Friday, October 24, 2014

Breeders' Cup and the Non-National Pick 6

Dan posted a neat link from 1984 on the interwebs yesterday. It is an SI piece that looked at the inaugural Breeders' Cup on NBC and it lamented the television coverage. The fact that it did not explain the horses and races as well as it should've generally stuck in the writers craw. The piece went on to present a rather ominous future for the event, in terms of television ratings.

I guess some of it, at least, became true.

I am certainly not here to beat up on the Breeders' Cup - I think most of the criticisms of the BC are weak. It's a spectacular event, it draws betting and a crowd to the live venue.  3.1 million people watched the Classic in 2010 because of Zenyatta, and if she was in the Jockey Club Gold Cup against Blame and others instead, it would've not even been televised. It's a brand that has been built, and it is a big brand.

The Breeders' Cup - how the races are explained, shown or on what network - has never been, in my opinion, the problem. It's more about racing than it is the event.

8 races or ten, or twelve, are not like the Derby, where one race with a rich history can drive betting volume. The BC's edge has always been the whole event. You, me, the fencepost and anyone else who loves betting horses will bet; and we'll do it for hours straight. For others who are more casual viewers (the ones who watch on TV), they're stuck in the same system that befalls racing at every turn. The inability to quickly become a customer.

If we turn back the clock, let's think of what the BC ratings would've been with a national pick 6; a powerball for horse racing, not unlike what the "Equilottery" has spoken about. In a country like Sweden, with the GDP of an Ontario or Pennsylvania, tens of millions can be bet on their national pick 7. That bet can be bet virtually anywhere. No SSN, approvals, state restrictions, advertising restrictions, no credit card checks, sending in a check, signing up for a "PIN" service and all the rest. You go in, you choose seven numbers, or you give the machine 50 Swedish bucks, and it spits out a bet. You're in the game.

The Breeders' Cup would look very different with a national (or 43 state, where some form of horse racing is legal) pick 6 than it does today. Over 30 years this type of bet might've grown to $50 or $100 million in handle alone. With a carryover from Friday to Saturday, every betting syndicate in the world would be betting millions into it*, driving it even higher and higher. And with a pick 6 like that - for one day, probably with a carry - it's where 30% takeouts can make sense, adding money to the industry.

Casual fans - say some of the 15 million who watch the Derby - don't dislike horse racing. Casual bettors, now playing poker, don't dislike betting it either. This market just does not pay attention to events-other-than-the-Derby because they have no skin in the game.

On a Sunday a casual NFL fan opens his or her fantasy team, his office pool sheet, and participates. Participating in a Breeders' Cup is not like that. It's always needed a national pick 6 - easy to find, easy to bet, easy to consume the product. Racing has never reached that point for myriad reasons, and I believe it's the most important reason that the even has been held back. If a consumer can't consume your product, he or she will not watch. How an event they are not able to participate in is explained on TV, is pretty irrelevant.

If I were the BC or the NTRA or Jockey Club, I would be worried less about TV ratings, and more about working towards legislating a nationally bet pick 6. 

Have a nice weekend everyone.

* - To understand the increases in betting volume massive pools and massive carryovers generate read Gambling Wizards for the section on Hong Kong race bettor, the late Alan Woods. When the "triple trio" carried over, he would bet several million into it. A national pick 6 pool, with a big carry and casual money into Saturday's races would likely generate many, many millions in handle. 

Tuesday, October 21, 2014

Racing's Sports Betting Conundrums

In the quest for more revenues, or more spinoffs in some fashion, some in racing have held sports betting up as another avenue for such. Most recently this looks close (close but maybe far) in Jersey, with Christie signing on.

Regardless what happens, there are several opinions about what sports betting at a racetrack does.

  • It's more competition and another drag on handle
  • It's a carve-out where racing could get more revenue, like comes from slot machines
  • It's an avenue to draw like-minded people to the racetrack, who may cross over and bet
I think I side mostly on the first of those bullets.

From the Paulick article we see the dichotomous opines on this issue. The first comment, by Fred Pope has some merit. Not surprisingly, I guess, Pope comes out for having control on sports betting and the carve out. "Are we going to allow our partners to throw us under the bus?"

Irwin has a more sink or swim opinion, "If racing cannot compete with these other forms of gambling, they better find a way to do it or perish."

Pope once again focuses on the slices, not the size of the pie, stating that under 2% of gambling revenue in the UK goes to purses (he's right).  But the UK does compete, like Irwin wants, by offering a good gamble on horse racing in a terribly difficult competitive environment. Is 2% of $20 billion better than 6% of $5 billion (where North America would probably be close to if all gambling was legal like in the UK).

The clock will not be turned back on gambling any time soon, so this new paradigm is something to clearly prepare for. And in a business that rarely prepares for anything in long term fashion, we might see - say in three years time - the policy dictated by letting the chips fall as they may.

Monday, October 20, 2014

A Big Scratch & Other Cray Notes

Years ago now I went to a race in western Ontario - Clinton I think - where a trotter we had was in an OSS. We traveled quite a few miles, got lost and had a pretty frustrating trip. Post time for the horse was something like 1:45 and after asking someone on a dirt road for directions at about 1:20, we stormed to the track, arriving just before the off. After sprinting to the tarmac, we watched the trotter break stride, never get on stride, and finish last by about a hundred.

Fun trip!

Yesterday I was watching the interview with Michael Owen on TSN (so nice to see Woodbine in HD on the Sports Network, BTW). He took the red eye from London to Toronto - in his dashing suit - and took a $15 or so cab ride to the track to see his horse, Brown Panther, contest the Canadian International. He had to do TV work the next morning, so he would leave the track immediately after the race for London.

That, as we all know, puts my travel story to shame. Brown Panther was a runaway in the paddock and on the track. After racing a half mile or so before the start, he dumped his rider and was scratched.

Not only was that bad for Owen, it was bad for Woodbine and for the fans. Woodbine had to refund the wagers on him, and he was one of the favorites; fans got to see one less contender contest the big race. Despite that, the race was fair, and the handle on the card was up from last year's edition.

Speaking of Michael Owen - and injecting another silly story - I bet the former soccer star was treated well during his brief visit to Woodbine. Partially because he plays soccer, not hockey or baseball, but I think it's more than that.

I was watching 30 in 30 yesterday. It was about disgraced sprinter Ben Johnson and his relationship with Carl Lewis. As most who follow track know - certainly Canadians do -  Canadian sprinting was re-engerized by Donovan Bailey, in 1996, after that debacle. He won the 100 in record time, was the world's fastest man, and won another gold in the relay in Atlanta. He was big news.

Anyhow, that got me thinking of a story. Back in the late 1990's, or early 2000's I took an afternoon off early in the year to go golfing. I went to a rather cheap course ($35 or something) in Oakville that tended to attract hackers. It was no posh club and in fact I think the course is now a subdivision. After hacking it around a bit, I am approaching the fourth tee after catching up to the group ahead. The group of two includes, well, you guessed it, Donovan Bailey. I am sure he knows we know who he is, but we just talk about the course, our golf games; a normal conversation that we'd have with any other group.

As we tooled around the course I was amazed that no one - not one person, even after the round - approached him for anything. It was just another day at the golf course. I guess equally amazing, is that this dude who was worth a pile of money was playing the same course as me, and seemed to think nothing of it.

That's so Canadian. It's just kind of the way it is. Live and let live.

I hope, despite the outcome, Mr. Owen comes back with that nice horse of his.


Nice handicapping tweet by Dave. This is so smart.

Want better security? Better protection for betting and horses? Sign this petition. 

Great post by Pat Cummings about run ups.

People don't comment much on blogs anymore, since twitter and facebook came around, but I was happy with some of them yesterday on my last post. Thanks for commenting everyone.

Taris was as large as a horse could possibly be on Saturday.

One comment, from Barry Meadow, on the petition above caught my eye.  Barry has a way with words. "Owners and trainers are simply suppliers of the product (horses). In any business, when you find one of you suppliers cheating, you simply never use him again. Why these cheaters keep getting away with little wrist slaps is a mystery to me."

Have a nice day everyone.


Friday, October 17, 2014

Have the Volume Players Finally Had Enough With Horse Racing?

There was a comment on the Paulick Report yesterday from an unnamed source, purported to be from a US betting syndicate.
  • not in a position to discuss specifics but we have scaled back dramatically in the u.s due to margin compression. major tracks have priced themselves out as far as we are concerned and our returns are just not commensurate with the positions risks we take. 
What this commenter is referring to is what we've discussed at the blog here for years: The signal (Host) fee squeeze, and added taxation/fees in places like New York, Illinois, Pennsylvania and  Virginia* along with New Hampshire**.  For years, the price that tracks charge for their signal has been increasing, some tracks have formed a consortium to have the Monarch's or Troutnets of the world negotiate for them (which is why you see some signals off your ADW in 2014... and some smaller tracks handle decimated); much to the cheers of racing insiders. Despite warnings of the damage this can do to handles and the long term health of the game by many players, it's gotten worse and worse in 2014.

When you squeeze a signal fee too high, a few things can happen: Takeout rates can go up and there is less incentive to lower them (like we saw at Churchill this year), innovation can stop, and player rewards can go down, which affects both small and large players.

When you add smaller fields - like we've seen at Keeneland - higher takeout and signal fees, and less incentive to bet, a negative reaction occurs. Handle goes down. In theory anyway.

Is this comment accurate in real life? Are bigger players pulling out, or scaling back? From my discussions with a few the last 24 hours, the answer is yes.

From one large player who has scaled back big in 2014, and is playing more poker: "Whale versus whale with high host fees has soured me"

From another betting vet, with some knowledge of the teams: "There is no doubt this is true"

From another: "I like horse racing and it is not a conscious decision  to play fewer dollars. Short fields and high fees make it impossible to create winning margins"

My handle is off well over 50% in 2014, probably 80% at Keeneland alone with the short field dirt fests.  I know many of yours is off as well, because it is getting really difficult to find good bets that any of us have a hope to convert to long term positive ROI. You don't have to be a whale to know you are not getting the best of it.

When racing concentrates on raising prices - whether it be on the top with a rake hike, or on the bottom with a signal fee increase - the result is less handle. The long term result is even worse because bettors who might have an incentive to play horse racing see it as a mugs game; a novelty to play on a big day like Derby Day. No sport can survive like that.

I don't have an answer to racing's ADW issues. What I do know however, is that what racing's braintrust is doing in 2014 with regards to pricing and signal fees is not the answer to increasing revenues to the sport. It's only making things worse.

* A 10% "source market" fee was supposed to allow live racing to thrive in Virginia.  Seven years later there are no racedates in Virginia.
** New Hampshire repealed their 2009 10% fee after handle in the state was decimated. 

Wednesday, October 15, 2014

Keeneland Juxtapositons, the Anecdotal & Leadership Bogs

There was a fascinating article today on Keeneland's handle. Officials at the track are leaning on weather as the culprit as a major reason handle is down. I know you've been following, and before yesterday weather was really not that bad (they've had the same number of off the turf races as last fall). But because of bad weather, fewer people want to bet an off track, field size shrinks because of scratches off the turf and so on. You know the drill. (if you read the article, Matt cites other reasons field size is down.)

Quickly doing a juxtapose dance, here's a similar story from 2011.  "Keeneland's Spring Meet Thrives Despite Inclement Weather"

"Withstanding the rainiest April on record in Central Kentucky, Keeneland's 2011 spring meeting ranked among the best in the track's 75-year history, posting strong attendance and handle figures. "If it were possible to chart adverse weather with all the race meet statistics, this would be one of the top Keeneland meets ever," Keeneland President and CEO Nick Nicholson said. "Synthetic surfaces are known as all-weather surfaces in Europe and ours certainly lived up to that moniker this spring."
Despite the nearly 13 inches of rain at Keeneland, the racing was quality and formful with relatively few scratches. All-sources handle on Keeneland marked a 9 percent increase. Total meet attendance for the spring season was 241,684 -- the third-highest for a spring meet ever.

Over at Woodbine, one of the few places that is doing well this month in racing (through similar weather to Lexington), field size is through the roof:

Keeneland's dirt race field size - well over 9.0 on the fake stuff - is a half a horse lower than Hawthorne at 8.2; despite the anecdotal "quotes" from vociferous horsemen saying how they were flooding the box if Keeneland switched to dirt. Meanwhile, Woodbine, thrives. Handle is up over 11% this month, clearly stealing horses and handle from Keeneland.

The anecdotal "no one likes betting poly", "I'll send you lotsa horses if you do 'X'" and other such tripe is not data; it's not information; it's not actionable; it's simply noise. Field size means handle, lower rake means handle. If you have those two determinants and you're racing on cherry jello you will get handle.

Meanwhile, Kentucky Downs, which has seen an over 300% handle increase the last few years and is a horseplayer darling, wanted more dates and applied for such with the Kentucky Racing Commission. With more dates they could build their brand that one day might be a "September Keeneland" with $8M to $10M handles. That's good for Kentucky and it's good for horse racing. Regardless, to me, you and the fencepost, this seemed like a no-brainer. That didn't happen. Churchill Downs - the track having customer issues, short fields that few want to bet, and drops in handle - was today's big winner with racedates.

We see one track - Keeneland - building a big betting brand with big handles take a step backwards this meet. Another track wanting to be like old Keeneland, is thwarted. When decisions are made on the anecdotal, on the political, on listening to noise - everything but numbers and science and strong leadership it seems - how can we expect anything good to happen?

Wednesday Notes

Good morning folks.

Many of you saw Modern Legend win the Canadian Pacing Derby for small-timer Dave Drew. Keith McCalmont at Trot has a really nice article on the owner-trainer.

Sometimes you just have to shake your head. High percentage trainer Pat Sheppard was recently suspended for a positive TCO2 test (tubing). The ORC allowed him to keep the horses stabled where they were, but bring in new trainers. One of them, yesterday, was assessed  .... you guessed it..... a positive  TCO2. It looks like he had been training the stable for less than 10 days.

Ontario changed its thinking (was forced to change it with slots being taken away) and slowly moved towards adding dates to the tracks that brought in handle and were growing, and taking away others who weren't. Last season both average handle and total handle was up and that has continued in year two. Despite losing 10% of the racedays from last year, total handle is up over 2%. 

Churchill and Kentucky Downs are fighting for September dates, and yesterday the commission stayed the hearing for a few weeks, to let them work things out. Horse racing makes things far too complex at times, with business decisions. Like the Ontario situation, when in doubt, go with the track that people want to bet.

3 year old pacer of the year is an interesting battle. The early season stars JK Endofanera and He's Watching are still racing, but two new kids on the block are sharper and faster right now: Always B Miki and Limelight Beach. The former looks a lot like Toscano's three year old from two years ago, who spent much of the summer in sires stakes and swept the last two months with wins to take the trophy home. Limelight Beach broke last week but raced amazing after that, showing he is still sharp. If either of those horses sweep October through November racing, they can win.

Yesterday's accident at Indiana Downs claimed the life of jockey Juan Saez. Horse racing is often described as the highest of the highs and the lowest of the lows, but this is positively subterranean. Juan Saez was just a boy of 17.