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Sunday, March 22, 2009

Guest Post - Fans Matter

We enjoy hearing from the community and we have been getting more and more feedback. Horseplayers have opinions (shock!) and we want to hear them. If you'd like to participate please send us a piece and we'd be more than happy to have a look at it. This piece speaks to the many categories of racing fan and bettor that needs to be serviced to make sure our game operates at an optimum level. And it illustrates nicely that it is a tough task under the current system we operate under as bettors, both big and small.

All the Fans Matter
By Indulto

Before I address Mr. Roark’s timely commentary, “The Fan Matters,” I’d like to make note of the following passage in the subsequent HANA blog entry, "Voting with Your Dollars Earns You Respect:"

“… So far as I can tell there is just no way around it – without some solidarity things are not going to change. So long as tracks are seeing their pools flush (even though we would argue they could be much larger) they aren’t going to be inclined to make the changes they need to make. And that won’t happen without rebate players standing up and voting with their dollars as if they were paying full takeout prices. At least until rebates are available on a much broader basis than they are now – there needs to be some solidarity on this front.”

Attempting to represent the sometimes conflicting interests of horseplayers of all bankroll sizes and participatory motivation/frequency is no easy task. While HANA has always advocated rebates and/or lower takeout for all, there has been no support for the concept that effectively lower takeout should also be equal for all -- just as lower direct takeout would be.

A generation has passed since racing was popular, and some believe interest has died because the competition has evolved into one between bankrolls rather than handicappers. So I was pleased to discover in Mr. Roark’s discussion the spark of an opportunity for HANA to indeed bring EQUAL benefit to all its members whether whale or minnow, investment or entertainment-oriented bettor, regular or casual player, etc.

I found the following remarks in Mr. Roark’s contribution to be of particular interest:

“…Without the player who grinds it out daily or weekly, our industry would be in a more serious position than it already is. “

“… It was our belief that there should be an ADW which was not-for-profit that paid all of the net profits back into the industry in the form of host track and horsemen’s fees and fair rebates to the players who were willing to risk large amounts of money.”

“… If tracks and horsemen will not agree to a not-for-profit ADW,then the players need to form their own.

Imagine an ADW where the players knew that the horsemen and tracks were getting more than anywhere else and the return to the player based on his wager was more also. ….”

While I agree with the first sentence, it isn’t clear to me that all such players would benefit to the same extent from a player-owned ADW where return RATE is based on wager VOLUME; a strategy which I believe is implied in the second sentence above.

Increasing rebate rate with increased wager volume is a device employed by third-party bet-takers as an incentive for their patrons to bet more and thereby increase the bet-taker’s profits. Several player-owned ADWs already exist for the benefit of their limited high-volume player-owners, but a truly cooperative, widely-participating-player-owned, not-for-profit ADW should exist for the express purpose of imposing the LOWEST POSSIBLE effective takeout rate on ALL THEIR PATRONS.

Mr. Roark also wrote, “The main argument I have heard against forming a not-for-profit ADW is that track operators such as Churchill and Magna will refuse to let that ADW have signals because it will be competing with their ADW’s. My response to them has been that there is a Federal law which would prohibit Magna or Churchill from refusing to send a signal to such an ADW. In 1936, the federal government passed the Robinson-Patton Act. This is antitrust legislation that prohibits price discrimination by a seller where the affect is to injure the competition. If we build an ADW that is willing to pay the same or more to a host track and horsemen’s group than they are getting from anyone else, and our site has been vetted as being legitimate, then litigation would ensue if a horsemen or track refused to give signals to this site.”

That may be correct, but it is my understanding that -- at least until a month or so ago -- an apparently legal and TRPB-vetted, for-profit ADW acceptable to both Keeneland and the Breeders’ Cup, was denied regular access to California’s thoroughbred venues and to TrackNet’s venues outside of California by the industry powers that be. Why couldn’t/wouldn’t that ADW have invoked Robinson-Patton? Is the cost of litigation too prohibitive to be practical?

Suppose HANA were to create an ADW such as Mr. Roark describes, but with common and equal benefits to all players who wish to buy stock in such a venture? Further suppose such a project could harness the talents and charisma of a uniquely qualified horseplayer, well-respected for his extensive knowledge of ADW operations? In a single stroke, HANA could accomplish its stated mission as well as achieve many of its secondary objectives.

A HANA-operated, member-owned, not-for-profit ADW could finally establish its owner-participants as industry stakeholders; creating a powerful, unified voice for horseplayers while growing handle through lower takeout and increased participation. That voice could now be funded adequately, with corporate officials elected – and their compensation approved -- by stockholders. It's worth noting that the various horsemen groups established to negotiate signal pricing appear to provide equal benefits to all their members who still have to be able to compete successfully to actually realize them.

Reducing the cost of wagering only for selected individuals through discounts proportional to their wagering volume gives them each an unfair advantage over their unrebated competition because the effective return on the former's wagered dollar is increased. In some cases that creates opportunities for profit not possible without rebates. In others, rebated players are able to effectively play additional exotic wager combinations at no additional cost? How can this disparity be defended?

This practice has enabled an elite minority of professional bettors to collectively exploit the vast majority of players who bet primarily for entertainment. The playing field is definitely NOT level, and I believe that increasing awareness of this inequity is the main reason new players aren’t replacing those who left the game. One has to wonder what would make these "investors" willingly abandon their advantage?

Hopefully this obstacle to horseplayer solidarity could evaporate with solid support for a true ADW co-op with a reasonable buy-in figure. In some ways this approach exemplifies an “if you can’t beat ‘em, join ‘em” solution, but it’s more reasonable to expect the industry to embrace stockholders as potential stakeholders than accept adversarial demands regardless of how effectively presented. Another consideration is how a one-player/owner, one-vote system could be implemented and preserved with the original premise protected over time and expansion. Hopefully other interested parties can expand on this opinion in comments or blog pieces to which all HANA members have direct access.

Indulto is the nom de plume of a California horseplayer and contributor to several racing-related websites.

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