I would play this over poker, or sports betting anyday. It is time the world knows it and we have to do our best to make them know it. h/t to Pullthepocket

So how do we get there? How do we make it so we want to actually offer horse betting and not run away from it like so many have? Not offer slots, or ask for table games or ask for a subsidy - but horse betting.

I don't know, but we will be trying here at HANA throughout 2009 to change minds and change racings entitlement minded culture.

Let's make our game popular again, one bettor at a time, just like the company above has.

With some work and smarts, maybe we won't even need to use a global reach like this commercial does to do it - we can just sell to the 10+ trillion dollar untapped economy here at home.

Meatballs

Horse betting down, sports wagering up in Italy.

Why?

Horseracing bets fall was due to high taxation, low medium quality of the events, irrational horse racing programming which determined races override, low appeal of the specialized TV channel programming.

On the opposite, sports betting encounter more and more favour among young, informed and trendy customers (who intensively use telematic systems) and take advantage by the wider range of events and typology of bets available.

I think that is a loose translation to English. I do know the takeout in Italy is something like 40% on horse racing. That's worse than Penn National!

Hat tip to Gathering the Wind.

Calder and Gulfstream Apparently Open for Business

According to the Bloodhorse:

Agreements on advance deposit wagering contracts have been reached for Calder Race Course and Gulfstream Park, officials on both sides of negotiations confirmed Dec. 22. The agreements should enable all major ADWs to take Internet and phone bets, said Kent Stirling, executive director of the Florida Horsemen’s Benevolent and Protective Association, which has been involved in protracted negotiations since April.

More

Question - What Tracks to Play?

We've had a few posts below on what overseas players are playing in US racing. A quote from a European player I read on their chat area is interesting to me. "We need liquity. If a US track is on TV here, and there is little competition against it, we will play it no matter what. The best track in terms of betting volume here was Great Lakes Downs"

Say what? Great Lakes?

I understand where that player is coming from. I often play cheaper tracks like Mountaineer - The mountain is on at night, it is available at just about every ADW known to man including rebaters. I play that much more than Hollywood Park for example.

What about you? Do you play only the big tracks? Does it make a difference if the quality of racing is like Woodbine with its $75,000 purses, or are you just as well to play Hawthorne with purses only a fraction of that? Do you depend on knowing the training colony or track bias and find that is more of a reason to play than field quality? Does field size like we see at Fairgrounds make more of a difference to you than betting availability?

The questions are endless. We are sending out a questionnaire soon to members where we will explore some of these things. I think they will help us understand what horseplayers want and need from the tracks in terms of these questions.

Thanking you in advance if you contribute.

How the Other Half Lives... and Grows

It is pretty amazing to watch and learn how we and old time racing are conditioned to think, versus other gambling companies. We have been reading on the Paulick Report much of the racing lament - our game is expensive, how will we pay for things if we cut takeout? Saying "increase volume as your price finds the right spot" does not resonate well. We are dealing with a business who never had to change.

A rather humorous exchange involved a bettor with this answer:

Mr. Pope…..You have convinced me that takeout doesn’t matter and owners need more money to grow the sport.

I propose raising the takeout rate to 45% on all bets. Give 15% to the owners, 15% to the host track and 15% to the bet taker.

Everybody will be happy.

Facetious of course, but hey: don't give them any ideas!

Flipping over across the pond I was doing some reading on Betfair, who is the world leader in horse wagering and is contributing piles of money to the game in the UK. They have 30% year over year sales growth, and now handle more bets in a minute than the European stock exchanges combined.

This is their answer in their annual review to a question asking about why they charge so low a takeout (their takeout is less than 5%) and if they are leaving money on the table with it that low.

Not at all. Betfair is a business, not a charity. We set margin at the level where we believe we maximise profit, taking into account the behaviour of customers and the overall marketplace. In the past, local bookmakers could set any price and get business, because they were the customer’s only option. But as an internet betting company in the 21st century, our marketplace is the competitive global village, and customers can shop anywhere they want. So price is set to maximise take.

Compare that to the comments on the Paulick Report and it should be readily apparent just how differently our business thinks. Something as simple as setting a price to maximize profits seems to be a foreign concept in North American racing.

If you want us help drag our butts into the century and make a difference, please sign up for HANA. If you do your homework this weekend - we need all the help we can get!

The photo in our piece is of Caracas Venezuela. One side prosperity, the other none. Please help us get on the right side of the highway.

Old Versus New

There is a very good chat going on at the Paulick Report regarding the Pope plan regarding wagering. Mr. Pope believes that tracks should get the most cash for putting on the races, not the resellers. It is a populist message that resonates with racing because that is the way they have always done business - hey, I put on the show, I want most of the money! Of course, this makes some sense, but Mr. Pope's plan would confiscate virtually all of the reseller money, which HANA believes is clearly a mistake.

The bettors, or the people who start an ADW tend to think differently because we know that ADW is the only medium that is innovating, cutting prices to encourage churn and reinvesting most of the revenue in advertising and marketing. There is a reason that it is the only growing part of this sport - because they are virtually the only group to reinvest in the customer.

A question asked to Mr. Pope in the piece is "sir, what about the 30-60% of the money that resellers reinvest in the sport?" If you give $200 to a track and a horseman group the golden rule is: Never expect to get any change. You won't get a penny back for marketing, or rebates. At least these folks reinvest. As one poster mentioned, youbet took down $120 million in handle fees. They made around 2 million, or 2%. Over 30% of their money went to business development, player rewards and advertising. This is not unlike poker sites - you know the ones we complain about that steal our customers.

The message is clear: Reinvest or die in the 2000's.

In an interesting twist, a horseplayer put up his thoughts on what the ADW model should look like to encourage handles. It is forward looking, it makes sense, and it preserves the ADW reinvestment in the player, which should have a positive effect on handles. It is amazing in this day and age, especially with social media. Dog food manufacturers use the web to find out what products to offer. Cable companies use the web to find out what packages to offer, and much more. Racing rarely if ever listens to the customer, but when reading many sites, the customer him/herself is often the one with the best and most workable ideas!

And this is one. Here is a sharp customer, who is probably a non racing businessman, who knows that the monopoly days are over. We can not do business like it is 1974 any longer and proposals like this are exactly what racing needs - split the pie yes, but don't stop there - put a system in place to grow it.

A while back I did some thinking about what a new model could look like, and that I thought made sense from a revenue sharing point of view, but also made explicit the sort of investments that needed to be made for this business to exist. It allows for both more money for the tracks, and for a flexible and vibrant reseller relationship.

I do think the industry can afford to pay more than 3% on a 20% signal to the host track. Part of that is the elimination of the subsidies in the form of source market fees. So in the following, we are assuming all fees paid for the signal are going where they belong, to the host track. And of course, the total fees already paid are well above 3%, so that is a moot issue.

I’d like to get anyone’s thoughts on a structure somewhat like the following.

So lets start with the baseline fee structure, this is where we start. We are using a 20% takeout number for all of this, after tote/taxes, that is what exists.

Payout:
Track: 5.5%
Purses: 5.5%
ADW: 9%

This represents a significant increase in revenues for tracks and purses. This is however only payable by an ADW that has one severe limitation, a significant reduction in takeout in the form of rebates, a key driver for a large percentage of our business, is not possible under this fee structure. But however, for some customers, this ADW would be able to provide a great experience, and can and should exist just fine, under this fee structure.

But what we need is some flexibility, we want a wide variety of ADW’s out there, and here is how we get it.

1.) Rebates can be made solely at the discretion of the ADW.
2.) The design of their rebate program is likewise solely up to them.
3.) And, they can rebate any amount the want, up to a certain limit. The limit exists, because the funds for the rebates will be coming equally from all 3 parties share. This is the key point.

What this engenders is an explicit admission on the part of all three parties that reducing takeout in the form of rebates is important, and that reducing takeout has a benefit to all involved. This is a true partnership.

The ADW can rebate up to a total of 6%, by an equal reduction in all parties share. At this maximum rebate level, this gives us:

Payout:
Track: 3.5%
Purses: 3.5%
ADW: 7%

For each party reducing its share, they are rewarded with a higher handle. Everyone shares the costs, everyone shares the benefits. The ADW can, at their own discretion, rebate beyond this 6% level, and some would, but the remainder of that rebate would come from their share alone. So for instance an 8% rebate regime would see tracks and purses stay constant at 3.5%, and the ADW operating funds would drop to 5%. This would be on the most price aggressive side of the spectrum.

Rebates are not the only form of flexibility this kind of sliding scale, co-investment structure allows for, the host track and the ADW could, if they come to agreement, offer any sort of innovative features they could come up, with an equal investment from all parties to cover the costs.

The only key distinction is that rebates, if the ADW chose to make them, are solely at their discretion. Everything else is collaborative.

The other thing about the model is that it is the same structure offered to every ADW. There is no need for a multitude of different models, one dynamic one will do. We want competition amongst the ADW, we want them to do the sort of experimenting that will ultimately find the best product mix for the customers. Wide signal availability, under a single unified model that has specific protections for the entire spectrum of business models to exist. Let the market tell us which one is best.

This is a model that returns more money to the tracks, encourages a reduction in takeout, and allows for a vibrant and thriving ADW community. In other words, this is the kind of new model racing should be looking into. Something much more dynamic, and something that actually encourages the kinds of actions that will increase handle, than what has been proposed here.

The difference in the two plans is apparent - one is new and fresh and vibrant. It is not static. It is not old world. It gives racing a chance to grow, while simultaneously giving more back to the track and purses. And guess what? It was written by a customer.

Someone is Listening

It is not the be all and end all, but in a nice surprise, racing stalwart Churchill Downs and Twinspires is offering a 5% rebate on a race this weekend.

It is not earth shattering, and we won't see massive power of churn like is noticed at places like RGS or Premier Turf Club, but it is something to take advantage of. Unfortunately, the rebate will be placed in your account in around a week. Note to tracks: if you are going to take advantage of churn, place the cash in the account the next day. Follow what the offshores do with that and you'll be better off.

Regardless, in a rapidly increasing high takeout environment, every little bit helps so we give kudos to Mr. Evans and the crew at Twinspires.

Wow! It's the year 1940 Again.

Shocking post about changing the Internet Horse Racing Act. Amazing stuff in this day and age. Doesn't anyone in our business know how modern gambling distribution channels work in the 2000's?

Memo to racing: You know all those businesses offshore that you want to shut down because they are too popular? Use the model that they are using, not something like this, which is the exact opposite.

ADW Cash Management

With account holders at the now bankrupt Hinsdale Greyhound Track facing uncertainty as to the future of their funds, this is an appropriate time to review a few basics regarding ADW accounts and money management. First and foremost, it is important to remember that an ADW is not a bank and should not be treated as a bank and deposits at an ADW are not protected as they are in a bank account covered by FDIC Insurance. This may sound like an obvious point, but it is one that needs to be highlighted because there is no deposit insurance protection for money held in an ADW account. In addition to potential bankruptcy issues, such as the case with Hinsdale, if for some reason federal regulators decide that there may be improper activities occurring either at the ADW or within its client base, they can easily freeze the accounts which will put your funds in limbo for an undetermined amount of time (one recent example is the federal government seizure of IRG funds at youbet.com back in 2007). In such a situation, while in all likelihood you would eventually get your money back, you will be unable to access it if you need it which has the potential to create undue hardship. As a result, it would behoove horseplayers to avoid stockpiling money in ADW accounts and instead keep the funds in those accounts limited to short-term capital (i.e. the amount necessary to cover a few weeks handle). Amounts in excess of necessary short-term capital should be transferred to an FDIC insured bank account (which now covers over up to $250,000 of total funds held at that bank), preferably one which pays interest. Horseplayers with more significant cash reserves should review their situation with their accountant/portfolio manager to make sure they have the optimal cash management based on their risk/return levels and liquidity needs.

On a related note, there is the temptation to call for ADWs to be regulated and held to the same standards as banks as a result of the Hinsdale bankruptcy. While this is an understandable sentiment, it is important to note that any additional regulation imposed will have a cost associated with it and that cost will be shouldered by the horseplayer and it also has the potential to cause some providers to withdraw from the ADW market, thereby reducing competition. Along the same lines, it is important to keep in mind that any potential problems using a domestic ADW are dwarfed by those issues one would be facing if an off-shore entity was utilized. While current regulations may have their flaws, when things go wrong you want to be able to contest the matter under U.S. business law and it is inherently more difficult recouping funds once your money crosses the border.

Lotteries Test; We Flounder

If you have to drive 10 miles to buy a [lottery] ticket, you are three times more likely to be killed in an automobile accident on the way than to win the jackpot."

Everyone knows this and no one would ever call lottery players price sensitive, yet even government lotteries have worked to find an optimal takeout level - they know returning more to the lotto players increases sales and revenues.

A proven strategy for lotteries across the country to generate additional funding for their beneficiaries has been to increase prize payouts. Higher payouts generate more winning experiences for players. This makes the games more entertaining and increases sales dramatically. Every lottery in the U.S. that has increased prize payouts has increased sales.

Two of the poorest performing lotteries, California and Louisiana, have a limited prize payout of only 50 percent of ticket sales.

The Massachusetts State Lottery is the most successful lottery in the nation. It also has the highest prize payouts in the nation ranging from 60 percent to 79 percent of ticket sales. With a population of only 6.4 million, compared to California's population of over 35 million, Massachusetts out-produced California in 2002 total revenues by approximately $1.3 billion.

OK, years ago Massachusetts decreased lottery takeout to (in some cases) 21% and they are kicking some major butt; including beating a state with a population 5 times more than they are. They have given "more winning experiences to players" and they are being rewarded.

Why in heavens name does a lottery have less of a takeout than your average trifecta? Why when HANA asks racing to decrease takeout to give "more winning experiences to players" and grow our sport is it considered like asking for something radical? Will someone from racing respond here and tell us why a lottery decreases takeouts to grow, but you can't?

Is your goal to "not" grow?

h/t to Equidaily.com for the news story and Chickenhead for the article.

News n' Notes From Members; Retama Free Contest

A few thoughts on a Wednesday:

We have received some great feedback from our very first newsletter. A few people emailed to say they were interested in HANA pins, a few asked for further information, and a few emailed just to say hi. That was awesome. Further, it appears that when we asked you to forward the newsletter to friends, you have done exactly that! We have had several signups today. That's great.

We would like to keep the momentum going, so if you have not forwarded it to a friend, and if you would like to express your interest in a pin, please email. We'd love to hear from you.

Second up: Retama Park simulcast director Steve (a HANA member!) emailed us and told us about an online handicapping contest that they are offering. It is free and you can win some moola if you are good ($1000 first prize). It is done online only, so if you are looking for something to do, place a few choices and want a shot, join the contest. If you notice the signup page Steve starts the contest with these words:

"This is a game of skill."

So let's see if a HANA member can win. If one does, you will get a prize from HANA, in addition to the cash Steve is offering. I am sure we can scrounge something up. You have to be a HANA member before the 24th of December however, to receive the prize. You can sign up for HANA here.

If any track or organization is giving back something to players, email us, we would be happy to let members know about it. Our game is expensive, so every little bit helps.

Last but not least, a couple of you have asked for a direct link to the Facebook page for HANA. It is here. We have had about ten new fans join us the past few days. Very nice; we thank you!

PS: If you signed up for HANA on Monday or Tuesday this week (I believe there were four or five of you) would you mind signing up again? Unfortunately during our database work our new memberships on those days were deleted. I know you took some time out of your day to sign up so apologies from us here for messing that up.

HANA2.0 - Sell Itunes, Not Albums

Seth Godin is a marketing writer, and a good one. What makes him stand out (what makes him a “Purple Cow” to use a Godinism) is that he is a ‘new’ economy business and marketing guy. He has been promoting his new book, Tribes, and does so via the blogs and so on. The interweb stuff. Originally posted on 26th story, a new media blog (and linked first via raceday360) was this question and Seth’s answer:

What's the most important lesson the book publishing industry can learn from the music industry?

The market doesn't care a whit about maintaining your industry. The lesson from Napster and iTunes is that there's even MORE music than there was before. What got hurt was Tower and the guys in the suits and the unlimited budgets for groupies and drugs. The music will keep coming. Same thing is true with books. So you can decide to hassle your readers (oh, I mean your customers) and you can decide that a book on a Kindle [note - internet reading page] SHOULD cost $15 because it replaces a $15 book, and if you do, we (the readers) will just walk away. Or, you could say, "if books on the Kindle were $1, perhaps we could create a vast audience of people who buy books like candy, all the time, and read more and don't pirate stuff cause it's convenient and cheap..." I'm a pessimist that the book industry will learn from music. How are you betting?

Hmm. Let’s change a few words in that to equate it with racing, k?

“The lesson from ADW and the internet is that there's even MORE opportunities to see racing than there was before.”

I played a race at Sunland this year, in fact several races. I do not even know where Sunland is. ADW’s like Youbet or Twinspires bring racing into the 21st century and allow us access. Just as Itunes brought new artists to the fore and will end up growing music to an otherwise unreceptive or unwilling audience, this will end up growing racing, if we do it right. In my opinion, we are not funding this enough to grow racing along the tail. To take more money from it, or to limit its access with infighting or archaic rules that were written before the Internet was even invented defeats its purpose entirely. Companies lose when they do things like that in 2008. The companies who win, embrace, invest, market and price their product accordingly.

Next up:
“So you can decide to hassle your bettors (oh, I mean your customers) and you can decide that a bet on a Youbet SHOULD cost $15 because it replaces a $15 bet at the track, and if you do, we (the bettors) will just walk away. Or, you could say, "if bets on Youbet were $1, perhaps we could create a vast audience of new bettors who like betting horses all the time, and don't play other games like poker instead cause it's convenient and cheap..."

Self explanatory of course. The economies of scale that the internet has brought us is amazing. You can buy a stock on a foreign exchange with the click of a mouse for $9 and it resulted in stock trading exploding with moms, pops and whomever buying stocks from their laptops. Ten years ago you would have had to pay $300 for the same trade, perhaps. If Ameritrade charged regular in-house prices over the internet, customers would walk away. In racing we seem to think this rule of Internet business does not apply to us. The marginal cost of an internet bet is negligible - yet we want to price it like we are delivering it at a 1950 racetrack, because after the sock hop there is nothing to do but go to the track. Just as customers will not give you $15 for a book online, he/she will not pay $15 for a bet online. And guess what? With competition, and traffic, and kids and work and all the modern encumbrances, he sure as hell ain’t heading to the track to do it. It is found money lost.

5000 people can read a book online for $1 and give us $5000. 5000 people can make a bet online for $1 and give us $5000. Neither of those two groups will be going to the bookstore, or the track and doing the same for $15. We seem to think zero revenue instead of $5000 revenue and potential new fans is a viable business model.

His last line: “I'm a pessimist that the racing industry will learn from music. How are you betting?”

I don’t think racing is quite there yet to learn from music, or poker, or anything that has grown on the web. Heck, we are currently shutting out internet signals. We don’t show live video on our track websites. We charge people to look at a PDF file, where after looking at it they will give us 21.8% of their money through takeout. We have some groups trying to take more money for purses instead of reinvesting it in the internet medium as a long-term growth strategy. We clearly have a long, long way to go.

I have saved his first line for last: “The market doesn't care a whit about maintaining your industry.”

This is true in the outside world. But it is not true in racing and that is the painfully ironic thing. We customers care about maintaining this industry. We might be the only customers of any industry known to man who care that much. Yet we seem to be treated as a nuisance, with companies and groups charging high prices and fighting for higher ones in an internet world, making us leave the game we love to play; and maybe even worse, not attracting any new fans in numbers to a wonderful sport to replace us.

It is very difficult to be a fan in a sport that seemingly does not want to help itself. All most of us have left is a glimmering hope for a brighter day.

It is no secret that bettors have been telling us we have not delivered what they want, at the right price. Supply and Demand in an internet world is a very neat thing. They always tell you what price is right. Racing must do the same thing; or the future will look like the recent past.

This article was reprinted here with permission.

HANANewsletter Vol1 Ed1

HANAnews: Your Quarterly Look at HANAhappenings


VOL 1 Edition 1

Hello HANA Members!

We promised we would rarely bother you, but since we have never really updated you all, nor formally thanked each of you for your contributions, we thought that it was a good time to start. In addition, we also got our email database programmed and it was finally made possible to do this mass mailout - it is nice to have a programmer involved with HANA (thanks to HANA president Jeff Platt!). As always, we hate any type of spam and we are a player driven organization. If you do not want to receive the HANAnewsletter, please click remove in a link provided at the end.

In this edition of HANAnews...... Facts about all of us..... "Why I Left Racing"...... Jeff Platt on ADW issues...... Hats or Boxers?.... Is Everywhere a PayPal ...... Wanna Blog?..... Up Next..... Help!..... Our sincere thank you's.....

And away we go...........

HANAFacts:

1. There are 428 of us, as of December 8th. You represent horse bettors, horse owners, horse trainers and fans. We have a very nice mix so far that we are proud of. Not all of you filled out handle information, but for those that did: We have about 45 everyday larger players (100k bet per year or more). We have about 89 smaller players (10k per year bet or less). The rest fall in the middle. Our largest documented player is several million bet per annum. Our smallest is $200 per annum. We're happy to have all of you. If you have not told a friend about HANA, send them this easy link if you do not mind. It heads straight to the sign up page. It has been an excellent period of growth. We have grown each month more than the last. It is catching fire.

2. We are Incorporated! This was achieved in September.
3. We have an Advisory board and are proud of those who chose to lend a hand. Barry Meadow & Nick Mordin followed original members Cary Fotias & Dr. William Ziemba (Dr. Z for short!). There are full bio's under the hyperlinks above. Anyone have a suggestion on new board members? We'd love to hear from you at horseplayersassociation@gmail.com.

4. We built a Website. It is free to us (so far) as our web hosting has been donated, and we are adding to it each week. Although regular updates happen on HANAblog, it is nice to have a spot in cyberspace for us to make available.

Hajck Joins HANA:

We were stoked to have Hajck Hillstrom write for the HANAblog. Hajck is a member of the Horseplayers Hall of Fame, and a horse owner too. He is currently writing a series on the blog about "Why he Left Racing". If you have not read it, give it a try. You can read part's one two ,three and four here. Next up for Hajck? HANALive! It is a look at live racing and what makes it great; and not so great.


Platt Works the Phones:

HANA president Jeff Platt worked the phones very hard with the ADW dispute. He has been interviewed by Bloodhorse, and has spoken to Jack Liebau from Youbet, Drew Couto from the TOC/THG and come to his own conclusions too. You can read his series at HANAweb under "articles".

HANAGear:

"The capacity to enjoy: so few people have it. Most citizens live lives of such routine and drudgery and are so concerned about security that they cannot imagine how delicious uncertainty is. A gambler may have as many periods of frustration as he does exhilaration, but at least he knows he's alive." - Andrew Beyer

Horseplayers are unique. We tend to walk to the beat of a different drummer. Because that's who we are, we have created a couple of things that members might be interested in.

First up, our HANA store is here. Hats, shirts, and despite the protestations of Treasurer Theresia Muller..... boxer shorts! We are not designers and we are working on pretty much a zero budget and our own dime; don't expect the world, but if you choose to support the Store by buying a tee shirt, be sure of one thing - the cash will be used for HANA.

Secondly, We are currently in the design stage for a state of the art, Official HANA Member Lapel Pin. These pins are not for sale on the website to the general public, nor will they ever be. They are only available for charter members of HANA. They will be gold (in color, not real gold; we ain't Jess Jackson), with our fine logo and a charter member insignia. These will be made for purchase and we think this will be the only revenue that HANA will achieve in a measurable way. As we stated in our Mission Statement: We will never ask for membership fees, ever. We feel that the tracks have taken far too much advantage of us by expecting us to play racing at all costs. We do not have this philosophy and believe it hypocritical if we did. Any revenue we ever ask for will be voluntary. If you would like to buy a pin ($20) please email us at horseplayersassociation@gmail.com, or simply reply to this email.

HANAnote: We would certainly like to take credit for the pin idea, but like most organizations, the grass roots know better than the ones bogged down with business - HANA member Ernie C is the idea man on this one. Thanks Ernie.


Shameless Plug:

We have our Paypal account set up. To donate, please click here. To everyone who donated..... a sincere thank you. We actually have a bank account now!

Facebook

HANA is on Facebook. We need friends! I am sure the tracks won't add us so if you are on there, please become a fan. We need all the help we can get (a common theme, I know).

Popular Posts at HANAblog:

We have had some well-followed posts at HANAblog. We update it almost daily with player and industry news (with some handicapping mixed in too!). Here are some of our more heavily linked and trafficked pieces.

2.0 - Ever wonder how racing on the internet is doing compared to other sports and games?

The Future Looked Bright: In 2000 we bet around $14.2 billion dollars. In 2008 we will probably bet less than 14.2 billion dollars.

We Need a Takeout Reduction: Racing execs have shifted their mentality. And the result: In the 60's and 70's racetracks were hesitant to even bring in exotics because they were worried that fans would lose money too fast and be discouraged.

Jeff Platt at Bloodhorse: "You don't walk into a casino and have someone tell you the craps tables are closed, or the blackjack dealers are on strike," Platt said.

Low Takeouts Grow Racing (featured by Nick Kling of the Troy record and in Trot Magazine in Canada): After 150 days of playing, this is the result: The track exec coached player is almost broke – he has around $2 left. He has bet in total, around $24,000. Our player, with that small rebate, bet over $330,000 in those same 150 days of betting.

We Need More Information: Vet Records : In Hong Kong they truly take their sport seriously and they take bettors seriously. After each sub par performance, the horse is checked and this information is made public so the bettors can be confident and know what happened.

Declaration of Horseplayer Independence (Cary Fotias) :When in the course of thoroughbred events, it becomes necessary for horseplayers to dissolve the financial bands which have connected them to insensitive racetrack owners and short-sighted state legislatures, and to assume among the powers of the earth, the rightful station to which they are entitled, they should declare the causes which impel them to action.

How About Uniform Payout Standards in Racing? : 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?

There is much more at HANAblog - the home for HANA, where horseplayers just like you are taking on the issues important to us. Want to guest blog? Do not be shy. We want to hear from members. Send us an email at horseplayersassociation@gmail.com and let us know what you want to post! Post questions and comments if you wish to any and all pieces. We sincerely want to know what you think.

What's Next at HANA:

Look for...... a systematic review of all tracks in North America.... HANA at Horseplayer Magazine...... a review of all ADW's in the US and Canada ..... HANA2.0 - a look at the Internet and wagering.... HANALive - a look at live racing past and present .... HANATen - Ten questions with a HANA member.... and much more


HANA asks for Help!

We don't have much cash, and we are not Andy Beyer on a TV screen or the Washington Post. To grow we need our members to help us grow. What can you do? Many things. If each one of you forwarded this newsletter to a friend who is not yet a member and they sign up, we could double the membership. Maybe you go to the track live? How about mentioning HANA to five players between races? They can find us by doing a google search. Maybe you are on Facebook or Myspace? If so, add us as a friend and ask your friends to do the same. There is a great deal we can do if we all pull together.

Our Sincere Thanks:

When this started it was a big question mark. Would we fall on our face? Would we be able to assemble a group of people that would put aside work and kids and the encumbrances of everyday life and stick with it? Would we be able to ever sit down and chat and get the nasty details taken care of like a bank account and incorporation and weekly meetings? Would horseplayers actually sign up?

We are happy to say that we have been able to succeed at this early stage, thanks to you all. And a special note to those early on who worked hard for HANA, but every day life has them in less of a role now: CJ, Raleigh, Maury, Indy, Andy, Ray and Andrew. I hope we did not forget anyone.

On our blog we saw a comment from Mike Maloney, a player who sits on many panels as well as many others in the sport that we'd all know. We have sign ups and comments from trainers. We heard from small players and big players. When Jeff asked Ken Massa of HTR and Dave Schwartz of HSH to post a helper for sign ups on their site they simply said "sure" and helped the cause. We have been linked on various blogs, were invited to be a part of the Thoroughbred Bloggers Alliance, have been linked at Equidaily, made the front page at Harnesslink.com, wrote pieces for the Paulick Report and had a comment or two at Bloodhorse. All in four months!

We are forgetting so many people that have helped. There are too many to mention. But we say thanks to all.

We ask again for more: If you know anyone who wants to join, or help, send them to our sign up page. If you know a horseplayer who might want to read a bit about what we are up to, please forward this email to them. Anything and everything you can do to help is appreciated.

We will see you back in the New Year with volume two of this newsletter. Thanks to everyone, and good luck at the windows.

Sincerely,

Jeff and everyone at HANA
PS: A sincere best wishes to everyone for the Holiday season. If you feel like doing something nice for the horses, HANAblog has linked several retirement foundations for our four legged friends. A few of us have donated to these causes. It makes you feel good. Again, Happy Holidays and thanks for supporting HANA.


When in the course of racing events, it becomes necessary for horseplayers to dissolve the financial bands which have connected them to insensitive racetrack owners and short-sighted state legislatures, and to assume among the powers of the earth, the rightful station to which they are entitled, they should declare the causes which impel them to action.

We hold these truths to be self-evident, that all horseplayers are endowed with certain unalienable rights, that among these are market-driven takeout rates, sterner drug policies, the integrity of the wagering pools and the embracing of new technologies that could make it easy to bet on any race, anywhere, at anytime.
-Cary Fotias

When Will it Ever End?

From the Kentucky Task Force Report released today. Among the recommendations:

The following funding mechanisms are proposed:

-Increase takeout on exotic bets and win-place-show bets

From the Cummings Report, written in 2004 and paid for by racing to recommend what to do to get racing up to speed in the 21st century:

"Racing has lived with rising rates of takeout for so long that they have become a way of life. They are the line of least resistance whenever the industry needs money. It is all too easy for the industry to see that if we have a constant $100 in handle, and we raise the takeout by one percent, we’ll make a dollar more. It is much less easy to see that handle is not constant and, over the longer term if not the short, we won’t have that $100 any more."

It's been four years since that report. Its findings have come true again and again. Yet still racing does the opposite of what he recommended.

Thanks to Inside the Pylons at Paceadvantage, for pointing this out.

Will Slots Continue to Hurt Handles?

Thalheimer and Ali present an ominous scenario in their paper entitled, "Pari-Mutuel Horse Race Wagering -- Competition from Within and Outside the Industry" (The paper can be found in "Handbook of Sports and Lottery Markets" by Hausch and Ziemba). Their research shows that when video lottery terminals (VLTs) are placed at pari-mutuel facilities, pari-mutuel handle decreases by 29% at the 114 VLT level and 39% at the 3,000 VLT level.

This article in the Saratogian supports their findings:

According to the article, "purses are expected to reach $120 million by 2010; up from $35 million before gaming was introduced. However, handle has declined. NYOTB President Raymond Casey is quoted in the article as saying, "But there hasn't been a corresponding increase in handle -- the amount people bet -- an indication that VLTs haven't boosted fan interest in racing."

Why should racino gaming in New York boost fan interest? It hasn't boosted interest anywhere else where it has been introduced at racetracks.

Mr. Casey also said, "Perhaps some money now dedicated for purses should be reallocated to marketing efforts, to promote racing and generate fan interest."

It certainly can not hurt to spend money on marketing. However, if increasing handle is the goal, marketing alone is unlikely to achieve the desired result.

Handle peaked 31 years ago in 1977 and has been in decline since. The "Go Baby, Go" campaign could not reverse the trend.

When VLTs are operational at NYRA, pari-mutuel handle will likely decrease. If NYRA continues its policy of not sending its signal to all licensed ADWs, players will continue their subversive ways. They will send their wagers into unlicensed pools where transaction costs are lower, (e.g., betting exchanges, illegal and/or unlicensed bookmakers). Tracks, horsemen and the state will derive no benefit.

Horsemen who race at non-VLT tracks are going to face tougher times as their purses shrink. The non-VLT tracks will probably raise takeouts resulting in more player subversion. Many non-VLT tracks will cease to exist -- a sad story for another blog.

It is likely NY State will see an increase in VLT gambling revenue, but a decrease in pari-mutuel revenue. Horsemen will see an increase in purses via VLT subsidies, but a decrease in the amount of pari-mutual handle that helps fund purses. The increase in purses from VLTs may be so large that the decrease in purse funding from pari-mutuel handle will be inconsequential.

It is hard to blame anyone who comes to the conclusion that NYRA and NY State do not care much for existing horseplayers.

Why should the horseplaying community that has supported the industry for the past 100 or so years not derive any benefit from VLTs? Players only want a game with low wagering transaction costs (on and off-track) and signal availability through their ADW of choice.

At the very least, NY State officials should care about NY State taxpayers. Tax revenue is being lost as untaxed betting revenue goes to untaxed bookmakers. Non-horseplaying taxpayers should be furious that a source of taxable revenue is not being collected due to the negligence of government officials.

Given the competition from gaming, professional sports, lotteries, alternative entertainment and other regional racetracks the only way to boost handle is to cut transaction costs for the player. A lower priced wagering product will sell more than a higher priced product. Fewer and fewer people are willing to pay for a horse race wagering product at it's current cost. And spending marketing dollars on an over-priced product is a waste of money.

Lowering takeout and widely distributing the racing signal are simple concepts for increasing handle. This is not rocket science to horseplayers, however, to government officials and industry leaders, it must be.

This is Part II of a series on subversion by HANA VP John Swetye.

HANA 2.0 - Invest & Reinvent

It is no secret that with more and more gambling, a 500 channel universe and high takeouts, racing has not been doing well the past while. Many people have spoken about a wagering crisis and it appears that there is, but with a plan for the web it may be possible to reverse these trends. The Internet is something that can be used to our benefit, just as we spoke about in Part I of the series. But it does not happen by itself. The super-highway is littered with company carcasses who believed that they could win at the game with a few dollars of venture capital and little more.

Just how is racing on the web doing, compared to other sports and gambling games?

Google is considered what racing is unfortunately not - innovative, customer driven and fresh. They try more and more new ideas, and put ideas into practice at laser-speed. A neat tool that they have is Google Trends, where they show off what customers are searching for and what the trend is. With Google Trends we can compare side by side search trends and popularity of different brands, celebrities and more. Using this tool for racing might open our eyes to what is happening out there.

To show how this works, here is an example or two. Here is the Google trend for "Facebook". We all know what that is, and how it has come to prominence. This should show this well.

Moran on Mark

The term “fan” in racing, except in rare and short-lived circumstance, is not applicable. There are only horseplayers......

more

HANA on Facebook

We dragged ourselves into this century and made (ok we didn't; a 22 year old did) a Facebook page.

For those not initiated with Facebook, but were alive in the late 1970's to remember shampoo, think of this:



We need to tell two friends. We don't have many. If you, your child, your spouse, your horse, or your buddies horse is on Facebook, please become a fan. Just search for Horseplayers Association and you'll find us.

ADW Redux

Reprinted from another blog, here is an interview dated December of 2007 with an ADW head. It is interesting to see what the philosophy is with the resellers and what is was like one year ago. We wonder here often why the business does not embrace and work with resellers. We still do a year later. It has gotten even worse.

When I emailed Ian Meyers of Premier Turf Club to ask him if he’d answer a question or two, the response was the same as it always is: “What can I do to help?”

He, after a long career as a stock trader (and a horseplayer since his teens) had a dream. It was to own his own ADW, or advance deposit wagering company. After toiling for a couple of years he finally got it off the ground. The company’s slogan: “By Players – For Players” is not lost on anyone who is a member. The betting platform is second to none. The features of the site are always changing and improving based on what his players are telling him. You want to dutch your bets? You can. How about conditionally wager, where you can put your bet in as limit order to make sure at one minute to post the odds have not dropped too much? You can. How about track your wins and losses by type of bet to improve your play? You can. How about player rewards? You bet. What about handicapping tools to make you a better player? He has them. Most if not all of these innovations happened after he was established. It is this type of innovation this business needs, and most if not all he does, concentrates on helping players win and become long-term horseplayers, with larger bankrolls, and growing handles. So he was a perfect person to ask about our topic.

Currently he has a wide array of harness tracks, ranging from places like the Meadowlands, to the B track scene with less than $200K handles per day. My questions to him focused on these small tracks. He had some good answers that should help us wade through the B track experience.

We know from experience that pool size is a factor to attract or dissuade play. Woodbine recently has mentioned that they are worried about sub $1M handles, because when they drop below a million, handle losses can snowball. Ian agrees that small handles are the biggest stumbling block to his players playing those tracks. “I know its chicken / egg. If pools are small it’s hard to get people to play, and if they don’t play pools are small.” he said. Surprisingly though, it is not as much the product. He says the product placed on the track matters “only to some extent”.

He believes that some of his larger players will play smaller tracks for a few reasons. Mainly these are as follows:

1) Signal availability: If they can watch it, they will play

2) Cost to Wager: If they can get rebates, they will play

3) Availabilty on the Betting Menu : Goes without saying

Offering rebates to smaller players is something he believes is of paramount importance, but finds there is some reticence in small tracks joining his service, simply because he is rebating. On the surface I would have to agree with him. Since getting handle up is the greatest challenge for B tracks (the chicken/egg above), why should it matter to them what resellers are doing? “Rebates to my players are absolutely essential, and you’d be amazed at how many small tracks at least dissuade you from offering them if they don’t try to ban them altogether. If you’re a track operator I never understood why YOU care what I do with MY profits.” He feels B tracks that he carries can get a leg up on some other higher-priced tracks with larger players. “We have a couple of players that wager $150k-$200k a month on almost all small tracks. One of them just killed Northlands this summer. We are finding a gradual shift away from some of the high profile (i.e. TrackNet) tracks as signal fees are pushed to unsupportable levels.”

What can or should small tracks do to get bigger players interested, then? Noticing last year that Buffalo Raceway planned to offer their signal out for a 1% fee, I asked if that was the right approach. “Yes, absolutely. Now there is only so much handle you can get on a small track regardless of the rebate offered (again a pool size issue) but an affordable signal fee is very important. Look at the difference in financial performance of the small tracks that are ball-busters in terms of price and access. Gigantic fall-offs in handle. Remington was down 25% this meet because TrackNet wouldn’t distribute the signal.”

So, it seems there is some room for B tracks, like those in Ontario to be part of the picture. If the distribution problems in the US, and the infighting continues, perhaps there is some opportunity.

Also, it seems that when a track signs up with a reseller (ADW) they leave it at that, and they do not continue to fight and claw for more business. I have always found this strange. If I had a track with a reseller I would try and make sure I distributed free video, programs, or anything else I could to encourage play. So I asked, what can a track with you do to increase wagering? Is there anything you can do to push a product working hand in hand with your tracks? He seemed almost apoplectic with this question:

“That is a terrific question that no track has ever asked me. You know we sponsored a contest on paceadvantage.com this year, put up prize money out of our own pocket. More than half the tracks we contacted balked at providing t-shirts, hats, etc. One track actually threatened to cut us off or raise our rates because we have conditional wagering. Tracks look at me as a parasite, but while I might not produce the product I am much better at distribution than they are. They should try looking at us like partners. We would be happy to develop a targeted campaign with a track or two that maybe included free handicapping analysis, t-shirt giveaways, special rebates for certain nights/pools, etc. Not one track has contacted us in the year we’ve been in business (phone or e-mail) other than for settlements. We’d love to do something creative with them.”

This is an extremely important point to me. The current market of tracks distributing signals, and resellers pushing them is a fine system. It is a system that is seen in business every day. Your resellers advertise for you. They work for you. They are in touch with their customers on a daily basis – customers that may never even be customers in the first place. It makes more sense for you to offer out something at price “A” where it encourages distributors to increase their profit by increasing gross handles.

I was happy Ian pulled no punches. When people are passionate about something, you tend to get their true feelings. From my conversation with him, I have concluded the following in terms of step one of the B track question: “What can B tracks do to raise handles?”

One, distribute their product far and wide. Offer it out for as low a price as possible, to get to as many people as possible. If the pool size grows, handle can grow at a faster and faster rate.

Two, work hand in hand with your distributor. Make it easy for them to push your product. If you have a back door to video on your site, let them have access. If you offer free past performances, let him offer them out to his customers too. If you have an on track handicapper, offer out his or her thoughts with those past performances. If you have hats, a handicapping contest, shirts, or want to design a promotional day with a special rebate offer, ask. If you have cross promotional ideas, go to it.

It seems we have barely scratched the surface on what may be possible.

This might be a good time for a series here at HANA. If you are an ADW and want to answer some questions and have your say, please email horseplayersassociation at gmail.com. We'd be happy to hear from you.

Oh, oh

NYRA exec Hayward on slots:

Racing’s share of Aqueduct VLT revenue is as follows: 6.5%-7.5% for purses, 4% for capital expenditures, 3% for NYRA operating expenses, and 1%-1.5% for breed development.

Are you planning to do anything for the customer? Y'know, the ones that are leaving in droves?

... more

Let's Get Rebating

On the Trackmaster blog tonight, the author explores a bit about rebating. It is amazing to see the sea-change. Only four or five years ago the word rebate was met with disdain from racing. More than likely because this business loves high takeouts and thought that they could still charge monopoly prices, while not being a monopoly. Hey, who can blame 'em! If you or I were selling hula hoops in 1950, we were the only seller, and the government mandated that the only exercise the citizenry were allowed to do had to involve a hula hoop, we would have stuck it to hula-hoopers everywhere. Cheaper hula hoops? Not a chance. You are lucky we aren't raising prices!

But times have changed. Rebate is not a bad word anymore:

Where does racing go from here? How can the industry grow? How are handicappers shown that they matter? Other than fixing problems like those mentioned, one way is by offering rebates to reward bettors of different wagering levels. Currently, only a privileged few are offered rebates throughout tracks in North America. These are the “whales,” individuals that can push through a minimum of one million dollars a year through the betting windows. It is estimated that currently, about 15% of the entire handle in North America comes from these players through legal rebate shops.

HANA believes with the fingers in the pie economics of racing, we are never going to get 20 legislatures, about twenty acronyms, a few horseman groups, Bob Evans (probably both the restaurant guy and the Churchill head) and a few other scattered groups to ever lower takeout. The only way to do it? Rebates - for everyone. If an ADW wants to offer them, and if a customer wants them, they get them. End of story. If it works for the whale, it works for the minnow. Mr. Racing, it is time you met Mr. Free Market.

When pari-mutuel horse race wagering first began, it had a virtual monopoly on legal gambling in most states. The takeout rate or cost of wagering meant very little since it was the only game in town. Over the years, the environment has changed drastically and racing hasn’t adapted to its altered status. Compared to similar types of betting, horse race wagering has a very high takeout rate, depending on the type of wager, normally from 15-25%. Poker or sports wagering each have a takeout rate of around 5-10%. That is a significant difference in cost to the bettor. The legal rebate shops are secretive about the exact percentage of rebates given to the “whales,” but it is safe to say they are probably at or below the 10% takeout rate. Right now, horse racing has the advantage as the only one of the three forms of betting mentioned, allowed to take legal wagers over the Internet from U.S. residents; this might not always be the case. Racing executives and horsemen need to understand that racing is competing against other forms of gambling. Simple economics dictates that racing has to have a competitive pricing structure for the game to flourish. Since lowering the takeout would be a difficult legislative process, providing rebates based on the amount a player wagers would be the best way to make this change, and while also needing legislative approval, might be an easier path.

It is an excellent piece. What the author fails to mention is that there are currently a couple ADW's who offer cash rewards for minnows and whales. Unfortunately those places (for example BetAmerica and Premier Turf Club) are shut out from getting some signals. Also, with the ancient rules we are governed by, some people in some states and/or Canadian provinces are not allowed to even bet with them. We wonder why. We'll be trying to find out for you, the bettor. Because your money matters, and you will be the one who grows this business. Not a slot machine, not a piece of legislation, not a handout - you. You matter.

Give the article a read. It is a good piece.

Worse Than You Think

Paulick:

We can blame the economy, and people like National Thoroughbred Racing Association CEO Alex Waldrop will almost certainly do so, when the dismal year-end figures show that pari-mutuel handle in the United States is at its lowest level since 1998.

But pointing to the dismal economy as the sole reason for the Thoroughbred racing industry’s woes will be a fatal mistake.

I think we should have learned from the postage stamp!

More....

Can We Learn from a Postage Stamp?

Great Britain issued the world's first postage stamp, the "Penny Black", on May 1, 1840 in an attempt to fix their broken system of paid postage. There was not a standard rate for postage before the Penny Black. The price could vary depending on distance and the number of sheets of paper in the envelope. The rates were as much as a day's wages and since all mail was sent collect, many letters were returned unopened -- obviously a waste of time, energy and resources.

Members of Parliament could send mail for free. So members were hounded by their acquaintances to send letters on their behalf. Those without connections devised other schemes to subvert the system.

A British Schoolmaster, Sir Rowland Hill, urged Parliament to adopt the "Penny Postage" program. Penny Postage legislation was passed and for the first time postage was paid in advance. The cost was only one penny to send letters anywhere in the country. The program made sending mail affordable to nearly everyone. Businesses realized tremendous savings.

Like any revolutionary change that threatens the status-quo, officials balked at the idea and worried the new program would bankrupt the system. "How can we charge one penny for someone to send a letter, with all the costs of the system? How can we charge one penny for someone sending something five miles, and the same penny for someone sending something 500 miles?" The answer of course, was volume - if it was convenient and easy and made sense and millions of people used the system - the business would do just fine.

When the plan was put into place the result was twofold:

1) The number of unpaid letters dropped precipitously.

and

2) Revenue increased and the post office profited greatly under the new system.

Now, simply replace the British Parliament with the powers that be in the racing industry; replace the pre-Penny Black postage rates with the current takeout rates; replace postal system users with bettors and the outcome is the same -- subversion. The lack of any effort on the part of racing's governing bodies to address high takeout rates has caused horse race bettors to subvert the system by placing bets with unlicensed bookmakers. Until this issue is addressed and a plan put in place that will bring the transaction cost of placing a bet to a level that is deemed satisfactory by bettors, bets will continue to be placed with unlicensed bookmakers which have no benefit to the people who put on the show -- racetracks and horsemen.

HANA believes that we need a new and better system - one that is fresh, exciting and can bring millions of worldwide gamblers back to the wonderful game of racing. The current business model was built for a time when racing was a monopoly. Just like an electrical utility had to change rates when competition was forced upon it, and just like prohibition and other rules and laws that led to subversion had to be tweaked, so must racing. To help us get the word out we need you. Please sign up to HANA now. It is free, confidential and you will be lending a hand to help the game we all love.

In Part II we will continue the theme on Subversion and look at VLT/Slots and what we need to do regarding their adverse effect on overall handles. This piece was submitted by HANA VP John Swetye

No Eclipse?

Ray Paulick believes that.....

Steve Asmussen should not be allowed on the Eclipse Award ballot as North America’s leading trainer this year, no matter how many races or how much money he’s won. I don’t think Todd Pletcher should be, either, or Rick Dutrow, or Larry Jones or any other trainer who in this calendar year has either served a suspension for a medication violation or has a pending complaint for a banned substance in a horse under his care.

.... Polls. chatter and more

HANAGear

The HANA Store is now up and running.

Hats, men's shirts, women's shirts, bumper stickers and for the adventurous HANA men and (perhaps) women: Boxer shorts.

This stuff is super-cool. I ordered a hat, wore it to the track and I got propositioned for about 50 dates.

OK, I ordered a hat and wore it to the track.

If you'd like to order something, please do. We need all the help we get. We're horseplayers, of course we're broke. In fact, we tried to get a celebrity to wear something to promote for us but all we could come close to signing with our budget was the guy who played Potsy on Happy Days. Even he was too expensive.

My purchase only took a few days to get to my home, so if your better half or family member wants something really unique (as far as I know I am the only person with a hat) that says "I'm a Horseplayer" for the Holidays, it will arrive in time.

Thanks for your support, and be rest assured if you do order something, the proceeds will go to a good cause. We'll use it to help our game. And of course, if you order some gear, expect to be one of the coolest people at the track. Even if the toilets go out at Belmont again like last year, you'll be happy because you will look good.

Get your HANAGear here today!

Down Another Ten

Wagering is off again in November, this time by about 10%. Strangely enough, race dates and number of races were up in the same period.

Thanks Ray.

They Do Read - Part II

In an earlier post we were discussing the fact that we have seen evidence that people in racing have changed. Listening to the customer is starting to take hold. In a couple of comments on the blog, and when people sign up we do see the malaise - "they won't listen." In a comment or two Mr. Waldrop was mentioned by name.

A recent comment on the Why I left Racing series, written by Hajck Hillstrom:

Thank you for taking the time to bring these issues to light. The industry as a whole and the NTRA in particular are waking up to the fact that we need to listen and respond to passionate horseplayers like yourself. Please go to ntra.com and read about the new NTRA Safety & Integrity Alliance - where horseplayers already have an influential seat at the table - and if you like what you read then pledge your support for the effort. While you are on the site, join the Horseplayers Coalition and help us eliminate federal tax witholding on winning wagers. Nothing will change this industry faster than horseplayers supporting reform-minded tracks and horsemen with your wagering dollars.

Best regards,

Alex Waldrop

Mr. Waldrop is being part of the solution, not part of the problem. Their work on the ridiculous witholding tax, involving spirited horseplayers like Mike Maloney is doing some good. In fact, when working on a platform, HANA noted that since Maloney was involved with the NTRA panel, we believed it could be left out of ours, as we were confident it would be on the front-burner from that capable bunch.

Just like HANA has an uphill battle in getting many of the planks of our platform noticed and changed via the massive dysfunction of racing, Mr. Waldrop and others have the same fight and the same issues. This is one mess of a business to change. We are dealing with a business set-up for 1958, in 2008.

Change won't come overnight, but people do listen, and some out there are trying. HANA supports many of the issues that the Players Coalition does, and are very much behind them and their work.

WILL THE RECESSION KNOCK SOME SENSE INTO THE RACING INDUSTRY

By Cangamble

Horse racing handles were dropping prior to the official announcement that the world has entered into recession. Handles in North America recently can't even keep up to tiny inflation increases. Even though horse race betting is available in more and more homes than ever before, the racing execs have forgot that their product is a game of chance, and they have not even attempted to compete with other games of chance.

Click Image to enlarge it:

The above graph looks better than things are. If you just factored in normal inflation rates since 1992, the total mutuel handle would be higher than $18.4 billion. Not to mention that in 1992, one had to go to the track (or OTB) to make a bet.

By all accounts, I expect 2008 numbers to be down anywhere from 5-8%. Here is an industry that should be experiencing nothing but tremendous growth. Horseplayers know that nothing compares to horse racing when it comes to gambling, when it comes to excitement and self admiration when it comes to selecting the right outcome.
I don't want to sound like a broken record, but the reason for the stagnation and decline in numbers boils down to one major thing: the cost of the takeout versus other games of chance.

While we are at it, lets look at another chart compiled by The Jockey Club:



As you can see, handle stagnated in the early 1990's but grew considerably from 1994-the late 1990's. This was due to teletheatre and mainly internet ADW growth. Many patrons didn't need to go to the track anymore to place a bet, thus on track attendance also declined, and continues to do so today.

Do these stats mean that people are gambling less? Absolutely not.
Take Canada for instance. $13.6 billion in gambling money was lost last year by Canadians last year. In 1992, only $2.7 billion was lost.
Canadians can and do bet on anything. Internet sports, poker, Pro-line, slots, all sorts of lotteries, oh and horse racing. We didn't have as many options in 1992, but we did have to go the track or the teletheatre to make a bet on a horse race.
In 1992 handle in Canada was $770 million, last year it was only $560 million. Not only is that shocking (I know slots took away a lot of it), but if racing grew at the same rate as total gambling grew in Canada, the handle number last year would have been over $3.5 billion.

In 2004, The Cummings Report was published. It seems that racing execs used the valuable information and recommendations in the 72 page report as toilet paper.

The problem is that they probably read it, but they didn't react. In 2004, they were still making money. Tracks were not closing.

The Report basically spelled out that racing needed to compete for gambling dollars, and pretty much predicted the downfall we are seeing today.

I'm sure the same is true with the North American auto sector, and their refusal to aggressively compete with Japan, by making more economical cars and cars that use other sources of energy.

I have news for the racing industry, not enough people care to even considering bailing it out.
But the biggest problem with horse racing today is that the industry might be too far gone. It is completely dysfunctional.

Some racing execs may now know that they HAVE TO REDUCE TAKEOUTS TO COMPETE AND GROW, but the horsemen groups won't take a risk on a complete new way of thinking. I just don't see it at this time.


Meanwhile, bettors are leaving, owners are leaving, handle is dropping, sales numbers are dropping, and tracks are closing, yet gambling overall is flourishing. Under the current pricing model (high track takeouts) there is no light at the end of the tunnel. There will be no growth, only decline from here.

There may be some temporary fixes soon, but don't get fooled. Horses will start running more and more for what they are worth, so tracks can put on a lot more low claimers, therefore paying out a lot less in purse money. And if the withholding tax law in the states gets overturned, gamblers will have more churn money, though they will end up losing the same as they would by the end of a calendar year, handle will spike a bit for a meaningless while.


If you play the horses and you mostly agree with what I have said above:
JOIN THE HORSEPLAYERS ASSOCIATION OF NORTH AMERICA
It is free. We are on our way to 500 members. The more members we have, the more pull we will have with the industry.

HANA2.0 - Embrace Change

Change.

A word that our business seems to enjoy about as much as death and taxes. But like those two things, change is inevitable. In our new series called HANA2.0 we are going to be looking at the Internet wagering landscape both here and abroad and what we can do to grow our game. In HANA's last press release the industry was asked to implement an Internet Wagering Task Force. HANA believes it is time for change.

"We are not being smart," said Platt. "It's 2008. People know about the Internet. They want easy access, convenience, and lower prices. Companies like EBay, Amazon, and E-Trade figured it out and have boomed as a result. Anybody can buy or sell 1000 shares of stock for just eight bucks - at home before picking up the kids at daycare. We buy stuff on EBay for pennies on the dollar in commission. We buy books at a discount prices with free shipping in the middle of the night at sites like Amazon."

To start us off, as part one of the series, let us have a simple look at the Internet landscape, and how we tend to try to stop its progress, by protecting the monopoly (the one that does not exist any longer), or by fighting over the pie.

In the UK in the year 2000 the Bookmakers who had been existence in essentially the same medium for centuries had to face a new competitor - the Internet. The response from them in their lobbying and otherwise was predictable - ask for the competition to be taxed, or banned.

I came across a story at a probability site, that was written during this time. The whole article is good, as it details betting economics and Internet wagering in a new world, but one slice of it I found hits the core.

Horseless carriages (cars) were a neat invention. However despite the revolution that was going on they did not meet with universal approval. Horseless carriages were cumbersome contraptions and had been powered by steam engines as far back as the late 18th Century. They met great resistance based upon two key issues.

• Stagecoach owners were afraid that horseless carriages would mean the end of their business.
• The general public found that their horses were scared of the machines.

Rather than try to compete, stagecoach owners decided to cling to the existing state of affairs rather than identify that an irrevocable shift had occurred in transportation and their businesses.

Eventually, opponents to the horseless carriage succeeded in harassing experimenters and lobbying authorities and laws were passed forbidding the use of steam engines on roads. In England, stupidity triumphed when Parliament passed the Locomotive on Highways Act in 1865. Popularly referred to as the "Red Flag Law," it stipulated that all self-propelled vehicles on public highways be limited to a maximum speed of four miles per hour and be preceded by a man on foot carrying a red flag to warn oncoming horse-drawn vehicles. Although the law was amended in 1878, it still retained the speed limit and required two people to operate the vehicle and a third to go ahead at danger spots, like intersections, and give a warning. After eventually seeing sense the law was repealed in 1896 but not before other, more enterprising, countries had taken the advantage. Such laws were unknown in the United States and the rest as they say, is history.

I guess belief and understanding of the free market are two diametrically opposed forces certainly where vested interests are at play. Suffice to say that the UK and its attitude put paid, or at best, delayed the adoption one of the most important innovations of the recent times. This in turn delayed increased productivity and commerce. The government also lost out on the basis of the fact that failure to spot his shift meant new commerce did not generate new profits which did not generate tax income.

Market forces could not be resisted and eventually the UK lost initiative, suppressed economic development but eventually embraced the horseless carriage when it was obvious that it was actually a good idea.

In betting exchanges the UK has become a global leader in this new and exciting industry. Exchanges are a new paradigm and demonstrate destructive capitalism at its best. Without these break points in economic development we would not be using computers for fear of decimation of the pen and paper would we? Inevitably these break points cause short term distruption to business and tax revenues as the market adjusts to the new state of affairs. By over-regulating or attempting to punish the success of exchanges it could be possible to de-rail this progress. Progress that could lead global dominance by the UK in a new industry and one that could generate significant opportunities for UK PLC.

Despite my best efforts I don't see many members of parliament currently using horses in London. But they do appear to use horseless carriages a lot. If they want to see the country prosper and develop they should learn to embrace and encourage new ventures rather than penalise them. Failure to do so should see all members of parliament adopt a drive to abandon the horseless carriage and move back to horses, to drop computers and adopt the pen and paper. If you fail to allow those things to progress and shape the world as they have done in the past you will fail to let the innovations of today shape tomorrow.

We have seen similar in North America on Internet wagering, ever since the early part of the 2000's. We were frightened that our "slice of the monopoly pie" will go away. We have tried to block it, tried to stop it and fought about it. We are scared that this is "something new" and we will have to change.

What if we instead said this: “This Internet thing is interesting. Ebay is going crazy with people trading goods…… if we play our cards right, price our game right for this new medium and offer it to everyone in a fresh way, we can be an Ebay for horse racing.”

What if we said that.

What if we chose to embrace a new technology, make a solid pricing and distribution plan, convince government what it can do for them and racing, and what it can do for the North American gambling economy.

This is what our industry faces today. We have executives - from horseman groups and tracks - who are clinging to the obsolete realities of yesterday. We have states that have banned Internet wagering on horse racing, like Arizona. We are governed by a simulcasting act that was written in 1978, before the Internet was invented. We have executives that think if we allow less access, people will go to the track again, like it is 1955. They have not kept up with the times. Our customers have told us that there is a "shift in the marketplace." Offshore wagering, online poker and betting exchanges are not going away; they are here to stay. As the writer above stated “market forces could not be resisted.”

We do have some Internet wagering in racing and that is good, but we are still trying to sell Studebakers to a market that wants a Smart Car. We find ourselves, once again, behind the times.

The Internet, and online gaming is this industry’s automobile and it is our future. It is simply the most important invention that gambling has ever seen. We can choose to be a part of it and work it the right way, or we can choose to cling to the past.

If we choose the latter, HANA thinks racing is clearly in serious trouble.

Next up: Part II, where we will look at online stock trading, and how it changed a tightly knit old-school business forever.

We need your help at HANA to get the message through. Please sign up and help us. It is free, all information is confidential and your fellow horseplayers will thank you.