Monday, May 30, 2016

Excellent Racing TV Coverage (With No Fluff), Nuncio & the Canterbury Biz

In North America, we are used to watching the big races covered by the networks in a certain way. Of late, that means celebrities, parties, clothes and interviews about celebrities, parties and clothes. Despite hard-core fans despising it, it does seem to work well for ratings.

And of course, if you want to watch analysis about the race, there are dozens of other sources, including the track feed.

Over in Sweden it's not much like that.

Yesterday's Elitlopp coverage (covered by Sweden's racing network and broadcast on TV) was something we really weren't used to. The races on the undercard, the interviews, the features and almost all coverage was related to the racing. Even when they interviewed trainers, it was done in split screen with the other screen showing the horses scoring out on the track; or (gasp) the odds.

While the race is being trotted, the coverage continued its race-focus excellence. Because the horses are not easy to see on screen, the producers often used boxes to show who was who, and where they were. If a horse was making a move, people at home saw who the horse was, as again the producers highlighted the horse. A form of Trakus was used as well.

We have spoken about this many times with the Derby. How difficult would it be to highlight Exaggerator live in-run like this when he was making his Derby move? He was one of the favorites, so letting the public know where he is on the track seems essential.

Sweden is in a somewhat unique position of course. Unlike NBC or ABC, they have to cater to a betting audience because most of the people watching have a bet on the race. The pick 6 and pick 7 is sold in corner stores and over $1M was bet just into the win pools for the Elitlopp itself.

As I have mused before - the best thing for racing coverage in North America is probably for NBC to own an ADW.

Most of the excellent crowd, coverage and size of the bet is not done by accident. Sweden invests heavily in its product, with access to $25M of TV time, a $1.5M digital marketing budget, etc. For a country with the GDP no bigger than Pennsylvania's that's huge.

As for the race itself, it was won mightily by the former American horse Nuncio. The horse was huge and it shows just how amazing that crop of horses in the US was. Nuncio was considered the third string of Father Patrick and Trixton that year, and he probably was. The crop was near tantamount (for Thoroughbred readers) to Curlin, Street Sense and Hard Spun. Hard Spun (Nuncio) turned out to maybe be the best (we would not know, the other two are retired).

Meanwhile back at the ranch........

I am continually getting to know Canterbury Park, and I am continually pretty impressed. Sure the racing this weekend had a lot of off the turf scratches and short fields, but the crowds were huge and the betting (considering) continued to be pretty fair. This place is a little gem.

Much has been made - and rightfully so - about the takeout reduction, but much that has been made, in my view, is wrong about it.

Canterbury cutting the juice is a low risk way to get noticed. Simulcast money (through signal fees) has zero cost - opportunity or otherwise - from past years. Any increase is gravy. On-track, where about $12M is usually bet, is the only risk, and really it is not much of one.

Canterbury, at the end of the year, will have returned about $375,000 through a rake reduction. This $375,000 is not kept in a sock. It is rebet in either their pools, or their simulcast pools where they do about $60M a year in huge margins. The money that is not rebet is taken home (improving Cx) or spent on food, beer or in the card room.

The hand-wringing that goes on with takeout reductions just doesn't happen in any other business that I see. When you get McDonald's coupons in the mail for two for one Big Mac's (a Big Mac does not have a 50% margin), no one bats an eye. No one runs around asking if that day the coupons made McDonald's franchisee money (they're a loss leader). It's lifetime value, cx. It's business.

When a track gives back $375,000 out of $52.3 million for a promotion, or to increase lifetime customer value, it's only 0.71% of total revenues. It's investing a little in your customer base, so that (for hopefully years) you have a happy customer base who's spending more and more of their gambling money with you. You don't need an MBA to figure it out.

Have a nice Monday everyone, and enjoy the racing. Canterbury goes at 12:45 central, and Belmont races the Met Mile, er, no, but it looks like a good card.

Saturday, May 28, 2016

A Tale of Two Betting Menus

Horse racing's betting menu has grown by leaps and bounds the last several years. Over the past twelve months, we can see what racing has done in this vein, via a tweet from Crunk.

These numbers look somewhat compelling for those with a bullish view ("wow, look at the Jackpot bets!), but (according to Crunk), 82% of bets for racing come from WPS, Ex, Tri and Supers. So, this is a teeny bit biased.

What's pretty clear, though, is racing has pushed customers from the easier to hit to harder to hit bets. Worse, by pushing them into jackpot bets, these folks are not churning any money, and horse racing becomes a strange sunk cost endeavor.

While racing has stagnated and lost market share since 2006, sports betting on the other hand has not. By the end of this year, legal betting on sports -- without legislative change, or through an increase in distribution - will have increased about 90%.

While racing has pushed players into hard to hit bets, sports bettors avoid them in big numbers:
  •  Breaking your customers early and often pushes them away to other games. And sports bettors are very savvy in the first place. Although Vegas books do offer some higher takeout bets, the betting public shuns them. In 2015, only 7% of all sportsbook revenue came from high takeout parlay cards, with 93% from 5% holds. Sports wagering customers are playing, and they are winning enough to keep them coming back.
Horse racing's one edge is "betting a little to win a lot" so I don't for a second think going back to two doubles, four exacta and two tri races a card is wise. However, racing does not seem to show any chops in using gambling economics to allow for their customers to churn.

Example: Two horse exotics (especially in short fields) cause havoc to bettors bankrolls and slowly break them if the takeout is too high. California - with minimum gambling study - virtually blindly increased two horse exotic takeouts to almost 23%. That's almost a quarter out of each pool!

In Australia, where wagering growth is higher than population growth and inflation, it's different. About half of all bets are win pool bets, with each of fixed odds,  the tote and exchanges offering some worthwhile takeouts. Out of the $26B bet in Australia (where about $2B is taken from takeout, $24B returned to bettors), the average bet size is $43. Even small bettors are churning.

Australia allows customers to churn. As does sports betting. In North America customers are pushed into jackpot bets or other hard to hit high takeout mediums. Although racing will tell you horse betting customers do not behave economically rational (look, they like jackpots bets, they are up!), they in fact do. Sooner or later they go broke, and you're left with another void to fill, and another loss of hundreds of millions in handle.

Wednesday, May 25, 2016

Racing Club

Racing is an interesting club and frankly, kind of an exclusive one to get let into. Just this week we saw it again action.

First off, we had two horses pass away, one from a heart attack and one from a fracture, at Pimlico. People who were watching horse racing for the first time, and others who don't like the sport in the first place, sprang into action, tweeting and press releasing the tragedy, some of them for their own gain.

This was tough for Racing Club, so some club members rose to the occasion to hammer those people about their terrible bias. It just happened on TV. What about the food you eat. The other days of the year are just fine.

Later on in the week, Michelle Beadle - a woman that seems to make Racing Club go full-on #bringhomechrome - spoke out about not liking horse racing much. That was bad enough, but wow, she covered horse racing once and said she liked it. What a hypocrite.

Racing Club is a bit of an odd bird.

If a newbie likes racing, Racing Club likes them. If a newbie tweets about not wanting to watch a sport where horses perish like they did Saturday, well, Racing Club points out how great life is for horses. If someone within Racing Club points out that what happened at Pimlico Saturday happens each day in racing, it's an issue, and those people have a point, that person is shunned by Racing Club. He or she likely will never be let back in.

If someone that's a celebrity says something about racing we like, Racing Club might ask them to be on the red carpet at the Breeders' Cup. When a commentator with brash opinions on many sports doesn't like racing, Racing Club trolls her on twitter, until she likes racing again, or blocks them.

Horse racing is filled with passionate people. Social media in horse racing is a success story, not a detriment. But sometimes the passion gets misplaced, where it becomes a bubble, where the Club can't see the problems and issues as others see them.

This bubble acts like a protective shield, so when a horse dies and questions need to be answered, they are not answered, but covered for; when a takeout increase happens and handle goes down, it's the "bad weather" and no one says a word; when a track goes from a safe racetrack back to dirt for black type and breeding, no one asks the tough questions; when someone on twitter doesn't like racing, they should be attacked and shouted down, not asked why they don't like it and how it can improve so they do like it.

The first rule of Racing Club is that you don't talk about Racing Club. That rule has to go. It needs to be talked about, because in many cases the sport can't correct its issues if it stays in its protective bubble.

Tuesday, May 24, 2016

Canterbury Park Pushes the Right Buttons for Opening Weekend

Canterbury Park - the Shakopee, MN racetrack that lowered takeout's this season - had a very nice weekend opener. Friday through Sunday, handle was up over 30%, year over year.

Although the weather cooperated, and on-track wagering was up, it's still (by any measure) a super result for the track who had hoped to generate some buzz with simulcast players. Wagering outside the state via ADW and other racetracks was up 34%.

Canterbury debuted an HD signal (to a couple complaints on social media, mainly regarding the lack of visibility of the odds in full fields), and odds that update every ten seconds, giving players a pretty good experience for a smaller racetrack. They also flew in Katie Gensler to help with the two new candidates for paddock analyst, and the pre-game show had a professional feel.

The track catered to both its on-track and off-track customers by doing the right thing with the takeout decrease -- they promoted it. It's messaging is on the starting gate, the track announcer mentions it, and during the pre-game show the analysts talked about and explained that lower takeout means their customers' tickets pay more. "When you win, you win more" is a strong message to patrons. 

They seemed to push all the right buttons to set the table for a decent meet. 

Canterbury, as many of us have learned, is in a unique position as a racetrack. While most tracks earn the vast majority of their wagering dollars from off-track sources, Canterbury has an amazingly strong on-track business; upwards of half of some evenings total wagering comes from people on track. Although many of these bettors are younger and per capita wagering is low -- they have mainly come for other activities and promotions -- it does again set the table for growth. If even a handful of these newbies get that if this new 18% trifecta takeout (with some work) can be beatable, it's again very strong messaging.

While we as bettors can enjoy the perks of better takeout, it's also those of us who are fans and horse owners to be quite excited for the meet itself. Also not left out are the trainers.

Trainer Robert Diordino said things at Canterbury are different, “At a lot of tracks, you feel like you’re walking into an empty bingo hall,” said Robertino Diodoro, Canterbury’s leading trainer last year. “It doesn’t feel like you’re even at a racetrack any more.”

Donna Keen who sent a string to Canterbury last season loved the family vibe and people in the stands, “It's unbelievable. I love seeing the families here and the young people..."

For most of us not at the track, Canterbury's Friday evening races are at 6:30CT (there will be Thursday night racing at some point), and racing continues this weekend with a special Monday matinee for holiday weekend at 12:45CT.

For Canterbury Park on social media during the races, Candice Hare will be handicapping @chare889 as the national handicapping correspondent,  Brian Arrigoni is the on-track paddock analyst @MrB_CBanalyst, and there are others playing on social media with the hashtag #playcanterbury

Monday, May 23, 2016

Preakness Headlines, Good and the Bad

This weekend's Preakness Stakes card (and the accompanying Black Eyed Susan card) produced great numbers. Considering the weather on Saturday, this was a little surprising. However, as we've been seeing for some time now, big stakes days (not just in the US, but in the world) keep growing.

I found the race itself entertaining, with Exaggerator cashing in for the slop players with a very nice middle move and victory. Nyquist, game as he always is, never gave up while racing on the pace. He's a really good horse. 

What was not so nice was the fact that two horses on the card perished. When such a thing happens on big days, we tend to forget the horses rather quickly, because the conversation makes a quick and predictable veer -- Those who knee jerk and try to make hay that racing is cruel, and those who push back, trying to protect the industry while being completely tone deaf.

In a lot of cases, it really is as banal and transparent as:

"Wow, we had 135,000 people show up, 9 million watched on television, and handle was almost 100 million, yippee, horse racing ain't dead!"

"Wow, we had 135,000 people show up, 9 million watched on television, and handle was almost 100 million. The mainstream is reporting on two horses that died, how dare they!"

The media will report tragedy, because that's what's reported. In any industry.

I am sure Exxon really doesn't like oil spills, or want them to happen; why would they. Good people work there, who like whales, who don't deserve to be called names in newspapers by writers who don't like oil companies. Air Egypt didn't want a plane to crash and has a good safety record. It employs nice people, I am sure too. But what happens happens.

What happened tragically in horse racing on Saturday was not something new, or out of the ordinary. It happens a fair bit, and it was a statistical certainty it would happen on a big day like Saturday, in front of millions of people. People reporting it, or asking tough questions of a business or industry is commonplace.

It's certainly not about chickens, or whatever insiders are talking about in their endless quest to carry water for the sport.

If after such a tragedy, commentators want to ask why a major track went to dirt, after being safer on polytrack; why a certain trainer with drug positives is still racing when he or she should not be; why the industry is resistant to federal oversight, etc, etc, it should not surprise anyone. In fact, in some cases it's perfectly fine. With other bizarre, odd, out-there opinion, well, that's not just for horse racing. It's life in this click bait media market.

As Aussie breeder and web radio show commentator Brett Coffey once said, "racing craves  mainstream attention, but not mainstream opinion."

One way or another, it better grow up and start accepting this opinion. Racing is an industry just like any other, but it's an industry with one big difference: The sport is built on horses being bred and used for entertainment and money. In 2016, when something bad happens, that's an elixir that drives headlines.

What a nice first weekend for Canterbury Park. Handle was up over 20% all three days, culminating with a nice 49% bump on Sunday Well done everyone.

Have a great Monday folks!

Sunday, May 15, 2016

Betfair's First US Harness Racing Exchange Card Starts Slow

Last evening the Saturday card at the Meadowlands was available to players at Betfair for the very first time. The impetus for this, as you all know, was the passing of exchange wagering in New Jersey.

Although some of the races were tradeable, with strong favorites, the volume of players seemed to be very weak. I was quite disappointed with the liquidity, because liquidity is a staple of the exchange, and, in my view, this should've been taken into account, with the use of many market makers.

When I wrote a white paper back in 2008 about betting exchanges for harness racing in North America (in this case, Canada), I typed the following as a main plank of their success or failure:
III - "A Market" -- Market makers must be employed, or core traders must be offered a low (or no) takeout on the condition of making a tradeable market. If a stock is bid 10 cents and ask 50 cents, no shares will trade. It's the same with horses.
 It's really not that difficult to achieve the above. Other exchanges use this tactic with foresight, along with a little bit of math.

Other than the above, there seemed to be no in-running trading (that I saw) for the races, which was curious, because not that long ago there was chatter that only in-running would be offered for harness.

On the flip side, even with low volume there were bets that sharp bettors could've taken advantage of.

In the fifth, Blue Muse - a quality trotter - was dipping in class and had a big driver change to one of the greatest handlers of square gaiters in the history of the sport. The mare held firm on the exchange at 5-1 for a period, even when it was pretty clear she'd take a beating at the windows. For those sharp players, a $6.60 mutuel was $12 (minus commission). There were some other examples.

Overall, the exchange debut for harness racing was inauspicious. I guess that's better than the alternative, which was forwarded for years from many detractors -- there were still people betting into the pools, there were no drivers falling off the bikes mid-race, and there was no evidence Al Quada was funneling money to trade Always B Miki.