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ADW's, Critical Mass, & Value

I read an interesting article on Techcrunch the other day about Spotify, the online music streaming portal.

Spotify, which in 2018 will likely IPO, pays royalties per listen to artists, and has amassed a more than 50 million person listener base (from just a handful at startup, in 2008). Early on, the company had to pay about a 70% royalty, but that's changing. Because of their critical mass, they now command value, and are negotiating lower and lower rates.

These lower rates can, and probably will, work, because of volume, and reach through convenience. 
 While at first glance, Spotify paying less for per stream might seem worse for artists trying to make a living on music. But the success of Spotify and the path it could forge for streaming services is also in the interest of those artists. Not only could royalty rates start to climb closer to CD sale revenue if it grows big enough. Spotify is also incentivized to help artists use streaming to promote their merchandise and…
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When the Habit is Gone, It's Forgotten

It's been several years (2009)  since New Hampshire enacted a betting tax on winnings over $600 that had disastrous results on betting handle. And it has been several years since the tax was repealed (2011), hoping to regain the lost handle and revenue.
“It’s been two years since this tax was put in place, and hopefully, the people who left have not become too comfortable betting someplace else and will return to the track,” said Rockingham president and general manager Ed Callahan. “What they (the legislature) did to the racing industry in New Hampshire might be something that cannot be undone. Those two men were prescient. People changed their behavior, and no, they have not come back to the track.

Handle in 2016 in New Hampshire was $53 million (versus about $140M in 2008).

Revenue to racetracks and bet takers in New Hampshire in 2016 was about $10 million (versus about $27 million in 2008).

There are a number of factors that come into play with regards to handle and track re…

They're Bettors, Not Bank Customers

The dichotomy between racing's treatment of their customer base versus the way other gambling games treat theirs is always eye-opening to me.

One looks at the base like they're customers of a bank, the other treats theirs like they're, well, skill game gamblers.

It was reported by the AGA that there will be $10.4 billion dollars wagered in some form on the NCAA tournament this year. Today, David provided us with some early buzz surrounding the wagering of the event.
Huge handle on tourney Thurs @southpointlv: "We wrote half the amount of our entire Super Bowl handle just yesterday," per @andrewssports. — David Payne Purdum (@DavidPurdum) March 17, 2017 These are with ten cent lines (about 4.5% takeout, as is customary since, forever), myriad betting products, and a will to grow said betting products.

Meanwhile, horse racing takes a different approach.

I heard there's been a new rule passed in Ontario for racing. Super betting is now allowed in five hor…

About that Whole On-track Thing.....

Texas has always been pretty consistent about not letting their customers bet racing over the Internet. This was at the behest of the industry in Texas. A few years ago they even went to court to keep the ban on Internet betting in place.

That - and I know this is not shocking to anyone - hasn't been a good policy.
Since 2001, T-bred handle on racing in TX is down 76% (-$320M) on 52% less races (-1,029). Purses down 50% (-$15M). — o_crunk (@o_crunk) March 15, 2017 Now, many years after the original ban, they've reversed course.

If Texas was a country it would have the 12th largest economy in the world. It would be bigger than Australia. To not embrace change, in the form of wagering over the internet, a whole swath of customers have been ignored, or worse, have left racing as a wagering pastime forever. 

Consumers have choice, and when they are not given one which fits into their lifestyles, they will substitute. They won't drive to the track, whe…

Racing Selling the Turtle

March Madness is upon us. This thing with the non-paid semi-pro student athletes has grown leaps and bounds the last ten or twenty years. That's no secret I guess; all you have to do is search "bracketology" on google and the results will blow your mind.

What CBS and the NCAA et al have done is allowed the event to flourish. If you're gambling it, gamble away. If you are playing in an office pool, here's a printable bracket. If you want to partner up and offer ten billion dollars for a perfect bracket, knock yourself out, advertise away, it helps us. If you want to watch on TV, online, on smart phones or tablets, here's a link.

By allowing an ecosystem to flourish, its flourished. They aren't worried about the disparate A, B and C, they worry about the topline ABC's.

Racing, as we all know, doesn't work like that.

The first time something looks like it may flourish, racing tries to shut it down or tax it mercilessly, because it might 'hurt th…

Sam McKee

By now we've all heard about the tragic passing of Sam McKee. It's been a tough time for harness racing, because Sam was, well Sam.

People who knew Sam well will tell stories and talk about him in ways I can not. But I will share, from my perspective, what I find remarkable in the hours since we received this terrible news.

When someone passes with a public persona, or who most know from their professional life, the immediate condolences all have a theme.

If a hockey player passes, people reminisce and pay homage about his hockey playing career. 

If a baseball player passes, he was a great first basemen, or catcher, or clutch-hitter.

If a businessman passes, she was a great CEO.

If a musician passes, she wrote great songs.

After the initial condolence, then sometimes people talk about the person, and his or her life. 

When Sam McKee passed, it was the exact opposite. The initial thoughts on social media and elsewhere were all about Sam as a person.

"He helped me when …

When Racing's Core is Not Sound, the Ancillary Goes Bad First

Back in the early 1990's I got my first real job. I was a pretty much an office gofer for a mining consortium.

One day a gentleman came in the office for a meeting. He had just returned from a trip to Russia. This fellow was there at the behest of the Russian government, to get his opinion on their state-owned zinc and copper mine in the southwest of the country. The story he told was very interesting - especially to a fresh out of school business major, who learned most of this man's craft in a textbook.

He had already studied the numbers and they weren't good. The mine was producing zinc at a cost per ton that was 25% higher than the revenue per ton. The only reason it was running was because the government was printing cash for the shortfall. However, because the industry in eastern Europe was not using modern western engineering, management techniques and technology - which could make a difference -  he still held out hope they could be helped.

While being driven to t…