Why I Left Racing: Part V

Hajck files Part V of his very interesting series on racing. To go from a six figure bettor and horse owner to, well, not a six figure bettor and horse owner has been enlightening. To say the least.

...... as Richie says "Listen to your customer, or die. If you don't listen, you SHOULD die! Close up shop and sell flowers."

Why I Left Racing

…and what it will take to get me back.

By

Doug "Hajck" Hillstrom

Part V

Van Nuys, Van Nuys



The first time I met one of racing's greatest characters was appropriately from across 3 feet of lacquered pine. "I'll take a margarita, kind sir, and don't try and pass off that lemonade you serve to the kids that will be jammin' this place in a couple of hours. I need a drink that will wash away one of the worst DQ's I've ever seen in my life?"

Richard Pratt had stopped at a bar on his way home from Hollywood Park, and my life was about to turn down a different path.

"I can do that for you" I said reaching for the Cointreau bottle.

"… and don't be throwing that in the blender, either. Make it on the rocks" he said as he laid tomorrow's DRF down on the bar.

The bottle of tequila and orange liqueur dropped down to my sides as I stared back at the man in feigned disbelief, "just relax and tell me who you like in the 5th tomorrow, and I'll spoil it for any bartender you ever order another margarita from again."

The year was 1984, and I was a racing neophyte. The next day was to be my first day at Hollywood Park, and the opportunity to query the salty railbird almost appeared as divine intervention.

As it turned out, the man everyone referred to as Richie was, like me, a transplanted Washingtonian, that lived just around the corner from the trendy watering hole I managed in Northridge, CA.

Richie opened the Form to the 5th race and perused the entries for all of 30 seconds before emphatically folding the publication back up and declaring "the only way you can find a winner in that bunch of cheap maidens is to find him on the track, and they'll be loading in the gate before I will be getting my bet down," as I placed his libation in front of him. He was extolling the virtues of confirmation and the body language of the equine when I asked him how his cocktail was.

"As the Hebrew settlers said as they ascended on the San Fernando Valley…. Van Nuys, Van Nuys."

The next day I met Richard Pratt at the track, and probably learned more useful handicapping insight in that single day than I would in the rest of my life combined. The racing world opened up on a visual level that I had thought was primarily confined to pages of data.

I would spend many days together with Richie at the track and ITW facilities after that day, including a memorable trip to Agua Caliente that could have been a chapter out of a William Murray novel.

"I can't stand a man without an opinion" one could hear Richie repeat over the years, and he was never shy in sharing his. His analysis was as astute as anyone I ever met because he always took as much information into consideration as possible before reaching a decision. He has probably been shut out of more wagers than anyone in the history of the horseracing, having to wait for the last feasible second to get to a window and invest in his gathering of intel.

The man shared in the common thread that weaves the fabric of horseracing, and that is Passion. You would be hard pressed to find a more passionate assembly in any cross-section of society, and certainly the most diverse supporters of any sport, than that of thoroughbred horseracing. It is just one of the things that make the sport great.

Another quality that the sport of racing is built on is that of Hope. Andy Dufresne said in the movie The Shawshank Redemption that "Hope is a good thing… maybe the best of things," a quote I often considered to be the cornerstone in the game. Hope is also the basis of the racing adage "no one ever committed suicide with a good 2 year old in their barn."

My passion and hope in the sport of racing have faded in recent times. Perhaps the reason is that I don't get out to the racetrack as much anymore. It is hard to capture the buzz one got from watching the likes of a John Henry thunder down the stretch live in the Big 'Cap with 80,000 fans whipped into a frenzy, or a Winning Colors break her maiden at Saratoga while sitting in solitude in front of a computer monitor or at a sparsely filled ITW facility.

Richard Pratt weaned me to the sport of live thoroughbred horseracing in the day that if you wanted to see a horse race in California, you had to be at the track. It was a different time, a different era, and the sport has had difficulty in its evolvement since that time.

It is my hope that I can someday return to the sport that I was once so passionate about. The game will have to undergo a major transformation though, without question. It will need strong leadership and organization. It will require aggressive marketing to a youthful demographic that has a sense of entitlement. The very maximum take on any form of wagering must be no higher than 15%, and the percentage of 10% seems even more equitable. It will take a heightened awareness of customer service, or as Richie says "Listen to your customer, or die. If you don't listen, you SHOULD die! Close up shop and sell flowers."

My friend and mentor asked me, "so when do you think you'll place a bet again?" to which I answered "I used to love thoroughbred horseracing. I loved the smells, the anticipation, and the analysis. I used to love to take people to the track and share in the excitement of the day. I guess I'll return when the sport loves me back."

WB

Something that really kicks horseplayers in the gut, as it does everyone in this business. Rest in peace pal.

Photo courtesy NYRA

People Do Pay Attention

Vic Z over at horseraceinsider.com, John Pricci's site said something interesting recently about groups like HANA. Paraphrasing he surmised that growing groups like this involves signing up players who have been with the game for so long and are so frustrated they believe "why bother, racing never listens?"

I don't blame those people a bit. In fact, many of them have signed up for HANA.

We are here to say that we think the business is changing - bit by bit, brick by monopolistic brick. We have seen industry response here at HANA. We are getting some respect and the members who have signed up are expressing some optimism.

More evidence? How about Dana over at the Self Appointed Fan Committee? They were invited by the Breeders Cup to give their thoughts (as well as other people who love the game, like Valerie at Foolish Pleasure and more). Saddle pads? Ladies Day? Ticket prices? All discussed and asked for by the BC. The SAFC asked members and anyone for their gripes, or praise beforehand.

The problem?

We brought print outs (and sent soft copies) of the submissions we received from SAFC. They were very grateful and started to read them immediately. The total amount of submissions? A whopping 27. It’s not that they’re not willing to listen, because they are. But if we’re gonna get a fair shake against their data, we’re gonna have to roar instead of peep. Many thanks to those who did make submissions, rest assured they’re being read and that they want to hear what we have to say.

As I said, I do not blame people one bit for feeling that their time would be wasted by trying to change racing - we at HANA were one of you. We seem to never get heard, but honestly we see a change. There is a willingness in racing to listen. But it is up to us. We need to participate to have our voices heard.

If you'd like to help us please give us a sign up, or tell a friend. We could use all the help we can get to make sure that racing hears us loud and clear.

As always, thanks for your support.

The Winds of Change

Jeremy Plonk in his most recent ESPN column:

But, at the same time, the "what's next" for horse racing might be every bit as exciting and effective in righting the game's sinking ship. My hunch is that something on the business end is going to break in 2009, something that gives racing a pulse. What do I base that on? Namely, desperate times and an unbelievable amount of core people associated with the sport who love it to no end -- despite its many faults. This game is filled with fans and hard-working individuals who wouldn't know what to do in any other field, nor want to be a part of anything else. They live and breathe racing, and defend it mightily.

We think so too Jeremy.... at least we hope so.

New Series' at HANAblog

Thanks to everyone who responded via email and by commenting on the blog for our last press release. We have generated some interest in what we feel is a very important topic - the future of online wagering in our sport.

Over the next while we will be posting different ideas and thoughts about where the Internet betting landscape has gone and will go. "HANA2.0" will explore what the future may bring, and where we can possibly go if we work towards that goal.

Two more features we hope to bring over the next while here at HANAblog involve our members, and live racing.

First we are starting a ten question segment: We ask a member ten questions about racing, and he/she shares some thoughts. One great thing about HANA is the diversity of the membership. Horsemen, fans, $2 bettors, $10 bettors and $100 bettors. We have thoroughbred and harness bettors too. We hope to chat and get some excellent feedback during this series called HANATen.

Second, HANALive will focus on the live track experience. We all remember (at least most of us do) the apron packed and the crowd loud - it seems so long ago. Some tracks have been very proactive in trying to bring back that excitement - Keeneland comes to mind. Others have faltered; and frankly we can not blame them too much can we? Slots have changed this game forever.

Hopefully you all will give us some good feedback on these pieces. We can not bring some of the issues to the forefront without help.

Note: We received our 400th member today. Let's hope 500 comes as fast as 400 did. Thanks to everyone who signed up.

Press Release: HANA Calls For Internet Wagering Task Force; Pleased with Hollywood Compromise

Horseplayers Association Encouraged with California ADW Deal. Calls For a Settlement in Current ADW Disputes Until An Internet Wagering Plan is Formed

FOR IMMEDIATE RELEASE

(Charlottesville, Virginia. November 25, 2008): In a press release dated November 9th, 2008, HANA asked the industry to come to a compromise regarding the California ADW fight. The Horseplayers Association of North America is encouraged that industry stakeholders have reached a one year agreement and the signal is no longer being withheld.

However, there still are ADW issues that have yet to be resolved. HANA is asking the Industry to settle these outstanding ADW disputes, with a similar one-year deal as in California, to allow for two things: 1) For fans to have access to these tracks should they want to play them and 2) To allow the Industry to form an Internet Wagering Plan for the long-term health of the sport.

"On Friday the ongoing fight over ADW revenue in Ohio resulted in a massive reduction of racing days further crippling thoroughbred racing in the state. In addition, continuing ADW disputes in Florida and Kentucky remain at a stalemate. In fact, The Bloodhorse reported today that stakes are being cut at Calder and wagering has fallen over 30% in 2008. The adoption of a similar one-year agreement in those jurisdictions is the first step to achieving progress by constructing and implementing an optimal agreement." says HANA President Jeff Platt.

HANA believes that the Internet medium is not being handled in a proper way to maximize its reach and revenue capabilities for the 21st century and it is about time we met the challenge head-on with a long-term action plan.

"We are not being smart," said Platt. "It's 2008. People know about the Internet. They want easy access, convenience, and lower prices. Companies like EBay, Amazon, and E-Trade figured it out and have boomed as a result. Anybody can buy or sell 1000 shares of stock for just eight bucks - at home before picking up the kids at daycare. We buy stuff on EBay for pennies on the dollar in commission. We buy books at a discount prices with free shipping in the middle of the night at sites like Amazon."

HANA believes racing has lagged too far behind.

"Racing is still trying to sell a 100 year old product on the internet at the same exact price it sells for at the track. Worse, racing is trying to use the internet to sell its product to some people in some states under a system of rules written before the internet was even invented. Wagering will not grow on the Internet by itself, the table needs to be set for it to grow." Platt said.

HANA calls for a group of people familiar with either the internet business, online wagering, or both to be part of a newly formed Internet Wagering Task Force. HANA would like to nominate these names for consideration, if they agree to be a part of such a panel:

Will Cummings: Mr. Cummings has detailed many of his findings to the industry before. He has called for better distribution and more flexible pricing for the different sets of racing customers. He would be a good fit to any group because of his 30+ years experience in all forms of gaming.

Halsey Minor: Mr. Minor was formerly with Internet giant CNET and knows a thing or two about an Internet business model.

Joe Riddell: Part owner of ADW Premier Turf Club who is currently trying to keep players onshore by offering Internet prices to price sensitive players through rebates.

Barry Meadow: Long time bettor, author and a member of HANA's advisory board has written much about the subject of online betting, and is familiar with many of the businesses both on and offshore, including betting exchanges that have shaped the Internet landscape.

Dana Parham: Mr. Parham recently spoke at the Arizona Symposium on wagering and echoed similar views to Mr. Cummings and Mr. Riddell.

The UK betting site Betfair was founded in the year 2000, with an Internet wagering plan of lower prices and easy access. In only seven years they have grown from no customers to well over 1 million customers. They currently handle more bets each year than the number of trades on the European stock exchanges combined. Online poker grew with an internet wagering strategy of low prices and easy access, and it has exploded in popularity around the world.

Jeff Platt: "Racing failed to grow handle when it was a monopoly by not formulating a long-term growth plan. That was racing's first chance. We at HANA think racing should not let a rare second chance pass it by. It is our belief that the formation of an Internet Wagering Task Force can result in a solid long term plan essential to the business of racing. We believe such a plan is needed to ensure long-term growth for the industry and reverse its current decline."

HANA would like to publicly thank Mr. Drew Couto and Mr. Jack Liebau for taking the time to listen to HANA during the impasse at Hollywood Park. Their efforts did not go unnoticed. However, we ask for their attention once again and look forward to speaking with them about setting up an actionable Internet Wagering Plan for 2009 and beyond so we can bring our fine sport to a new market and allow it to grow for generations.

Please visit us at Horseplayersassociation.com for further information.

The Horseplayers Association of North America is a grassroots group of horseplayers, not affiliated with any organization, who are not pleased with the direction the game has taken. HANA believes that both tracks and horseman groups have become bogged down with industry infighting and have completely forgotten something: The importance of the customer. HANA hopes, through proactive change on several key issues (including but not limited to), open signal access, lower effective takeouts, affordable data and customer appreciation, the industry's handle losses can be reversed. HANA is currently made up of close to 400 horseplayers (both harness and thoroughbred) from almost all states and Canadian provinces. It currently represents over twenty five million dollars of yearly racing handle.

Members of the HANA advisory board include Barry Meadow, Nick Mordin, Cary Fotias and Dr. William Ziemba.

Our web address is http://www.horseplayersassociation.com and interested horseplayers can sign up there for free. We are horseplayers, just like you and we are trying to make a difference. We need and appreciate your support.

-30-

We truly do need your help, so if you are inclined, you can by signing up for HANA here. There is no obligation, it only takes a minute to do, your information is held in confidence and it is free! Our growth since being incorporated in September 2008 has been solid, but we strive each day to make it better. There is strength in HANA; there is strength in numbers.

If you are having any java problems with the signup page please email your sign up info to horseplayersassociation at gmail.com.

News and Notes For Tuesday

Some action on the blogosphere and some racing news this past bit.....

Bloodhorse reports that Calder is cutting their stakes, and handle has been lower than a snakes belly this year:

Calder Race Course will not hold any overnight stakes through the rest of its meet that ends Jan. 2, 2009.

Calder began its 2008 live racing season April 21. In its latest quarterly report to the Securities and Exchange Commission, parent Churchill Downs Inc. said total handle at Calder was $397 million through Sept. 30—31% lower than the $574 million for the same period in 2007.

Calder’s net pari-mutuel revenue fell 24%, from $59 million in the first nine months of 2007 to $45 million in the first nine months of 2008. Part of this year’s decline is related to contract disputes between Calder and the Florida Horsemen’s Benevolent and Protective Association.

Amid contract disputes, Calder cut average daily overnight purses by 30% April 22. It restored those cuts July 7. But on Sept. 12, it cut average daily overnights 17% from $180,000 to $150,000.

Blogger looks at the recent fall in revenues in the News industry:

“The complacency stems from having enjoyed a monopoly--and now finding they have to compete for an audience they once took for granted."

That quote is about the news industry but can be paralleled to racing he thinks. Further:

We are not there yet. Not even close. Look at the current ADW fight in the US, or with recent horseman and track fights in Canada - they are shutting out racing customers as almost an afterthought, like they do not matter. Worse yet, we have the greatest medium to grow this sport we arguably have ever had and they can’t figure out what to do with it, except squabble over percentages. The monopoly will not die, eventhough the fork has been stuck in it for over ten years.

I don’t think horse racing as a betting sport is obsolete, not at all. Actually it is tailor-made for the internet. The folks in charge just have to find a way to make sure that they find a way to grow back the bond and trust with their customers, and exploit racings reach by pricing properly on the web. If they do not, I fear we will be a footnote of wagering history.

Trackmaster blog looks at ADW and mentions HANA. "ADW wars a Lose Lose Situation"

Blogger looks at racing revenue and casino revenue. Conclusion: Our lack of foresight in changing our product and delivery has us getting our asses kicked.

NOTE: HANA will have a statement about the resolution at Hollywood as well as where the group thinks we should go next. We will post it as soon as we can.

NOTE II: Thanks to Hajck Hillstrom. His series on "Why I Left Racing" is well received and members are finding it interesting. It is nice when we have members who take time out to help us at HANAblog. It is nice to have Hajck aboard

Why I Left Racing: Part IV

Hajck is back! This time with Part IV of his series (parts one through three can be accessed to the right under "HANA Feature".

Why I Left Racing

…and what it will take to get me back.

By

Doug "Hajck" Hillstrom

Part IV



Is the frost on the pumpkin?

While growing up as a lad in the fertile Yakima Valley of Washington State, I would eagerly awaken every morning and devour the contents of the local newspaper, The Herald-Republic. First stop would always be the box scores from Major League Baseball, or the line scores of the NFL/AFL and the NBA/ABA. Next would be the college scene and prep scores from around the Valley. This ritual was interrupted by only one event, and that was when the Yakima Meadows meeting was running, because it was then that I first turned to Poor Paul's Picks before committing Carl Yazstremski's stats to memory.

Paul George was the paper's public handicapper, and back in the 60's and early 70's he would go head to head with the paper's sport's editor, Jim Scoggins, in a mano y mano contest of who could make a determined bankroll last the longest over the course of a meeting. This type of coverage was common back in the day every where horses were running in this country. I seem to remember a kid by the name of John White making the scene in the mid-70's and developing some pretty decent handicapping skills while joining in the fray against the two more seasoned railbirds. It was the first time I could actually interact with participants in a sporting event by following their prognostications

I also recollect hearing stories of tracks to the east and west of the centrally located Yakima Meadows, Longacres to the west in Renton outside of Seattle, and Playfair to the east in Spokane. I could only imagine how exciting those now defunct ovals must have been, because I wasn't allowed in the racetrack growing up, but that didn't stop me from watching the races from outside the fences during my annual visit to the Central Washington State Fair.

While I was being introduced to the game in my unobtrusive way, two other lads, one to the east, and one to the west, were throwing themselves headlong into the sport. They would be at the track almost everyday finding ways to get a bet down before it was even legal for them to do so. Their passion for the sport was engrained before Secretariat won the Triple Crown, and they weren't just observers of the sport… they were part of the game. When their local plant wasn't running, they were catching rides to points east and west, following the then robust Washington circuit.

The man growing up in Seattle's name was Lee Rousso. Most handicappers that have been around since the early `80's remember Lee, as it was difficult to open a western edition of the DRF and not see his face advertised for his on-track handicapping seminars.

Lee, who grew up on Mercer Island, remembers the day he first attended the races, as he, his father, and his brother drove the 150 miles north to Exhibition Park (now known as Hastings) on October 5th, 1968. It was a right of passage for the 10 year old as his Dad could be described as a "hardcore player," and from that day forward Lee considered himself a "track-rat." For an interesting perspective on Lee's journey through the sport, check out this article written about him in the San Diego Union-Tribune.

Since the article was written nearly four years ago, Lee has been named the president of the Washington State chapter of the PPA (Poker Player's Alliance), a position from where he is championing the rights of the online poker player in Washington State, and even manages to reference horse racing in his complaint to the King County Superior Court.

In an interview I had with him this week, I heard him echo many of the sentiments serious handicappers everywhere have about the state of the sport of horse racing.

Once you become knowledgeable about the game, you realize how nearly impossible it is to expect to make a reasonable profit at it. With an average take on any wager over 20%, the churn will eat a player's bankroll faster than lone speed on a sealed track. Couple this with the fact how difficult it is to market the sport to the youth of today, and you can't help but seeing limited growth for the game. Handicapping the horses for profit is hard work. Even if one has the useful determination to spend 3-10 hours preparing for a given card, or a combination of cards, the odds are against you with the product put on many of today's tracks.

"Five and Six horse fields just aren't going to cut it. Back when the average field at Longacres was ten-twelve horses per race, you had the opportunity to realize a return, plus it was a pretty cool place to take a date. There was an air of excitement, a buzz you just don't see anymore except on racing's biggest days." It is pretty safe to say that the vibe of today's live horse race has diminished in recent years.

Lee has attended the races but twice in the last five years, both of those were the Breeder's Cups held at OakTree in `03 and `08. "Before the advent of satellite wagering facilities in SoCal, it wasn't unusual to see 60-70 thousand at the track for some of racing's bigger events, and even over 80 thousand for the Big `Cap." Hard to believe when Day 1 of this year's BC announced attendance was 35,000, but a more accurate total was certainly more like 25,000.

Racing lost one of its true ambassadors when Lee Rousso walked away from the game, and along with his departure left some of the spirit of the game as this is a man that is passionate about his gambling. He even ran in the Washington State Democratic gubernatorial primary this year against incumbent Christine Gregoire on a Pro-Online Poker platform, so as you can see, he doesn't shy away from a fight, and has probably demonstrated he has enough common sense to hitch his wagon to a fresh team of horses before the tired ones drag him over the cliff.

Next week we will take another look at one of racing's great characters from east of the Cascades that has been involved in the game for more than half a century, and how he perceives the direction the sport has taken.

Quote of the Day

Veteran trainer Vladimir Cerin said, "Drew Couto and the horsemen never agree on anything. On this one, we support him. We are all fighting for a piece of the shrinking pie."

From here

Ohio: Racedates Lost and Racing in Peril

Today the thoroughbred times reports that in Ohio a massive racedate loss for 2009 is in the works:

The Ohio State Racing Commission on Friday approved a 2009 schedule that includes no live Thoroughbred racing dates at River Downs and 60 days of Thoroughbred racing at Beulah Park.

Both tracks, which will conduct Quarter Horse racing next year, were seeking substantial decreases in the total number of live dates offered because of difficult economic times created in part by competition. River Downs offered 105 live racing dates this year while Beulah was approved for 119.

A request by Jack Hanessian, the president and general manager of River Downs, to run two live days of Thoroughbred racing in 2009 was denied by the commission, which approved a request for Beulah’s live dates. Thistledown previously was approved for a 91-day meeting next year.

“The handle has been going down by 10% to 12% a year for the last five years,” said John Izzo, the Ohio State Racing Commission’s deputy director. “This is just something else we’re going to have to overcome if we want to keep going forward.”

During this time we have seen the shutting out of signals with horseman holding out for a bigger split:

Wagering on live racing at Beulah is not offered by major advance deposit wagering providers TVG, HRTV, TwinSpires.com, and Youbet.com because horsemen have not approved the track signals to be sent to ADW outlets. Horsemen are negotiating an increase in the percentage of ADW handle committed to purses.

I think the above news today suggests this was not a good policy.

At HANA we have said countless times: We think that taking more money from ADW and the player, and using a pre-internet pricing formula for ADW, while constantly fighting will result in a loss for the business. Purses will not go up, they will go down. It is time to fight for one thing: Handles and the sport. If not, we feel headlines like the above will become commonplace in our sport.

Horse Racing Must Drop Takeouts Substantially

I've written about fixing horse racing many times before. Most notably, June 2007, I wrote a post called How To Save Horse Racing, and in February 2007 I wrote a piece called Thoughts On Track Takeout.

In the last year, horse racing has gone even more downhill even more when it comes to the growth and the bettor. Most of this has to do with the current ADW-Horsemen conflict, but in the last year we also saw even more tremendous idiocy when Calder and NYRA raised their track takeouts.

The economy isn't helping right now, but horse racing has been dying for years. The reason is simple. It doesn't even try to compete with other forms of gambling, and no long term winners are produced, so as to attract new players.

Drugs, potential cheating, lack of proper disclosure, fatal injuries, etc. are just secondary problems when it comes to growth. In fact, if racing were to increase their fan/bettor base by competing for more players, the other problems would go away because integrity would actually matter as the game would be taken seriously again, by the masses, and the masses would demand it.

All the marketing in the world won't help grow the game. Sure, it might get someone to come to the track once, but there is absolutely nothing that will hook the person to be a regular customer.

Aside from the fact that it takes years to understand most of the handicapping nuances that allows a player to be better than average, the reality is that being better than average won't make one a winner. Far from it. A handicapper is considered good if he or she only loses 10 cents on the dollar (the collective average takeout at Woodbine, for example, is around 21-22%).

Racing execs have shifted their mentality. And the result: In the 60's and 70's racetracks were hesitant to even bring in exotics because they were worried that fans would lose money too fast and be discouraged.
Now racing is set up under the baseball stadium model: Get as much as you can from the customer as quickly as you can because they might not be back for a while. You will probably not see many of them again.


Why Was Racing So Popular In The 60's and 70's?
It was the only game in town in many places. Players also had lower takeouts to overcome. No exotics. No intertrack. You only had around 40-45 races a week to play.

Sharp handicappers had speed figures, before Beyer figures came along and were published them in the form. There were winners, there were those who were getting a regular return of 95-1.10 on their betting. Those who won attracted many players to at least dabble as well. Friends and family were brought to the track, because quite a few people left with money in their pockets so they could come back again the next day.

Many of players that are still left in the game today are products of home environments that included at least a day at the track each week with their parents. And this was made possible because the game used to be possibly beatable in the long term.

There were no major lotteries to compete with, and in Toronto, it wasn't until the Blue Jays came into town in the mid 70's that the race track realized they were no longer a monopoly.

Still, because racing was still a monopoly when it came to legalized gambling, the stands and the pools attracted a lot of mooch money. Gamblers who didn't even want to bother reading a racing form, who regularly lost 20 to 30 cents on every bet. This created another edge for those who devoted time to handicapping in an attempt to beat the game.

So how did race tracks react to not being the only game in town? They raised takeouts and tried to compete with more and more exotics. Triactors and superfectas with a track takeout of 25% plus are bankroll killers. They pumped in simulcasts, and nowadays an outfit like HPITV show 15 tracks a day.

Intertrack/simulcast wagering made sure that only a few people could go home with money in their pockets. The least they could have done is drastically reduce takeouts so players could last a bit longer each day. But the opposite happened, triactors with their high takeouts are now available in every race that has at least 6 horses. Racing has become like blackjack in the fact that you can play 5 really good hands every 20 minutes. Except blackjacks house edge (takeout) is 15 times lower than the takeout at a race track.

And then came slots and lotteries. Slots made sure that mooch money in the pools has disappeared to almost zero. There is hardly a player left who bets without a form. And family day is dead as well. Slots are way more appealing to those who just want to gamble. No thinking is required. Yet, even those who run slots realize that if they increased their takeout to over 10%, slots would be in trouble too. People keep coming back because it mostly takes time to scoop the players gambling money. Someone going to the track knows that $100 may give you 6-9 minutes of real action depending on how much one bets. If you are lucky enough, you might cash, and be able to win another 6-9 minutes of real action.

The way the game is set up today, it is impossible for winners to be created. Nowadays you have good handicappers facing great handicappers, and the great handicapper isn't a winner unless he or she is getting a very good rebate.

Marketers can't go there. They can't advertise that the only people who win at the track are those who bet offshore, or those who get substantial rebates. Racing has no long term winning poster boys, whereas poker has many. Is it a wonder that online poker, and other forms of gambling have grown, while racing, despite being available all over the place, has gone down the toilet when it comes to growth?

RACING NEEDS TO REDUCE TAKEOUT SUBSTANTIALLY IF THEY WANT TO GROW, NOTHING ELSE WILL WORK


Takeouts need to be in the 10-12% range or forget about it.

Note: This piece is also co-posted at Bloodhorse Blogs

The Future Looked Bright

In this article dated October 21, 2000 the numbers were good. Racing was moving forward.

Only seven years ago [in 1993], Thoroughbred racing was a very different sport from today's game. As illustrated by purse statistics for individual tracks across the continent-a new annual feature of Thoroughbred Times-two events have altered the economic fabric of the sport in that relatively short period of time.

One development is full-card simulcasting, whose effects have spread throughout the sport and provided the financial engine for creation of the National Thoroughbred Racing Association. Also playing a big role in individual track's growth were slot machines, which have in some cases brought tracks back from the dead.

Individual tracks and purses were discussed. Things were really looking good as the article focused on purse increases galore.

At Delaware:

In 1994, Delaware authorized slot machines at the state's racetracks to save the racing industry and to generate income for a state that has no sales tax. The effect was dramatic and continues today. Through October 1, Delaware Park's purses averaged $27,826. Even allowing for inflation-a $5,230 purse in 1993 has the same buying power as a $5,554 purse today, based on changes in the consumer price index-Delaware Park has more than quintupled its purses.

At Woodbine:

This year's spectacular success story is Woodbine racetrack, where slot machines arrived in the spring with dramatic results. To be sure, Ontario Jockey Club officials primed the pump by raising purses before its new slots casino put money in the bank, but slots piled up the reserves very quickly.

Through October 1, the Toronto-area track was paying out $50,479 per race in Canadian funds, which was up 48% from a year earlier. By contrast, the Ontario track had an average purse of $23,266 in 1993.

In Kentucky:

Growth continues in states such as Kentucky, which has ridden the full-card revolution to year-round prominence. One of the chief beneficiaries has been Churchill Downs, which with Frank Stronach-controlled Magna Entertainment Corp. has gone on an acquisition binge over the past two years. Churchill's flagship spring meeting had an average purse of $44,078 this year, up 63.9% from 1993.

Ellis Park, now owned by Churchill, had a similar increase, growing 58% to an $18,477 average this year.

In 2000 we bet around $14.2 billion dollars.

In 2008 we will probably bet less than 14.2 billion dollars.

When inflation is taken into account in 2008, wagering will have dropped about 28%.

So how did this happen? Currently we are in a fight about exactly this: Purse increases. The very sharp and capable Steve Zorn argues below in a comment about the trouble owners are having.

I guess my question is, in 2000 we raised purses by an absolutely obscene amount (as a horse owner you won’t hear me complain about that), yet eight years later we are nowhere. The handle ship is sinking. If purse increases were the answer should we have not grown handles, or at least held them flat?

HANA members think they have the answer on why wagering has fallen despite record purses. They tell us that through all this time the customer has not been appreciated - both the live track and ADW customer. The industry has invested in bricks and mortar, given away huge amounts of slots and handle money to purses, but have not invested in them.

We have a chance to make this right and we sincerely hope that racing takes steps to help the customer. Without them and their handles, and this is becoming very apparent this year, we are in serious trouble. We have a wagering crisis in racing.

As a commenter on a blog recently stated: “If handle is so unimportant, then why are the sides always fighting over it?” That is a good comment, and I think true. Handle is important because handle fuels purses. With the numbers we are seeing lately, the business is starting to take notice that the loss of handles is becoming the most important metric in racing, just like it was 50 years ago. Now that our business has finally realized we have a problem, maybe we can discuss ways to fix it.

Why I Left Racing: Part III

"I propose a quorum in a test market. Five (or more) representatives from each of the three factions of racing I eluded to in Part II of the series (Horsemen, Horseplayer, & Administration) sitting down together and creating the fundamental racing model for the advancement of the game. There wouldn't be a hierarchy, but a quorum where the likes of a Jeff Platt, an Andy Beyer, a Nick Nicholson, and a Richard Mandella would sit at a table across and next to each other, each having an equal voice in the decision making process."

Doug is back with the popular "Why I Left Racing" series on the regular Monday slot. Part III is preceded by (guess:)) Parts One and Two. You can read them at the hyperlinks provided if you'd like to start at the beginning.

Regardless, in this piece he explores what fans are talking about and how we can possibly address them to help our game. Enjoy, and please comment in the comment box below. Just click "anonymous" to comment if you do not have a google account.

Why I Left the Game

…and what it will take to get me back.

By

Doug "Hajck" Hillstrom

Part III

Can We Find a Solution?

In Part II of this series, we addressed that horse racing had lost its way while attempting to deal with a myriad of problems over the last few decades, but just exactly what are those problems?

I put together my short list recently and polled the astute horseplayers at PaceAdvantage.com on their perspective. Over 115 of some of the finest handicapping minds in the country answered the poll with some very articulate elaborations on their answers.

Richard Bauer states it well with his observation; "Every problem listed is valid, but in reality they aren't problems. They are symptoms. The problem is that the industry's refusal to do what is necessary to make horse racing a robust business for everyone concerned over the long haul leaves it mired in a continuum of quick fixes in response to whatever each month's adverse public reaction places on the table. As soon as the clamor subsides it's back to business as usual. At one time I was naive enough to think that the industry cared about "me" as a customer."

I think that it might be better stated that the sport of Horseracing has a huge problem with numerous symptoms that need be remedied.

In the poll, it is interesting that the issue receiving the most votes was that of Excessive Take with a response of 31%. Interesting, but not surprising, as don't most decisions usually come down to the bottom line?

You might be curious how I voted in the poll, and believe me, it wasn't easy to come up with a single problem that outweighed the others significantly, but I am, as it turns out, in agreement with Jeremy Plonk, as I opted for the issue of Too Much Racing. It is time to consolidate the sport to make it a tighter product, therefore improving it.

It is my contention that the sport has become diluted in recent years with the advent of simulcast wagering and ADW's. At no time has the adage "less is more" been more prevalent. It isn't much of a stretch to see the average week of racing at any track comprised of 42 races spread over 5 days. Now, the average of slightly over 7 horses per race is recognized as the average, but not the norm. It is the era of the 5/6 horse field, and nothing turns off the astute horseplayer more than short fields. Why not consolidate those 42 races down to about 30?

The concept of eliminating 25% of racing opportunities should increase field size, but I'm not an expert on the topic, in fact, I'm just the average Joe that just likes to wager on Thoroughbreds.

The greatest coach ever, in my humble opinion, was John Wooden. Every year Coach Wooden would gather the prospects for his team, and do you realize the very first thing he would tell them?

He would show them how to put on their socks.

Fundamentals are the cornerstone to success.

The industry of horse racing needs to address the all of the fundamentals in the sport. They need to address it on a very small scale at first… but just "who" are the "they" I refer to?

I propose a quorum in a test market. Five (or more) representatives from each of the three factions of racing I eluded to in Part II of the series (Horsemen, Horseplayer, & Administration) sitting down together and creating the fundamental racing model for the advancement of the game. There wouldn't be a hierarchy, but a quorum where the likes of a Jeff Platt, an Andy Beyer, a Nick Nicholson, and a Richard Mandella would sit at a table across and next to each other, each having an equal voice in the decision making process.

It is easy to find fault, but difficult discovering solutions. The key is to find out what global markets are doing successfully and building a racing model that captures all that is marketable in the sport of racing. In this country, one could do worse than to utilize what I perceive the best model to improve on, and that would be Keeneland's operation.

Next, the sport needs a marketing adjustment. The sport is about gambling, and it is time to stop tiptoeing around that fact and accentuate it. Does anyone think the game of poker has experienced the success it has in recent years just because it is a fun game to play?

Without pointing any fingers and playing the blame game, let's see what we can do to put it back on the path of prosperity it once enjoyed in this country, and the type fan base enjoyed in other countries on a global scale.

I would think with H.A.N.A.'s primary objective to increase handle, the N.T.R.A. and every other governing body in horseracing would be sending a limo to pick up their representatives in such talks.

In Part IV of the series, we will take a hard look at another example of someone else who walked away from the game out of frustration, and it wasn't a monetary issue, but one of growth and prosperity.

Please visit Paceadvantage to vote or comment on the player poll. Joining Pace is free. To join Doug as a HANA member click here. It's free too and all information is confidential.

ADW Dispute: The Parties & HANA

HANA President Jeff Platt, as we have previously reported, as been working the phones with the parties in the ADW dispute. He has placed three articles on the HANA website, speaking a little bit about his interpretations and opinions.

In Part I he speaks of his discussion with the ADW side.

In Part II he speaks of his chat with the horseman side.

In Part III he speaks about how important this issue is, and solving it with an opinion that the long-term view trumps both sides. He uses data from a racing study by an MIT graduate with 30+ years experience in gambling to point out why ADW wagering should follow the business principles it was designed to follow. If it does not, we might be in the exact same spot five years from now fighting about this all over again, but this time with even more handle losses.

The parties involved aren't just going back and forth on numbers for signal and host market fees. Decisions reached in these negotiations are going to have a profound effect on thoroughbred racing well into the future. Whatever final agreement is reached, it should be part of a comprehensive strategy that takes into account the future of the industry.

From what we hear from HANA members, as well as some critical thinkers in this sport, it is not about getting 4% or 9% or 11%, or whatever. It is about growing the sport in 2009 and beyond by reaching a gambling customer who is currently spending his/her money elsewhere, or who might be interested in racing if we offer it to him/her in a new, fresh way. We believe that if E*trade was created on a "fight for a slice" model, rather than an internet model it would not be successful, and we believe the same online stock brokerage model should be used for the ADW system. It is time for racing to become 21st century. This dispute and the future of racing is bigger than the parties, and what's best for the industry as a whole must be the only consideration.

HANA needs your help. The response has been overwhelming the past two weeks. Horseplayers from all walks of life, of all sizes, including small bettors, big bettors, horsepeople and horseowners are all joining us. Please join up if you already have not. Your information on the form is held in confidence, it is free and you can add your name to the list of folks who want to see this industry grow, so we have higher purses, more of a fan base and bring the sport we love to those who are yet to find it.

This week at HANAblog: Watch for Hjack Hillstrom's Part III of "Why I Left Racing", due out sometime late tomorrow. Read Part's I and II at the right if you have not for an interesting read.

Plonk Gets Even More Interesting

We race 52,000 races a year in North America. Handle per race is around $250,000 and average purse per race is $18,000. Japan races 18,000 races, per race handle is $1.5 million and the average purse is $40,000.

In other words, Jeremy Plonk is on to something.

Players would love to play in 1.4M pools. Horseman are currently after more for purses, because average purse levels are too low. Race less and win? What do you think?

From the article:

Those tied to horse racing almost universally agree that there's too much racing. Not enough healthy and sound horses, not enough fans, not enough oomph in the gas tank to fuel the show. I don't pretend to have the magic wand, but I do know enough about the racing landscape to put pen to paper and start the thought process.

Racing desperately needs to trim the excess.

Too many racetrack executives are narrow-minded and worried about the wrong things. They fear moving traditional schedules that might upset their on-track fan base. But the reality is that 85 percent of their betting handle comes from fans off-track. While they scratch and claw to lay claim to those popcorn and parking receipts, they fail to embrace the low-overhead, solid return they get in the simulcasting game.

Further, horsemen simply don't want to budge. Whether we're talking finances, drug policies or race days, horsemen remain a group firmly against change. They love long race meetings with short fields, reducing travel expenses and increasing their chance to pick up a piece of the purse with few rivals in the starting gate. They assume the game will always be here and that what provides their benefit trumps the fact that it's a death knell for the track operators and fans.

Read more at the link. This is on the heels of the last Plonk item on ESPN about the ADW crisis. Check that one out too if you have not and are interested.