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Tuesday, September 30, 2008

$273M......

It was reported today (hat tip to Ray at the Paulick Report) that the state of Pennsylvania has received over $273 million from slots.

In other news, the trifecta and superfecta takeouts at Penn National are 31%, equal to the Massachusetts state lottery and the highest in the nation.

If you give a company a $273 million dollar break, it is usually reflected in a benefit via pricing to a consumer, because that is the only way a business survives. It also tends to result in an increase in sales. Not in racing, however. Despite this massive increase in purses, and racedates, handle in Pennsylvania fell. This is a correlation we are seeing time and time again as this business clings to the monopolistic business model of the 19th and 20th centuries.

Monday, September 29, 2008

Say What?

This is a true story. I was talking to a general manager of a racetrack and said "how about that 25% takeout on exactas?" And he said "I know! The state won't let us take any more than that!" I think he missed the point slightly.

So goes a quote from horseplayer Rich Halvey's piece in Horseplayer Magazine this month.

We have a long way to go folks.

Saturday, September 27, 2008

NTRA Task Force and HANA

Two approaches, same goals.

A HANA member lets his thoughts be known on the differences and how we can support each other:

Kudos to the NTRA task force for getting bloggers on board with their ideas. Kevin from Aspiring Horseplayer, Jessica and Dana, two other influential bloggers all played a part. Here is the story.

There is much to go through in the report and much of it is interesting. Most of it new. New ideas from passionate fans. It's a good thing.

The main difference with other groups, like The Horseplayers Association of North America, is that the NTRA task force works on newer fans, or the entertainment part of the game, while HANA tries to grow the gambling side. They do not focus on takeouts and such. I guess a simple way to put it is: They try and get fans to walk through the door and takeout groups like HANA try and keep them here when they do.

"New" fans generate about $30 of daily handle (if you look at casual fans on big days and track handles). Maybe they come twice a month. If the NTRA task force gets 1000 new fans with some new ideas (a good thing) it might result in $700k of handle.

Then what do we do with them? If 99% of them lose, a fair share will not come back. We know this to be true. Our game is hard to stay at as fans. If watching brown horses go around in a circle when you are on a 37 race losing streak is easy, then a root canal is a Sunday picnic.

I think the NYRA spent something like $25M marketing to these types of fans with the Go Baby Go campaign. It's tough to keep them as fans if they don't bring home some scratch.

That is where groups like HANA come in. In making the game more winnable, allowing for open access for all ADW and moving the game into the 21st century with both pricing and delivery, we have a chance to grow rapidly. For example there is one HANA member that has gone on record saying that he bet $30,000 per year before getting a lower price. After the lower price was given (through rebates) he then bet $1.3M a year. That is a $1,270,000 handle increase by one person.

Thankfully more progressive racing cultures have gone in this direction, so we don't even have to guess about this.

Australia, as we all know have 16% takeouts mandated by government, which is about 25% lower than North America's takeout. The per capita handle there is $430. In the USA it is $48, almost ten times smaller. If we could somehow get to a meager half of what Australia is, we could up handles by a huge amount.

In Hong Kong, getting new people out was important, but when push came to shove the braintrust there moved to lower prices to curb losses in handles. Rebates of 10% were given when the HKJC lobbied the government to take their tax off pools. Handle was up precipitously and the bleeding stopped. That one move of lowering takeout could result in 100's of billions of handle over the next decade for the Hong Kong Jockey Club.

It is clear that new fans are important, but lest we forget our old ones, and our current ones. They are already prequalified to love racing. We don't have to teach em a thing, don't have to give them a cap, don't have to start a handicapping contest, run thousands or millions of TV ads, or get a mini-horse to come and make an appearance. We don't have to go find them because they are right under our noses. We just have to give them a chance to win. If we do, they will be back spending money on racing and not a ball or slot machine.

There is a $500 billion dollar + gambling market out there. We must attack it from all sides. We at HANA are doing our part, but we need your support. Please sign up. It's free and confidential.

Friday, September 26, 2008

Racing is What's Wrong With Racing

About 15-20% of HANA's membership are harness players. Harness racing has the same essential systemic problems as the thoroughbreds do. This post from a harness racing blog explains that point, and HANA members might find it interesting. A commissioner, lower takeouts, better delivery, listening to customers? All the same folks.

"When he took over in 1960, as a little known fallback choice of the league's owners after 23 rounds of voting, professional football was chickenfeed - an uninspiring hotchpotch cluster of local teams, local markets and purely local enthusiasms. By the time he retired, the NFL had outstripped major league baseball to become a national institution, the country's richest, best run and most widely followed sport."

That is from the official obit for NFL commissioner Pete Rozelle.

Does the fractured NFL/AFL of the 1960's sound a lot like us?

We have spoken a couple of times about what the NFL has done to grow. I won't go into another central organization or commissioner tirade, which I am sure you are happy to read, but it is interesting to look at that history. I was watching the NFL Network last evening and they had a decent show called "Top Ten" on. This shows topic was "Top Ten Innovations of the NFL". There was a common thread in these innovations, but primarily they were borne by a response to the customer (i.e. viewer).

One interesting one was rule changes. We are seeing how we handle rule changes in our sport now with whipping. It does not seem to go very smooth when you have upwards of 30 commissions and so forth. In contrast, the NFL adopted rule changes in 1978. Defense was ruling the game and fans were turned off with defensive football. What did the NFL do? Simple, they responded to fans and changed the rules. The result? Growth.

How about the AFL? When they were started there was suddenly a competitor to the NFL football monopoly. What did they do? Took the best ideas and teams from the NFL/AFL and changed their league. Oh, and of course, just for good measure this new-found partnership resulted in a little game called the Super Bowl.

The NFL embraced another thing, and that was television. They were one of the first sports to recognize this medium. There were some that wanted to ban televising games because they thought that people would not come to games if they could watch them on television and that would hurt the sport (sound familiar folks, who constantly comment on 'live racing'?). Luckily leadership ruled and the NFL took over television sports, like no sport ever has before. Now 2% of people who watch football attend games to do so. $5 billion dollar TV deals are the norm.

What did they do with the money? As we all know Rozelle (and anyone else with a clue) knew that each team had to share in the revenue to build the league.

In contrast we have not done as well listening to customer complaints, competition, technology or revenue sharing, have we?

What do we do when fans have complained about high takeout? We have raised takeout even higher.

What do we do when fans try and go offshore to get better prices and/or mediums because of a new entrant to the horse betting monopoly? We try and shut them down and do not recognize we have a problem on what we are delivering, not what others are.

What does racing do with new technology and high value added low marginal cost mediums like the Internet? Not much. A buddy of mine called from work wanting to watch the Little Brown Jug last week. Sorry pal, in the vernacular you are 'SOL'. In fact, there are rumblings that if there was not offtrack betting or TV betting that people would go to the track instead and all will be wine and roses. Oh my head. The NFL learned that was nonsense 48 years ago.

How about sharing that revenue? I would guess that there will be about $4B distributed to racing in some way, shape or form from slots in the next year or so. Did we do anything with it to grow handles? Let's see, it would cost no more than $50,000 to start up a harness racing website with all free video of all tracks a la TwinspiresTV. Is there one? No. I read a bit about starting up an ADW like Day at the Track or Premier Turf Club. We could have started an All Harness ADW with all kinds of bells and whistles. It's a revenue driver for sure. Cost? Let's say $1.5M. Do we have one? No.

For something as simple as a harness racing website with free programs and free video ($50,000 to create) it works out to 0.0013% of our slots revenue. To equate that to a lawyer making $200,000 (after taxes) that would be about $6.50, or a Big Mac meal.

When someone emails me and asks me what I think is wrong with racing I know how to answer it: We are what is wrong with racing.

Thursday, September 25, 2008

See How Easy This Is?

Open access, throw in a few rebates, free video from most if not all ADW's. If we speak to some, this relatively simple business concept is likened to writing the Magna Carta whilst simultaneously curing the common cold.

Not at Hawthorne Racecourse.

In a piece titled No ADW Issues Evident we get to see what happens when racetracks and horseman groups actually distribute a signal to customers.

Walsh said the Hawthorne signal will be going out to all major advance deposit wagering companies -- the providers of Internet and telephone wagering that, along with horsemen and tracks, have been the focus of a battle this year over revenue-sharing plans.

“I don’t think there is a place out there that is not going to be able to bet Hawthorne,”


Score one for common sense with this line, as well.

“Horsemen are on both sides,” he said. “They believe they should get bigger percentages, but realize there may not be a percentage of any kind to get if these companies go out of business.”

If Horseplayers want to play Hawthorne it appears they will be able to and they won't have to bounce a ball on their nose to do it.

Wednesday, September 24, 2008

Keeneland Strikes Again

Listening to customers and the Poly questions, Keeneland comes up with more customer-centric perks. They have included a database on their website, the Thoroughbred Times reports.

The site will feature a free data sheet with sortable information from every race contested at Keeneland since the 2006 fall meet, which marked the debut of the Polytrack surface that replaced the conventional dirt strip at the Lexington racetrack.

Sortable data categories include race type, distance, temperature, field size, final time, track maintenance and information about the winner, including post position, half-mile position, and last race location.


Jeremy Plonk was apparently asked to help on this feature.

Kudos to Keeneland.

Guest Post: California Racing

Sometimes we get a HANA member who is frustrated and wants to have their say. So they send us an email. This one caught our eye. Roger is a horseplayer and has been so since the early 1970's. He does not like the way things have gone in California (where he lives and bets) and he expresses some of the thoughts that get his back up. He calls his piece "A Three Legged Stool".

Three-Legged Stool

California horseracing is like a three-legged stool. The first leg is the State. The second leg is the people who put on the show, the racetrack, associations and the horsemen. The third leg is the customer.

The traditional primary mission of any business is to put out a product designed to attract and grow the customer base to insure a healthy return for all involved.

California horseracing has focused on two legs of the stool at the expense of the third leg, the customers.

The racetrack and the horsemen’s organizations are the loudest voices heard at industry meetings. They all have multiple demands that take more from a shrinking pie instead of making proposals that would increase fan interest and participation. The only proposals you hear is how they plan to get more money from the remaining fan base though increased take out or new, near impossible, high take exotic wagers designed to create carryovers.

Take out fees have skyrocketed from 10% to 20%over time and more for exotics. Carryovers are a Band-Aid for a hole in the bottom line. Many California tracks would be in the red ink if it were not for the carryover attraction. It is no accident that there is more carryovers today than ever before, despite more handicap information available to the public and smaller field size. The racing managers have learned all too fast how to encourage a carryover. The average loyal patron must lose to build a pot for the deep pocket patron to come in and swoop up the pot with high value tickets, with little handicapping skill involved.

Because of the emphasis on exotics and carryovers the quality of the product has been declining. We get a lot of small fields designed for the horsemen, not the public, and they become mostly Jockey strategy dominated races. In the exotics we get a lot of full field bottom level claimers with spot or no records. It is undeniable that quality has taken a back seat, so has handicapping.

The racing managers used to say, “We do not care who wins”. The racing managers make no pretense these days and cannot tell you with a straight face that they do not care who wins. They prefer long shots that create carryovers.

It seems obvious to this long time horseplayer that plenty could be done to grow the fan base if the racing managers would concentrate on what the customers wanted, instead of the first two legs of the stool.

Card races that customers want rather than what the horsemen want.

Require 8 horse fields.

Reduce take out to allow more customer winners and churn and return.

Create a National Central Office to coordinate regulations, and allow customers to participate and have a say. After a hundred years or so, it is time.

My father told me never to participate in a game that the house has an interest in who wins. I think the public perception is that they agree with my father. We need to change that perception.

Tuesday, September 23, 2008

Punters Deserve Better Treatment: Mordin

This article is by British racing journalist, Nick Mordin. It was published in Racing Post Weekender.

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PUNTERS DESERVE BETTER TREATMENT

In a former career I had the dubious distinction of being involved in one of the biggest disasters in marketing history. The advertising agency I worked for handled the Sinclair account at the time Sir Clive Sinclair decided to sink a large slice of his company’s resources into an electric car known as the ‘C4’.

Everyone in my department knew the C4 was headed for the rocks even before the media started making fun of it. The thing was so low to the ground it looked positively dangerous to drive. One of the art directors I worked with drew up a mock advert to highlight this. It showed a giant Euro lorry driving over a C4. The headline read ‘C4 and see God.’

I thought I’d never be within the blast radius of such a marketing massacre again. But last week’s announcement by Betfair that it was going to impose an additional 20% commission charge on some of its most successful punters proved me wrong.

Now let me state right here that I am a great admirer of Betfair. I think it’s wonderful that they’ve made low cost betting available to punters. It wasn’t so long ago that I devoted an entire article to extolling their virtues. Hell, I like them so much I’ve written for their website.

Knowing them as I do I can pretty much guarantee Betfair will reverse their new policy sooner rather than later. They’re not idiots. They know they’ll lose market share to their rivals if they don’t.

What interests me though is just how Betfair came to make such a horrendous blooper.

I think I know the answer. I believe that Betfair’s move stemmed from a gross misunderstanding of punters which is shared by many.

From what I’ve seen, the vast majority of decision makers in the racing and betting industries worldwide see punters as mugs and punish them when they aren't. In doing so they’re failing to understand what it is that motivates us to bet.

The truth is I and every other punter I know doesn’t bet because we have some sort of psychological disorder which compels us to gamble away our hard-earned money. Quite the contrary. We bet because we want to win.

I know, it’s a real shocker isn’t it. But it gets worse. Not only do we want to win, we’re also convinced from our own experience and that of others that if we work really hard we actually can win.

This is why we get angry when an organisation like Betfair takes action against punters who are long term winners. We may not be long term winners ourselves, but all of us aspire to be. So when you attack punters who are long term winners you’re attacking every punter by destroying the very thing which motivates us to bet in the first place.

Betfair are hardly alone in the kind of action they took last week. A couple of years ago the Hong Kong Jockey Club moved to exclude long term winners from the rebates they were offering to big punters. If you bet big into their Tote system they’ll kick back a fair percentage of what you bet as an incentive. Unless you win that is. Then you’ll get nothing.

Even the British Tote took action against consistent long term winners a while ago. And it’s almost certainly because of a system I wrote up in this column.

It all started right after I reported how a big punter in America known as ‘the mad bomber’was earning a fortune by exploiting the generous Tote place dividends paid on long odds on shots.

A smart team of UK punters employed a very clever variation on the mad bomber’s technique by making massive place bets on long odds on shots in flat races where three or more place dividends were paid. They only made a tiny loss on these bets because long odds on shots place on the flat over 90% of the time. Their profits came from the fact that their huge place bets on the odds on shots massively inflated the place dividends of every other runner in the race. As a result the team were able to get 10-1 or better about horses whose place odds should have been a fraction of that price.

The team apparently made thousands of pounds a week for a couple of months after I wrote my article. But then the Tote took action. They issued a press release accusing the team of ‘tote rigging’. And to stop them they cut their minimum place dividend to 70 pence - meaning that thenceforth punters could make a successful bet with them and actually lose 30 per cent of their stake.

The Tote reversed their action eventually. Nowadays I think their minimum place dividend is £1.02. So if you want to annoy the Tote and have the thousands of pounds needed to distort their place odds I say go ahead and use the mad bomber’s system. I’ll be rather interested to see how they react a second time around.

I should note that it’s not just betting exchanges and Tote systems which seem to treat winning customers as enemies. Bookmakers do it too. If you become a long term winner with a bookie I guarantee they’ll either refuse to take your bets or else force you to take the ‘starting price’ and then lay off part of your bet at the track to reduce the odds.

Indeed the very idea of the ‘starting price’ itself raises another major concern for me. As I see it, the whole concept of ‘starting price’ is just another example of punter abuse.

Tell me any other shop, other than a betting shop, where the owners have agreed to offer any product or service at exactly the same price as all other shops of the same type. There’s a term for that. It’s called price fixing. Nobody would put up with it in any other industry. Punters however are supposed to swallow it hook, line and sinker.

I understand why off course bookmakers feel they cannot compete on price with each other to the same extent as their on course counterparts. Their overheads equal something like 9% of the betting turnover they generate. So they’d make a loss if their gross profit margins were the same as the 3.5% to 5% enjoyed by on course bookmakers. But there is a way around this, and I’ve seen it in operation in South Africa

In South Africa off course bookmaking takes place in ‘Tattersalls Rooms’ situated in every major city and town. Scores of bookmakers share the cost of maintaining each of the Tattersalls Rooms and compete with each other in a big hall where punters can shop around amongst them for the best price. It’s a great system and creates something very close to the same atmosphere as the betting ring on a racecourse.

Another great advantage of the South African system is that the bookmakers are required to offer the odds they advertise for any horse to lose a significant sum of money. If you want to bet ten grand on a horse they’ve marked up at 2-1 they have to take the bet. Try doing that with your local high street bookmaker.

The British Tote system too could easily reduce its overheads and offer a far better deal to punters. When the first Tote system was introduced in France at the turn of the last century the Paris tracks that offered it took just 5% out of their betting pools. If they could make a good profit offering 5% commission with Victorian technology I don’t see why the British Tote can’t use modern computer technology to do the same.

Sadly, I don’t hold out much hope of a better deal for punters in Britain or anywhere else in the immediate future. The reason is that there’s a huge cultural divide between punters on the one hand and the betting and racing industries on the other.

The cause of this problem in my opinion is that far too few people in management positions in the racing and betting industries actually bet to any meaningful extent. A large percentage don’t even bet at all, or else they have their punting activity limited or stopped by their employers. As a result they just don’t see where we, their customers, are coming from.

If I had my way anyone who works for a racing or betting organisation would have 20% of their salary deposited into a betting account, and they wouldn’t be able to access any of it until they’d used it to make a bet. This would force them to see our point of view and understand our needs.

Until something like this is done those who provide betting systems or benefit from them are going to continue seeing most of their customers as mugs and their biggest customers as enemies.

Will this change anytime soon? I wouldn’t bet on it.

Sunday, September 21, 2008

HANA Press Release: Officers and Incorporation

Horseplayers Association of North America (HANA) Announces Incorporation, Appoints Officers


FOR IMMEDIATE RELEASE


(September 21, 2008. Charlottesville, Virginia) The Horseplayers Association of North America (HANA) is pleased to announce that it has been incorporated as a Virginia non-stock corporation with the goal of obtaining 501(c) status as a non-profit organization with the Internal Revenue Service.

HANA believes that this is an important first step in becoming a force to help grow the sport of horse racing.

HANA would also like to announce that they have elected their Officers.

Jeff Platt has been elected President. Jeff, a computer programmer by trade, has been a horseplayer since 1981. In addition, he is the owner, operator and creator of Jcapper, a popular thoroughbred handicapping software.

John Swetye has been named Vice President. John is a business professional, long time horseplayer and one of HANA’s founders. The Treasurer is Theresia Muller, CPA, CFP, who is an investment professional, avid horseplayer, horse owner and thoroughbred racing forum owner. Finally, Dean Towers of Toronto will add international flavor to HANA as its Secretary. Dean is a marketing professional, a horseplayer; and like Theresia, a horse owner.

The Horseplayers Association of North America is a grassroots group of horseplayers, not affiliated with any organization, who are not pleased with the direction the game has taken. HANA believes that both tracks and horseman groups have become bogged down with industry infighting and have completely forgotten something: The importance of the customer. HANA hopes, through proactive change on several key issues (including but not limited to), open signal access, lower effective takeouts, affordable data and customer appreciation, the industry’s handle losses can be reversed. HANA is currently made up of over 200 horseplayers (both harness and thoroughbred) from almost all states and Canadian provinces. It currently represents over ten million dollars of yearly racing handle.

Our web address is http://www.horseplayersassociation.com and interested horseplayers can sign up there for free. We are horseplayers, just like you and we are trying to make a difference. We need and appreciate your support.

-30-

Calling Mr. Shapiro

In the recent Bloodhorse article titled "Hollywood, Horsemen Squabble", it appears that the Thoroughbred Horseman's Group is back up to their old tricks.

The dispute was made public during the board's Sept. 18 meeting at the Los Angeles County Fairgrounds in Pomona, in which the CHRB considered Hollywood's license application for the 40-day stand.

The board approved the application, conditioned upon the completion of the horsemen's agreement with the Thoroughbred Owners of California, which is seeking a larger cut of the ADW take in future contracts. The TOC has authorized a national coalition, the Thoroughbred Horsemen's Group, to negotiate on its behalf for a larger percentage of the revenue.


Note to members: "larger cut of ADW revenue" means less to us as horseplayers (check the money spent via ADW on rebates and R and D). Not to mention when money is taken off the front lines it results in a decrease in handles in the sport we all care about. ADW grew at 17% last year because of many of these reinvestment policies.

The good thing is this:

Both Hollywood Park and the TOC agreed to allow the CHRB to intervene.


The CHRB is headed by Richard Shapiro and he has been horseplayer friendly in the past, and he seems to be one of the only people in Californian racing who think that we matter (not to mention perhaps the only person who understands competition, open access and churn). We as horseplayers implore him to get this settled and stop the Thoroughbred Owners of California (e.g. Mr. Couto) from running all over us, like they have for so, so long.

One of HANA's planks is open access. Another is lowering effective takeouts. Mr. Shapiro please work for us to get California racing offered to any ADW who wants it; including places that offer rebates from their ADW share. Work on returning some of the ADW share to the player who can grow our game, and grow our handles, instead of groups who yell the loudest. Players should not have to play over $1M to get more than a toaster back. And we should not have to play offshore either. We all should matter.

The writing has been on the wall for some time now with decreases in handles. The players have been speaking. They are saying that this has to stop.

On HANA's Mission statement we say the following:

H.A.N.A. is a grassroots Non Profit organization made up of horseplayers just like you. Simply put, we are not happy with track management and horsemen's groups. We are less than thrilled with what they are doing to the game that we love.

Instead of promoting awareness of the sport and growing handle they have become bogged down with industry infighting and have completely forgotten something: The importance of the customer.


Every week it seems this mission is ever more apparent. Horseman starting groups to fight tracks over a pie that is shrinking. One day I assume that they will find there is not a pie left. Until then we will keep fighting.

We need your help, so please join HANA if you are interested in helping us make a difference. There is strength in numbers.

Friday, September 19, 2008

Takeout, Up, Up and Away!

We'll have to start a clock on the side of the blog when the words "takeout increases to pay for things" occur in this business. It might be a heavily updated feature.

Thanks to Seth at Equidaily for bringing us these headlines.

First, in New York. NYRA has increased takeouts on us. Our ROI goes down again.

What business in the U.S. treats its customers with more contempt than horse racing? Yesterday, an across-the-board increase of 1% was added to already onerous takeout on all wagers on NYRA races, making takeout in NY State one of highest in the nation.


Second, Kentucky says they need some cash. It appears they want it from us. Have they seen our bankrolls lately?

Kentucky may consider raising taxes on betting to pay for improved racetrack and betting security and more drug testing.


If your business is falling, as betting has on racing North America-wide, do you actually think you will sell more if you raise the price?

If Sam Walton noticed he was not selling too many bar-b-ques and asked for advice and his Vice President said "I think we should raise the price of them, Sam"; that VP would wind up on the unemployment line.

Unfortunately there is no one running racing who can put their foot down and send these price raisers walking to another line of work.

At HANA we hope to make a difference, to get headlines like this out of this business forever. If you'd like to join us, please email us to the right of the page. We need your help. We can not do it alone.

Wednesday, September 17, 2008

Pricci: We're Not Doing Too Bad

On John Pricci's blog today he notes how racing is faring compared to many other games.

He is right; but may I add more to his opine. Racing is down, yes, but its players love the game. We are not your normal gambler. We are horseplayers.

We think people that play roulette are fine to do so, but we know that we have that 1 in 37 chance to lose, and will lose. We know that we need to pick over 52% of spread winners in the NFL to win. We'll probably lose.

In racing we have that inescapable bug - the one that brings us back time and time again.

It is both a blessing and a curse. A blessing because being a horseplayer is a wonderful thing; a curse because we as horseplayers constantly get taken advantage of because we will not leave.

It is what we at HANA are here for. We want to let the industry know that this is a game one can get hooked on for life. We want to spread the word to other gamblers that they are completely bonkers to watch that wheel spin, or that ball drop. They could be betting the outside late bias at a track in the afternoon, and the inside speed bias on another that evening. We want them to come play, and get hooked too.

But virtually every time we do get someone to play racing, they go home broke. Or they get terrible customer service, or they don't understand why it cost them $20 to play the races, when they get free drinks to watch that mindless ball. When some actually get past their first visit, they wonder why they can't watch free video, or write a program to scrape data off the past performances and build a database, or why they can't play Santa Anita at their internet betting site. If they are still there after all of those roadblocks, they participate in the slow death of trying to beat 21.8% blended takeouts.

Yes, racing is doing better than some other gambling games. But think of how much we'd grow if we removed many of those roadblocks? We might then not be speaking of cutting losses, we would be thinking of spreading the wealth of growth.

Dare to dream; with horseplayer help we might just be able to do some good.

To join us, please submit your information to the signup link to the right.

Friday, September 12, 2008

Handicapping Multi-Leg Wagers

Originally posted on a HANA members blog:

We often, as players, take 'stabs' at a pick 6 or 7, throwing in longshots. Sometimes we like two longshots in a pick 3 and play it at a smaller pool track, thinking we have an edge. This is an excellent primer to show us that this is not a great strategy.

Frankly, I am of the belief that many of these wagers are handle killers. Just like the Massachusetts lottery learned quickly (they have lowered their lottery take from traditional takeouts to 30% now), when you give people something back, they churn it. I would bet there are a whole lot of Mass lottery scratch tickets that are purchased for $2 that pay out $2. We need more of these bets, instead of fewer than them in racing. $48 bet into a pick 6, with a 0.5% hit rate that is paying lower fair odds than that, is not only bad for us as players, it is bad for the business as churn is almost zero on these wagers.

Multi-leg bets are wagers that require you to pick the winners of multiple races. The usual bets are the Daily Double, Pick 3, Win 4, Pick 6, and Super 7. These wagers typically have a higher takeout than normal win betting. So, the question that you have to ask yourself is why make the bet instead of a regular win bet?
The answer is that you gain an edge with the multiple bet against making a parlay in the win pool. The takeout on the WEG circuit for Win is 16.95%, Daily Double 20.5%, Pick 3 26.3%, Win 4 25%, and Super 7 26.3%. Taking the Daily Double as an example, every $1 wagered returns 79.5 cents. If you took $1 and wagered it in the Win pool under the expectation that you would receive an average payout of your wager minus the track take and then parlayed the following race, you would have $1x.8305x.8305= 69 cents. Your Double bet gains 15.2% over the win bets. The corresponding numbers for the other bets are Pick 3 73.7 cents versus 57.3 cents (28.6% gain), Win 4 75 cents versus 47.6 cents (57.6%), and Super 7 73.7 cents versus 27.3 cents (170% gain).

So, theoretically you do better on the multi bets instead of win betting. But, it is not quite as simple as that. You are obviously not content to lose money at a lower rate. You want to make money. The horses that you put in your multis need to be horses that you feel will beat the takeout in comparison to their odds. For the Daily Double, having a horse that beats a 10.8% takeout in each leg would return a positive bet. This number is figured out by multiplying that takeout over 2 races. This would produce the 20.5% Double takeout. This assumes that the public bets the Double in the same proportions as the Win market, although that may not necessarily be the case. The corresponding percentages for the other bets are 9.7% for the Pick 3, 7% for the Win 4, and 4.3% for the Super 7.

Another reason to make a multi-bet wager is when you believe the odds that you will receive on a horse will be much larger than what will be reflected in the Win market. For example, in the early Daily Double at Woodbine on March 13, 2008, the first leg was won in a fortunate manner by 0.90-1 shot Duchessofnorthyork. In the second race, Escaping Beauty was the fifth choice in the morning line at 6-1 but was sent off as a solid second choice at 2.9-1 and got the win. A $2 win parlay would have paid $14.82, but the Double was a generous $29.90. Double bettors who could recognize the value in Escaping Beauty received a much better price than the Win backers.

A final note that multi-leg bettors should be aware of is to be aware of the pool sizes, especially when backing longshots. It would be great to have 3 consecutive 20-1 shots win in a Pick 3 on the WEG circuit, but unfortunately the pools usually only contain approximately $4000, leaving around $3000 after takeout. A $1 Win parlay of 3 20-1 shots would pay $9261, but hitting that pays you at most $3000, and less if someone else has also hit it. Making a Pick 3 wager with horses going off at 13.45-1 or more in each leg is a mathematically poor bet. This effect is most pronounced in Super 7 wagering. When the pool has a $10000 guaranteed payout, 7 horses of 2.75-1 or more creates a parlay that would pay more than the $10000 that you would receive. For a $50000 carryover pool, the odds only increase to 3.7-1. For a $250000 carryover, it is 4.9-1. The lesson to be learned is that you should probably only bet the Super 7 when you have some very solid low price horses that you are comfortable keying.