Has the Time Come?

If you walk into a store to buy a loaf of bread, and notice that the bread is stale and overpriced, you put it down and you walk out of the store.

Thousands of racing customers have been doing just that for the better part of a decade now. If you take all sources handle as it existed in 2003 and adjust it for inflation, and you compare it to all sources handle today in 2010, you will discover that all sources handle today in 2010 is approximately one half of what it was just seven years ago in 2003.

Consider the real life case where instead of walking out of the store, a group of conscientious racing customers took the time to contact the owners of the store and explain to them in a reasonable and intelligent manner why thousands of racing customers have been buying their bread somewhere else.

Instead of listening to the customer group’s suggestions, the owners of the store decided to implement a takeout increase at one of their stores: Los Alamitos.

Oddly enough, this same group of racing customers presented data to the CHRB clearly showing that year over year on track handle at Los Alamitos was down more than 27 percent during the six month period immediately following that takeout increase.

Instead of rescinding the takeout increase (as had been promised at the time it was implemented if it caused handle to drop) the CHRB voted unanimously to keep it in force – effectively telling racing customers everywhere what they could do with their ideas about fresh bread at competitive prices.

Shortly afterwards, the owners of the store lobbied the California Legislature to amend an innocuous bill originally written to promote the Breeder’s Cup. They were able to convince John A. Perez (D) to tack on provisions mandating a takeout increase of up to 15% over previous levels for exotic wagers at California's thoroughbred tracks. Takeout on exactas and daily doubles was raised to 22.68%. Takeout on all other exotic wagers was raised to 23.68%.

The above events actually took place during 2010.

Who are the owners of the store?

Hollywood Park, Del Mar Thoroughbred Club, Santa Anita, Golden Gate Fields, Los Alamitos, the Thoroughbred Owners of California (TOC), and the California Horse Racing Board (CHRB).

Who is the customer group?

HANA.

The state law?

At the September, 2010 CHRB meeting, when it was announced that Senate Bill 1072 had been signed into law by the Governor: The owners of the store stood up and cheered.

At some point, as a consumer, you have to consider the possibility that the owners of the store no longer deserve your business.

That’s exactly where horseplayers are at right now given the recent actions of the store owners in California.

You do not raise prices in the face of economic downturn. You lower them.

The store owners in other states are watching. It’s time for players everywhere to send a clear message back to the store owners. It’s time for players to start speaking with their wallets.

To me, the fact that other states still have takeout even higher than California’s new 23.68 percent takeout on trifectas is irrelevant. California is where the store owners decided to raise takeout over the objections of the players. California is where the CHRB ignored the facts related to the Los Al takeout increase. California is where the track owners, the TOC, and the head of the CHRB lobbied the Legislature for a takeout increase. California is where the Legislature ignored the voice of the player and passed that takeout increase. California is where the Governor ignored the voice of the player and signed Senate Bill 1072 into law. California is where the owners of the store made comments like the following after they enacted the takeout increase:

CHRB Commissioner David Israel:
Quote:
“People often say we are competing with the casinos. I think that’s shortsighted and wrong. We’re not competing with casinos. We’re in the entertainment business. We’re competing with the Dodgers and the Giants and the Angels and the Lakers and we’re putting on a show..."


CHRB Commissioner Keith Brackpool:
Quote:
"We offer in California the premier racing product on a year-round basis,” he said, “but we were offering our first-class product at a discount price. We’re changing the pricing model. We left win-place-show where it is. But we came up with a solution that will produce $30 million more a year. That’s a 25-to-30% increase in overnight purses."


I hate to use the word boycott, but in my opinion the owners of the store in California clearly no longer deserve even one penny of my business.

I have to put the question out there to other players:

Has the time come for an organized national players’ boycott of California racing?

Jeff Platt
President, HANA

Press Release: HANA Supports Racing Development Plan

Horseplayers Association of North America Offers Support for the Racing Development and Sustainability Plan

FOR IMMEDIATE RELEASE

(September 26, 2010, Charlottesville, VA) The Horseplayers Association of North America (HANA) would like to endorse and offer its full support for Ontario harness racing’s “Racing Development and Sustainability Plan”.

This ground-breaking plan, proposed by forward-thinking horse owners in the Canadian province of Ontario, allows for a slice of purse money (primarily from slot machines) to be used to promote racing through several potential customer-focused initiatives, including:

* Seeded Pools/Jackpot Bets (e.g. lower effective takeout)
* Exchange Wagering
* Handicapping Leagues and Championships with Larger Prizes
* Customer retention techniques and promotion

When slots were initially passed in many jurisdictions, racing was given a warning that handle on their core product would fall due to the presence of an attractive lower takeout competing product on premises. As more and more racino’s emerged (using essentially the exact same business model), horseplayers and industry watchers have urged racing to give a portion of slot money back to the customer, not only to directly address their needs and wants, but more importantly to keep horse racing betting on sound economic footing. Until now this advice has been largely ignored. In just eight short years handle on Canadian harness racing has fallen from $719M to $431M. Conversely, since slots were introduced in Ontario in 1999, almost $2B has been distributed in purses.

“Our members have been calling for tracks and horse owners to do more on the consumer demand side using slot/VLT revenue for some time now. We are extremely encouraged and thankful that Ontario horse owners are stepping up to the plate by looking to cultivate their customer base - both the existing ones and the ones who have left - with some of their slot money” said HANA President Jeff Platt.

“Answering a customer’s needs and wants is not a radical idea, it is good business. We feel if Standardbred Canada uses achievable means to lower takeout, seed pools and offer customers a reason to play your product and attend your racetracks, you will win in the long run. We would love to work with horse owners in Ontario in any possible way we can once this new plan is enacted.”

Barry Meadow is a member of the HANA Advisory Board and is a long time bettor and author of Success At The Harness Races and Professional Harness Betting. He echoes Jeff's thoughts. "It's good to see an initiative that takes the most important part of any business--the customer--into account. Anything that makes a bettor want to bet more, or more often, will help the industry."

If passed, the new Ontario Plan is slated to go into effect on January 1st, 2011. HANA will be keeping all of our members updated on its progress.

If you would like to comment on their plan or learn more, please visit www.standardbredcanada.ca.

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, wagering integrity, affordable data and customer appreciation, the industry’s handle losses can be reversed. HANA is currently made up of over 1700 horseplayers (both harness and thoroughbred) from almost all states and Canadian provinces. It currently represents over $75,000,000 of yearly racing handle.

Our web address is http://www.horseplayersassociation.org 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, appreciate, and ask humbly for your support.

Note: A special thanks to members (you know who you are) who were focused on slot programs being used for a better means for our sport.

Further Evidence We Need Gambling People in Power

CHRB Vice-Chair David Israel:

"Vice Chairman Israel said regarding the takeout increase and the issue of price, “People often say we are competing with the casinos. I think that’s shortsighted and wrong. We’re not competing with casinos. We’re in the entertainment business. We’re competing with the Dodgers and the Giants and the Angels and the Lakers and we’re putting on a show."

Meanwhile - back in reality:

Pew Research did a survey on the popularity of "sports" and what "fans" like.

Football: 34%
Basketball: 14%
Baseball: 13%

Horse Racing (not enough responses to make a list): 0.13%

It was beaten by Rodeo/Bull Riding.

Thank god we are not competing with the Dodgers and Giants. If we were, purses would be less than a biggie sized Big Mac meal.

Until this industry finds a way to fund purses from sales of TV deals (we pay networks millions to show our races every year, not the other way around), Zenyatta T-shirts or Todd Pletcher jerseys, from 0.13% of sports watchers, we need to cultivate gambling.

Why? Because bettors pay all the bills for purses.

$2B of revenue comes from gamblers for racing. Other revenue sources are non-existent. Trying to squeeze revenue out of a place there is none, is akin to promoting a Justin Bieber concert in an old age home.

As Gibson Carothers said in his Eclipse Award considered piece, warning racing that they have to concentrate on their real market (gamblers) to grow the sport:

“It’s amazing how many advertisers confuse their real market with the market they would like to have. In all my years in advertising, I can’t recall a client [racing] who was so conflicted about its own product.”

This is alive and well in California and the CHRB, Mr. Carothers.

Note, at the same meeting, the CHRB gives us another head scratcher:

· The racing commissioners voted unanimously to “have the will of the Board conveyed to the Governor’s Office that California Horse Racing Board critical contractors (i.e. stewards, veterinarians and other contract personnel) receive compensation for services rendered from monies received from the wagering public to ensure the continuation of horse racing in California .” Chairman Brackpool explained that even though CHRB operations are funded by the industry, not the State General Fund, CHRB contractors have been ordered included in the general non-payment order for contractors during the budget impasse. CHRB Executive Director Kirk Breed was instructed to convey to the Administration the Board’s desire to pay its contractors immediately.

Comment (from Rich at Paceadvantage.com): Does this mean that the stewards, vets, etc. work for the horseplayers? If we're paying the bill for them out of our bets the we should have more say about the "who, what, where and when" of their behavior and stop being told to "sit down and shut up" when we raise issues about the same?

Takeout Increase Signed in California

Today the California governor signed the California thoroughbred tracks takeout increase into law.

For exacta players, you are particularly getting a poor deal. The 22.68% takeout is punishing. In fact, California exacta wagers are now the 60th worse value bet for that choice on the entire continent. They just edge out Los Alamitos, who as everyone knows, hiked take this spring (and suffered tremendously).

It will be interesting to see the effects. Handle will go down over time, that is assured. But by how much?

When speaking to our economic adviser here at HANA on takeout, they pointed us to the duration element in terms of analyzing this hike. As we all are well aware, a price increase does not affect demand overnight - it is a slow grind. So, as Tampa Bay Downs, who has lowered takeout since 2001, has grown their business and handles incrementally over time, the opposite happens with a takeout hike.

For example, from Wikipedia:

"Duration: for most goods, the longer a price change holds, the higher the elasticity is likely to be, as more and more consumers find they have the time and inclination to search for substitutes. When fuel prices increase suddenly, for instance, consumers may still fill up their empty tanks in the short run, but when prices remain high over several years, more consumers will reduce their demand for fuel by switching to carpooling or public transportation, investing in vehicles with greater fuel economy or taking other measures."

This economic principle helps explain the slow burn of handle over the last decade (people going slowly broke, searching for other games to gamble etc), as well as explaining how short term reductions never do a lick of good. People do not just leave day one, they simply find they have less money over time, and leave one by one, hurting our growth. Even in Hong Kong, who lowered takeout effectively by 2% in 2006 to try and stem seven straight years of handle losses, the positive metrics (an increase in handle and a 9% increase in purses), were not felt until late in the year.

One might have the opinion that in two or three years, California and the CHRB will be back, asking for another increase, because this one did not do what they wanted it to do (remember, this same jurisdiction raised take only five years ago to "fix problems").

It's what racing does because we have a dearth of leadership and do not manage based on fact, a business case and sound economics, but on emotion, and band-aids. Appeasement and the path of least resistance is not a policy; it is an albatross in an industry devoid of ideas. It will continue to resurface, until we put people in charge who embrace change, respect and a modern vision with regard to their dwindling base of customers.

Pari-Mutuel Puzzles

Speak to most in racing, they will tell you that the tote system is just fine. However, as players, we tend to disagree. Time and time again, it seems we live it, while others speak about it.

We were alerted today to the third at Finger Lakes. At post time, the odds flashed 6-1 on the four horse in the third race, Cat's Playmate. The gate sprung open and Cat's Playmate left with the pack, but stumbled right after the start, unseating the rider.

Over the next half minute, the odds on Cat's Playmate, sans rider, went from 6-1 to 8-1 to 12-1.



Can anyone in racing tell us, when looking at this, that everything in the pari-mutuel system is fine?

When horseplayers ask racing for fixed odds betting, which is available in places like Australia through tote companies and betfair, we are not just whistling dixie. We are asking because our system has a severe problem.

Balmoral Works the Bet. Portland Meadows Pick 4 Goes Low

** Balmoral Park's pick 4 pool goes 6 digits. Portland Meadows approves a new pick 4 with the lowest takeout in North America **

Over the last decade or so, if we've heard it from players once, we've heard it 1000 times.

"Why don't tracks work harder and promote their bets and their pools, if they have something to offer"

The monopoly mentality of racing is hard to shake. For years and years, if a track put on a race, people would come. "People would come" might be mis-phrased. It was more like "people had to come because there was nowhere else to gamble." It is not like that any longer.

As most know, it is extremely difficult to get noticed if you are a smaller venue. And it is an even more difficult task to get takeout lowered industry-wide. What we are left with as players, and with smaller tracks, is smaller pools and or increasing takeout. Often times when a track decreases their takeout, they do it in a small increment, for a short period of time. Understandably, this rarely works. For a takeout decrease of any kind, it must be stuck with and worked. High takeouts have hurt the business since about 1940. It won't be fixed with short-term experiments.

However, one track is proving that taking a shot and working a bet properly, is paying off.

Balmoral Park, a harness track in Illinois, lowered their pick 4 takeout to 15% this year, and they went to work. We at HANA, as well as several groups, get updates on the wager. We get carryover information, and often times get a tip sheet, sent out by the track handicapper. Yesterday we received an email alerting us that the carryover was $19,000. A $19k carryover, and a 15% take is a good bet for players.

In the email, the track said they expected a $60k pool.

They got $104,000.

What makes the number more amazing, is that last year this track averaged about $8000 a pick 4 pool, and nothing near 104K, even when they had a carryover. In fact, the new betting last night (at 15% take), almost paid for the purses of the 4 race sequence (purses averaged about $3200 a race).

I watched the coverage of the pick 4 (and bet into it too). On screen they pushed it, letting people know the pool size, talking about the bet and updating players. Players want to bet into a good pool and a good low take bet, and they want to follow it. Sometimes you just have to ask.

This season, the wager is blowing away last seasons' numbers. It gives a small track hope and of course, for players, it gives them a worthwhile bet to follow. Why this was not done when slots came in at all venues (using some slot money to grow handles as well as fatten the coffers) is beyond us, but we see more and more tracks doing it - ironically, many tracks which do not even have slots.



Portland Meadows, it was announced Friday, has joined the brigade.

They are offering a new pick 4 at a 14% takeout - the lowest pick four takeout in North America!

The meet opens October 4th. The new low take goes into effect that day.

Retama and their low take pick 3 (the pools there are growing a little bit which is great to see), Balmoral Park's pick 4, and now Portland Meadows. A few tracks are trying, and players are paying attention.

This will not shake the foundations of racing, nor will it "save it". But one thing is for sure - some tracks trying to get players back by offering what rebate shops and offshore betting establishments have excelled with for years (lower pricing for all), is a step in the right direction.

Eng: "NYRA is Poised to Crush" & More

Rich Eng is back at it in the Las Vegas Review Journal, speaking about racing in the Golden state. He believes "the numbers are a lie" and that NYRA is ready (with slots and better take) to crush California.

Rich does not mince words. He is a gambler, and he knows gambling. He even puts forth the argument that we put forth here in February, about the change in blackjack rules, that are currently hurting Vegas casinos.



Fantastic interview here with Jason Settlemoir, VP of Tioga and Vernon, on their last meet. They lowered takeout and players responded. He is trying to get horse racing takeout on par with slot takeout (9%) to help grow the sport. He has some great opinions on growing he sport and including the customer in its growth. It was a great listen and we wholeheartedly recommend listening (and commenting there if you'd like to show support) whether you are a HANA member who follows the hoppled hooves of that sport, or not.

Who's Taking Care of Horse Racing?

Currently the horse racing industry holds a virtual monopoly on online gaming. As stated by many business analysts and gambling experts, this should be a perfect time for us in racing. With technology allowing for a full-frontal assault on pricing and availability through economies of scale, as we have seen in many other industries, trying to maximize our online slice, through innovation and cutting pricing should be at the top of the list. However, instead we seem to twiddle our thumbs and try and put square pegs (high pricing, fighting over more of a shrinking pie, signal restriction and signal fee hikes, state by state regulations, infighting etc) into round holes (a competitive market).

Never is this more apparent to us as players than in the following. This shows the lobbying money spent in Q2 in the US.

The leader, Harrah's, is spending money on trying to get online gaming passed; a threat to horse racings slice of the online market.

"Internet gambling supporters spent the most to influence policy during the quarter, accounting for an estimated $3.37 million, or 80.1 percent of total spend. "

And this includes some heavy hitters.

"Significantly, a number of Las Vegas operators and federally recognized Indian tribes began reporting lobbying expenses for Internet gambling – including Boyd Gaming Corporation and the Morongo Band of Mission Indians – indicating increased interest in the issue among the United States’ top brick-and-mortar businesses."

As other gambling enterprises are spending money and time to attack our monopoly, we seem to be more concentrated on stopping innovation and raising takeout (see California), making our business even less competitive for the cutthroat future.

This is looking more and more like the mortgage bubble for racing. Our business and current business model of high prices and signal fee restriction is unsustainable. And if online gaming is passed, it would even be worse - much worse. But it appears no one is home.

Who is minding the store? Who is fighting for racing?

Trackmaster Wins Pen & Micro-Chip Challenge

At the beginning of the Tioga Downs harness meet, where they reduced takeout to state law mins, HANA, Paceadvantage.com and a few harness players got together and created a new contest for their meet - the Pen and Micro-Chip challenge.

The challenge was pretty simple: get two computer picks programs and pit them against two very good human handicappers. Trackmaster offered their Chatsworth Consortium picks out for a computer challenger. Ray Schell offered his program (Rays Robot) out for a test spin and two human cappers with decades upon decades of experience - Mel and Bobby Z - would take the banner for the pen and paper crew.

These challengers diligently did their work, playing the entire meet. And boy, did they do well.

In the end, Trackmaster's entry won, with a whopping 16% ROI. Coming second was Bobby Z with a 4% ROI, third was Mel, with a very respectable -5% ROI and Ray's Robot ("I think windows 7 screwed him up") still beating the take with a -9%.

This is amazing; players and computer programs picking every race and showing profit as we all know, is extremely difficult. Yet, there were two of the four over the waters edge, and the two who did not make it, were close.

Overall the computers won the challenge by 5%.

Trackmaster will be contacted to see where they want the winnings donated.

On the side contest run by Ray at Paceadvantage, we found out one thing - there are some sharp players on that board. A couple had an exacta profit, and one poster "Mirror Image" won the side prize with a 14% win ROI. Outstanding!

Tioga's takeout reduction for this meet appears to have bucked the handle trend in NA. It looks like it might even be up, which is hard to do in harness this season. For players, it supplied them with some interesting racing, and fuller fields. Jason and the crew at Tioga are to be commended for trying. It caught our eye, and later on it even caught the eye of Bill Finley at ESPN, who wrote a national piece on this little track; a track that tries.

We'd like to thank everyone for participating in the contest on Pacedavantage.com, and we'd like to congratulate the winners.

A special thanks goes out to Trackmasters President Dave Siegal, Ray, Mel and Bobby at Pace for taking time out of their day to post picks, every day.

Ray, who ran the contests, worked tirelessly on them, and on behalf of HANA: Thank you so much Ray.

Final overall players and standings below (challenge players and the four protagonists all together). Please click to enlarge.

Understanding Signal Fees

While the nuances of signal fees may be something many are unaware of, it is an issue that impacts all horseplayers. HANA feels that education is one of the key components in helping horseplayers make the most important decisions for their long-term bottom line. The following is part of a continuing series highlighting the various issues that affect horseplayers.

A Signal Fee is the percentage of every dollar of gross handle that is owed to the host track (the track where the race is run) by the ADW or simulcast facility for the right to wager on that track's races. Signal fee rates can vary quite dramatically amongst tracks ranging from 2-9%. Unfortunately for horseplayers, signal fees have been facing upward pressure the past few years which in turn puts downward pressure on the level of player benefits a horseplayer can receive. Often times when there is a break in the availability of a track's signal to customers of a particular ADW or track consortium, it is due to a disagreement over signal fees. Since one of the rare growth areas in horse racing is the ADW market, signal fees have become more important and an increasing important point of contention. ADWs currently account for approximately 25% of handle in the United States and Canada and that figure continues to increase.

How does the level of signal fees a track levies against an ADW affect a horseplayer (aka the ADW customer)? If a track charges a reasonable signal fee, it allows an ADW greater flexibility in providing benefits to its customers through rebates/player rewards, as well as helping to provide the necessary capital to help fund technological innovations to their ADW platform which provides an improved customer experience. In addition, the bulk of advertising in racing is by ADWs advertising their companies to an internet savvy customer. While a low signal fee helps promote growth in handle through player benefits/innovations, a high signal fee has the exact opposite effect, stymieing player returns and technological innovation. The above reasons is why there has been a shift in strength from higher signal fee tracks to lower signal fee tracks. And of course, the higher a signal fee is, the less likely it is that takeout for the track will be reduced.

The most recent signal fees controversy arose from the Illinois Racing Board's decision to install a 5% cap on advance deposit wagering fees charged by out-of-state racetracks to send their signals to customers in Illinois. The cap lead to cutoffs of tracks such popular summer tracks as Del Mar, Saratoga and Calder which typically have a 8-9% signal fee associated with them. The cutoff of out of state tracks which failed to comply with the 5% signal cap led to a severe decline in wagering for Illinois ADW customers with handle plunging 47% after the cap was instituted on July 12. In response to the plunge in handle, the IRB just raised its cap to 9% to allow wagering on the cut-off tracks to continue.

On a separate note regarding signal fees, open access is in the best interest of both the tracks and horseplayers versus the contractionary mindset of limiting a tracks signal to a certain number of ADWs. It is a very basic tenet of business that making your product as available and easily accessible as possible (not to mention at a reasonable rate) is the best way to expand your business and increase revenue. Expecting your customer base to jump through hoops to get your product is not a good business practice in terms of long term profitability. It goes without saying that a horseplayer should not have to maintain multiple ADW accounts in order to give racing their money.

Plonk Lets His Thoughts Be Known

Many horseplayers have said that they should not be the one who should pay for racings never-ending mistakes, through takeout hikes and all the rest. Jeremy Plonk on ESPN.com thinks so, and says so publicly.

"But don't insult me with another tax hike that makes the game even less attractive. I'm not an addict, and neither are the vast, vast majority of other horseplayers. We don't need to wager seriously on the game if we have absolutely no chance to win.

What this bill essentially says should be of no surprise to anyone who has watched the national news in the past several years. Now, more than ever, it's the consumers' responsibility to prop up horse owners who have overspent on their operations and have forgotten that racing a horse once was a privilege and sport, but now has become a painful ink stain on a spreadsheet to too many. It wasn't horseplayers who drove up the yearling prices, or who decided that because a drugged-up 2-year-old worked in 11 seconds at an auction preview, that he or she suddenly became worth $140,000 when the same horse should have sold for $20,000 based on pedigree. "

Many horse owners believe the same thing. A lot of this business's problems are on the supply (i.e. horse ownership) side, because of increases in costs, and other factors, that have nothing to do with the takeout. Using takeout to address problems, does not fix the supply side and cost problems, it only delays them for another day. Which is why in 1908, takeout was 5% and it has grown to almost one quarter of the betting pools, and we have more problems than ever.

Even if that does not register with people let us ask: If raising the takeout is the answer, why don't they raise it to 80% and fix everything?

Much more at link.