Too Much Class?

On a recent weekday evening, I was scouring through data at a Midwestern track seeking potential opportunities for an advantageous wager or two. I finished five races worth of research and was struck by the pure number of different race conditions listed in the Past Performances. Of the horses running in the first five races, there were over 75 unique classes listed in their Past Performances. The concept of Stakes versus Allowance versus Claiming is simple enough, but the challenges faced by racing secretaries to fill races has created a whole new set of race conditions ranging from Non – Winners of a certain amount in a year to State-Bred races to endless numbers of different Claiming conditions to Starter Allowances to several subsets of Optional Claiming races [Granted, in the example above, some of the 75 unique conditions were simple differences in the values of the allowance races before and after changes in purse structure (i.e- $17785 nw1x vs $18995 nw1x) which reflect the same overall class. However, to the uninitiated it can all look like hieroglyphics].    

This need to fill races has created an unintended consequence: Further alienating new customers from becoming regulars. Class in the modern era is difficult enough for an expert to comprehend, let alone a newcomer. I rely on an in depth data service to help me discern which races are the strongest since pars and other methods of pure class analysis are too antiquated in the modern era. I have a tough enough time explaining the simple nuances of the game to newcomers without the myriad of classes involved, which is enough to make your head spin. 

 Horseracing can actually take a cue from Greyhound Racing with respect to this issue where in general, a simple letter system for grading races is utilized. In most jurisdictions the top level races are “A” races with descending levels of class down to “E” and “M” for maidens. If a dog wins a race at the “D” level, it moves up to “C”. If it goes a certain number of races without hitting the board at its current class, it moves down a level. This is simple and self-explanatory.

One of the great things about horse racing is the total number of moving parts in the handicapping puzzle so this is not to advocate moving to a letter grade system in a wide spread manner (nor would that be logical in a sport where a majority of races are of the Claiming variety). However, wouldn’t it be nice if the track program and simple past performances could include a letter grade or number system to help those without a more familiar grasp of the game with the subject of class?

Of course, this is a truly minor issue in the realm of all that ails the game. By no means is this small issue a make or break proposition for long term survival. However, as stated previously, due to the lack of institutional inaction on the higher level issues of takeout, medication uniformity, access to the product, and marketing, we’re left with tiny incremental ideas to help improve the game where possible.

Del Mar Handle Numbers - Meet to Date through Sunday Aug 19, 2012

Del Mar is having a pretty good meet. A look at their 2012 handle numbers reveals they are up 5.5% overall this year vs. last year.

Let's take a closer look and see where handle is up and where it is down.

Handle Trend Races 1-5

The screenshot below shows the summary tab of our spreadsheet for races 1-5 - or the races in the 14% Takeout Pick 5 sequence only. 

(To view, right click and select Open in New Window.)

There is plenty of interesting data, trends, and black ink on the page worthy of being investigated.

That said, there are a few things I would like to point out:

First, handle for every wager type – WPS, EXA, QUI, TRI, SUPER, DD, P3, and P5 – all of them UP.

Q. What single wager type is up the most?

A. That’s easy. It’s the 14% Takeout Pick 5 and it’s up 51.8% this year vs. last year.

Q. Is it possible that instead of cannibalizing handle, customer awareness about the 14% Takeout Pick 5 bet is generating overflow handle into the other pools and races for the races involving the pick 5 sequence?

A. Overall handle for races 1-5, the races in the 14% Takeout Pick 5 sequence is up an encouraging 10.2% this year vs. last year.

There’s one thing about these numbers that I find truly remarkable - and you would only know this if you happen to have studied long term handle trends. By long term handle trends I mean handle at all tracks everywhere spanning – oh, the past 75 years or so. What you may not know is that historically, the early races on race cards garner the lowest amount of interest and handle while the later races on race cards garner the highest amount of interest and handle. That’s the big picture trend.

The trend for the races in the 14% Takeout Pick 5 sequence represents a sharp departure from that. Taken in that light, overall handle growth of 10.2% for the first five races seems noteworthy (to say the least.)

Handle Trend – Races Outside the 14% Takeout Pick 5 Sequence

The screenshot below shows the summary tab of our spreadsheet for races other than 1-5 - or just those races NOT part of the 14% Takeout Pick 5 sequence.

(To view, right click and select Open in New Window.)

There is plenty of interesting data, trends, red ink, and black ink on the page worthy of being investigated. That said, there are a few things I would like to point out:

First, handle for the following wager types – WPS, QUI, TRI, SUPER, DD, Hi5, and P3 – all of them DOWN.

Q. What single wager type is down the most?

A. That’s not so easy. Superfectas are down the most percentage-wise at minus 5.8%. Trifectas are down the most in terms of sheer handle dollars at minus just over $600k.

Q. What single wager type is up the most?

A. That’s easy. The $2.00 pick 6 is up 25.3% (compared to a 51.8% increase for the 14% Takeout Pick 5.)

Overall handle on the races outside of the 14% Takeout Pick 5 sequence is up just 1.6%  (compared to a 10.2% overall handle increase for the races inside of the 14% Takeout Pick 5 sequence.)

That is all for now. I hope you found these numbers interesting. I know that I did.

Jeff Platt

President, HANA

About our Handle Numbers

HANA volunteers recorded data from Equibase charts into an Excel spreadsheet for the first 25 days of the 2012 Del Mar meet and for the the 2011 and 2010 meets at Del Mar in their entirety. The numbers above compare the first 25 days of racing from this year’s meet to the first 25 days of racing for both the 2011 and 2010 meets. We have 217 races over the first 25 days in 2012,  218 races over the first 25 days in 2011, and 217 races for those first 25 days in 2010. We next compared our numbers to handle reports pulled from CHRIMS. The CHRIMS numbers made available to us show totals only and do not enable a breakout by wager type or race number. However, our Equibase meet to date totals are in line with meet to date totals pulled from CHRIMS – giving us a fair degree of confidence that the numbers presented above are accurate.

Part III - Eric's "Disdain For Bullies" & Wanting To Do Something About It

 In the last instalment of Eric's articles on being a horseplayer advocate and trying to get the industry involved in player issues, he gives us a summary of why he began this journey. He touches on several issues that we all know to be accurate. Horse racing has to deal with myriad issues, and there are myriad alphabet organizations who 'want their slice'. The demand for betting by you the betting customer runs most of the industry's revenues, but there are very few listening to you. If they do, some might find themselves in the unemployment line. 

We thank Eric for his time. Parts I and II are below this.

People have often asked me why I started this project.  The short answer is two-fold.  First it was to provide motivation to my children to stand up for what you believe in, even if the odds are against you.  The second is my belief in the importance of consumer advocacy combined with a disdain for bullies.

I view the Horseracing hierarchy as a bunch of bullies.  They were taking advantage of their customers.  The regulators who were mandated to protect the Horseplayer did not understand the game of horse wagering or gambling.  They were being manipulated by industry stakeholders.  They bought into their spin.  They lived in a bubble and were never presented with the other side of the argument.

At the outset I was told by those close to me that I was wasting my time.  I would never be able to change perceptions.  The wall was impenetrable.  But as I began to put together logical arguments I found that there were many who supported the need for Horseplayer representation at the regulatory level.  Unfortunately a lot of those people were employed by the industry.   They had families to support.  If they stepped outside the line they would be in jeopardy of losing their jobs.

It was those people who provided me with the motivation to keep going.  Ron Nichol, a veteran of the CPMA (Canadian Pari-Mutuel Assn) tweaked me to the idea.  Hugh Mitchell (CEO of Western Fair, an Ontario racetrack and casino) characterised my goal as a daunting task, but was very generous with his time while offering his vast experience.  Darryl Kaplan of Standardbred Canada (a rising young star of the industry) provided a great sounding board, often challenging my arguments allowing me to refine them.  And of course John Blakney of the ORC (Head of the Ontario Racing Commission) and his management team for believing in the need for Horseplayer representation at the regulatory level.  When I first met John he reacted like I was from Mars.  I must credit John for taking the time to listen to the arguments, and being open minded enough to become a believer.  Not an easy task for the man who has the most difficult position in Ontario Horseracing.  There is a whole host of others who I probably should not mention for fear of negative repercussions, but thank you to you all.

At this point I am not sure what will happen with my concept in Ontario given the threat of the industry folding and the potential of the ORC having its role limited.  It is my hope that the government will continue to providing funding thru the current breeding cycle as the industry learns to become self sustaining.  Unlike OHRIA, I believe it is possible for this great game and industry to become self sustaining.  It is my hope that if the Provincial government does providing funding they will create an Oversight Board which will establish criteria for racetracks to earn the funds.  And such an Oversight Board will employ a Horseplayer.

 I would like to thank to the HANA Board and it members for allowing me the opportunity to share my concept and thoughts on their forum.   The volunteer work that HANA has provided has been ground breaking.  They have almost singlehandedly brought the outrageous take-out issue within the game to the forefront.

The reaction I have received to the first two installments of my guest blog has been overwhelming. I hope it provides inspiration to all those believers that it is possible to have Horseplayers involved in the regulatory process whether you are in Canada or in the USA.  

Below is a snapshot of my presentation to the OMAFRA Transitional Panel in Ontario which was created to provide non-binding recommendations to the Minister of Agriculture about how the Government might help the Industry adjust to the end of the Slots at Racetrack Program.   The bolded lines are the questions asked by the Panel.

Follow Eric on twitter at @epo13

We thank Eric for his guest posts, and his work for horseplayers everywhere.

 

1/A vision for Industry self-sufficiency

-Continue government support for the current breeding cycle

-Continued support is based on pre-determined set of criteria, for which the funds must be earned- i.e./handle, innovation, horses per race. THIS IS HOW IT SHOULD HAVE BEEN WHEN ORIGINALLY SETUP

-Create an entity whose sole responsibility is to manage Ontario Horse Racing

-entity develops/enforces both pari-mutuel and on track rules and wagering products

-entity develops and markets the Ontario brand of Horseracing, both at the ownership and gaming levels

-create a major league sports format.  Ideally across North America

-Eliminate Quarterhorse Racing-it is a travesty that money was wasted developing a breed for which there is no wagering customer at a time when the two current breeds were in crisis.

-Ensure Horseplayer involvement in the Process-IF HORSEPLAYERS WERE INVOLVED FROM THE OUTSET, THE RESULTS WOULD HAVE BEEN DIFFERENT

The above vision assumes some government responsibility in creating the problem and a desire to contribute to the solution

Should the government decide to only provide the short term transitional funding, the local breeding industry will die, which will cripple the local horse supply and ultimately the wagering industry.  The Horseplayers will be quick to jump ship.

Comment-for the past 15 years the industry has shown no ability or desire to deliver a self sustaining model or vision, in spite of knowing that slot revenue would not last forever.  The industry’s current model is incapable of achieving self-sustainability, its roots are rotted.  To think the current host of industry stakeholders are capable of doing such is an extreme long shot at best.  The current culture of entitlement is pervasive, the monopolistic DNA runs deep.  Both must be eliminated.

Key adjustment challenges and what is required to meet those challenges

-Transition funds are to be earned based on a set of identified criteria-develop such criteria, touched on earlier

-Address Transparency, Accountability, Fairness and Integrity (TAFI) issues-involve Horseplayers in the process

-Balance racing supply to meet pari-mutuel demand-eliminate racing dates, not necessarily race tracks

-Develop new revenue streams i.e. / sponsorships, jockey advertising-first the perception of the game must be cleaned up.

-increase horserace wagering by developing a strategic marketing plan that redefines and addresses:

a) The CUSTOMER BASE-gamblers, gambletainment, horse/animal lovers

b) The PRODUCTS-keno-ize the game, introduce lotteries/sweepstakes, prop bets, exchange wagering, contests…..

c) PRICE-takeout reduction is an absolute in order for the game to be competitive with similar forms of gambling

d) DISTRIBUTION-corner stores, casinos, exploit new technologies to its fullest potential

Encourage dialogue, strategic planning and consensus building within the Industry

-the horseplayer perspective can play a key role in enhancing the dialogue and building consensus

Advise on priorities for transition support and how best to address the priorities, including how to allocate funding amongst these priorities;

-Co-priorities should be increasing the wagering base/developing additional revenue streams and ensuring a horse supply to support the wagering base

Provide additional observations on how the Industry can improve governance and work better together

-Make the horse wagering customer the number 1 priority.  If such is achieved everything else will fall into place.

-Ontario horse wagering customers have been ominously quite.  Perhaps because they do not care as there are a host of other horse wagering and gambling options

-An ADW monopoly is not health for the industry.  Competition must be encouraged

-What is good for Woodbine is not necessarily good for the industry

-If an ADW becomes insolvent, horseplayers lose their funds-I have been arguing that funds should be secure and that the CPMA has let down Horseplayers by not ensuring such.  Some thought I was ridiculous in that an AWD could never become insolvent.  We now know such is possible

-It is interesting to note the industry has yet to make any noticeable changes to date since the announcement of the end of Slot funding

Gather information on the scope and dynamics of the Industry and consumer demand for its products and services

-the A circuit of Ontario racing is respected worldwide.  It would be a shame for it to disappear

-the industry has historical fought amongst themselves which has partly been alleviated by the cozy relationship WEGZ has established with the HBPA and COSA, although this is not a healthy relationship for the overall industry

Assess the Industry's prospects in a competitive gaming marketplace

-potential is huge, the task is herculean

Identify the barriers to, and enablers of the Industry's transition to a self-sufficient business model

-Barriers:  current attitudes of entitlement, old school approach, general lack of marketing sophistication, CPMA’s inability to react, a ADW monopoly

-Enablers:  The customer/Horseplayer can be the most efficient enabler

Standing Up For Customers in Ontario

Eric Poteck is a horseplayer who wants to change racing. Based in Canada, his journey to have input as a customer to make our game better was detailed in part one of this series.

In Part Two, he details what he think should happen to racing in Ontario, in a letter he has sent to all stakeholders . As most know, slot machine revenue has been taken away from Ontario racetracks (to be eliminated in March of 2013). The Ontario Horse Racing Industry Association - a group representing many racing fiefdoms - put forth a plan recently, that they hope the government embraces. Eric looks at that plan (the plan is linked here) below, with comments from a player perspective and lobbying force. You likely won't read a more to-the-point critique from a knowledgeable participant in the process anywhere in the racing press.

I AM A HORSEPLAYER

I believe Horserace wagering can be the greatest gambling game on earth.  It is challenging, exhilarating and competitive, cerebral and just plain fun.  My favorite game is being ruined by greed, short sightedness and just plain ignorance.  In my own way I have been challenging the Ontario industry stakeholders to correct the flaws that exist within the game.

Four and a half years ago after an apparent transmission error in North American only, which led to the incorrect posting of the results of the 2007 Arc de Triomphe I was inspired to read the provincial and federal rules that govern Horseracing.  I was appalled at what I read and began a journey to create a Horseplayer presence at the regulatory level in Ontario.  After speaking with virtually every senior industry stakeholder in Ontario and various members of the CPMA I targeted the Ontario Racing Commission (ORC) as the most logical location for such a voice.  

 In February of 2011 I submitted a conceptual Proposal for a Horseplayer Advisory Group to the ORC.  

 In March of 2011 the ORC indicated that their management directors were in support of the concept.  

In January 2012 at the ORC’s request I presented the concept and back up rational for the need of a Horseplayer group to the ORC’s Consultation Group.  

In July 3, 2012 I made a presentation to the OMAFRA Transitional Panel. 

In October of 2008 I did a comprehensive review of the CPMA rules as they apply to Horserace wagering. 

I have reviewed the OHRIA Plan made public on July 24, 2012 from both a Horseplayer perspective and how I perceive the Minister of Finance office would view it.   

My thoughts and observations are as follows.

My initial thought after reviewing the Plan was how vague the proposal is.  Given the seriousness of the crisis it was my hope that the Plan would contain a specific concrete model on how the industry would travel down the road to become self sustaining.  Sadly it did not.  It appears as if the plan was hastily thrown together and lacks any real substance.  It is a regurgitation of the same old philosophies that has led to the industry’s current crisis.

*The Plan makes mention of ‘increasing government net revenue from gambling’ but it never indicates how the Plan would achieve such an objective.

*The Plan sarcastically states that, ‘the transitions funds of $50 million over a three year period would certainly assist some of those currently employed within the industry to transition to unemployment and public assistance.”  If you have your hand out asking for money I do not believe sarcasm will win friends and influence others.

*The Plan notes some racetrack operators have expertise to manage casino type gaming.  This may or may not be true, but those same racetrack operators have not shown expertise in running a Horserace wagering industry.  The Association and Horse people have taken with both fists for the past 14 years without building or even contemplating a future strategic plan.  The industry’s rejection of Standardbred Canada’s Racing Development and Sustainability Plan is a perfect example of the industry’s short sightedness.

*The Plan mentions the ‘current excellent level’ of Ontario Horse Racing.  That is undoubtedly true from a breeder, owner, jockey, trainer and race track operator perspective.  However with take outs as high as 27%, it is not true from a customer or Horseplayer perspective.  This is further highlighted when one considers the lack of Transparency, Accountability, Fairness and Integrity (TAFI) from as Horseplayer perspective as clearly detailed in my ORC proposal.

*The Plan notes the fund would be administered by OHRIA.  OHRIA’s past instills no confidence that they could run the industry.  OHRIA has had that opportunity to run the industry for the past 15 years and they have been asleep at the wheel.  Based on what I have gleaned OHRIA is merely an extension or arm of The Woodbine Entertainment Group.

*The Plan notes the need to move from a supply-side mentality to demand-side.  This need has been noted by some senior stakeholders for at least the past 4 ½ years with Hugh Mitchell being one of the more vocal proponents of such.  Yet there was zero action taken.  

 The number of race dates proposed in the Plan makes no reference or quantification or rationalization in the number of dates suggested based on demand.  A logical starting point for demand side economics would be the current level of pari-mutuel handle. One has to question the commitment to demand-side economics when the Plan notes, ‘the question remains as to the size of the fund that will be needed to fund some 797 live race dates under the new model.’  That sure sounds like a supply-side economic philosophy.

*The current model of 1540 race dates which receives $340 million in slot funding equates to an average of $220,780 per race date.  Under the proposed Plan of $210 million in funding based on 797 race dates equates to an average of $263,490 per race date.  In essence the Plan is asking the government for 20% more money per race date than it currently receives.  I fail to see the logic of such a strategy.

*The Plan recommends that the government have up to 3 appointed OHRIA board members.  If am Mr. Duncan I would be looking to have control of the $210 million in funding, not just a voice, particularly given the industry’s past history of malfesasance.

* My impression of the Plan is it has tried to appease ALL members of OHRIA.  No hard stand has been taken.  I understand that some in the industry believe that a reduction of 48% of the race dates is a hard stand, but the reality is tracks that race regularly for $50,000 or $100,000 in purses with $4,000 to $20,000 in pari-mutuel handle is ridiculous.  One of the biggest travesties in Ontario Horse Racing is Quarterhorse racing.  The industry was showing declines in both Standardbred and Thoroughbred handle and instead of investing in Ontario’s long established breeds a decision was made to divert monies to establish a third breed.  Taking a fringe hobby where they raced for purses of $600 and increasing them to $10,000-$100,000.  There has never been a customer wagering base for Quarterhorses in Ontario and probably never will be.  Had the money that has been pumped into Quarterhorse racing been spent on marketing the game’s two established breeds, making it more attractive to the Horse wagering customer, perhaps the industry would not find itself in the dire position it is currently in.  For the Plan to suggest spending $8 million on Quarterhorse racing is ludicrous.

I could go on, but I believe the point has been made.

The pertinent question I have after reviewing the Plan is, “what is OHRIA really thinking?”  Do they truly believe the government will buy into this Plan?  Having spoken with a number of OHRIA’s board members I believe there are some very intelligent people there.  Do they really believe this plan will fly or is this really a smoke screen?  Have they yet to play their true hand?  Is this part of a strategy to negotiate with the government?

My best guess is that there is a hidden agenda, but that is pure speculation.  I can only hope that there is a Plan B, because if this is as good as it gets, I cannot see Horseracing in Ontario surviving.  And that would be very, very sad…….

What I do believe is that this current plan reeks of what Mr. Sadinski referred to in 2008 as a pervasive culture of entitlement within the industry.  Based on this Plan, the mentality of OHRIA has not evolved but rather has taken a giant step backwards.

The Anatomy of a Passionate Horseplayer

For several years now Canadian racing fan Eric Poteck has tried to achieve the unachievable in horse racing: Get a seat a the table for the long forgotten customer. From meetings to presentations, to wagering conferences to banging on doors, his story is fascinating. In this three part series on HANABlog, he'll detail how he has approached this task, and offer some solutions to the problems happening in the Province of Ontario, with the loss of slots, and the various plans currently being discussed. 

In Part One he outlines his presentation to the various stakeholders in racing about the need for a strong customer voice, to be recognized in our industry, as a funded and vital part of it. From OTB robberies, to fictitious payouts, to pool integrity, takeout and respect, we at HANA think this illustrates why it is so vitally needed.

To those of you who have yet to meet me I have been researching and developing the concept for a Horseplayer group for the past 4 ½ years. It has become a passion and a hobby!

As part of my research in putting together the proposal I have reviewed the rules of the ‘game’ from both the Federal and Provincial levels. I have literally read the CPMA Rules and Regulations and have provided the CPMA with a comprehensive review from a Horseplayer (HP) perspective. If any of you are interested in a copy of my review it would be my pleasure to share it.

I have spoken to a number of industry stakeholders including the Ontario Minister of Finance office, the Ontario Director of Gaming, media members who cover horseracing, Horse people groups, associations, various members of the CPMA and the ORC, including handful of you around today’s table, and as far back as Stanley Sadinski and his report and as far away as Bill Nader Executive Director of The Hong Kong Jockey club.

When I reviewed the provincial industry reports, strategic plans and rules, it struck me how little focus there was on the GAME of horse racing. Everything revolved around the Sport of Horseracing. The term Horseplayer or bettor was virtually not referenced in any strategic planning documents. My opinion is that the past focus on the sport of Horseracing has marginalized the game of horserace wagering which has resulted in an alienated customer.

The lack of focus on the ‘game of horserace wagering’ has resulted in Horseplayers and the general public having a low opinion of the games Transparency, Accountability, Fairness and Integrity, what I refer to as TAFI. My focus has been on creating a concept that will enhance TAFI by representing, protecting, and educating the Horseplayer and ultimately improving the Horseplayer experience and participation in the game.

One of the challenges I faced from industry stakeholders when I started this project, was the need to cite specific examples which reflected the lack of Horseplayer representation and protection. The following is a culled down list.

ISSUES REFLECTING A LACK OF HORSEPLAYER PROTECTION/REPRESENTATION

All these issues reflect a lack of Transparency, Accountability, Fairness and Integrity (TAFI)

It is important to understand that in each of these issues my goal was to bring light to the issue, understand the current logic and if required make a recommendation.

1/POSTING OF PAYOUT PRICES WHICH EXCEED THE TOTAL MUTUEL POOL

This was one of the first issues I tackled, as I thought that it would be an easy one to solve. A fictitious pay out takes places when the posted payout price exceeds the total pari-mutuel pool. Payouts can be up to 20 times more than the actual total pool.

It is my position that the posting of pay out prices that exceed the pari-mutuel pool is unethical and is deceiving the wagering customers, ultimately enticing them to wager into the pools. Further it was wrong for associations to promote such fictitious pay outs on website highlight banners and press releases.

Based on my complaint the CPMA determined that it was wrong for associations to promote fictitious pay outs on website ‘highlight banners’ and via press releases, but it was okay to publish the fictitious payouts on websites and newspapers which is an extremely odd approach.

For the CPMA to frown upon fictitious payouts on highlight banners or Press releases and not ban the practice completely is contradictory and shows a lack of commitment to their stated mandate of ‘ADVANCING THE INTEGRITY OF PARI-MUTUEL BETTING, AND PROMOTING A FULLY TRANSPARENT AND ACCOUNTABLE PARI-MUTUEL MODEL’

The current loophole allowing for the potential of posting payout prices exceeding the pari-mutuel pool obviously lacks in integrity and is certainly not transparent. The simple solution to eliminate fictitious payouts is all prices should be shown at the minimum wagering amount.

You will all note that Horseracing is the only form of gambling that promotes or posts payout prices which never take place. It doesn’t reflect well upon the industry

*update*-Woodbine and others have now stopped this practice although some other associations continue to post fictitious payouts.


2/AJAX DOWNS OPENS WITHOUT A FUNCTIONING TOTE BOARD

At the time of Ajax Downs opening it was in contravention of the CPMA rules for an association to race without a functioning tote board (sadly this rule has since been repealed).

In the very first race held Ajax Downs there was a 20 min inquiry resulting in a complete race refund.

The only manner in which Horseplayers were informed of the complete race refund was by PA announcement and a scroll on the TV monitors which lasted for only one race.
The CPMA said they were only informed of malfunction tote board 2 hours before post and they chose not to halt racing. It should be noted that Ajax opening day was postponed 1 week because the race track required some work.

Three months after the race un-cashed tickets represented 16% of the total pool-vs. the annual average of 0.0027%

This illustration shows a lack of respect for CPMA regulations as well as the Horseplayer.

Because the CPMA has no ability to fine associations, thus there was no fear of repercussions for Ajax Downs by not following the rules of section 31(1) of the CPMA regulations

Ajax Downs showed little regard for the Horseplayer by not taking special precautions to protect the Horseplayer given the non functioning tote board.
At the end of the day Ajax was rewarded monetarily because according to CPMA regulations they keep all un-cashed ticket revenue. In this case the un-cashed ticket revenue rose to 59.26 times the average annual rate…at the expense of Horseplayers!

This illustration shows;

1) The CPMA is really not a regulator-but an advisor-as they have no ability to discipline those they regulate. This is contrasted with the ORC who has the ability to fine Associations for things such a light outages

2) The fact that an association can break the rules intended to protect Horseplayers and literally profit from it certainly lacks fairness and accountability.

It is difficult to argue that a game that has rules to protect the customer that are not enforced is a game that possesses integrity.

TELETHEATRE ROBBERIES

Between June 3/09-Jan 10/11, 5 greater Toronto teletheatres were robbed at gunpoint. Tellers and patrons were robbed of cash and in one case an employee who panicked and ran from the teletheatre was chased across a 6 lane highway by one of the gun toting robbers.

After the first two robberies the teletheaters instituted a safe lock system, where excess cash was deposited into a time delay safe. They further hired a security company to have a single guard drive between teletheatres.

After the 3rd robbery the teletheater operator was contacted and asked to provide a warning to Horseplayers who were attending the teletheatres. The request was refused for fear of a downturn in business, potential copycats, public over reaction and a belief that proper precautions had been taken. After the 4th robbery the teletheaters were again contacted and asked to provide Horseplayers with a warning.

At that time it was argued that with the teletheater operator’s knowledge of the robberies, the teletheaters were able to take precautions to reduce their exposure and that Horseplayers should be afforded the same opportunity.

A Horseplayer concerned about the robberies may choose to get their bet down at the track or via telephone or internet. If Horseplayers chose to attend a teletheater they could limit or eliminate their exposure by using a voucher or wager on account and leave excess cash at home.

Finally after the 5th robbery, the teletheater operator relented and posted a notice to Horseplayers in all locations warning them of past robberies. The effectiveness of such a posting would have been enhanced if the teletheatres had a clearly identifiable Horseplayer Information Center.

The point of this illustration is that literally there was NO ONE protecting Horseplayer interests in spite of the existence of two levels of government who are mandated to do so.

4/PROTOCOLS FOR PAYOUT ERRORS-CANTOR GAMING

The current regulations are very vague in how associations are expected to communicate payout errors to Horseplayers. The methods used are not very effective in communicating the errors

A recent example was an Oct 26/11 race at Keenland where the rules were incorrectly interpreted by their stewards resulting in an incorrect posted payout. Ontario Horseplayers were informed of the error the following day by a posted memo at race tracks and a faxed copy to teletheaters. Presumably Horseplayers knew where to look to find the posted memo at the Tracks, and the fax sent to teletheaters was actually posted for Horseplayers to see. The website, which is the go to spot for the majority of Horseplayers did not acknowledge the wager, literally and was never updated.

CPMA Paragraph 118 states that ‘if an association posts an incorrect payout price, as soon as it becomes aware that an error has been made it shall,
(a) post the correct payout price
(b) inform the public of the change in the posted payout price.
The CPMA was of the opinion that a posted memo at racetracks and fax to teletheaters were sufficient means of communicating the error.

As we know when there are payout errors the percentage of un-cashed tickets soars. So again, when associations make errors, they are ultimately rewarded by collecting extra revenue at the expense of Horseplayers.

Again it is difficult to argue that such a system possesses transparency, accountability, fairness or integrity.

Given the trending global nature of the industry the potential for errors is much greater. In the past year there have been a number of payout errors such as:

*Jan 1/11-Woodbine/Australia race 4B-human error caused an incorrect posted order of finish as 11/2/8/9. The correct order of finish was 11/12/8/9

*Mar 17/11-Western Fair 3rd Race, tote error resulted in wagers not being comingled resulting in refunds.

*May 18/11-Belmont 3rd Race, human error results in all tri bets being refunded

*July 16/11 Hollywood 5th Race, human error resulted in the 5th place finisher being placed 4th in the official posted results

*Sept 10/11 Kentucky Downs 7th race, human error resulted in the 5th place finisher being placed 4th in the official posted results

*Oct 26/11 Keenland 6th race, human error resulted in an incorrect posted result and payout on a 2/10/9 Pick 3, when the actual result was 2/10/A.

The suggestion offered to the CPMA is that there should be a specific protocol for associations to follow to communicate errors. For example a clearly marked ‘Horseplayer Information Center’ located at all wagering facilities and on websites. In the past WEG has used a ‘pop up’ message on their website which is very effective in communicating with Horseplayers.

It is interesting to contrast the above with the circumstances of a Sept. 10/11 NCAA football game involving USC and Utah. On the final play of the game the referees made a rule interpretation error which resulted in Utah covering the spread. Two hours after the game, NCAA officials reversed the referee’s decision changing the game’s final score which resulted in UCS covering the spread. Unfortunately in Las Vegas rules for football wagering do not allow them to correct payouts, once a game has ended.

However, Cantor Gaming, one of Las Vegas largest sports books, decided that they would pay off on both sides of the wager. This move was estimated at costing Cantor millions of dollars.

I am sure you can see the implication. NCAA Football and their judges have no connection to gambling, and yet an independent bookmaker makes good on a judging error. In Horseracing there is a direct connection between gambling and the judges, yet the house benefits from errors and the customer suffers.

Again, it is difficult to argue that such a system is fair and possess Integrity.

DUBAI SUPERFECTA CARRY OVERS NOT ADVERTISED IN NORTH AMERICA

Dubai racing is hosted out of South Africa by Phumelela and as such host rules apply. One of the differences in the rules in South Africa relates to superfecta wagering, where if the total amount of the winning ticket wagers are less than $1.00 the difference is carried over into a future pool (generally the final race on the next card). For example, if there are 3 winning $0.10 tickets purchased, 30% of the winning pool would be paid out to those ticket holders and 70% of the pool would be carried over. If there were no winning tickets selecting the correct order of the first 4 finishers, 100% of the pool would be carried over.

On March 27/10 there was a notation on the HPI website indicating a superfecta carryover. When contacted HPI customer service was unable to explain why there was a carryover notation or if in fact there was a carryover. On March 31/11 HPI informed me that there was in fact a carryover on the final race on March 27.

It should be noted that Dick Powell an Amwest consultant (Amwest is the North American licensee and provides the North American signal for Dubai) was unaware of the carryover rules and confirmed the carryover was not advertised in North America. He pledged to have this corrected for the following meet.

On a Dec 16/10 Dubai card, there were two pools carried over to the Dec 30/10 final race. However there was no mention of such a carryover on the HPI site on Dec 30. HPI said they only receive information that is forwarded by Phumelela, who did not advise them of a carryover. Amwest said they were not aware of any carryovers. On Jan 11/11, WEG informed me that going forward they would monitor any carryovers and add such to the ‘changes’ page on the HPI website and add a crawl notation on their HPITV telecast. On the Jan 13/11 card the carryover was noted on the HPI ‘changes’ page.

The point here is that because of a lack of research or knowledge by those offering the simulcast Horseplayers were not advised of a rare bonus opportunity. The associations missed a rare promotional opportunity that requires no budget.
You can bet that with a Horseplayer group involved in the process, these types of opportunities will not be missed!

6/UNLEVEL PARI-MUTUEL PLAYING FIELD

As we know, pari-mutuel wagering is a competitive competition among Horseplayers. Assuming an average take-out of 20%, a Horseplayer must be 20% smarter or luckier than the competing Horseplayer just to break even when all competitors a subjected to the same rules and takeouts.

However in recent years the playing field has been tilted against Canadian Horseplayers as a result of:

*Canadians not being able to wager into US fractional pools, where as American Horseplayers can wager into Canadian fractional pools.

*a takeout premium added by Canadian associations to some wagers on some US tracks

*the existence of Bonus Payout Promotions paid by US ADW’s on Canadian products

It is impossible to argue that the game is Fair, when one competitor has a statistical advantage over another competitor, or to argue that the CPMA is protecting the Canadian wagering public.

Each of these issues may seem minute on their own, but when you combine them they send out a powerful message.

I must say from the time I started this project over 4 years ago to today there has been a shift in the ‘industry speak’ towards recognizing the Horseplayer. When I started this project, the conceptual support I received was virtually unanimous, but the consensual belief was that the ‘industry’ would never support such a group and I was just wasting my time. However, the deeper I delved into the aspect of the ‘game’ and presented logical arguments and the more I spoke with industry stakeholders the greater the support I received.

To date I have received support for my concept from the ORC’s management team including John Blakney. Rande Sewchuck of the CPMA has sent a letter of support to John Blakney. Hugh Mitchell has been a supporter from day 1. The former Director of Ontario Gaming was in support. HANA, which if you are not familiar with is a North American grassroots Horseplayer Group with over 2,000 members sent a letter to John Blakney supporting my concept. When I met with Bill O’Donnell of COSA he indicated to me that he was in support of the concept.

I understand that some of you may have some apprehension to my proposal. To those that feel such I would say this group, more than anybody should understand the need for self representation. You have no less than 15 groups around this table representing the unique and different needs of Horse people in Ontario. And there are another 15 horse people groups in Canada, but not any are related to the Horseplayer.

If you have confidence in your industry, you won’t fear a Horseplayer group, but rather embrace it because you understand it will be a valuable tool to help improve the game. And by improving the game in Ontario it will allow you to grow the customer base and increase your global market share.

The industry will best be served if it sanctions and works in a professional manner with a Horseplayer group. Over the past 4 plus years I hope I have shown that this can be done in a professional constructive manner. And that is how I would expect the Horseplayer Group to be run.

One of the oddities of Horseracing is that it has some of the most passionate customers of any industry, but they are also some of the worst ambassadors for the game. As such the industry loses out on one of the most effective forms of advertising or recruitment of new customers, namely ‘word of mouth’. Today, with the explosion of social media the attitude of the customer has become exponentially important. It is my belief that by creating a group as proposed, the Ontario ‘brand’ will benefit greatly by showing its commitment to the Horseplayer in maintaining a user friendly Game committed to Transparency, Integrity, Accountability and Fairness. The marketing spring board created by establishing such a group would be tremendous. Ontario will immediately be vaulted to the top of the world wide industry in the eyes of the Horseplayer. It will undoubtedly receive its 15 minutes of fame, and the challenge for the Ontario Industry will be to build upon that momentum. The potential is huge or in today’s vernacular EPIC!
Never before in the history of Horseracing has the GAME aspect of pari-mutuel wagering been so important and prominent. As I have demonstrated today the game has flaws which are not being addressed by the current regulatory system. The regulators have conceded they don’t understand the Horseplayer and need help. They are supportive of the concept and the need for an industry recognized and funded Horseplayer group.

I believe that with the support of your group today I will be able to make this Horseplayer Advisory group a reality.

I hope I was able to demonstrate that need to you today….thank you.

Tomorrow we'll run Part Two. We thank Eric for submitting it to HANA. Photo Courtesy Flckr here.

A Sports Bettor That Isn't Looking at Racing

Surfing around twitter yesterday we noticed the following tweet:

It would be easy to say there's "another whiner complaining about the rake" in horse racing. Ho hum.

But it's not from a racing customer. It's from a sports bettor that we in racing wish we had betting our game.

Steve Fezzik is a long time, well respected gambler. Unlike many sports bettors who handicap to make their betting decisions, Steve focuses on line shopping. Takeout is everything to people like him, and it's clear from his tweet that he doesn't think much about horse racing. Whatever your views are about takeout, I think we can all agree that having a sports bettor who bets tens of thousands a day "LOL" because our game is akin to Keno is not a positive position for our sport.

Sports bettors and poker players - an estimated $500B betting market - should have a home in horse racing.  It's up to racing, not them, to make it so.

For background about how sports bettors see and view betting on horse racing, please see this article.

Kentucky Downs Slashes Takeout Rates

Kentucky Downs will offer an expanded wagering menu featuring some of the lowest takeout rates in North America when it opens its 2012 live race meet on Saturday, September 8.

This year, Kentucky Downs has lowered takeout rates on all of the wagers offered during its 2011 meet by anywhere from one to three percent.  The takeout rate on the popular Exacta wager has been lowered by 3.75 percent – from 22 percent in 2011 to 18.25 percent in 2012.

Kentucky Downs also will provide horseplayers with more wagering options in 2012 with the additions of two Pick Four wagers, a Pick Five wager and a Super Hi-5 wager on each of its six racing days.

“We are sending out a clear message that Kentucky Downs greatly values and
respects horseplayers,” said Corey Johnsen, Kentucky Downs president.  “With
a wide array of wagers plus an across-the-board reduction of takeout rates,
we believe Kentucky Downs will have one of the most inviting wagering menus
in North America this year.”

In 2011, Kentucky Downs’ takeout rates were 17 percent on Win, Place and
Show wagering and 22 percent on all exotic bets. For its upcoming season,
Kentucky Downs has lowered the takeout to 16 percent on Win, Place and Show
wagers and 19 percent on all exotics except the Exacta, which will have an
18.25 percent takeout.

“I’ve always considered the exacta to be a staple for horseplayers,” said
Johnsen.  “By making our exacta takeout the lowest in North America, we are
showing horseplayers that we are as serious about improving our wagering
product as we are every component of our live racing program.”

Kentucky Downs previously announced that its total purse structure will
increase by 242 percent in 2012, with average daily purses of $409,000.
Kentucky Downs also will introduce five new stakes races in 2012, bringing
the total stakes schedule to seven.  The stakes schedule is headlined by the
Grade III Kentucky Turf Cup, which will be run on Saturday, September 15 for
a purse of $200,000.

“Our goal is to provide full, competitive fields in races that horseplayers
will find interesting and exciting,” Johnsen said. “That, combined with some
of the lowest takeout rates anywhere, should make the upcoming season of
live racing a winner.”

Kentucky Downs is planning to make more information available to bettors
than ever before. The track has launched a redesigned, information-rich
website that will include racing news, analysis and opinion. Rick Lee, one
of the most respected handicappers in the region, will make the Kentucky
Downs morning line and offer daily selections. Track announcer John Lies and
Gary West of ESPN.com will offer analysis through daily seminars and the
track’s simulcast signal.

Kentucky Downs will present nine races on both of its Saturday cards
(September 8 and 15) and eight races on Mondays and Wednesdays (September
10, 12, 17 and 19).  First race post time each day of the 2012 live race
meet at Kentucky Downs will be 1:35 p.m.

Located in Franklin, Kentucky, Kentucky Downs has been transformed into a
year-round entertainment center that offers live racing, simulcasting seven
days a week, Instant Racing, charitable gaming and other events.

The Ups and Downs of Handle

Being a bit of a betting and gambling geek, a hobby of mine is looking at the factors that drive pari-mutuel wagering. It’s a fascinating exercise because there are so many items that go into the make-up of a gross betting pool.  Sure we know the basics, like the lower the takeout the higher the bet, and the less gambling competition we have the better it is for racing handles, but there are so many more.

So far in the 21^st century we’ve seen wagering fall, but it has not been all bad. Racing has done some good too. I thought I’d look at some ups and downs this century; what I think has helped, and what I think hasn’t.

The “Ups”

A Concentration on Increased Field Size – I’m a horse owner. When I have a horse in to go and it’s a five horse field, the only thing I like better is a four horse field. For bettors it’s the exact opposite. In the early 2000’s this metric was barely on the radar for tracks and race secretaries. Small fields at some of our large tracks were not an exception, they were the rule. Now, in 2012, you’ll often hear tracks like Gulfstream Park and Keeneland trumpet their field size numbers and do everything possible to increase them. A big field means more choices for bettors and makes for a more interesting product to wager on. This has been a plus for handles, and with race dates decreasing the past few years, it should only get better as time goes on.

Dynamic Pricing – It seems like it was a long time ago when bettors were flocking to offshore sites and Vegas to get rebated for their play. Racing wanted no part of dynamic pricing for a long, long time, but in the mid-2000’s this started to change. Today, even large organizations like Churchill Downs Inc., and Magna have embraced the model. The jury is still out on whether this is good or bad for the long-term health of the business, but with some estimates that decreased takeout through rebating drives 60% of handle, it certainly is formidable.

Lower Takeout Bets – While you can grow organically by increasing the churn of your current customer base, any good business needs to look outside of it to try and increase turnover.  If you visit a sports betting or poker site and tell the crowd you’re a horseplayer, they immediately think you’re a sucker. “How can you beat 20% juice? You can’t”, is a familiar refrain. Lower takeout bets have, at the very least, tried to attack that mindset. They also act as a branding mechanism for racetracks to promote something positive, and increasing payouts to customers always increases the gross bet. 

“Big” Days – Time and time again the last half dozen years we’ve seen a racing juxtaposition: Headlines screaming at us about large overall handle losses, yet simultaneous headlines about tracks having record handles for their signature race days.  Whether it’s the Kentucky Derby, the Florida Derby, The Wood, The Preakness or the Jockey Club Gold Cup it doesn’t seem to matter. A big part of this, perhaps, is social media. Go on twitter and see first-hand the excitement regarding stakes racing and signature days. It’s palpable and people want to be a part of it. For whatever reason, racing needs to continue focusing on their big days, because it’s working.

Wager Variety, Incremental Bet Sizes – If the cheese market only contained havarti, it would be a pretty small market. If a company invented a few different kinds of cheddar, mozzarella and parmesan, sales of cheese would skyrocket. Bets like 50 cent pick 4’s and 10 cent supers are racing’s cheddar. More variety in increments means more dollars. When we lower the denominations, we increase churn, and when we do that, handle goes up. When fractional wagering catches on, which I believe it will, it should help handle even more.

The “Downs”

Higher Takeout – There’s a reason your neighborhood bookie charges 10 cent lines in 2012, which is the exact same price charged a century ago – because that’s where he/she makes the most money. When we increase takeouts we will make less money in the long-run, and even worse, it maddens horseplayers to no end because they feel underappreciated.  Even the explanations like “we’re increasing takeout so we can have a better product for you, so you should be happy to pay” are hair-pulling. Not only are they illogical (if increasing takeout made tracks more money, forget raising it to 25%, try 80% and make even more), they turn off customers.  Would racing fans and participants be happy to pay $5 a gallon instead of $4 a gallon for gas if the purses for the Dubai World Cup went up?

Jackpot Bets – This may have been expected in the “ups” section, but I don’t think it should be. Jackpot bets like the Rainbow Six, are great for a single track because they have something to promote. However, too many of them are churn killers. In the 1970’s when win place and show ruled the roost, you could bring $50 to the track, bet a few win and show bets, and that bankroll would last. Now, good luck with that. Jackpot bets, like a carryover pick 6, takes money out of circulation. Even winners don’t invest that big payday all back into the pools. There’s a place for jackpot bets in racing, but I think the proliferation of them does more harm than good.

Internet Wagering – We can bet a baseball game anywhere we want, without too much trouble. We can sign up and load an E*Trade account, buy or sell stocks, options or futures in the middle of the night in all 50 states with ease. Betting horses on the web is anything but easy. If you live in state “A” you may or may not be able to bet state “C”’s tracks. You may be able to sign up to watch video only if you live in state “F”. In state “G”, well you may not even be able to do that. We have 1978 laws governing the 2012 Internet age. It’s been a huge problem because potential new customers do not want to hear about horsemen and track “home areas” or a variety of excuses on why they can or cannot do something that others can do.  Today’s consumer wants action, and they want it yesterday.

Wagering/Pari-Mutuel Technology – If you or I go to our local Wal-Mart, see an iPad on sale for $399, walk up to the cashier and he/she tells us the price changed to $499 and we have to pay it, we would not be too happy. That’s what horseplayers go through each day. If you bet a horse at the off that you think has a 33% chance of winning at 5-2 and he drops to 7-5 at the second call, you made a terrible bet. It’s 2012. Late odds drops, an archaic wagering system and rumors and evidence of past posting does the game no good at all. It’s a complete turn-off for informed and technologically savvy bettors that expect more.

There are several other factors I am sure I could’ve looked at, but those are a few that I found interesting and tangible. I believe if our industry does more of the positive, and less of the negative, we’ll drive handle on the plus side this decade.

This article is reprinted with permission. It was originally written for Harness Racing Update.