PlayersBoycott

Alert!

Monday, July 11, 2011

THE IMPORTANCE OF A COMPETITIVE MARKETPLACE FOR ADWs

The 2011 HANA Track Ratings have been out a little less than a week.

The amount of effort that went into producing this year’s version of our track ratings was considerable. Before going any further I would like to say a big THANK YOU to Bill Weaver for his tireless efforts in making the HANA Track Ratings what they are:

A one stop resource on the web where players can go to get information on takeout, wagering menu, field size, and pool size for every thoroughbred track in North America.

We’ve received quite a bit of feedback - most of it positive – and yes, some of it negative.

Reading comments about our track ratings from around the web, I came across one comment in particular (posted by “Rewards” at The Paulick Report) that makes a very important point.

I thought enough of the point expressed by Rewards that I emailed Ray Paulick and asked for (and received) his permission to quote Paulick Report site content as part of this article for the HANA Blog.

Here is specific text from the comment as posted by Rewards on The Paulick Report:

CD as # 2. If distribution is so important how does CD rank # 2? Despite the Department of Justice's effort to break up the old company that sold signal on behalf of CD (I believe it was call Track Net or something like that) they still are carrying on for CD. CD controls the signals for several CDI and NON CDI tracks including Oaklawn (another top 10 HANA track) and CD refuses to wide distribution of those signals because they do not want it to affect Twinspires. Sound business? Maybe, maybe not. Good for the game? No way! Good for the players? NOT EVEN CLOSE!!!

If HANA is representing players then despite the takeout and other factors, if a track or company is withholding signals they should be severely penalized and put at the bottom of the list along with all the track they represent - Flat Simple as that!

Leaders of HANA need to wake up to that or step down and put someone in there that recognizes the important of product distribution for not only the good of the player but the survival of the game!


Rewards, I agree with you.

One of the things HANA has advocated right from day one is tracks and horsemen not withholding track signals from licensed ADWs.

We at HANA believe that best industry practice involves ALL track signals being made available to ALL licensed ADWs who want them. This helps foster the type of competitive marketplace so vital to the health of every industry you can name - including horse racing.

We at HANA want to see racing achieve a true competitive marketplace because only a competitive marketplace creates the conditions that drive businesses to compete and innovate to earn market share. We see a true competitive marketplace as racing’s best (perhaps only) chance to survive and (dare I say) flourish.

Within the ADW market space, a true competitive marketplace would produce innovations such as:

1. Free past performances.

2. High quality streaming video.

3. Handicapping Contests.

4. Lower effective takeout (Rebates.)

5. Wagering Interfaces that offer: improvements in reliability and stability, an intuitive look and feel, facilitation rather than hindering ticket construction, conditional wagering, wager submission via text file upload, and wager submission via smart phone app.

6. Robust online reporting of account wagering history.

7. Choices among competitors.

The last item on the above list is a crucial indicator of a true competitive marketplace. In a healthy marketplace, the customer spends his or her money with those businesses doing the best job of satisfying customer needs and wants.

Sadly, for many of racing's customers - the last item on the above list is the one item most noticeably missing from the ADW market space.

At best, the customer spending his or her handle dollars in today’s ADW market space quickly discovers that his or her choices are limited.

At worst, to many customers spending their hard earned handle dollars in today’s ADW market space, the landscape looks more like a monopoly than it does a competitive marketplace.

A monopoly is the opposite of a competitive marketplace. With a monopoly things like competition and innovation for customer business simply do not happen.

We at HANA see horse racing as an industry that is constantly pushing for quasi monopoly practices almost everywhere.

Consider, for example, source market fees.

In California, the TOC (Thoroughbred Owners of California) lobbied the California Legislature to write source market fee into state law. The impetus for doing so was in the name of bolstering purses. But the TOC sponsored ADW Retention Cap Law is not without negative consequences. This law drives up the wholesale cost of a bet to the point to where ADWs can't afford (margin-wise) to rebate anything back to the customer. Because of this, instead of bolstering purses, the real effect of this law has been to enrich non pari-mutuel sportsbooks over the years by driving hundreds of millions in handle dollars offshore (the only place California’s price sensitive bettors can get rebates.) 

Further, the source market fee is so high that ADWs have little or no financial incentive whatsoever to compete for, innovate, and market to non rebated California residents. As a result, things like competition and innovation do not happen - at least not for ADW customers unfortunate enough to be living in California - and racing suffers as a result.

Horsemen in other states (Virginia, Washington, New Jersey, and Arizona) have pushed through similar laws.

Sometimes enacting state law in the attempt to keep a monopoly going really backfires.

Take the case where a measure backed by tracks and horsemen that became state law in Arizona in 2007 actually made betting a horse race online or by telephone a felony.

Instead of driving Arizona horseplayers to the track, the new law caused players in numbers to abandon racing altogether. (Ask me how I know.)

Two years ago I attended a series of meetings in Phoenix that saw Yavapai Downs, The AZ HBPA, and the AZ Dept of Racing trying to get the law changed once they realized how AZ bettors were reacting to it.

Management from Yavapai was willing to move in a different direction and wrote a proposal that would have enabled them to operate an ADW jointly with their horsemen. This new measure to bring ADW wagering to AZ was jointly backed by Yavapai Downs, their horsemen, and the AZ Dept. of Racing. Sadly, the Governor’s Office and the Attorney General’s Office quashed the idea. 

Fast forward less than two years and Yavapai Downs is no longer open for business.

Connect the dots.

Like I said earlier, a competitive marketplace is vital to the health of EVERY industry - horse racing is no exception.

I agree with points made by "Rewards" in his comment about our track ratings.

If HANA truly wants to represent horseplayers, then we at HANA absolutely MUST do a better job of raising awareness about the role track signal distribution plays in creating a healthy and competitive marketplace.

One way to do that would be to make sure signal distribution score plays a more significant role in determining how a track ranks when we publish our 2012 HANA Track Ratings next year.

Another way to do that would be to point out the worst offenders.

From our 2011 HANA Track Ratings, the following tracks, listed in alphabetical order, each scored an "E" in the area of Signal Distribution - the lowest possible score on our scale: Arlington, Calder, Fairgrounds, Golden Gate, Gulfstream, Hoosier, Laurel, Lone Star, Oaklawn, Pimlico, Portland Meadows, Remington, and Santa Anita.

Q. What do all of these tracks have in common?

A. All of these tracks formerly contracted with Tracknet to distribute their track signals.

Did the Justice Department play a role when CDI/Twinspires announced the disbanding of TrackNet last year right before their YouBet acquisition was finalized (as the poster named "Rewards" alleges?)

One thing seems clear. The disbanding of TrackNet has not resulted in these track signals becoming widely available to all licensed ADWs who want to offer them to racing's customers.

I interviewed sources close to the ADW market space in an effort to find out why. 

What I was told confirms the comment posted by "Rewards" on The Paulick Report that I quoted above. 

ADWs willing to pay the going rate for these track signals are finding it extremely difficult to contract for them. 

Further, sources that I spoke with allege that this withholding of track signals is a conscious decision on the part of those representing the tracks themselves.

Sadly, that state of affairs signals the exact opposite of the type of competitive marketplace that we at HANA believe is vital to racing's long term financial health.


Jeff Platt
President, HANA

6 comments:

Anonymous said...

Well, you clowns, why no gloating and moaning on and on about the figures from the recently concluded Hollywood Park meeting?

Purses at Del Mar up TWENTY percent, and your so-called boycott seems to be falling flat on its ass yet again.

When you fools figure out that your imperceptible moans will never be heard unless you start backing the tracks which offer desirable take-out numbers, that may be the day when HANA rides high in the saddle.

Until then your collective waste of space is just additional idiocy sitting in the way of any remaining chance racing has.

You boys are good for amusement now and then.

Anonymous said...

Someone from the TOC learned to comment on a blog. Well done HANA.

Phil

Anonymous said...

Wow... Thanks for that.

Kind of refreshing to be reminded what many of those working in this industry really think of the customer.

Cangamble said...

There was less racing, handle was off by close to 10% in total compared to last year (sure the daily handle was off less, but when adding Hollywood handle to the national figures, there was a lot less money bet by Horseplayers on their product compared to last year.
Take away the Pick 5 (which was a suggestion from HANA reps and members), and handle would have been off even more.
HANA pretty much bailed out Hollywood, though, I believe that the purses were artificially inflated and not a complete result of the new deal. Of course, the powers that be won't let anyone in on that.

Anonymous said...

(sigh) ... and then there is Cangrumble:

He believes that Hollywood purses wouldn't have been zero for every race at the meet had the 2011 takeout increase not taken effect.

No wonder he is lurking in the hallowed halls of HANA. More complete brilliance from a body that calls itself an organization.

A prerequisite to an organization is 'organization'. With such, HANA would be pounding away at the 12% pick-3's at Sam Houston, and would be wailing away at the Hialeah pools every year. TVG offered a 0% takeout effect on the Portland Meadows pick-4 last fall and hardly anybody played it. That's HANA's organization.

The Pick 5's handle influence had nothing to do with HANA (remember, HANA is still boycotting California wagering to a man). The Pick 5 having been embraced by the California tracks' wagering public in 2011 is akin to how the bettors would have reacted to the same thing had it been introduced at Centennial Park in 1979.

Introduce a 25-cent daily double during harsh economic times to a track whose minimum bet had previously been four times that amount, and see what happens anywhere.

Why I'll bet the 20-cent pick-3's in Can Gamble's little leagues are just as popular relative to the size of the respective pools and population.

When you people begin to understand that you collectively comprise more of the problem, than of any sort of solution, only then can racing worry about what and who matters.

Anonymous said...

Apparently, track management sees HANA as part of the solution (not part of the problem.)

Based on improved handle that came about by implementing player suggestions like the reduced takeout Pick 5 and seeding the Pick 6, track management from Santa Anita, Hollywood Park, Golden Gate Fields, and Del Mar are now jointly asking the TOC for lower takeout rates.

North County Times story:
http://www.nctimes.com/sports/equestrian/racing/article_09c452c7-0e7d-533e-b631-5a08d62ce885.html

DRF.com story:
http://www.drf.com/news/california-tracks-look-reduce-takeout-doubles-exactas

Copy of the letter "leaked" to HANA and PlayersBoycott.org:
http://www.playersboycott.org/Ltr_to_Bd._of_Dir._TOC_7-26-11.pdf

Interesting no?