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Monday, August 13, 2012

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.

5 comments:

Anonymous said...

Here's a guy who obviously has done his research and is not motivated by anything other than ensuring that the punter gets a fair shake. Eric has my support.

Anonymous said...

Smart guy, well thought-out premises. I give Eric credit but at some point he will tire of beating his head against a wall as many that have tried to better things in this industry have.

The game is rub by insiders / for insiders. No one of any importance gives a rip about what horse players want or need. In fact it's just the opposite. Most track operators and horsemen would be thrilled and delighted if they could operate alternative games without having to run live racing. Penn National for one has all but said that publicly. Sad to say we are the last generation of horseplayers. The legislation of online poker in this country will be the final nail in the coffin.

signed,
Used to Be Optimistic

Ted said...

That takeout premium (on some exotic wagers that have a takeout of less than 25%) really bugs me to the point that I try to avoid tracks that HPI pays less than track odds on. Whenever I cash a bet on the affected wager types, I feel like I'm being ripped off.
I wonder if HPI thinks people don't notice. I think the bettors that matter the most (the ones that wager the most) do notice, and this practice has probably cost them a lot of money and maybe a lot of players.

Charlie Davis said...

Great piece Eric! It's great to hear that you're getting some traction with your common sense approach.

I can't wait to read the follow-up pieces.

Eric Poteck said...

anon-thank you for your support!

Used to Be Optimistic-I have a lot of stamina. Hopefully you will drop the 'used to be'.

Ted-I agree, we need a level playing field.

Charlie-I appreciate it.