News

Loading...

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.

Tuesday, July 29, 2008

Horseplayers Could Use A Little More Information

By Cangamble (also posted on Cangamble's Blog)

Renee Kierans deals with an interesting yet obvious question on her latest post on the Woodbine blog site, "Is First Time Gelding Information That Important?"
I wondered about this question over 25 years ago. And it still hasn't been dealt with.

To me, it is a gimme. Outfits geld horses for two main reasons: so that the horse might just run faster and/or so that the horse might keep his mind on his business (which makes the horse easier to train, and therefore the horse may run faster in races).

I'm assuming that gelding horses does achieve the goals above in at least many instances, or it wouldn't be a common practice. That being said, it has to be pertinent information that needs to be published. Why publish gelding information at all if it wasn't important?

New gelding information should be reported to Equibase within a couple of days of the operation. Equibase could put the info and date under the last running line or on top of the last running line.

Gelding information isn't the only thing that shouldn't be hid from horseplayers either. I know there is a practice that is pretty widespread (or used to be) that had to do with the throat on horses who had breathing problems. From what I understand (and I'm far from being a vet), some sort of hole is made in the throat.
Anyway, this is something else that should be reported to the betting public and also potential new owners who are looking to claim horses.

And why stop there? I think any vet procedure that costs over $200-$250 should be reported. We know when a baseball player has any type of procedure. Why should horse racing get off so light, especially when every horse is one bad step away from becoming worthless as a runner.

Wind Speed During Races
Why is wind speed not recorded and placed in the Form? How hard would that be? The chart caller just needs to check on one more thing before he or she submit the chart.
It wouldn't even take up much room. A backstretch wind of 20 mph could be reduced to b20, while a homestretch wind of 20 mph can be reduced to h20.

Wind speed once it gets over 15 mph is significant when dealing with pace breakdowns and final times. It should have been implemented into the Racing Form a half a century ago.

UPDATE: Update: Greg Blanchard likes the wind idea too. Check out his column at the WEG Blog Site.

I also want to add why wind speed is important. When horses face a strong wind in their face in the homestretch, it makes it tougher to close ground. The opposite is true when the wind is behind the horse in the homestretch, the advantage then shifts to closers.

Monday, July 28, 2008

Handicapping Monday: The Sphere

It's time to step back for a moment. After all, we are all horseplayers. We are not all consumed with ADW fights, takeout gripes or all the rest all the time. Sometimes we just need to talk shop and hopefully become better players. Just like low takeout can help more people win, so does 'capping and money management skill.

Jeff Platt, a HANA member and software creator (Jcapper.com) has allowed us to reprint some of his handicapping columns. That's great, because quite honestly they are darn good. Here is what I think might be his best piece, The Sphere.

Articles like this not only are good for us to read as players, they might have some effect on the people we are trying to speak to, as well. It shows what handicappers must go through to try and win. It is a tough game. We are not all there just to watch the horses go around in a circle and take in the atmosphere, and making our game more attractive to play like Jeff does will certainly help it. I hope tracks and horseman groups take something out of this piece. Education is important.

Introduction
I spent a little free time these past few weeks organizing my thoughts. My intent in doing so was to be able to do a write up of the mental process I go through on a daily basis when I’m in the act of playing horses. I think this stuff is important. While I’m playing, there are certain processes I do each day as I attempt to beat the takeout. I tend to think of the sum of these processes in terms of them forming a game plan or roadmap that leads to success. I know from my own personal experience that when I follow this roadmap the very act of overcoming the takeout becomes a much easier thing to do than if I attempt to go outside its boundaries. What you will find in this write up are things that I do to help me achieve my goal of being a winning horseplayer. My hope in committing these thoughts to writing is twofold. First, I hope that the act of writing this piece will serve to reinforce my own clarity about these ideas and help me to remember them on race day. Second, I hope that someone else out there somewhere finds them to be of benefit after reading what I have to say.

Most of what I am going to present here is basic philosophy. Much of it reaches well beyond the subject of handicapping. In fact, if you give it some thought, you just might realize that this can be applied to just about every area of human endeavor you see fit to undertake.


A Little History and a Profound Realization
In February, 1999 I left a pretty cozy accounting job in the 9 to 5 world that I had held for 12 years. At the time I decided I needed a career change. I loved programming but had no formal training as a programmer. I had already written a very early version of the program that would later evolve into JCapper. I had the ability to run database queries and had crafted a handful of CPace and BasicFitness UDMs that had shown reasonable enough profits over a pair of 3,000 race samples. I decided to take a shot at playing horses for a living.

My rough game plan was to use some of my savings as a bankroll. I hoped my winnings would be enough to cover my monthly expenses. I would also devote 20-30 hours each week towards getting enough formal training to make it as a programmer in case things didn't work out as planned.

I knew from the database tests I had run that success was one possible outcome. I also knew that failure was another very real possible outcome. In the end I made my decision more as a leap of faith than anything else. I believed I could fly. Therefore I jumped.

Please understand that I am in no way trying to convince any of you to jump in the event that jumping is something you happen to be thinking about. It should be obvious. Failure to fly under such circumstances can have very severe negative consequences. Attempting to fly was the right decision for me at that time in my life. In no way does my own decision make it the right decision for you.

In February of 1999 I was living in Tempe, Arizona. I had never heard of offshore wagering accounts or rebates. Back then, I had to drive 35 miles across town each day and show up at Turf Paradise to enjoy full card simulcasting. Arizona's OTB locations, and there was one barely a half mile from my house, offered the local Turf Paradise card but only a tiny number of out of state simulcast races each day. Stranger still, Arizona's OTB network did not commingle wagers made into the pools of the simulcast host tracks. Instead, they created their own separate pools which tended to run on the smallish side. That point was painfully driven home one afternoon. I nailed a $130.00 winner in a Maiden race at Hollywood Park - only to see my own $30.00 win bet in the local pool (which was barely $1500.00) knock the price down to $58.00.

At the time my workday would start around 7:00 am. Using a dial up modem, I would download data files from Bris. Then I would manually unzip them. I loaded them one at a time into my program, and spit my reports out onto perforated computer paper using a very loud (and slow) dot matrix printer. On most days I would have 4 or 5 tracks printed out by 8:00 am. After some breakfast I would drive across town and arrive at Turf Paradise sometime around 9:30 am. That would give me 30 minutes or so to start handicapping the early races at the east coast tracks. In those days I had to comb through my printouts and manually identify my own plays. I carried around a set of index cards with rules written on them - one index card for each spot play (UDM) that I had. The simple concept of programming a computer to find my own plays wouldn’t even occur to me for another three years.

I saw the same faces at Turf Paradise each day. People got to know me. And I got to know some of them. One of the most memorable events that ever happened to me at a racetrack happened within the first 30 days of me setting out to see whether or not I could fly. An elderly man – I only remember him as Jim – asked me a question. Jim knew that I had quit a pretty good day job to play horses full time. Understandably he thought I was nuts. And he made no bones about hiding it.

It turned out to be a loaded question. I didn’t realize it at the time but the answer Jim gave me to his own question turned out to be one of the most profound things anyone has ever said to me.

The exchange went something like this:

Jim: “Jeff. In your opinion, what is the single most important factor in horse racing?”

Me: “That’s easy. Early speed is the most important factor.”

Jim: “You sure about that?”

Me: “Yes. Why?”

Jim: “Are you really sure?”

Me: “Um... Ok. Early speed with enough form and class for a horse to stay in front all the way to the wire. That’s the most important thing.”

Jim: “You’ll never make it as a handicapper.”

Me: “Um... Ok. I’ll bite. What do you think the single most important factor in horse racing is?”

Jim: “Discipline. That's the single most important thing. Without it you have no chance as a horse player. Never forget that.”

Unfortunately, I dismissed this conversation at the time. It took nearly two full years for me to realize the profoundness of what Jim had actually said to me. In the end it turns out Jim was 100 percent correct. Discipline is the single most important thing in betting horses profitably.

What follows are my own thoughts on making discipline work for me.



The Sphere
When I play horses the first thing I do is form the image of a glowing electric blue sphere in my mind. Try not to laugh. My sphere is my reality. I have rules for my reality. Anything with the ability to affect me, in either a positive or a negative way, is important and belongs in my sphere. Everything inside of my sphere, because it has importance, deserves and receives my intense focus.

Everything outside of my sphere has no ability to affect me and is therefore irrelevant. I completely ignore everything that exists outside of my sphere. I refuse to waste my time and energy by focusing in the least on things that do not matter.

So what belongs inside my sphere? What belongs outside?

In my opinion, the most powerful single thing found in JCapper (I’m the program’s author remember?) is the concept of the UDM (ed note: it is simply Jeff's spot play that has shown it is ROI positive and worth considering as a bet). Hopefully I can get my point across in such a way that it won’t be lost on you.

Suppose for a second that you have one and only one UDM. Let’s also suppose for the sake of argument that your lone UDM has one very remarkable trait:

As you bet its plays over the course of time you get back more money from the cashier than you fork over for the tickets you buy as you make the bets. In other words your UDM is profitable.

Suppose for a second that you create a sphere of your own.

Now, given the above scenario, let me ask you a question. What happens if you place just one thing inside of your sphere? What happens if you place your one UDM inside of your sphere and nothing else?

Now let me ask you a second question.

What happens if your sphere is your only reality when you play horses?

The answer should be obvious. If the only thing inside of your sphere is a profitable UDM and the only reality you have when you play horses is your sphere… you just became a winning horseplayer.

Go back and read that last paragraph again. Let it sink in. It’s what really separates the tiny percentage of winning horseplayers from the vast majority of players who lose money.

Here’s a list of the things that are important to me and have a place in my Sphere:

1. Profitable UDMs/Spot Plays. Just because a UDM is profitable across many samples doesn’t mean it has a place in my Sphere. One area that I often see with new users is that they try to do too much. I’m talking about a question of workload. In my opinion it’s far better to play a single UDM at a single track and do it accurately while following scratches and changes and making the bets in accordance with an overall bankroll money management plan than to try to make the plays for dozens of UDMs at multiple tracks each day if trying to make all those plays means that you have to do it haphazardly. By haphazardly I mean that you are missing scratches and changes here and there and you are possibly even getting shut out of races because there are too many plays coming up simultaneously.

2. A Bankroll/Money Management Plan. I’ve made no secret of the fact that my game is based around backing UDM plays to win their races and that I play to a bankroll. One of the primary goals I have when I play is growing a small bankroll into a large one. Unless you are just extremely lucky the task of actually doing this takes an incredible amount of willpower. The reality is that without discipline the act of growing a small bankroll into a large one over an extended period of time is nearly impossible. Along these lines I suggest that the inexperienced player start out by going through the exercise of simply flat betting UDM plays just to get experience. After proving to yourself that you have the ability to bet UDM plays while betting nothing else, and do it profitably - then and only then try making each bet within the context of each bet being part of a bankroll. Trust me, there is no other way. Until you try you simply won’t believe how hard it can be sometimes to play a perfectly clean race day – a day where the only bets you make are UDM plays and where each bet is made at your intended percentage of bankroll.

3. Mental State. When I play horses I want to be in the best mental state possible. The right mental state for me is one of detached involvement. When I play I’m not concerned with outcomes. I’m concerned with being able to execute my game plan. Past history tells me that if I can do that then the outcome takes care of itself. There’s one question that I ask myself over and over each race day that helps get me in that right mental state. That question was taught to me by a professional poker player. That question is “What should I be doing next?” I find myself asking myself that same question over and over hundreds of times each race day.

When I’m in the right mental state my decisions become instantly clear to me. I’m on autopilot and my game plan seems to self execute. I check each race for fresh scratches before I bet it. I see a play and I make it. I move on to the next race. The game seems incredibly easy at such times. Everything flows and time ceases to exist. The only things I see are those things I’ve allowed inside of my Sphere.



Here’s a list of some things I refuse to allow inside of my own Sphere:

1. Emotion. In my opinion emotion has no place in horse race betting. I could tell you a thousand horror stories of how I’ve let emotion cloud my own judgment – how I’ve let it cause me to make action bets that bled profits from my UDM plays and bankroll – how I’ve let emotion cloud my judgment so that I missed making plays on overlay UDM winners that I had every intention of playing, etc. The bottom line is that emotion, good or bad, can cloud your judgment and prevent you from executing your game plan. Because of this emotion has no place in my Sphere.

2. Action Bets. I’ve mentioned this before but it bears repeating here. It’s easy for action bets to get out of hand.

I define an action bet as any wager:
  1. Made on a non UDM horse.
  2. Made on a UDM horse outside of predefined odds or odds ratio value ranges indicated by my own research.
  3. Made on a UDM horse that is sized incorrectly. I employ a Bankroll Money Management Plan based on hard research. Each bet is a percentage of bankroll where the percentage is determined by the strength of play. Betting too much is bad because it increases the player's risk of tapping out. Betting too little is bad because it curtails earnings (provided the player has a positive expectancy.)
My attempt at playing professionally ended after 18 months because I lacked the discipline to make it work. I let action bets get the better of me. I ended up having to go back to work. Don’t get me wrong. I landed a very nice programming job. But imagine the self reflection that comes from realizing I chased a dream and failed because I couldn't control myself.

Looking at my UDM plays in isolation, I realized my betting was profitable enough (without a rebate) for a period of over 18 months to have paid my bills and then some.

Looking at my action bets in isolation told me exactly why my dream would have to wait: The amount of money I had I lost on action bets totalled up to nearly two thirds of the profits made from UDM plays. The profits from UDM Plays less the losses from Action Bets still left me in the black. Technically, that made me a winning player. But I wasn't making enough to cover monthly expenses. So in the end, even though I was a winning player, I decided to bite the bullet and go back to work.

Trust me. I know of what I speak. Action bets have no place at all in my Sphere. Hopefully you’ll never find them in yours.

3. Distractions and Annoyances. These also have no place in my Sphere. I say this because they have the ability to invoke an emotional response from me. Hopefully I’ve already gotten the point across that emotion has the ability to lower your mental state to the point to where it can interrupt the execution of your game plan. With that understanding in mind I’ll list a few of the things I consider to fall within the Distractions and Annoyances category:

a. Lost Photos
b. Disqualifications
c. Troubled Trips
d. Poor Starts
e. Bad Rides
f. Late Money Odds Drops
g. High Paying Mutuels from non UDM horses
h. Not noticing scratches and changes
i. Not focusing on the task at hand resulting in getting shut out of a nice winner

You can probably think up a few more. But hopefully you get the idea. If items h and i from the above list are happening to me with any frequency at all I take it as a very strong hint that I'm letting something interfere with my desired mental state. I immediately flush my emotional reaction away by telling myself "Ok. That's in the past and I can't change that. Now what should I be doing next?"

Summary
I’ve found success with this approach: I create my own Sphere each and every race day. I only allow certain things into my Sphere. I deny certain other things entrance into my Sphere. When I play horses my Sphere is my only reality. Everything inside of my Sphere merits my intense focus. Everything outside of my Sphere is worth none of my focus at all.

Create a Sphere of your own and let me know what happens.

Friday, July 25, 2008

Consumer’s Guide to Racing Fan Groups

In his Troy Record column, "Feel the Love,” Nick Kling examines several groups claiming to represent racing fans.

“At periodic intervals over the last decade, various members of the racing media have tried to poll Thoroughbred racing fans. The subject was whether there was interest in an organized group to represent the betting public. My own experience was that what appeared to be a positive initial response evaporated when it came time to move forward. The bottom line was this. Racing fans like to complain, but few want to surrender any of their autonomy to join a coordinated effort. That may be changing. Several groups purporting to represent fans, or calling them to join an organization, have sprouted like mushrooms.”

Mr. Kling described what he perceives to differentiate the various groups that we at HANA hope will not prove mutually exclusive. Of HANA he writes:

“A handicapping forum called 'pace advantage' appears to have generated some people who began the Horseplayers Association of North America (HANA). Like the Self Appointed group, this one charges no membership fee. This group may be the most hardcore, in that the writings on its site are focused on betting and improving the return to the horseplayer”.

“The formation of grass roots fan groups like HANA, and possibly ThoroFan, reveal the difference in focus. HANA's primary goals are lowered takeout and the resulting higher return to bettors, as well as changes in the unfair tax laws which plague horseplayers. The people to whom policies like that are addressed don't stand in line for T-shirts, nor care if they can buy a sweatshirt for 10 percent off.”

He concludes with the caveat

“Time will reveal which of these groups: 1) has a positive impact on fans, and, 2) will remain in operation. For right now, isn't it nice to know someone cares about you? Do you feel the love?”

We at HANA thank Mr. Kling for joining other journalists in bringing HANA before the public’s eye. We would, however, like to adjust (as opposed to correct) his perceptions of us.

First, while HANA includes serious as well as casual players, I don't believe the term “hard-core” is an accurate description of all those whose support we seek. I myself am a weekend/holiday player whose handle couldn’t currently qualify for cash rewards even if I were to bet every racing day.

Second, although one of our stated goals is indeed IRS withholding reform, our main focus is on two issues 1) Lowering takeout -- either directly or else indirectly via rebates -- for all, and 2) Enabling every in-home or on-line bettor using any ADW he chooses to be able to bet any scheduled race in North America, and to be able to watch it live.

A minority of the founders of HANA may fairly be called medium-core activists, but all of us would prefer to cooperatively work together with OISH (Other Industry StakeHolders) to create a bettor-friendly environment that addresses everyone’s concerns and satisfies the needs of all involved.

We are definitely NOT happy with the special treatment given to a small subset of players known as “whales” who receive rebates on their bets based on their extremely high volume of dollars wagered. In our efforts to “level the playing field” for all bettors, we also expect to effect improvements in the areas of customer convenience, service, and treatment.

Will we be around for any length of time? Only if people continue to support us with legitimate sign-ups that will enable us to accurately measure our collective influence. In the meantime we hope to make all players aware of how the industry currently operates and what positions we believe will benefit players collectively in order to grow the game, and secure the enjoyment of racing for future generations of horseplayers.

This opinion was submitted by a California member of HANA.

Churn

I received an interesting email awhile ago I thought I would share. It is from a small harness player.

I registered for a XXXX account and I must say I am impressed. All they need now is free video and programs. I like the smaller tracks like Monticello and Northville... I even tried a place ticket on a 3-1 greyhound...... best yet.... I started with 100........ betting frivilously and stupid, I blew it all... but next day I had 23 dollars in my account.... and then last night.... I got the 23 all the way back up to 100 and then blew it all again ... but anyway I managed to bet about $700.... So now they throw $35 back in my account....... Thanks for playing!!......... Back to the slow grind.

If this player took his $100 to the track, he is broke after the first day. Instead, by getting a boost through an overnight rebate he bet well over 7 times that amount. Instead of contributing $21 to racing through takeouts, he contributed over $150. There is a genuine excitement in his email, and I found that infectious. That is exactly what we need in this business.

This is a small player; and that folks is churn. Lower takeouts should not be just for whales. Whales started as minnows once too.

This was contributed by a Canadian member of HANA. As always, if you would like to join HANA please click here, it is free and all information is confidential. We'd love to have you a part of our association. We need your help to make this a better game.

Thursday, July 24, 2008

40% Takeouts. Live and Learn.

Bill Finley had an interesting article on Italian racing that we missed earlier.

The Italians like to gamble. With recent changes liberalizing Italian gaming regulation, it is estimated that about $91 billion will be wagered in the country annually by the year 2010. The problem is, too many Italian gamblers are choosing to bet on something other than horse racing.

New fans aren't coming to the sport and old ones are being driven out. The takeout in Italy is exorbitant, as much as 40 percent on the trio, which is the Italian version of our trifecta. According to Barsotti, it wasn't always this way, but Italian racing regulators have decided to allow major increases in the takeout rate over the years.

Too many gamblers are going broke, which has created smaller betting pools. With smaller betting pools, it's hard to make a large bet. Anyone wanting to make a big wager on a horse will drive the horse's price down to unacceptable levels. That has caused big bettors to flee the game, which makes the pools smaller yet. It's an unending cycle.

Raising takeout is almost an unstoppable handle killer and it does not seem to matter in what language we speak. Every horseplayer understands "When I bet racing I go broke", regardless of their native tongue.

Wednesday, July 23, 2008

Is America Going Betless?

In his Blood-Horse article, “Wagering Plummets Since Triple Crown” Ryan Conley reported that Wagering has dropped 11% on North American Thoroughbred racing since the end of the Triple Crown series …”

“… Churchill Downs meet was down 11.5%, and opening-day handle at Del Mar was off 9% -- including a 14% drop in on-track wagering despite a record crowd of more than 43,000 on hand.”

Speculation as to causes is rampant.

“Take your pick of reasons for the decline … the national economy and oil/gas prices headline pressures working over the industry from the outside; signal disruptions from revenue disputes and integrity issues are among many taking a toll from the inside.”

Save the whales?

“There is an ongoing concern that the “whales” of the industry – those high-volume players that annually bet upwards to $1 million or more – have left outlets contributing to purse-feeding pari-mutuel pools because of restrictions in wagering offerings. Signals to such ADW giants as TVG and Youbet.com, among others, have been curtailed in recent months by a well-publicized national dispute between racetracks and horsemen groups on how revenue from those wagering dollars should be shared.

But [Chris] Scherf discounts the theory that whales are leaving the pari-mutuel pools.”

Lack of interest?

“But he agrees that handle may be an accurate reflection of general interest in the sport."

"If the handle is going down, that is not a good sign,” he said. “There is less interest. What underlies that, though, is that it may not be as bad as what it looks for a particular racetrack, or that it could be way worse for another racetrack.”’

The Derby tragedy?

"It could be related to the Eight Belles tragedy, the integrity issues, the health and safety issues," he said of the recent declining numbers. "While we certainly can't ignore all of the factors, including the economy and others, it’s probably too soon to separate the issues.”

Gambling elsewhere?

“Instead, he said there is concern over the loss of wagering dollars to alternative forms of gambling.”

“… one of the organizers of the new Horseplayers Association of North America feels some bettors have indeed departed the pools for friendlier environments."

Bettor dissatisfaction?

“There is no doubt that some players have left the traditional pari-mutuel wagering platforms,” said John Swetye, a Connecticut entrepreneur who helped launch HANA, an advocacy organization for bettors. “Some left because they can't get a bet down with their ADW because it doesn't offer a particular track, or because the player can't have an account with a certain ADW because of where they live.”

“… he said some perceptions are going to have to change.

“Right now, horseplayers get too little respect -- especially among some racetrack executives,” he said. “Horseplayers can not understand why the customer is given so little respect. Without horseplayers, would racetracks exist?”

While my own thoughts mirror those of the last category, I believe the Congressional hearings were a factor as well.

Prior to those hearings, there was hope on the part of many that the racing industry would at last be forced into dealing with all its issues. The initial uncertainty as to what problems would be exposed -- and what steps might be taken to correct them -- may have temporarily distracted some players from their past performance data. However, once the hearings made it clear to the customers that business would still be conducted at the whim of the usual suspects -- while givng the appearance, at least, of meeting new Federal standards for medication use -- hope started to evaporatie and bettors began to bet less.

Should this trend continue, the changes advocated by HANA and others may be required to turn increasing bettor apathy and resistance into enthusiastic participation. Toward that end, HANA will continue to present its case to horseplayers with the expectation that the industry will be willing to turn the situation around sooner than later.

Because let's face it, when arguably racing's most ardent supporters -- the members of HANA -- can't or won't bet anymore, racing may be in more serious trouble than anyone realizes.


Tuesday, July 22, 2008

HANA Starts to Roll

Ray Paulick of the Paulick Report spurred the discussion on ADW by reprinting a guest editorial today.

Thanks Ray. I believe that the Paulick Report was the first major news site to offer a view about ADW from a bettors perspective.

But that was only the first. Now, Bloodhorse has a story up related to the huge drop in wagering we have seen since the Triple Crown series.

A quote from John (who wrote the fascinating piece below on the Paradigm shift) and one of the founding members of HANA:

But one of the organizers of the new Horseplayers Association of North America feels some bettors have indeed departed the pools for friendlier environments.

“There is no doubt that some players have left the traditional pari-mutuel wagering platforms,” said John Swetye, a Connecticut entrepreneur who helped launch HANA, an advocacy organization for bettors. “Some left because they can't get a bet down with their ADW because it doesn't offer a particular track, or because the player can't have an account with a certain ADW because of where they live.”

Swetye, a former horse owner who is involved in television production and hedge funds, said one of HANA’s goals is to contribute positively to the industry’s solution process. But he said some perceptions are going to have to change.

“Right now, horseplayers get too little respect -- especially among some racetrack executives,” he said. “Horseplayers can not understand why the customer is given so little respect. Without horseplayers, would racetracks exist?”

We are beginning to roll.

To join us at HANA click here. Membership is free.

Racing Needs a Paradigm Shift

If you follow the racing industy news like I do, then you can not help but notice how frequently it is written that "racing is broken". I don't share that opinion. Racing is a fantastic sport with great potential. The problem is that it takes a lot of money to make the mare go. I believe racing needs a paradigm shift if it is to grow and prosper.

For lack of a better metaphor, racing is like a big pot of stew. For many years, racetracks and horsemen controlled the taste of the stew and it was deemed palatable enough and was eagerly consumed by the wagering public. Then, a couple of little things called the internet and rebates happened. The new account deposit wagering companies wanted to spice up the pot.

Racetracks and horsemen welcomed this extra spice, but soon noticed that handle was increasing, but purses were not. Thus, the horsemen banded together in an attempt to become the head chef. The struggle continues.

I started frequenting the Paceadvantage.com message board several years ago. I noticed a constant increase in the level of dissatisfaction among horseplayers because their needs were being ignored -- mainly by the racetracks. The main complaint is that it is impossible to bet on every track from one account deposit wagering company.

Several times over the past few years I have made posts on Paceadvantage suggesting that horseplayers band together to form an association that addresses issues that affect them. Usually, there was no interest or there was a belief that organizing
horseplayers would be like trying to herd cats -- it can not be done. I do not like limited beliefs and believing that horseplayers can not organize is a very limited belief. Horseplayers have a lot of spice to add to the pot. Horseplayers have finally started to feel enough pain that they have decided it is time to join together to further their goals as well as improve the industry.

So here we are -- tracks, horsemen, ADWs and horseplayers -- all adding our ingredients in an attempt to adjust the flavor to our liking. There is just one problem. No matter how the pot gets stirred, it still tastes like shit. There are an infinite number of ways to adjust the flavor of the racing stew -- add a little track, take away a little ADW -- take away a little track and turn up the heat on horseplayers, -- cut back on THG and horseplayer -- etc., etc., etc. Nothing seems to work.

This is why a paradigm shift is needed.

I was at the 1998 Breeders' Cup at Churchill Downs with my good friend and British racing journalist Nick Mordin. I became fascinated by UK bookmaking. Nick told me many stories about them. He even wrote a book "Betting for a Living" which he wrote
about how to make a living betting on horses and against bookmakers. I also read Pittsburgh Phil's book in which he described how he made a fortune betting against bookmakers. I learned that the Mara family, owners of the New York Giants, made their fortune as on-track bookmakers, though I do not know the full story.

Well, Nick and I were anxiously awaiting the 1998 Breeders' Cup Classic because we had seen every one of Skip Away's races over the course of two seasons. I had won my biggest win bet ever on Skip Away in the 1997 Breeders' Cup Classic at Hollywood Park. By the 1998 Breeders' Cup we knew Skip Away inside and out -- maybe better than his trainer. In fact, Nick and I wondered why Skip Away's trainer bothered entering him in the 1998 BC Classic because he had deteriorated so badly. His coat was dull. He looked sluggish. In fact, he looked sick. We knew he wouldn't win, but we didn't know who would. I thought, if only I could bet Skip Away to lose.

Pittsburgh Phil said occasionally a bookmaker would lay a horse for him. But the problem for me was that I was in the United States and bookmaking was illegal. And even if it was legal how would I find a bookmaker to lay odds for me. I didn't
have the capital to move to England to become a bookmaker. It was hardly feasible to move to England for one race.

The internet was still new in 1998. One of the biggest success stories was Ebay, the auction company that brought buyers and sellers together on-line.

So standing near the paddock at Churchill Downs I had an epiphany. Using the internet and an Ebay model, it would be possible for the little guy to play the role of a bookmaker -- really not much different from shorting wheat on a commodity exchange.

The big difference is that, for as little as a dollar, a horseplayer could become a bookmaker online and anonymously. (One problem with betting with bookmakers is that they get to know you and may not take all your action.)

Even more exciting than the little guy becoming a bookmaker was the thought that it would be possible for two people from anywhere in the world to bet against each other on any event where the outcome could be verified.

I knew this idea was so big that I was trembling in my shoes as my mind was flooded by all the possibilities.

I immediately sat down and wrote up a business plan and tried to figure out how to raise capital to make this betting exchange concept a reality.

I spoke to several trusted colleagues. Everyone said it could never happen. U.S. racetracks would never allow betting on their races. They would want to control the betting. Plus, bookmaking was illegal in the U.S.

The first time I showed the idea was at the first annual racing and wagering conference hosted by Dr. Richard Thalheimer at the University of Louisville in Kentucky.

I figured academics would "get it". Well, they understood it, but they aren't necessarily entrepreneurs.

Undaunted, I started to submit my proposal to business people. I showed it to George Hofmeister, who at the time owned The Vinery breeding farm and Real Quiet. He was a successful entrepreneur and liked the idea, but was not in a position to start a new company after having just bought a large breeding farm.

I submitted the proposal to Richard Branson of the Virgin line of businesses. You can read his reply to me at http://www.hypernormal.com/html/virgin.jpg. It was a rejection.

Note the date of Branson's reply - March 18, 1999. My first son was born on March 16, 1999. I knew the best chance of getting the betting exchange off the ground would be to move to London. Having the responsibility of caring for a newborn made it very difficult to pick up and move to England. So I put the idea on hold knowing that the time wasn't right for a U.S. based betting exchange and it was not practical to move to England.

Fast forward 10 years later. Racing in the U.S. and Canada is not growing and is faced with stiff competition from lotteries, on-line poker and a proliferation of casinos.

The one thing that could turn racing around in this country is a betting exchange. Having had 10 years to think about betting exchanges and see a few of them in operation and having placed bets with the major ones, I've got some pretty good ideas on how to make them work in this country and how to improve them. The big question -- is U.S. racing ready to embrace this paradigm shift? Well, they better because they aren't going away and in the meantime U.S. racetracks and horsemen are giving up millions if not billions in revenue. This reminds me of full service brokerages complaining that it wasn't fair that they couldn't compete with discount brokers. Well, they had to learn how if they wanted to stay in business.

If we really want to sweeten the pot then we should embrace the betting exchange paradigm shift. Horseplayers have. I'm sure ADWs are interested in running betting exchanges. Horsemen would welcome the revenue. I know racetracks would welcome the revenue.

Come on, what are we waiting for? Bankruptcy? Slot machines?

Published by John Swetye, Founding Member of HANA

Monday, July 21, 2008

ADW Opinion: Bad Precedent

It was announced a few weeks ago that Ellis Park in Henderson, Kentucky struck a last hour compromise between Ellis and the KHBPA, allowing for racing to begin in 2008. With it, close to 6% of ADW handle will be going to purses this summer. It appears that Ellis is charging ADW’s up to 8% signal fees for the right to broadcast Ellis races.

The Thoroughbred Horseman Group’s Bob Reeves said this recently about the deal as reported by Ray Paulick of The Paulick Report: "We are trying to save racing."

We think deals like this will do the exact opposite. And we’ll tell you why.

An ADW normally pays about 5% (which is about what the current free market dictates) for the right to broadcast a signal and sell it to their customers. It is like a web-affiliate bookseller selling a book and keeping a commission. Then the ADW pays expenses, keeps some of the generated handle for themselves to run their businesses, and returns the rest to the player in a few ways:

1) Player Rewards – A video game, maybe a hat, trinkets of some sort, what have you. We all have received these perks.

2) Innovations and Customer-centric Benefits – An improved betting interface, R and D (like Twin Spires TV), free handicapping information (like Ian Meyers’ paddock reports at Premier Turf Club, his deal with Woodsideassociates.com, or partnerships with Thorograph at betfair), free past performances, free video. Things to encourage the player to up their handles.

3) Cash Rewards Through Rebating – Churn baby churn.

This model of giving something back to the player and delivering it in a customer-centric way has resulted in a rise in handles for ADW. Up over 17% last year – our only true blue growth segment.

If ADW’s are charged a higher fee, things like free rewards, hats and shirts; or the interesting innovations we have seen like race replays, and conditional wagering and paddock reports can all be cut. This hurts us in attracting new fans to our Internet platform, as well it alienates our existing customers (ask Vegas how they'd do without comps or adding a concert as an attraction; and ask them now what would happen if they took them away!). All those rewards and incentives are very important, but the most important point however to us as a business: It effectively increases takeouts. If 3% more is charged for a signal, 0.5% might be absorbed by the ADW. Where does the other 2.5% come from? Yes, the customers pocket - the customer that already pays for purses to the tune of 21% blended rakes.

When the signal fee is raised 3%, more than likely 2-2.5% will be taken from the cash rewards from certain ADW’s. If you were receiving a rebate of 5% on win wagers at track ‘A’ and they are cut in half you know, we all know what happens, you bet less. With these price sensitive players, where 2.5% can mean a huge difference, it can kill their handle. As Dan, a professional player, said recently to us “Even miniscule reductions of 2 points can make a HUGE impact on a player’s bottom line. The intelligence of the modern player is frankly overlooked by those in positions of decision.”

This is of course not only a big player phenomenon. Every player I know who is non professional enjoys getting a boost, and guess what? They rebet it, and rebet it hard.

With a conservative elasticity of demand of 4 for rebated players, this takeout increase could result in a 10% drop in handle (many would argue it would be much more). Not to mention any new players (or current ones too), especially the younger demographic we covet, that are attracted to some of the perks like free past performances, or innovations, will find they are not there any longer, and it makes the customer experience deficient in a demanding 21st century business model. Online poker anyone?

It’s like going to McDonald’s and finding out that yes, the price of a Big Mac was raised 30 cents, so you might eat one less a month now; or maybe go to Wendy’s instead, but not only that: Now your more expensive Big Mac is served not complete in a nice wrapper, but in a do it yourself kit. When sales of Big Mac’s go into the tank, it would not surprise any executive at McDonald’s, they would know they cut their own throat.

Increasing takeouts, poor customer service and an absence of both soft and hard innovation through reinvestment is something we should have learned has helped kill this business by now. Year after year the evidence is overwhelming. In fact, this study written several years ago by a gambling expert and reported to racing, stressed the takeout point and making sure horseplayers are taken care of.

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.

If we don’t offer a low takeout (via rebate) to customers, we’re going to lose them, or at least a significant portion of their money. Hence the efficacy of rebates: they target reductions in the takeout to the customers who would respond the most to them.. (Analysis of the Data and Fundamental Economics Behind Recent Trends in the Thoroughbred Racing Industry, 2004)


Sometimes I wonder. I really do. Do we actually want racing to lose market share? If we do, we are certainly doing a good job at it, handles were off last year.

Everyone needs to work together in the current ADW impasse and the business must know where players stand. If players are not heard from and respected, we will not grow the pie, we will simply end up having less of a pie to split.

Feedback

Some interesting feedback from the comments section that we think should not go unnoticed. We thank everyone for their comments. They are appreciated.

HANA-

{If you agree with the opinions you read here, if you believe that the concerns of horseplayers do not have the sway they should within the industry, then please sign up with us now}

I am not sure if these issuea are mutually exclusive or inter-dependent upon each other in order to qualify or be considered for membership.

It is easy to come to the conclusion that horseplayers do not have the sway they should within the industry, as decisions are regularly made by other industry participants (legislatures, regulators, track owners, horse trainers/owners, and jockeys; and sometimes even the horses themselves; LOL) that not only fail to consider the general or specific concerns horseplayer, but will actually be in direct conflict with the horseplayers concerns.

That being said; I am not sure if you will find unanimity around all of the opinions posted here, so as a result I am not sure whether this should be indicated as a condition of membership (real or implied), and you might want to re-consider how that is phrased.

"If you agree with us, then you should join our organization" seems exclusive and resistant to divergent opinion. Yet believing that the horseplayer does not have the influence they should in the industry decision making process, seems more open to the idea that collective but a broader range of ideas and input can and will be considered.

Some people view take out, as the number one issue for horseplayers, while others view the cost of attending live (parking, admission, programs, concessions,) as being a disincentive toward live attendance. Others that might rarely if ever visit the track these days believe that open access for all ADW's is critically important, while others might see some benefit to exclusivity at least as it pertains to video broadcast. Some might perceive federal regulation and oversight in the U.S. as more desirable, while others instead would view a move toward uniformity on some industry issues (race day medications), while maintaining a state by state regulatory model is more important for adressing local industry issues and concerns.

There is a great deal wrong with this industry; and much which needs to be "fixed". The horseplayer is a voice that is far too often either drowned out or ignored in the process of considering or implementing solutions. Not all horseplayers are alike however; as evidenced by the recent "meeting" discussion, however different opinions on the same subject can lead to greater objective analysis towards what needs to be improved and what the priorities should be.

As a result I would suggest consideration of modifying or removing the suggestion that "agreement with what is posted here" is in some way a condition for joining, HANA.

I do think however that in order to be considered as a voice of reason in the discussion; rather than just a small and yet collective group of loud mouthed whiners and complainers, the Association consider the adoption of some kind of platform that represents a consensus opinion on important issues associated with the industry. This way the Association will be seen as contemplative and deliberative in offering well reasoned ideas for solutions, rather than just as a vehicle for voicing opposition or complaints to industry regulations or practices.

Adopting a platform will be one of the best ways to present ideas on important issues to other industry participants in a way that will allow them to better understand the rationale of the horseplayer(s) in arriving at their suggested industry solutions, and the importance of the impact the suggested solutions could have on the overall industry.

Some suggested industry solutions can often be perceived to benefit one group, to the detriment or exclusion of another. As a result, I think it will also be important not only to point out within the platform planks, not only how a concept or idea benefits one group, but how the perception of its detriment to another industry constituency may be over-stated, and how the perceived detriment can actually be diminished or dismissed, as well as how the entire industry can collectively benefit, far beyond those believed to be the primary or sole direct beneficiary of any proposed industry change.

The underlying issue that serves to do more damage to the industry as a whole seems to me to be selfishness and greed. In craftng a platform of recommended industry solutions to horseplayer concerns any proposed changes will need to not only reflect the primary concerns of the player, but also the collective benefit to the industry. Otherwise, HANA will just be another special interest segment that could serve to further divide the industry, rather than to help it grow and prosper.

Common sense will need to try to find a way to prevail, not just in this industry, but in a world in which it has continued to become far less common.

I support the idea and concept of HANA in theory, but if it just becomes a forum for whining and complaints without offering real solutions and practical ways to implement them, than I am afraid it may instead just do more harm than good.

And.........

I just wanted to to say thank you for the very well articulated comments, I think you've hit the nail on the head on several key points. I wanted to highlight one point again, as I believe it's so absolutely critical.

I hope soon HANA can present some proactive model agreements for the horsemen/track/ADW stalemate, and it should live up to the below standards. We must offer implementable solutions, with honest discussion of the costs and benefits for all, with full explanation of why we believe it is better than the various industry models offered up to date.


"Adopting a platform will be one of the best ways to present ideas on important issues to other industry participants in a way that will allow them to better understand the rationale of the horseplayer(s) in arriving at their suggested industry solutions, and the importance of the impact the suggested solutions could have on the overall industry.

Some suggested industry solutions can often be perceived to benefit one group, to the detriment or exclusion of another. As a result, I think it will also be important not only to point out within the platform planks, not only how a concept or idea benefits one group, but how the perception of its detriment to another industry constituency may be over-stated, and how the perceived detriment can actually be diminished or dismissed, as well as how the entire industry can collectively benefit, far beyond those believed to be the primary or sole direct beneficiary of any proposed industry change."

Sunday, July 20, 2008

Opinion: Paulick Report's Whitfield Column

Congressman Ed Whitfield selected the paulickreport blog to report his conclusions regarding the state of the horse racing industry in America in an op-ed piece titled “Time to Get Horseracing Back on Track.”

“… an overwhelming consensus was reached on four key issues plaguing the Sport of Kings.

The first is that far too often, horses are given performance enhancing drugs and pain killers to ensure they run as fast as possible, while masking pain that may have provided a warning to avert a catastrophic injury for the horse and the jockey. The second is a lack of uniformity of applicable drug rules and data collection statistics regarding track accidents and safety issues among the 38 separate state racing jurisdictions. The third is the excess number of drug labs in the U.S. - over 18 today - and their inadequate funding to ensure quality and accurate testing. The fourth is the absence of any one entity with the authority or power to enforce uniformity in a myriad of regulations across state lines.”


Just as in the hearings, the work of the House Subcommittee on Commerce, Trade and Consumer Protection focused on horses and ignored customers.

“… when the American people read news stories about the rampant use of drugs administered to the horses and see it described as "chemical warfare;" when they realize that over 5,000 horses have died from injuries on racetracks since 2003; when they see the life threatening injuries suffered by jockeys riding the horses; and when they discover the number of horses that are sent to slaughter every year after falling into the lowest claiming races, horseracing becomes less appealing. In fact, a recent poll taken by a newspaper in Seattle found that 38 percent of those polled wanted to ban horseracing.

I do not want to see that happen and do not believe it will.”


And then he backed away from a comprehensive solution.

“ I do, however, strongly believe that Congress can help the industry solve its problems and do so without creating an expensive new federal agency.”

“Congress can help because it can adopt minimum standards or guidelines for excellence, control and uniformity among the 38 racing jurisdictions. Just as important, Congress can enforce the minimum standards through the Interstate Horseracing Act of 1978.”

“Today, simulcasting provides 85 percent of the revenue for horseracing, but the industry has not been able to solve the serious issues it faces. It is time for action. I propose that Congress set minimum standards in the 1978 Act and require state racing authorities to adopt those standards to continue receiving the benefits of simulcasting. The federal government working with industry leaders and groups can solve the problems and ensure a strong, safe and vibrant sport for future generations.”


Congress could have defined a central industry governing body representing all industry stakeholders (including players), and empowered a strong commissioner to effect unity and enforce uniformity across all racing venues, but instead it abdicated its responsibility to the consumers it was supposed to protect.

So, once again, horseplayers are left to their own devices to bring about needed industry reforms that will level the playing field to that of pre-simulcasting days. On-track attendance will never regain its previous levels, but the number of people regularly betting on races can exceed those of that bygone era through in-home, on-line wagering and viewing.

But fewer of today’s savvier, better-educated youth are willing to play this game which is now so hard to beat and so limited as to what can be wagered on and viewed live. They may find the Pick Six attractive in concept, but not in implementation as bigger bankrolls buy jackpots that elude all but the most fortunate smaller player. Today’s largest players receive rebates based on their tremendous volume; placing the smaller player at an even greater competitive disadvantage.

The only way to force other industry stake holders to take a smaller share of the pie in order to increase their net is to stop serving pie until they do. It’s not just a matter of betting less, but of being willing to go betless until it’s worth wagering again.

Why do we need to take a stand, you say? Because if we don’t, the game we know can be so challenging, so rewarding, and so exciting will become even less beatable and less enjoyable than it was before too many pieces of the pie were spoken for.

This opinion was submitted by a California member of HANA.

Saturday, July 19, 2008

"It's Not a Big Deal"

Brought to our attention from a HANA member, this interesting note from an article about Del Mar.

Then, at the California Horse Racing Board meeting on Thursday morning, Drew Cuoto of the Thoroughbred Owners of California (TOC) told the board a problem had arisen.

Del Mar executive vice president Craig Fravel said an ADW company he wouldn't specify ---- TVG, Youbet, XpressBet or TwinSpires ---- objected to bets being taken via the Internet instead of exclusively over the phone.

Fravel said the situation was resolved by forbidding Internet betting in those states.

"It's not a big deal," he said.


Can we imagine if someone said that it is "not a big deal" if everyone could not buy a car in 1907 where Ford Motor Company would be today? Can we imagine the response if Amazon.com could not sell books because book buying over the internet was forbidden in certain states?

In racing it appears this is "not a big deal."

Thanks to a California member who noticed this piece.

Friday, July 18, 2008

Thoughts On Track Takeout

By Cangamble

Just over a year ago, Brisbet's Ted Mudge really let David Willmot have it on a radio show. Willmot wasn't there, but his ears must still be burning. Mudge called Willmot a beggar, who without slots, would have driven Woodbine into the ground.

The point Mudge was addressing is Willmot's constant whining about other on-line gambling that is available, which Willmot feels, is hurting his corporations bottom line.

What Willmot is denying, either wilfully or deceptively, is the fact that the horse racing gambling industry has been in trouble for ages, even before on-line poker, rebate sites, and exchange betting sites arrived. The younger generations did not replace the older generations loyalty and addictiveness to horse racing. The younger generations gamble, and even more so than before, but they do so on games of chance that have a much smaller takeout or house rake.

Willmot, unrealistically thinks that if you ban the competition, you will get the
younger crowd. WRONG. The way to get the younger crowd is to give the gambler a chance to win.

Right now, the way the game is set up, with it's ridiculously high takeouts, and lack of marginal to bad handicappers adding money to the pools, pretty much only backstretchers and knowledgeable handicappers are left, to go head to head with each other.

To make things worse, with the slot explosion, the unsophisticated gamblers have put their gambling money to work on the one armed bandits and out of the horse racing betting pools. Again the vast majority of the money in the pools these days pools sharks against sharks.

Some history

Back in "the old days," if someone wanted to bet, they had to go to Vegas, or the track. In the 60's, a typical Woodbine or Greenwood card had 8 races, which included only one daily double, and one or two exactors. People left the track usually with at least some money, much of the time. This gave them enough incentive to come back tomorrow.

The 70's were the same, except more exotic bets were being introduced. Exactors showed up in most races, and then triactors appeared as well (this caused less people to leave the track with some money, but it was still OK) There wasn't any simulcast wagering. You could only bet on horse racing 5 times a week, and there were only 40 to 50 races one could bet on. The crowds were large, and families would go to the track, because there was little competition, especially on weekends.

The track takeouts were less significant, because it is much easier to leave a track a winner when you had a bankroll of say $100 to $200 and only had 8-10 races to play. People who leave the track with money, tend to want to come back and sometimes even bring friends next time.

What killed all this, was simulcast wagering. Now, players were impelled to play 10-50 races a day. The track takeout remained the same, so this bled to death the player in a much quicker fashion, making those who left the building with money an endangered species.

The way it is today is very similar to blackjack, with so many plays an hour. Except of course, horse racing's takeout is equivalent to a blackjack game where the player would need an 18-21 to win even if the dealer goes bust, and ties go to the house. If those were the blackjack rules, the tables would be close to empty, except for the the real idiotic bettors who just don't care how fast they go broke.

Gamblers love action. They only have X amount of dollars to lose each year. The lower the takeout, the longer they can last, and the more likely they are to play.

Just look at Betfair. Even with a $6 minimum (actually it is much lower if you are booking a bet that is under even money), the action is great. With a $200 bankroll you can all day, and most likely have money left to play the next day, thanks to the low house take (2-5% on winning bets only).

Shutting down the competition won't work. Besides being unfeasible, most players don't like guaranteed losses, so they won't go to the track regardless. In today's horse race betting environment, without a healthy rebate, you are pretty much guaranteed to have no chance at winning.

What is needed is a complete change in thinking by the entire industry. Change the track takeouts to 10% maximum everywhere. Embrace the idea of low takeout online exchange betting: The industry in North America should do it themselves, instead of letting a third party take a good chunk of the profits.

The racetrack industry must understand that their customer has only a certain amount of money he or she can lose gambling during the course of the year. Eventually, they will get that money, no matter what the takeout is. And a lower takeout will attract many, many more players, and some will actually win. There is no better form of advertising than a professional handicapper who plays all day long and has his house paid for thanks to winning consistently at the track.

HANA in the News

There are hundreds of websites about racing, probably thousands. Sometimes if you do have something to say, word gets around.

HANA was in the news and plugged by both an influential blogger, and one of the best, if not the best, news sites about racing on the web today.

Jen Morrison, writer for the Toronto Star, and the DRF, and long-time fan of racing, mentions HANA in her last piece. Thanks Jen!

And Seth at Equidaily.com gives HANA front page treatment on his fantastic site. Thank you very much Seth.

Award-winning journalist Paul Moran at paulmoranattheraces.blogspot.com gives HANA a super sendoff on his blog. Thank you very much for your support, Paul.

We'll keep members posted about our mentions or comments on the web from time to time.

If you peruse the site, have read and agree with our mission, feel free to join HANA by clicking HERE.

Thursday, July 17, 2008

Opinion: The Game is Broken

Horseplayers have become increasingly more and more fed up with the way the industry is being run. Horsemen withholding signals from ADWs, track management's disdain towards the customer, trainers who are constantly rewarded for cheating, and a tote system based on obsolete technology - these facets of the game and more have resulted in an industry that is, to put it kindly, no longer mainstream.

An entire generation now exists who could care less about racing.

Yet, over the past two decades while racing has been alienating itself from an entire generation of potential new fans, almost all other forms of gambling have seen explosive growth. Go to almost any casino and you will find a young vibrant crowd (the generation that racing failed to win over) having fun feeding tokens into slot machines.

There is a formula for success in business that I remember from a strategic management class I took in college. Ok. I turned 50 in the past year so I've been out of college and part of the real world for a while now. But what they taught us back in 1977 is every bit as valid today as it was back then:

Define your market space and target customer. Understand your target customer's needs and wants. Figure out how to satisfy those needs and wants and (amazingly) your business will grow.

Every successful Fortune 500 company practices this. By itself it doesn't guarantee success. But failure to practice it practically guarantees failure.

The reason I get so pissed off at the people who run the horseracing industry is that they so completely fail to put this into practice.

And failure to put this into practice just widens the chasm that exists between the industry and its customers. I am both amazed and disgusted by the way that horsemen and track management continually appear so completely clueless that a problem even exists at all.

There is a gap between those running the horseracing industry and the customer. This gap has been widening for decades. But track management and horseman's associations continue to act as if no problem exists at all. Stagnation of handle growth and a faltering industry is the result.

They haven't listened to the individual horseplayer. Ever. But they will listen to horseplayers in numbers. Together we can accomplish that first step: We can make them aware.

Every form of gambling except horseracing has enjoyed explosive growth in the past two decades. Instead of growing while other forms of gambling have prospered, horseracing handle has actually stagnated. Why? Handle stagnation is the direct result of an industry whose management continually fails to listen to and address the needs of its customers.

Handle is the one thing that drives the industry. Increased handle means more revenue for race tracks. It means more money that can be distributed back to horsemen in the form of purses. It should be obvious to track management and horsemen that there's just one thing and one thing only that they should be focusing on: promoting handle growth. But they haven't done that. Instead they manage to operate the industry in a way that prevents handle growth instead of promoting it.

Frankly, this hurts racing and we at HANA have had enough.

By banding together in numbers we can finally get industry management to listen to and address customers needs and wants. That will only lead to one thing: Handle Growth. And when that happens everybody wins.

This opinion piece is from Jeff at Jcapper.com, a full-time player, software developer and fan.

HANA Meeting Tonight - Update

Thanks to all who attended tonight's HANA Meeting at Paceadvantage.com And a special thank you to Mike who graciously lets us use that chat room to, well chat.

Tonight's meeting was well attended. And there were a great many excellent items thrown out for discussion.

In the coming days and weeks we will be putting out some posts and releases (like the one directly below) about what we think the ADW world should look like, in the 21st century. We want to achieve that elusive goal where there are four seats at the ADW table - tracks, horsemen, ADW's and the player. We envision a mechanism where all four will have their voices heard; and the model is setup with one thing and one thing only in mind - to grow the sport. All members (and blog readers) are encouraged to comment on our discussions and offer their own insight.

The next HANA meeting will be next Wednesday night. If you would like to join HANA, just click the email link to the right (the "Become a Member" area), and tell us your name, city, state and estimate your yearly handle (handle not required, of course). We welcome anyone who wants to climb aboard.

Wednesday, July 16, 2008

ADW in 2008, Stagecoaches in 1888?

In 2006 most know that the Unlawful Internet Gambling Act was passed in the US. Racing seemed to be a big part of this (and were thankfully exempt!), but it appears the lessons that the offshore wagering sites taught us, which were a big part of their success, fell on deaf ears. Offshore 'pirates' have a few things in common as we all know: i) They offer lower takeouts ii) They offered all tracks in one account iii) They offered healthy signup bonuses iv) They offered a quick and easy way to deposit and withdraw from accounts. v) They innovated their betting interfaces to be very customer-centric.

In effect, they knew how to do business with an eager 21st century racing customer.

Almost everyone has heard of Betfair in the UK. They started with very few customers just eight short years ago. Now they have over 1 million. They have been allowed to compete while guided under laws and regulations that have been put in place to ensure growth. They have delivered to their UK customers, a product that is on par with the offshores. There are no "home market areas", there are sign up bonuses, there are low prices. Just like in the US, however, where we have many fighting over a shrinking pie, it was not always like that across the pond. From a good probability site I have read, there is a story about this phenomenon:

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.


Protecting our racing product is not a bad pursuit - it is our product, and our dollars pay for purses. However, are we not stifling innovation in North America by building stagecoaches, while our customers want cars? Should the racing industry get together and deliver the same way as offshores have, and encourage innovation and growth instead of fighting over a shrinking pie, like we see with the current ADW impasse? Should we learn to deliver our product better in the 21st century market, which seems to demand it?

The current way that ADW is being handled in North America is of great concern. We are building stagecoaches in an Internet world. Our customers want more, and if they do not get it, it is my opinion that they will not be a customer for long.

Monday, July 14, 2008

Opinion: Low Takeouts Are Our Friend

I’d like to issue a challenge. Two people are picked at random who have never bet before. It could be anyone really. Each person gets a coach who is a good handicapper. One coach is a track executive picked from any North American racetrack, and he has to play by his rules. The other coach is a professional bettor, and he gets to play by his rules. Each hand-picked person gets a mythical $1000 bankroll. At the end of 150 days of betting we get to see who helps racing the most and who will continue to help the game in the future.

Let’s make each player a losing player. Each player has a return on investment of 0.96, or on each dollar bet, they lose 4%. This is a very good player. It is difficult to lose only 4% with such high rakes in our game. But regardless, they will both be losers.

The regular player, coached by the track executive plays by track rules. No rebates. Let’s say the vig, or rake is 15% on win bets. The professionally coached player gets to play by his rules. Rebates are not outlawed. Let’s make the rebate fair. Say 5%. So, the takeout on his win bets is 10%, not 15%.

Each day, each player bets his bankroll in full. Since our starting bankroll is $1000 that means each player makes ten win bets of $100 on the first day, and so on, depending on his bankroll.

So, all the rules are equal except for the rakes. Now, let’s play and see what player helps the business more.

After day one, the player coached by the track executive loses 4%, with his 0.96 ROI. That means he bets $1000, gets back $960 for a loss of $40.

After day one for the professional player’s student, the ROI is the same. He bets $1000 and gets back $960. He loses $40. BUT, he gets a rebate of 5% remember? So when that $50 is added to his account, he now has $1010. This seems like a minute amount, because after all, what is 5 percent, right? It’s only ten dollars to his bankroll on the plus side!

Now we keep playing, with the same rules, with the two people of completely equal skill.

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. Not too bad at all. He played for a long time and he really contributed a lot to purses. 15% of $24000 is $3600. That is $3600 to purses and profits.

The professionally coached player, with the 5% rebate (remember the takeout reduction was tiny right?) did better. A whole lot better. That small rebate helped the player win. Not a life changing or earth shattering amount, but it helped. He ended up with over $4000, or $3000 profit. Well, of course he did, you say. He took some of the tracks profit and purses, so he had to have made money. He made money at the expense of us! He took our $3000 profit for himself!

Not so fast.

Our player, with that small takeout reduction, bet over $330,000 in those same 150 days of betting. That’s three hundred and thirty thousand dollars! How about the proceeds to the track and horse-owners for purses? Well we gave a 5% rebate, so instead of charging 15% we charged 10%. 10% of 330,000 is $33,000. That player, with a little help, contributed $33,000 to purses instead of the player we did not help who contributed $3600 – almost 10 times more.

More importantly, that player is still playing. Remember, the first player is broke. I bet the winning player will be playing for a long, long time too. And I bet he will tell friends.

Now you know why in online poker, a player can play for months and months with a small bankroll and he tells his friends to play too, and the game grows. Or why betting giant betfair with their low vig has a million clients and is growing. Their business model assures it.

It’s churn. It’s low takeouts. It helps people win and become long-term horseplayers. Players who are serious about the game and might be, or were, our best customers have left to play new low rake games. Let’s get them back.

Low takeout is our friend. And the rest of the gambling world from slots, to poker, to sports betting has known it for generations.

It is time racing joined the party.

This opinion piece has been printed with permission from the Pull the Pocket blog. He has joined HANA, as many of the principles he supports; and he, like all HANA members, wants to see the game grow and be a force in the 21st century gambling landscape.

Sunday, July 13, 2008

News: Cost Containment Could Cancel Conflict

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

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

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

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

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



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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

Opinion: The Time Has Come For Takeout Reduction

For decades pari-mutuel betting was granted monopoly status by many states -- it was the only game in town.

Las Vegas offered legal gambling, but it didn't harm race track attendance in any meaningful way.

Racetrack attendance began to suffer when Atlantic City legalized casino gambling. Driving from New York City to the Playboy Casino suddenly seemed like a lot of fun compared to attending the races at Aqueduct.

State sponsored lotteries proliferated. Holders of winning lotto tickets could win life changing jackpots with only a $1 bet.

Now it seems that every state I travel through has billboards promoting casino gambling or state-run lotteries.

States in which casino gambling and lotto were legalized receive vast sums of gambling revenue and there is no turning back the clock on this easy money.

Unfortunately, racing began to decline as a result of the intense competition for the gambling and entertainment dollar. Those who benefit are not the ones who suffer.

Then, some smart racetrack owner figured out that they would offer to save racing at their track in exchange for a monopoly on running slot machines at their pari-mutuel facility. This worked beautifully at Mountaineer Park in West Virginia, for example. Purses are way, way up. The quality of horses running is way, way up.

A side note: I spent many days at Mountaineer Park when it was Waterford Park. The horses running now actually look like thoroughbreds. Not sure what was running there before. Although, I suspect many horses were literally running for their lives. Waterford Park was the last stop on the racing circuit. If they didn't win at Waterford it was off to the killer man. Fortunately, times have changed and that practice seems to have been eliminated.

What hasn't been eliminated is the extorsionist takeout rates on pari-mutuel gambling. For years, it was the horseplayers who kept the sport of racing alive. Through good times and bad horseplayers have stood by the sport they love and have bet their hard earned money which helps fund the purses for which the horsemen race their horses.

Today, racetracks with slots and casinos enjoy excellent revenue streams. Mountaineer has even opened a second racetrack with more slots at Presque Isle Downs. Horseman are filling up the racing cards due to the outstanding purse money so generously subsidized by slot machine revenue. The states are filling their coffers with tax revenue from gambling.

Despite all the easy money that is flowing, horseplayers are still suffering. The very people who made it possible to have purses in the first place are leaving the game. So while everyone else is getting an increased share of the easy money, the horseplayers are offered the same old takeouts.

It's time to return money to the horseplayers in the form of lower takeouts. Every student of Economics 101 knows that lower costs will increase sales volume.

So why haven't pari-mutuel takeouts been lowered at racinos?

I suspect it's partly because of inaction on the part of horseplayers.

This must change. The Horseplayers Association of North America (HANA) has a major goal -- working toward reducing takeouts.

HANA will do this by issuing press releases, letter writing campaigns to politicians and governing bodies, Youtube videos, blogs, message boards and making their message known anywhere HANA can find an audience.

As stated earlier, the ones who benefit are not the ones who suffer. Horseplayers are tired of being on the short end of the revenue stream. Horseplayers are as much a part of this game as Tracks, Horsemen, Jockeys, Backstretch workers, etc. It's time we stand and speak with one, unified voice so that everyone benefits and no one suffers.

This opinion piece was contributed by John Swetye, who is a long-time horseplayer and a proud, founding member of HANA.