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Sunday, January 30, 2011

Boycott Q & A With HANA President Jeff Platt

HANAblog contacted President Jeff Platt to get some information and perspective on what is happening with the California National Players Boycott. How are things going? How did this past week’s meetings go with various players in California? Find out below.

HANABlog: How are things progressing with the National Players Boycott of California Racing?

Jeff: News about the boycott is spreading by word of mouth. Every day more and more players are telling us they support the boycott.

HANABlog: Do you think the boycott is having an impact?

Jeff: Yes. Players are speaking with their wallets. Their willingness to stand up for what they believe in is absolutely showing itself in the handle numbers.

This past Friday, handle at Santa Anita was down almost 30 percent from Friday the same week in January last year. Handle for Saturday was down about 23 percent from Saturday the same week in January last year. Today’s (Sunday) handle vs. Sunday from the same week in January last year was down almost 27 percent.

I’m not saying the boycott is responsible for all of that, of course. But those numbers are telling.

HANABlog: You and other HANA members had meetings with California track management last week. What happened? Can you share some details?

Jeff: Sure. Upper management from Santa Anita invited HANA to a meeting that was held at Santa Anita on Sunday January 23, 2011. A representative from the TOC (Thoroughbred Owners of California) was there too.

I thought the meeting was productive overall. We talked about field size, the takeout increase, and the ADW retention cap. We also talked about the importance of having people who are qualified to make decisions about takeout and wagering be the ones making decisions about takeout and wagering going forward. I think they were listening very closely when Associate Professor of Economics at USC and Director of Southern California Horse Rescue Caroline Betts started speaking about the literature and case history that’s out there about things like takeout, elasticity, and optimal pricing. They have been studied extensively in the past, and that study could even progress more. She let them know how they might obtain research grants to fund research of their own in those areas.

We also got to know each other a little bit, which is always good. I think upper management at Santa Anita now has a better appreciation for how players are impacted by high takeout than they did before. Also, we came away with a better understanding of how the takeout increase is impacting Santa Anita.

HANABlog:  Can you elaborate on that before and after statement? And was there another meeting this week in San Diego?

Jeff:  Sure. Prior to the start of the meet, Santa Anita announced a 25 percent purse increase based on the idea that handle would be unaffected by a takeout increase. The thinking was that handle would remain the same, or maybe go up because of the return to dirt.  That didn’t happen. Handle at both Santa Anita and Golden Gate is down. At the same time, handle at other tracks like Gulfstream and Tampa Bay Downs is up.  We think that is something they did not factor into the mix.

On Monday January 24, 2011, representatives from HANA also met with upper management from Del Mar. That meeting was more informal than the meeting with Santa Anita. But I suspect Del Mar doesn’t want to end up in the same box Santa Anita finds itself in.


HANABlog:  What type of box is that?

Jeff:  Well,  Santa Anita is shelling out money for a purse increase based on the idea that handle would stay the same or even go up a little as I mentioned. But handle is down. I think the numbers from this past weekend, if accurate, are telling and might be putting them in a box. If they announce a purse cut, that’s an admission the takeout increase was a failure. On the other hand, if they quietly keep paying out money for a purse increase and handle keeps falling, well, that can get expensive.

HANABlog: What has to happen before they are willing to rescind the takeout increase in your view?

Jeff: That’s a really interesting question.

The takeout increase was a really bad idea. But I don’t think the idea for California’s takeout increase came from the tracks. I think it came from the TOC. Sure, once the idea for a takeout increase was floated out there the tracks got behind it.

So yes, in that sense, if customers react negatively to that, the tracks deserve whatever they get.

However, I think there might be at least partial support at this point within track management to rescind the takeout increase. I say that because they reached out to us. They are looking for solutions.

But the tracks can’t roll back the takeout increase on their own. California State Law gives power to the CHRB to set takeout rates. My read on the CHRB is that the tracks and the horsemen will have to go in front of the CHRB jointly and ask to have the takeout increase rescinded. If that were to happen, I think there’s a very good chance the CHRB would vote to rescind the takeout increase. But the tracks need support from the TOC first before that can happen. I’m not sure the TOC is willing to do that just yet.

HANABlog: What can players do to help who are already not withholding their wagering?

Jeff: Support the boycott. Send a clear message by not betting California thoroughbred races. Also, tell other players about the boycott.

I really think the TOC and the CHRB thought players would behave like sheep and just go along with the takeout increase. Clearly that isn’t the case.

The boycott is making an impact. It’s shining a very public spotlight on racing's decision makers who failed to realize that racing is a customer driven business. The takeout increase was and continues to be a very bad idea. I feel we’re getting closer. If enough players stop betting California races the TOC will have no choice but to go before the CHRB, and jointly with the tracks, ask to have the takeout increase rescinded.


HANAblog: What’s next?

Jeff: The ball is in their court. We are just going to continue to work, move ahead with more paid marketing, and relay the message to those who have not already heard about the effort.

HANAblog: Thanks Jeff.

Jeff: You're welcome.

John Doyle Wins NHC

Photo courtesy the NTRA Facebook page
John Doyle wins the NHC, and the big check, which is really a big check. Congratulations John!

Charlie Davis, a HANA board member, took his shot at the NHC prize this week too (he did great, finishing 33rd). He spoke with John both before and after the competition and found him a great guy. John offered up he was a HANA member and Charlie asked if we might mention that on the blog. He said "sure, and you can tell everyone I use your track ratings spreadsheet all the time too!"

Since we don't have much of a budget, it's nice to get an NHC champ to mention you, even on the blog :)

Charlie was pretty impressed with John's skill . In responding to a comment on a chat board about contests like this being luck, he said:

"I'll tell you what. John was not throwing darts. I spent a lot of time with him this weekend and he did his homework. He watched replays of every horse in the races he was playing, and was able to do things like identify a horse with the chart comment of "tired".  He's an excellent handicapper."

Charlie should have a write up soon here. He thoroughly enjoyed himself. He thought Steve Crist and Alex Waldrop's speeches were terrific and thanked them for being a part of this great weekend. It looks like the purse for next year might be up again, with a long-term vision of growing even more. That is great news for horseplayers, whether you play on the tourney circuit or not.

Congrats again John and if any other members would like to share their experiences at the NHC please do below or via email.

Friday, January 28, 2011

Horseplayers: "Degenerates", "Sheep"? How About "Brainy"?

Dan Needham of "Thorotrends" on his blog today looked at a couple of surveys about horseplayers. He finds the data completely crushes the stereotypes. You are not your average, every day person pulling a slot handle, but you know that already. A snapshot of the Pew Research survey is below.


We commissioned, or more accurately, Dan volunteered his time to help design our HANA Member Survey in 2009. He mentions it in the article and if you wanted to go through it and all 50 questions with responses, you can here.

Please read the full story on Dan's blog.

Thursday, January 27, 2011

Quotables

“We can’t spend our time arguing over who among the tracks and horsemen get what share of the pie,” Waldrop said. “We have to figure out how to serve our customers. They’re the ones that matter.”

More at the DRF about the state of the game including comments from Jeff Platt, HANA President.

HANA Harness Working Group Taking Shape

Last month HANA announced the creation of a working group for harness racing. As you know, we at times have worked at harness issues of a player-centric nature - like we did last year at Tioga Downs with their takeout reduction and handicapping contest. Both sports have similar issues, but there are a great many items in harness that are harness specific, for example:
  • Improving half mile track racing
  • Problems at the Meadowlands
  • Fair Start Rules and Other Rules
  • Distance Racing
  • New Bets that are harness specific
There are many more that I am sure you can think of.

Having a working group looking at these issues and providing feedback and opinion is vitally important. To our knowledge never - not even since Dan Patch - has a group like this ever existed for harness racing. We think it can be a huge help and for those who think tracks and industry people will not listen, we disagree. We have already been contacted by some in the industry for help.We will be surveying the group very soon on many issues.

At the moment we are in its infancy. We have working leadership, led by Allan, and from a few others that have shown interest. We now need you - more critical mass.

Are you a fan of harness racing? Are you a bettor? Do you have an interest about being surveyed about harness racing? Would you like to be involved in working on rule changes or new bets by providing feedback and opinion?

If the answer is yes, please add your name to our list. If you are a HANA member already, email Allan@hanaweb.org and he will add you to the email list. If you are not a member of HANA please join here and mention "harness racing" in the comments field and that will do the trick.

Thanks and we hope to speak with you soon!

The HANA Harness Working Group

Tuesday, January 25, 2011

Quick Points of Order

We saw a piece today on the Paulick Report calling into question Hana and its motives.

We know you as members know this, but from our Mission Statement and organizational integrity that was established in 2008 as well as our status as a non-profit, the following has held firm and will be held firm.

Hana holds its members confidence and trust as inviolate. No Hana member has ever been marketed anything as a result of their membership, by Hana or by any third party. Nor will any Hana member ever be marketed anything by Hana or by any third party as a result of their membership.

The Hana email list of members is private and we have not, and will not disclose any names, or mention any names, unless said person identifies him or herself as a Hana member publicly.

The Hana email list will not be sold, or distributed. It is used to keep you updated on the work you are all doing as volunteers.

Revenue for Hana comes from you, the horseplayer through paypal donations (thank you!). Since incorporation the money spent from your donations has been primarily for marketing or donations to horse retirement farms.

Thanks for reading and keep up the good fight folks. We have plenty more to come this week and are looking forward to it!

Sunday, January 23, 2011

2011: Cautious Optimism From Woodbine Hub

Upwards of $1B in wagering per year comes out of the Woodbine hub; through their teletheater network, telephone betting and Internet betting. Like most of North American racing handles, the trend has not been positive for several years. This season, however, it seems there is some hope. A Canadian HANA member got some information from Woodbine about this years numbers. In addition the most popular signals in the country of Canada are an interesting case study. We detail those below.

So far in 2011, the handle from Woodbine is up about 5%, but WEG's Vice President of Racing cautions that with cancellations and other suspect criteria it makes it difficult to predict the value of the measure.

Some racetracks are rebounding nicely, however.

As of last week Fair Grounds handle is up 25% this season with one more race card. This is a solid rebound and is confirmed nicely with US numbers. Fair Grounds seems to be doing something right this season.

Tampa is the other big winner. Handle is up a very solid 13% from our Canadian friends with no change in dates.

Gulfstream has stayed flat (up on a per day basis, however), but it is pretty popular historically and of special note: The pick six is not available to Canadian customers. The 50 cent pick 5 at the low 15% takeout is also a $1 minimum.

On the down side is Santa Anita, with a 23% drop (down on a per day basis as well). Like US customers, Santa Anita is getting a big thumbs down from our northern neighbors.


In order of popularity here are the top signals from the hub, in terms of wagering volume so far in 2011.

1) Gulfstream Park

2) Aqueduct

3) Santa Anita

4) Tampa Bay Downs

Despite the problems at Santa Anita, the overall 5% hike in handle is hopefully a good sign for racing in 2011. We'll keep watching.

Friday, January 21, 2011

Crist: Bettors Deserve More After Takeout Hike

Today Steve Crist tackled the California issues in an opinion article.

Regardless of whose numbers are right, customers remain angry, and officials aren’t helping things by the way they executed the increase and have defended it. 

It also didn’t help that the two ranking commissioners on the California Horse Racing Board called the old rates “underpriced” and claimed that racing needs to compete with the Lakers and Dodgers, not alternative forms of gambling with lower takeouts.

No one from the tracks or the board has explained the rationale for the nature of the increases or adopted a tone of regret about the supposed necessity of them. Asked for reaction to the situation last week, Santa Anita president George Haines said a committee was being formed to locate and hire an official spokesman on the issue.

Mr. Crist also noted that some folks out there are calling for "8%-12%" as optimal takeout. While those bettors may be correct for the long-term growth of racing (some studies back up those rates), as a point of clarity, the position of Playersboycott.org was released in their press release on  January 12th, 2011:

In addition to demanding an end to the takeout increase, Players Boycott also proposes a new "Gambling Board" to advise the CHRB on all gambling related matters such as new bets, takeout rates, scratch rules, etc. This board would include an economist, a track official, and a player representative. Players Boycott believes that experts should be the ones making gambling-related policy for thoroughbred racing in California.

Players Boycott also urges the CHRB and the TOC to work towards ending California's ADW Retention Cap. This cap has prevented most California players from getting rebates that are available to players outside the state. 


The reasoning for this is twofold: One, rolling back the takeout increase will help handles and start to move in the right direction, and two, with gambling people who are experts in their field we expect sound decisions can be made in the future to help grow wagering. Jeff Platt elaborates on the Gambling Board vision here.

Playersboycott.org believes with that structure in place, perhaps California racing can start to tackle their problems (problems that are certainly not all takeout related) and turn the corner.

No Hurry at the CHRB

Yesterday's CHRB meeting has come and gone. It was nice to see a few people stand up during the public comments section and mention the recent takeout increase and the handle measures that have accompanied it. Trainer Peter Miller's father, a man who has been attending the racetrack almost each day for 40 years, was particularly pointed in his comments. We'll have a full update later.

Ed Zieralski noted that today in his column and stated:

The CHRB continues to draw fire for implementing an increase in the takeout of multihorse wagers such as exactas, trifectas, superfectas and Pick Six in California races. The increased takeout — 2 percent more on two-horse bets and 3 percent more on three horses or more — went into effect Dec. 26. Despite indications that betting handles are suffering, it was clear the board isn’t in any hurry to rescind the increase that was mandated by the state legislature.

Commissioner John Harris relayed that it is not the CHRB's job, it is for others:

“That would have to come from the tracks themselves and from the TOC,” commissioner John Harris said, referring to Thoroughbred Owners of California."

We'll have some numbers and some more commentary this weekend. As well, we plan a Monday feature interview again this week.

Tuesday, January 18, 2011

What is Churn Anyway?

A common used term by any gambler or gambling establishment is “churn”. But what exactly is it and what does it mean?

Churn is simply the times you turn your bankroll over at any gambling game. If you bring $100 to a slot machine at 3% takeout, with a nickel minimum you will churn that hundred dollars many times, and play for a long time. If you bring that same $100 to a $5 machine it will last much less time – you will roll over that bankroll few times and probably leave the casino early.

It is easy to see that at a lower takeout slot machine the player plays much longer and has more fun. Las Vegas casinos try to maximize revenue by balancing the churn with profit. That is how they come up with their “optimal takeout” where they make the most money and keep the most customers happy and coming back.

In horse racing it is not really that different at all, and it is a big part of our enjoyment as players. 

Kenny Mayne in an ESPN piece spoke of the walk to the ATM at a racetrack as the “walk of shame”. We’d all love to be able to buy a $100 voucher or have $100 on a players card and play with it all day, like the nickel slot player, but we know that all too often our cash can disappear quickly. For a long time we were the only gambling game in town, and churn was not a huge factor to those in power to any large extent. If horseplayers got mad and left, or lost all their money quickly, where else were they going to gamble?

Now however, with competition for the betting dollar and as handles fall, we want players to churn as much as possible, because churn means more enjoyment for the player and more handle for the industry, just like the casinos have long ago figured out.  

So how is churn increased? 

1) Decrease the takeout
2) Increase cashable tickets
3) Eliminate hard to hit bets

If we have a takeout rate of 20% and $1 million bet on the first race, we return approximately 800,000 to the players. That means for race two there is $800,000 left in the players bankrolls to rebet. After race two the players bankrolls shrink to $640,000 and so on.  It takes about  18 races to bust bettors bankrolls.

If we have a takeout rate of 5%, the $1 million dollars bet in race one return $950,000 to the bettors after the race, $902,500 after race two and so on.  While at the 20% takeout level bettors are busted at 18 races, after 18 races at 5%, horseplayers still have almost $500,000 in their bankrolls and they are happily churning away.

For a look at how long it takes us to go bust at differing takeout rates please look at the spreadsheets here and here.

The second way to increase churn is cashable tickets. 

If horse racing had a “pick 8” on every eight race card, made the minimum $5 for a bet and paid off in the last race, churn would be very poor.  Customers would not have much fun, because they would rarely or never cash and have to spend $240 on an unhittable 48 horse combo.  This is why we have seen fractional wagers be added. If you play a 10 cent super in a nine horse field you are going to cash many more supers. If you play a 50 cent double, like Retama has, you are going to cash many more doubles. This adds to churn and it is a major reason this is one factor in the HANA track Ratings.

Lastly, we could eliminate hard to hit bets. 

At Betfair, where only win betting is allowed, there is a great deal of churn because with low take and win bets only, players cash frequently.  In press releases and their annual reviews they mention this is a huge part of their success as a gambling company – players think they can win. In the 1970’s that menu was similar in the US – there were very few exotics – and a lot of players thought they had a shot to beat the game. In fact, some tracks only had two or three exacta races a card, and sometimes a tri in the last race. Just like it is easy to churn at betfair, it was much easier for tracks to add handle in the 1970’s because of increased churn. Today, with hundreds of races a day to bet, with many hard to hit exotics, (some at a $2 minimum) we can lose the GDP of a small country in a half an hour.

Maximizing these three parts of churn is a like walking a tightrope for horse racing.  We know the takeout is too high, and every piece of literature backs that up, so lowering it will help, but the other two are very hard to decipher. Do we cut exotics and hurt short term handle to grow churn? Do we add very low fractions for every exotic wager which makes the payoffs less attractive for people who love the ability to make a big score? Do we stifle choice where choice can hurt handles, but it also up handles as more choice assures that?

There is a formula which maximizes the customer experience along with revenues for purses by maximizing churn.  It has to be found and all tracks have to follow it, or the system will break down. It takes some organization, which we seem to lack in our sport at the present time, but if we ever found the right spot, our sport will grow.

Sunday, January 16, 2011

Interview with Caroline Betts, PhD, on Horse Rescue, CA Racing & More

Caroline & Zenyatta
If you have been around California racing, California horse rescue or have seen comments on industry websites about "optimal pricing" and other economic concepts from someone who seems to know what she's talking about, chances are you've encountered Caroline Betts. Caroline is a driving force behind the Southern California Thoroughbred Rescue, a well respected rescue, and teaches economics at the University of Southern California. Recently, the Horseplayers Association offered out a vision of a "Gambling Board" in California and submitted Ms. Betts name as someone we'd like to see get involved. We contacted her recently and asked her several questions. At the end of the interview, you will find links to Caroline's organization, its Facebook page, Twitter page and more if you'd like to adopt, donate, or keep apprised.

What's her academic opinion on takeout issues? Can horses have their very own 401k's? Find out below. 

(1)   What is your horse racing background?

        Primarily, I’ve been a fan. I watched my first live racing on (English) Derby weekend from a stroller on Epsom Downs, and remember it.  My grandparents were daily handicappers and bettors, and my step mother is also an avid racing fan and a member of Elite Racing Club in the UK which campaigned the G1 winning mare Soviet Song and also a recent runner - Dandino - in the Japan Cup. It’s been fun keeping up with her racing “ownership” interests. 

        In 1994, I moved from Cornell in New York to USC in Los Angeles to take up an economics professorship. I also took up horse riding again and found myself surrounded by off-track thoroughbreds.  I bought my first off track thoroughbred from a groom at Santa Anita in 1999. He was a British bred horse that had formerly raced at our local small track in Sussex, England. My husband, a former thoroughbred owner/trainer, and I owned and managed a small, hands-on thoroughbred breeding farm and sales business here in southern California for a few years, although both partnerships are now dissolved. Currently I run a non-profit thoroughbred rescue organization.                   
Hawaiian Lyon - Available for Adoption at http://www.sctbrescue.org/
 
(2) How did you get involved in horse rescue?

          That’s a painful recollection for me.  A few years ago, I found myself single and caring for a significant number of young horses and former broodmares while working full time. I needed to find homes for some of them. I reached out to friends in the horse business for help with that, but was lied to by a local licensed owner about her intentions for one mare.  (It’s a felony in California incidentally, to lie to or deceive someone for the purpose of obtaining an animal for commercial gain). Within a few weeks, I found myself scouring local low end horse auctions looking for the horse, which I never found. 
 
        I was appalled at what I witnessed and learned at those low end sales which were an awfully long way from the sales pavilions at Keeneland and Barretts. Local young racehorses and breeding stock, including pregnant thoroughbred mares, were routinely dispersed there for their residual value which was often in the black market value of their meat for human consumption. It is a felony in California to purchase or sell horses for the purpose of export from the state for slaughter, but the law is not enforced.  

        I wanted to help as many of those horses as I could to find a safety net, and to advocate for them and for change in this method of dispersal. I founded Southern California Thoroughbred Rescue which tries to do those things, albeit in a small way.      

(3) We first spoke with you about some other issues in racing. You have been active in answering questions of horseplayers and the industry on takeout via blogs, emails etc and seem quite passionate about it. In a lot of the items you address you speak of "optimal takeout". What exactly is that?

        “Optimal takeout” is the percentage tax rate on amounts wagered (betting handle) that maximizes tax revenue i.e. the percentage of handle that is not returned to bettors which maximizes the tax revenue received by state and local governments, racetracks, and horsemen’s groups. 

        Legal wagering on US horse racing is taxed by state and local governments and, in practice, the pari-mutuel tax revenue is shared by governments with racetracks and other horsemen’s groups incurring costs and - varying in degree by state - the total tax/takeout rate is also determined in consultation with these groups. States today take a very small percentage relative to tracks and horsemen’s groups collectively, and derive income from other forms of legal gaming which often is a larger source.  

        “Optimal takeout” derives from the idea that the law of demand holds for legal games. In other words, the demand for bets is inversely related to the “price” of a bet - the percentage of handle that is taxed and not returned to bettors. There is therefore a Laffer Curve associated with takeout rates, which characterizes how revenue from taxation of handle varies with the takeout rate. 

        If the takeout rate were zero, there would obviously be zero revenue. Because demand falls with price, there is also some very high takeout rate - 100% is an obvious example – at which the tax base (handle) would shrink to zero which would also produce zero revenue. There is therefore some takeout rate on handle, between 0% and 100%, which maximizes revenue. What the revenue maximizing takeout rate(s) is/are depends on the shape of the demand function for the legal game in question. Specifically, it depends on how sensitive or elastic demand is to price changes at different takeout rates. If demand increases (decreases) more than proportionately to a price change at a given takeout rate, then revenue will rise (fall) if the takeout rate declines (rises) – demand is elastic at that takeout rate - and conversely if demand changes less than proportionately to a price change.     

4) Have you had a chance to read any published literature on takeout? Is the general conclusion in academia and through empirical testing that our takeout is too high, too low, or about right? 

        I’ve read quite a bit of the academic (peer-reviewed) literature that tries to establish optimal takeout rates on pari-mutuel wagering. These are statistical analyses that estimate the price elasticity of betting handle, for specific samples of tracks and dates. They use the estimates to infer what the implied “Laffer Curve” looks like around the takeout rates that prevail in the samples. Then they can say whether prevailing rates are higher or lower than the revenue maximizing rate. That literature begins with the seminal work of Gruen (Journal of Political Economy, 1976) and continues up to the present time with recent studies from Europe. The recent US academic literature has been more focused on estimating how betting handle responds to the availability of, and prices of, substitute forms of gaming and to the availability of simulcast signals and ADW wagering options, as you would imagine. 

        The analyses all suggest that demand for pari-mutuel wagering is inversely related to its own price, the own takeout rate i.e. gamblers are rational “utility maximizers” in their response to price changes. It is also inversely related to the availability of substitute games (state lotteries, casinos, etc.) and positively related to the prices of substitutes (i.e. if the price of a substitute falls, betting handle on racing falls). The direction of sensitivity, and the rationality of gamblers on pari-mutuel horse racing in regard to price changes, is not at issue. The issue, for the purpose of establishing optimal takeout rates, is what the magnitude of price sensitivity is. 
 
        Almost all studies of own price/takeout elasticity show that demand is “elastic” at the takeout rates prevailing in the samples studied; i.e. that takeout rates were above the optimal rate and that revenue could be increased by reducing them usually by a substantial margin. The only two estimates I have seen that suggested a specific takeout rate was lower than the revenue maximizing rate date to 1979 and 1980 when average takeout rates were in the 14% range.   


5) How do other industries find "optimal pricing" and what can racing do in an academic or scientific way to do the same?

        This is a huge question which can’t be answered in less than a novel. In general, “optimal pricing” depends on the goals of the industry. The ability to achieve any goal is constrained by many things, including the structure of the industrial organization, industry cost and demand conditions, and the legal environment. 

        Determination of pricing goals (e.g. short-run profit maximization, long-run profit maximization, quantity/consumer/market share maximization, partial cost recovery, survival etc) along with actual determination of the optimal price – generally require knowledge or estimates of production cost functions, demand functions, and broader market conditions. 

        Obviously, since state and local taxes are a part of the price of pari-mutuel wagering, then the goal of the government is also a factor. In California, for example, the CHRB has an explicit goal of state tax revenue maximization, which suggests that revenue maximization might be a key goal of pricing in racing. In Florida, the state regulatory authority of pari-mutuel wagering has a quite different mission.   
        
        If revenue maximization is the goal for pricing of pari-mutuel wagering, then the cost structure of the industry is irrelevant - and racing needs to continually monitor market demand to know how demand is changing over time and under alternative market conditions to know how revenue will respond to a given price change. It needs to know what the shape of the “Laffer Curve” or total revenue curve is. 

        An industry could use existing demand elasticity estimates to simulate the impact for revenue of a variety of price changes. The econometric studies of pari-mutuel wagering I mention above provide “point elasticities” for handle with respect to price. They tell you whether revenue will rise or fall as you change prices from the levels prevailing in the sample, and hence whether you are above or below optimal takeout at the prevailing prices in that sample. But these estimates are unlikely to reflect current market conditions and demand. In any case, they do not map out the entire demand function which you would need to derive the Laffer Curve and the current revenue maximizing price.

        How can you infer what the entire Laffer Curve looks like in your state today, without directly experimenting with your customers? Consumer surveys as a controlled experiment. Researchers conducting experiments could ask participants to respond in hypothetical wagering amounts to menus of prices allowing you to derive a behavioral and quantitative model of gambling demand over prices. I think to do this right would likely necessitate a long and complicated experimental research program, but it warrants academic and industry investigation.

        You could develop agent based, theoretical models of wagering behavior - for example, models that assume rational, forward looking optimization on the part of bettors - calibrate them, and simulate them under alternative pricing and product menus to map out an entire demand function and Laffer Curve. You evaluate how good the model is by comparing the simulated handle data to actual handle data as takeout rates change. There is an academic literature which examines attitudes towards risk, and the objective functions, of pari-mutuel gamblers, which might provide a basis for initial behavioral modeling assumptions. I think this is a promising avenue for research too, and also a major project. 

        Some very simple behavioral models have been explored in the existing literature. For example, in the 1970s you could assume that the state had a monopoly over legal pari-mutuel wagering and so use a simple profit maximizing monopoly model to derive the optimal price, which is simply a markup over marginal cost of production (estimated from track percentage take) where the markup is a specific function of an estimated demand elasticity. Obviously, that model is no longer relevant.  
        
        In any case, ongoing research to assess the market that racing faces is called for if the goal of pricing is revenue maximization or in any way depends on what the demand curve looks like – which is true of any optimal pricing strategy.  

6) HANA has put forth your name as someone we’d like to see get more involved, say on a gambling or wagering board/panel in California to hopefully grow our sport. Does this interest you?

It is something I would be interested in.

7) Back to horse retirement: If you could wave a magic wand and do one thing to help retired horses live their days out in dignity, what would you do?

        I think my “nirvana” is for all industry stakeholders – state and local governments, owners, breeders, trainers, private owners of racetracks, and fans/gamblers – to agree that a 401K should exist for every thoroughbred racehorse prospect, with the funds contributed by all and centrally managed and dispersed. How large should it be per horse? Just large enough to ensure that if that horse cannot or can no longer race or breed, there is a reputable, approved non-profit specializing in the retirement and/or transitioning of racehorses that is willing to take it in at the time of the horse’s retirement. 

        That does not mean that the fund should cover expenses for the lifetime of the horse; for many young, relatively healthy horses there is an active adoption and sale market which will absorb them as non-racing prospects relatively quickly, while horses genuinely in need of retirement can be subsidized from that turnover. There are some owners that literally keep their racehorses for their lifetimes, and some good private markets, as well, for off track thoroughbreds that will absorb some that can be transitioned. I don’t think a central fund will need to finance the transitioning and retirement of them all – but it should be there to secure a place in the non-profit sector of those that have no good alternative.    

        Is it feasible? I think so – and more, I think it will enormously benefit the industry to develop a reputation for altruism and uniformly caring for its equine athletes when they are no longer athletic. The trend of social conscience in favor of humane treatment of animals is unlikely to reverse, so you have to take account of that in any plan to build or even maintain public and political support. I’m not naïve about the costs – they would run in the tens of millions of dollars a year, although I’d note that is dwarfed by what is spent on thoroughbred racehorse and breeding prospects each year at public auction. Maybe you need an initial investment fund to be established by a sympathetic philanthropist to establish a new norm or standard for industry practice to live up to.

        Based on my own experiences – as a very naïve horse owner some years ago and now much less so – secure, humane placement and retirement of racehorses is very difficult to accomplish, and usually best left to organizations which specialize in doing so. They just need to be adequately funded to do that work on behalf of the industry.
          
For further information on Caroline and her rescue, contact her at her website, facebook page or on twitter below.


Socal Thoroughbred Rescue Website.
Facebook page
Twitter


Web Store and Calendar with Donation link. Please consider helping retired horses today.

"Percy", one of the many at So Cal Thoroughbred Rescue that need your help

Andy, Roger Stein and Bob Talk California Racing on the Radio

Many of you have seen emails, or read on chat boards a California bettor and industry watcher named "Andy".

We come across in many different ways via various mediums - email, commenting on blogs, or in person. Yesterday "Andy" was on the Roger Stein show live and we were able to hear him, in person. For a listen to the interview with Andy, Bettor Bob and Roger speaking about CA racing, boycotts, handles and takeout increases, please give it a listen: It starts at about the nineteen minute mark.

That's a repeat of yesterdays Roger Stein show, in a WMA file.

Saturday, January 15, 2011

Horseplayer Rich Bauer to be Remembered at Tampa on February 13th

Richard Bauer, long time horseplayer and one of the original members of HANA, passed away in October of last year.

Richard, a US Navy veteran, was survived by his wife of 47 years, Karen Metzger Bauer; one daughter and son-in-law, Jill and Doug Dunne; two grandchildren, Kylie Dunne and Trevor Dunne, all of PA; and one sister and brother-in-law; Judie and Frank Armijo, AZ.

Each winter, Rich would make a trip to Tampa to spend a week or so playing the ponies. This year, sadly, that will not be happening. However, HANA Treasurer Theresia will be attending this February, and she contacted Peter Berube (who knew Rich).

Thanks to the good folks at Tampa: Race 7 on February 13th, 2011 will be in memory of Rich.

In addition, HANA, on behalf of members will be donating a check to "TROT" a Tampa based horse retirement called Thoroughbred Retirement of Tampa Inc, in Rich's name.

Rich had tons of friends and was very well known, so if you can pass this along to them, please do. If you would like to join Theresia for the race and honor and remember Rich, please email her at skip.away@yahoo.com.

Reason #51 and #52 to Get Moving

We push much needed change for customers here at HANA, but the storyline is usually about making needed changes to grow the whole sport, because the writing is on the wall, almost each day.

Today in the Orange County Register, it was reported a state senator in California is pushing for online poker. He believes it can generate up to $1B for the state in ten years.

Yesterday in Bloodhorse, Tom LaMarra noted the cuts from slot funding to horsemen groups, breeders and purses of 43% in this years budget in that state, directing it to general revenues for the citizens. This was not done by committee, nor was it expected - it just happened. Notice how much was taken from operators? Nothing.

Who will save horse racing? Governments aren't because they are looking to pass one of the most popular betting games in the world in the Golden State which will be huge competition for the gambling dollar. Slots aren't, because as soon as they are there (some sires moved just last year to take advantage of Indiana slots and now find themselves out in the cold with no one to run to for help), they can easily be taken away.

Customers will save racing, if it can be saved, because they are what racing can fall back on for revenue, just like any other business does. That is why we at HANA say - it's time to get moving on growing our customer base. It's why we're here, and we are ready to start working.

h/t to Blueshoe on Paceadvantage for the poker story link.

Friday, January 14, 2011

Wilson Commentary: "It's Time to Give the Horseplayer a Chance to Speak"


Wilson's Daily News piece today:

Excuse me if you've heard this question before, but can the California horse racing industry become any more messed up than it already is?

Well, when dealing with organizations like the California Horse Racing Board and Thoroughbred Owners of California, never say never.

It's time the CHRB and TOC sat down with representatives of HANA, and I don't mean teleconferences or symbolic meetings that just pay lip service, but for a full-fledged, face-to-face meeting. Heck, make it a weekend at a resort and hash out these problems and try to make the game good again.

Heaven knows, HANA representatives are willing and able, and it's a sure bet that CHRB and TOC officials should be chomping at the bit to hear some new ideas from a group that has far too long been deprived a voice in the industry.

The ball's been in the CHRB's and TOC's court long enough. Time to let somebody else offer some solutions that might help before it's too late.


Read more at link for full commentary.

Note - there are several other links today that have come across the wires regarding all of you taking a stand in California, and we will link them all this weekend if we have a chance.

Thursday, January 13, 2011

Mike Maloney Interview

Mike Maloney is a HANA VP and he works hard on industry issues. Sometimes we forget he is a heck of a good horseplayer. He was recently a part of an in-depth interview on myriad issues.

On picking his spots: "Now I try harder to be a complete horseplayer, to find pedigree plays, pace plays, and trainer angles that work—or maybe angles that are specific to a certain distance at a certain track."

On Pace: "I think evaluating pace is still an area where there’s still some opportunity if a person takes the time to do it."

On Take: "All we’re doing when we raise takeout is driving away people. The regulars are coming less often or they’re coming just as often but getting ground down. People within the game still don’t understand how destructive takeout is."

On Pros: "All of us who watch poker tournaments on TV—and I never thought I’d be one of them—see winners. We see these young kids with great skill making money. And that helped drive the popularity of poker. You never hear those kinds of stories in racing."

For the full interview, graciously allowed to us for reprint by Horseplayer Magazine (thank you!), please click here. It will open into a PDF. Note: Mike will be a guest on "Blinkers Off" tomorrow at 11:30AM on TVG. He will be talking about some of the tote issues he has been working on.

Lamarra & Bloodhorse Strike Right Tone

Tom Lamarra (for those of you who have wondered via email and twitter where the racing press is on this, they are here) in Bloodhorse wrote an article today on the horseplayer action in California. In it he discussed some numbers, what appears to has or has not happened, and what the player group over at playersboycott.org is looking for. We at HANA felt it struck the right tone.

We at HANA who support it (and the ~70% or so of you who were polled who say you support it) have worked very hard on getting the message through that this is not about "players wanting money". We have quoted gambling experts, old policies, empirical results and more which show purses will be lost in the long-term by a raise in takeout. We don't want that to happen (many HANA members are horse owners). We would like us to find "optimal takeout" where the takeout rate drives the most money to handles to drive customers to our sport, where we make the most money for purses.

The article touches on phase two: A Gambling Board. HANA would like professionals to make gambling decisions - a wagering economist or two or three, a smart horseplayer rep, and a track rep. We'd also like the CHRB to concentrate more on horse owner issues. We all know how much it is to train and keep a horse in CA. We need to address high costs in a professional way.

We'd also like to see the Gambling Board above look at rebates for CA players (as well as simulcasting issues in the state). People outside CA can get them and the industry supports that, why not inside CA for those horseplayers? Like a board member of HANA said (who lives outside the state of CA) today:

"I'm not a whale, not even close to it. I'm probably right around average. I started getting rebates about a year and a half ago, and since then my handle has multiplied just over 6-fold. That's just one player, and not even a big player at that. Imagine what would happen to handle if the retention cap were removed and suddenly all CA players could get rebates just like me. Not only would each of those players' handle increase, but the players that are playing offshore because it's the only place they can get rebates would likely bring their handle back to our pools. "

We think that makes sense - that board member plays through the pari-mutuel pools and supports racing in big numbers now, so why not CA residents. Maybe it doesn't make sense and is not workable, who knows, but we say study it and let the gambling board stocked with experts to decide if it is good policy. (**Note the HANA policy, however, is lower takeout will do the same thing, and bring more people into the pools and have a level playing field)

There are dozens of other issues we'd like to see professional consultants and gambling experts decide: New bets; can we test them to grow? Pari-mutuel rule changes - is the CA rule that a three horse race can have tri wagering a bad one? Can we eliminate it and have happier customers?

Anyway, spirited debate is good and spirited debate can yield positive policy changes to grow the sport - for customers, owners, trainers, grooms, and everyone else. We hope more and more places like the Bloodhorse start offering out some of our vision for growth, and let people decide. It might not be perfect, but why not talk about it as reasonable, decent people who care about our sport should?

Wednesday, January 12, 2011

It Begins: Major Media Starts to Report on Playersboycott.org

Today the San Diego Union-Tribune, California's second oldest newspaper with a reported Thursday to Sunday 300,000 person circulation, reported on the Players Boycott of California racing in a detailed story published online.

In the article, "Group calls for betting boycott of California horse racing", by Ed Zieralski, HANA's California representative Roger Way and HANA President Jeff Platt share their vision for what they think California racing must do to finally grow.

"Horseplayers have been kicked around long enough," said Jeff Platt, president of the Horseplayers Association of North America (HANA), "The California Horse Racing Board approved the takeout increase figuring that players would just complain and go along like sheep. But, partly thanks to word of mouth and partly to players who are willing to stand up for what they believe in, handle has dropped precipitously at Santa Anita so far this meet, while handle at several other tracks has been up."

Santa Anita President George Haines: "Haines didn’t want to comment on the boycott, saying the California horse racing industry is going to have an official spokesman on the betting takeout matter and other issues. “We’re supposed to have an industry spokesman and a committee is working on that”

Players Boycott.org said the goals (partly) are:

"In addition to demanding the CHRB end the takeout increase, Players Boycott also proposes a new "Gambling Board" to advise the CHRB on all gambling related matters such as new bets, takeout rates and scratch rules. Organizers see this board including an economist, a track official, and a player representative. They don’t believe the present CHRB members understand gaming issues because they wouldn’t have raised takeout percentages if they did.

“Players Boycott believes that experts should be the ones making gambling-related policy for thoroughbred racing in California,” Platt said."

For more on Playersboycott.org and to add your name to their growing list, please click here. Change in California horse racing that can grow it, not continue to shrink it, starts with you. For those of you who have emailed asking why the racing press has not picked up on this story, we don't know, however the largest paper in San Diego has and we thank them for reporting on this very important issue.

Nick Kling in Troy Record: Will Santa Anita See a Purse Cut?

Nick Kling yesterday explored what has been happening in California recently in a column. In it he openly opines that with business this poor so far, a purse cut might be coming:

"To them it is a simple equation -- raise takeout and there will be more revenue to divide among the track, horsemen, and taxes. Just the opposite is poised to happen in California. Purse levels at Santa Anita are likely to be cut before the meet is concluded and the resulting revenue stream to other recipients will decline as well." he wrote.

Nick also looked at the article posted here at HANA, on poker players and sports bettors views of horse racing.

He seems to have a point. Steve Crist mentioned when the takeout hike was passed via the article "Caifornia Board Skews Takeout Tale". With comments from California early that this should help get full fields, promote better racing and so on, that appears to not have happened thus far. Even handle "per race" is down quite a bit from 2009 numbers. And since they have raced even fewer days so far than last year, the gross number is much larger than even that. Meanwhile of course, tracks like GP (up 17% so far) and Tampa, seem to be doing just fine. In addition, Fair Grounds has announced a purse increase of 5% due to brisk business at the betting windows.

Tuesday, January 11, 2011

Spreken ze Horseplayer? Mullen Stays Feisty

We found some odd hits on the blog today, from Germany. After reading the website, and dusting off some grade 8 German (I enjoy the beer, but am not overly well versed in the language), I think I have the gist, but let's see if you do.

"Das sind die zusammen gefassten Ergebnisse einer Befragung von Leuten, die Pokern oder zu anderen Sportwetten abgewandert sind. Durchgeführt von der Gesellschaft Amerikanischer Pferdewetter. Nicht überraschend, daß der Takeout von im Schnitt 22% die Hauptursache für die Abwanderung ist;"

The way I read that, it says something like - 'if you think 22% takeout is high, you should come here. The frau's and frauleins who run our racing won't lower it either and we've been sinking into the Berlin river quicker than a lead bratwurst.'

Anyway, takeout in horse racing and the unwillingness to do something positive for the sport with pricing, is not only a North American disease.

Horseplayer and industry watcher Liz Mullen, who we looked at before re: Twitter, is back at it again - she's quite charged up. She wonders why there are no players on the CHRB or involved in other boards (a lot of players & industry watchers have wondered this that we have heard from). Ray Paulick even got into the discussion. But, I don't think he is calling for a player boycott of North American racing.



Players Boycott's twitter site added to Ray and Liz that people have been boycotting for a long time - perhaps both here and in Germany. Handle since 2002 is off close to 50% in real dollars. I wonder: If Wal-Mart, Apple or Nissan had half their real sales cut in only eight years, would they have raised prices, followed the status-quo policies and kept the same people in charge like racing has?

Santa Anita (the track Liz and other boycotters are fired up over, including some professional "whales") still seems to be having handle issues, despite dropping back to four days a week. The last we heard, handle was off somewhere around 18%, despite having the Mid-Atlantic signal this year. Meanwhile, places like Tampa and Gulfstream (up 17.3%) seem to be doing well. We'll have more on handles this week at the blog.

Monday, January 10, 2011

Gulfstream Handle Starts Well

Like cross town Tampa, Gulfstream has started the meet well, with handle gains of 17%. Even when we add the fact that they, along with tracks like Santa Anita and Fair Grounds, did not have the Mid-Atlantic signal at this time last year, it's a good start of at least a six or seven percent gain.

The Pick 5 is rolling as well, for people who want a good value play. This weekend the pool topped 100k each day, which is good for a new bet. We urge you to support that bet if it interests you, because Gulfstream is a track that has been listening to players.

There was a scratch recently at GP of a part of an entry, where the lesser part filled all horizontals. We wonder: How do you feel about eliminating entries everywhere? They are doing that in some places to increase betting interests. Any opinions? We'll have more on this later.

NYRA has been converting some of the OTB losses and handle is not horrible at all there considering. LATG has a look at the numbers.

Something that you know as members we are for, and it is one of our planks is more cooperation and uniform rules. States working together is long overdue.

Thanks for all the comments and readings of the blog piece on sports bettors and poker players below. It was a record day on the blog and we thank you very much. We have a special thanks to "Breakage" on the Turf n' Sport board who took it upon himself to ask the question to all those sports bettors. Learning how the other half lives and how they think of our sport is beneficial to us.

Sunday, January 9, 2011

How Do Sports Bettors & Poker Players Feel About Horse Racing?

Knowing what other skill-game customers think about us, might allow us to fix some of our sports problems. Below they tell you what they think about betting horse racing - unedited, and in their own words

At various conferences, or in trade papers there is always a discussion on the loss of horse bettors. There are many reasons given by those in the know - lotteries competition, other forms of gambling are more fun, offshore wagering pirating pools, the form is too complicated and it is a very hard game to learn, 25 minutes between races are too much (because young people need action), the lack of "stars", there are not enough people at the track to get introduced to loving our sport and becoming bettors, and so on. Some of them would seem to have some merit.

Many of us believe that a gambling game (i.e. racing) which has a tagline "you can beat a race but you can't beat the races" tells a big part of the story. The price of a wager is too high, and once people found choice (or were not forced to bet racing when we no longer were a monopoly), they left for other games they had a shot to make money on. The numbers bear this out. In 2012, the gambling market (not the underground one) is said to grow to approximately $450B (Canadian Gaming Magazine). Online wagering, as the internet moves the price of a bet lower, is a big part of that growth with 42% increase expected in the US between 2008 and 2012. (KPMG pdf). Meanwhile, horse racing wagering has fallen to near $11B in the US.

What do the growing skill games (i.e. our skill game competition, not games like slots or lotteries) like hold 'em poker and sports betting have on us? Are they easy, fast and more in tune with today's society? Is it because of pocket cams, or pretty people dealing cards? Is it because they are cool, on TV, and they give some good perks like free drinks when you play them? Is it because of all the things we read about them in our racing trade press?

One poster on a chat board set to find out. He's primarily plays horses, but he frequents other boards where they play poker and sports bet.

He asked the following question to those bettors - sports bettors and poker players - on their very own chat board:

Why don't you bet on horse racing?

Feel free to be as brief or as long as you like and as candid as you want.

Thank you in advance for your time and answers.


Here are their responses, in their own words:

> When you see a 4-1 and a 7/2 double pay $26.50 do you think horses are worth playing?

> Track takeout is much too high

> 17% is pretty tough to beat.

> I love the "challenge" of (predicting) capping the races. I live near Santa Anita and go to Hollywood Park and Del Mar every year, but the rake is absurd. Trying to make consistent money betting horses is nearly impossible.

> The 21 or now 23% take out

> Takeout. I quit betting horses about 7-8 years ago when I realized how hard it was to beat simply because of the takeout.

> No way would I ever try and do it seriously with that house edge.

> It just seems impossible to beat. I'll throw a few bucks down on the big races sometimes. But, it's just for fun and I don't really expect to win. I'd love to see someone have a great day at the track. Like "Trotter" in the movie "Let it Ride."
But, that seems like great fiction.

> takeout is ridonkulous

> I live in the free part of the world and can use Betfair that has about 5% rake, so no reason not to bet horses.

> Takeout is certainly a factor. We get 11/10 assured on football if one is smart. And I love the horses!!

> Knowing that the takeout is 18ish pretty much took all the interest away.

> Takeout and my lack of ability or confidence that I could do well are the biggest reasons I'd never think about betting it seriously.

> If there was a lot of head to head matchups between horses with a standard 20 cent lines, I might give spend some time on horse racing. But I'm not going to fight that 18% cut.

> too much take out and too many races

> Takeout is #1, absolutely absurd where 15%- >26% is removed. Besides the lottery where is the rake greater, maybe keno but have no idea on that one? Instead of lowering takeout I read where Cali tracks have increased takeout on exotics by 10%+.

> The take out is too low, thus not providing me enough of a challenge.*
* obviously joking

> Since the UIGEA passed I don't have a good rebate out for horse racing. When Pinnacle had their rebate (I think it was 7%) I bet a bit of horse racing. I coincidentally know one of the DRF's handicappers from outside of gambling so I'd probably bet some of his stuff if I had better outs. As far as why I don't handicap horse racing myself, I think there are smaller, easier markets to beat, although if I had a good rebate out and exhausted other opportunities and had time on my hands, I might tackle horses.

> I grew up a horseplayer. Got to the point where I could pretty well break even. Discovered offshore, where a 4.54% cut [sports betting] is considered excessive. Never looked back.....

> Living in Vegas, I haven't gone to a "live" race in 8 years. I used to sit in the casino and lay down a few bucks but I stopped that practice. The reason is the aforementioned take out (hard vig to beat) and in my case, incompetent writers.

> Seems too hard to quantify my edge.

> Take out is the main reason why I have not ever looked in to betting horses. I can safely say I have never made a bet on horses and doubt I will in the future as I have zero knowledge whatsoever of them.

> I'm sure if they cut the house take down dramatically, many of the individuals in this thread and sharp gamblers all over would enter into the horse racing markets.

Non-takeout responses:

> The total disdain towards the betting public by management of these places. They think people will keep coming back no matter how they are treated. The fiasco on Friday Breeders Cup (was it Ladies Classic?) where Pletcher horse ran, absolute joke. There was at least 3 million to win on that horse, who knows how much in exotics, she was favorite or 2nd choice. No refund of anything. I don't follow it closely anymore so not sure what happened post race.

This stuff continually happens, gate malfunctions, horses breaking 5 lengths behind, jockey's giving horses absolutely horrendous rides, short fields, late odds drops 30 seconds after gate opens, late info on geldings/workouts/medication. Stewards decisions not explained by them.

Obvious drug and medication super trainers who amazingly take a broken down claimer and turn it into a stakes horse.

I'll only play Triple Crown, and Breeders Cup (some races) now and that will be offshore only so the greedy bastards don't see a dime of my money.

> I'm not 75 years old

> If you meant for this to be an academic study, actually I do enjoy going to the race track and try to get there a couple times a year, but I do so with the intention of making $5 exotics for entertainment and have no illusions that I can beat it.

> As someone who knows just the very basics of horses, I shy away because of the idea that it is fixed. Seems to easy for a jock to control an animal to do what they want it to do. Plus, the rewards do not seem to be worth the time. Other than a fun night out with the boys, I have no desire to wager on them at all. Would be a whole different story if I was on the inside or had access to that information.

> No inherent interest in horses. My foray into sports betting stems from my initial interest in sports which later developed into analyzing the betting market to find value. For me, this requires a baseline interest in the betting subject to follow/gauge it over time, which then allows me to anticipate and understand why market participants do what they do.

> I play on the "big days", other than that = it's just too time-consuming to try and fit in. Too many tracks, too many races to try and keep up with.

> Because I grew up playing and watching baseball, basketball and football. I understand those games and they are fun to keep up with. There are all kinds of tv and radio shows covering sports, none covering horse racing.

I did not grow up around a horse track or horses. I don't know anything about them. I wouldn't know where to start capping them. And the races are not nearly as fun to watch as a sports game so it would be really hard to make myself keep up with the sport. Don't the horses change every year too? That is just too much turnover to keep up with.

You have to be too patient. In a horse race you have like 10 horses running. Its like playing long parlays in sports or betting nascar. The wins are few and far between. But the main reason is the first paragraph.

> Politicians treat the customers like retarded degenerates. Therefore some of the customers act like retarded degenerates. There is frequent dishonesty in the 'sport'. Some jocks still insist on punishing the athletes. Unless you have access to big rebates, its a foolish pursuit.

> I used to go to the track quite a bit. There is undeniably a cruelty element with regard to the horses. Horses are run lame to fill cards, drugged to win purses and whipped to win races. I was at the Barbaro Preakness and that was my last live race. The horses are bulked up, trained to the max and the physical elements like bones and tendons can't keep up. There is an occasional ownership element that is exceptionally seedy doing anything to stay in the game even going to the extremes of barn fires to collect insurance. Bryant Gumbel had an HBO special that was quite insightful as to the treatment of less than stellar horses. Absolutely despicable. I loved the sport for a lot of reasons but will never go back.

> I've never really taken it seriously or bet big $ as I learned early that the **** is rigged and with an 18% take the juice is basically unbeatable.

> Ten years ago, I would play two to three days a week. I still love to play the big days, and play when killing time at the sportsbook when we are in Vegas, but I hate beating my head up against a wall, because I normally lose. I really enjoy the handicapping aspect of the sport, but I am just not very good at it. Bob Knight once said "Find out what you are doing wrong and stop doing it." I have taken that approach and stopped playing the ponies, because I rarely would come out a winner.

> I know nothing about it and don't care.

________________________________________________________________________


It looks like the score is about 25 or so for takeout, a couple for corruption/treating animals poorly, a couple for liking other sports better, or too many races/too hard to follow, a few for not being treated well by management.

It reads like our organization's mission statement.

We at HANA believe this should not be a shock to any of us, if we even have a rudimentary understanding of gambling. The fastest growing gambling game this century is fantasy football, and it is purely stats driven, hard to figure out and time consuming - so complexity is not an issue. Poker is a game where you can fold hands for a half an hour or more without playing for a pot - so time between races is not an issue. "Offshore wagering", giving lower takeout, was not all 'pirates stealing customers', it was creating customers we were ignoring. As soon as the UIGEA was passed and it was outlawed, these players went back to sports betting, because they would not play into 22% blended takeout, just like bettors told the industry years ago they would (when they were labeling it a panacea).

73% of HANA members polled in 2009 said takeout was their number one issue. Sports bettors and poker players seem to agree, but it appears in even higher numbers. With them representing a multi-hundred billion dollar market we need and crave, that is not good news, especially since horse racing takeout has been going up, not down.

We clearly have many problems in racing, but to deny that the price of our product is a big one of them, is denying reality.


To join HANA and try and work on some of the changes needed to grow our sport, please click here. It's free and confidential.

Saturday, January 8, 2011

O'Meara on Narrative Change

Brenden O'Meara over at Horse Race Insider says the following today:

I’m not sure what to think of 2011. On the surface there’s absolutely nothing to look forward to. The main beef with this 2011 — and it’s only eight days old — has everything to do with takeout.

Takeout needs to be on the conscience of everyone. When Santa Anita president George Haines tells Daily Racing Form that, “Maybe the top point-one percent of the handicapping world has that in their equation — what the takeout is — but for the most part, people are looking at handicapping winners.”

People need to know about this, everyone from the $2 bettor to the “point-on percenters.” Otherwise positive change for the engine that drives the sport will always play understudy to indifference.


It seems this is true, and if you go on chat boards, or on industry sites, there is more and more sensible and honest talk about one of the most important parts of any industry, gambling game, or business - it's price.

Read more from Brendan here.

Friday, January 7, 2011

Great Racing Videos - Sorted and Searchable?

In what would be a great step for fans, Robin over at Thorobase seems to be working on a video catalogue of great horses and great races. It looks to be searchable as well. I like a lot of you, have searched for horse racing video many times on the web, and it seems to be more mixed up than a drunk baker. In addition, not long ago (if we can believe it), horse racing videos were taken off the web because of some sort of arcane 1847 rule on copyrighting or something. I remember going one day to watch the Florida Derby on youtube and the next day it was gone, never to reappear.

If you'd like to be kept updated on the project you can via an email box on the site. As fans we can get lost for hours on old video, if it is categorized and labeled properly. Let's hope this helps!

Eng: Tale of Two Tracks

Rich Eng in the Las Vegas Review-Journal looked at Gulfstream and Santa Anita today:

"Sounds like a case of Stronach's left and right hands not knowing what the other is doing." he types.

We have a slightly different take on that point - we think it is more because of over-reaching policy from above. When customers and racetracks are allowed to discuss issues, and share growth goals, some good can come out of it (in this day and age several tracks are listening to you), but when things are dictated by a third party, that only exacerbates and enhances the issue relating to racings many fiefdoms. Case in point - NYRA's resistance to any takeout hikes three years ago with respect to the OTB problem dictated to them, and of course, the CHRB making multi-billion dollar gambling decisions, directly opposed to all available economic literature on the matter. When there are seemingly dozens of fiefdoms with power all armed with salt to throw on a wound, the wound ends up hurting.

Wednesday, January 5, 2011

Numbers

The numbers have been flying around the web of late.

One, which no one can be happy with is the numbers out West. Santa Anita has had a poor start. Ray Paulick looked at the numbers here, and replied: "The only Santa Anita numbers reflecting an increase are track records and horse ambulance runs"

The numbers thus far have not been good, however time will tell. One caution, and we hope that industry watchers remember this: Santa Anita will be on a four day week this week, and comparing that to a five day last year is problematic. It's what was done with Los Alamitos here, which tried to make these charts look "positive" (they cut dates and compared "handle per date". And we know that is not correct, or good for the industry.

What we want to see is this: If dates go down (in this case almost cut in half), it is best that overall handle goes up. Per race is inconsequential.

"In 2009, the 141 T-bred race dates were split between Monmouth Park and the Meadowlands Racetrack, and, according to the brisnet.com report, total handle rang in at $354,867,156. In 2010, with nearly 50 per cent fewer race dates and racing consolidated at Monmouth, the total handle was $477,375,167."

Overall handle numbers are out for 2010: The industry lost 7.3% last year.

According to the Thoroughbred Racing Economic Indicators released by Equibase, commingled wagering on all U.S. racing last year totaled $11.4 billion, compared with $12.3 billion in 2009. U.S. purses totaled $1.02 billion in 2010, down 6.1% from $1.09 billion the previous year.

If we would have only held the rate of inflation the last decade, we would be somewhere north of $20B last time we checked.

Some good news though - some tracks had handle gains. Charles Town, Woodbine, among others.