Orb Will Be A Tremendous Underlay

Orb is great Orb is this and Orb that, c'mon people, the horse won in the goop. I've been handicapping races for a long long time and one of my steadfast rules is to not rate off track races unless it is the only race the horse has in its past performances, and if that is the case, do so with extreme reluctancy. Take away his Kentucky Derby win, and his speed numbers are slightly inferior to more than just one Preakness entrant. I'm not saying he can't win, but he will be a huge underlay, not the biggest underlay of the year, as I've seen many 3-5 shots or less go down the tubes at Aqueduct and Belmont this year, for example, horse that looked like really bad bets going in. Orb could also be like a Zenyatta, the speed figures might not matter, he just gets it done. But I really don't like him tomorrow. Besides the inferior speed figs and the big win in the slop, there is also the fact that he was well prepped off a month plus layoff prior to the Derby, this also makes him a big bounce candidate.

Horses like Orb make the game beatable. Yes, they win some of the time, but because they are so overbet, it means there will be others in the race that will be underbet. Seeking value is the only way to beat the game in the long run, and unless Orb goes off at 7-1 or better, there is no value there.

I got dusted with my Derby picks, but again, this is a long term game and the Derby was just a race. That being stated, I am probably very due when it comes to getting the Preakness close to right. So who do I like? My ratings came up with three horses close to tied.

Mylute, with Rosie Napravnik, could be the one. He had a very good speed figure in the Louisiana Derby, and the 30+ day layoff going into the Derby might have been a negative. In fact, this horse rarely runs twice within a month, but looking his Derby line, I have to figure that coming back within two weeks could mean a peak performance from him. He will most likely need a fair track or more preferably a closer's track, in order to win the race.

The fact that Goldencents is in the race, means either you can totally discount his 49 length loss in the Derby, or that his connections are just plain nuts. I am leaning towards the former. He had a very good number in the Santa Anita Derby, and figures to be very close to the pace in the Preakness. If he is right, I don't think he will be compromised by other early speed in the race, and there isn't much of a difference between 1 mile and an eighth and 1 mile and 3/16th, so distance shouldn't be an issue.

Oxbow is the final horse in my top three. The Preakness distance looks perfect for him, and the expected pace of the race and his post position, makes him a contender. He ran a good race in the Derby, and should be able to time his move much better tomorrow, his past figures are decent, and he should have no problem outrunning his final odds in the Preakness.

A case could be made for almost every horse in the Preakness. If I use Orb, it will be on one superfecta ticket with my top three picks.


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Obligatory Kentucky Derby Post

The Kentucky Derby, the most hyped 2 minutes in sports, goes off today, hosted by an organization that doesn't give a rats behind when it comes to growing horse racing. OK enough with the negativitytruth, lets move on to my analysis.

I have to stick to my handicapping guns. I don't like horses who race a mile and a quarter who have been off over 30 days. That line of thinking was much better 30 years ago before trainers started
racing horses like they are in Europe, and before such phenomenal training methods like hyperbaric chambers were used by "clean" trainers. But still, those who raced within 30 days have a distinct advantage over those who haven't.

So I am eliminating these horse from finishing 1-2: Revolutionary, Golden Soul, Mylute, Giant Finish, Lines Of Battle, Itsmyluckyday, Orb (yes, Orb), and Will Take Charge.

Now that I have the race down to 11 contenders, time to eliminate the slower ones, or the ones that appear farther off from a peak race. Those are Overanalyze, Frac Daddy, and Fallen Star.

So now we have eight, and to be honest, on figures, they are inseparable to the point that trip will mean just about everything. That being stated, value is key. That means eliminating Goldencents and Verrazano. Gun to head, I like the latter better, for what it is worth.

I Tweeted that Normandy Invasion will win in a romp, but that was before he ran off with his exercise jockey in the morning, so I've downgraded him to third. I am now leaning heavy on Palace Malice to win the Derby. The distance
doesn't seem to be a problem, and coming off an artificial surface might just give him a huge fitness edge, and he seemed to just be short in his last. I can't say that Pull The Pocket hasn't influenced my decision to rate Vyjack high, but he needs to put the pom poms down because the 19 post might make it very difficult for Vyjack to have the trip needed to win. Oxbow has had three 10 posts in a row and now gets the rail in the Derby. This could mean the shortest trip around the track for jockey Gary Stevens. Java's War, who beat my selection in the Blue Grass maybe peaked a race too soon, and his last to first effort including a terrible start has sucker's bet written all over it, but he just can't be dismissed today, and Charming Kitten just seems to be a fringe contender, but a perfect trip could mean roses just the same. He did show good turn speed in the Blue Grass.

10-20-5-2, that is my four horse box.

Go Palace Malice, but more importantly, it would be nice to see a horse compete for a chance at the Triple Crown in the Belmont this year.

Here is the 2013 Blue Grass Stakes:

Updated Google Takeout Maps Of North American Racetracks

Thoroughbred Tracks


View Thoroughbred Racetracks in a larger map

Harness Tracks


View Harness Racetracks in a larger map

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The Canadian Track Takeout Landscape

I want to first say, I love horse racing. To me, nothing beats it when it comes to intellectual gambling. I'd love to see horse racing grow instead of what we see today, which is an industry that paddles against the rapids. Horse racing fails to compete with other forms of gambling like sports betting, poker, and slots which have much lower takeouts (house edges, rakes, whatever you want to call it). And please lets not use the lottery argument, as it is apples to oranges, because when one buys a lottery ticket, they aren't looking for a gambling fix so much as they are buying a dream.

The other argument that I hate to hear is that most people don't know what the takeout is. That was probably very true 10 years ago, and it is partially true today. However, it doesn't matter if players know what the takeout is when they gamble. Gambling for most is probably 90% plus psychological. What I mean by that is that when one gambles continuously there is a scale of satisfaction that determines how long they gamble and what they gamble on. If someone has the idea that they are close to winning or winning, they will play more, if they constantly go broke quickly, their desire to come back diminishes.

Horse racing is plagued with a high learning curve and no real visible long term winners (though some exist but that is sort of a secret). Why should someone learn to handicap horses if there is the idea the game cannot be beaten long term? Sure, slots has no long term winners (except possibly for the odd huge jackpot winners), but it has no learning curve and because of the low rake (4-8%) there are enough wins in an hour for most gamblers to give them the impression they are close to winning, and frequent cashes satisfy their brains the same way inhaling crack does for a drug addict. Editor's note: If I had my way I would limit slots and roulette (not expand them) because the games are unbeatable in the long run no matter the level of expertise one has, and especially when it comes to slots, the game intentionally prays on trying to attract the addict in you.

Horse racing needs to give players more satisfaction, and that comes with higher churn, which means lower takeout. A lower takeout means that some visible winners may be able to show their faces, and that will draw more players just like it did with poker.

In Canada, especially Ontario, it seems the opposite approach has been taken. Ontario racetracks and horsemen had slot revenues subsidizing their operations and purses for the past 14 years. Did horse racing grow? No way. And taxes can't be used as an excuse either. Only 1.3% of what is wagered go for provincial and federal taxes (the federal portion, 0.8%, goes towards drug control, photo-finish, video patrol and audit services). Check out the chart below. It looks like most track didn't even try to compete or grow. For comparison purposes, I added Keeneland (HANA's number one rated thoroughbred track), and the Meadowlands, which would most likely be the number one harness track if HANA did harness ratings:

Racetrack	WPS	Ex/DD	Tri/Sup	P3/P4
Woodbine TB	14.95/16.95	20.5/20.5	25.0/26.3	26.3/25.0
Woodbine/Mohawk H	16.95	20.5/20.5	27.0/26.3	26.3/25.0
Hastings	15.00	21.8/15.0	27.3/26.3	15.0/15.0
Fraser Downs	15.00	21.3/21.3	26.8/26.3	22.3/15.0
Assiniboia Downs	19.00	26.0/26.0	29.0/29.0	29.0/15.0
Alberta Downs	15.80	24.8/24.8	24.8/24.8	24.8/24.8
Fort Erie	16.95	26.2/26.2	28.2/26.2	26.2/26.2
Ajax Downs	24.60	24.6/24.6	26.6/24.6	N.A./N.A
Western Fair	21.40	26.3/26.3	28.3/26.3	26.3/15.0
Rideau Carleton	24.05	24.0/24.0	27.2/24.0	24.0/24.0
Kawartha Downs	21.30	21.3/21.3	23.3/24.3	24.6/24.6
Flamboro Downs	24.70	24.7/24.7	26.7/24.7	24.7/24.7
Georgian Downs	24.70	24.7/24.7	26.7/24.7	24.7/24.7
Grand River	24.00	24.9/24.9	26.9/24.9	24.9/24.9
Keeneland	16.00	19.0/19.0	19.0/19.0	19.0/19.0
Meadowlands	17.00	19.0/19.0	25.0/20.0	15.0/15.0

Ontario racetracks are now faced with the reality that they need to nurture and grow their customer base. Fans are good, but Ontario racetracks need bettors. Since, for the most part, very little handle comes from live wagering, it is time for Ontario tracks to do a massive overhaul when it comes to takeout reductions, in order to compete with other tracks on ADW and simulcast menus but also to grow their own local customer base. Lower takeouts keep seats in the crowd longer, and the more often the regulars go, the more likely they are to introduce newbies.

On a bright note, Woodbine seems to be coming along. They recently announced that they are dropping the takeout on win bets to 14.95%, which is the lowest win takeout on the North American continent. A year or so ago, they dropped takeout on triactors to 25% from 28.3%. These are steps in the right direction, and I really like the fact that Woodbine, by lowering takeout on win bets, is recognizing the power of churn. Lowering exotics like Pick 4's or Pick 5's are not recognizing churn but an attempt to compete with other tracks, which is important, but these type of initiatives do little or nothing to gain more business for the industry.



When it comes to Canadian tracks, kudos go out to Hastings. If they can just get their field sizes up, I believe we would see handle sky rocket. Yeah, field size is very important too.


The one thing I don't get is why didn't Woodbine drop place and show, which have even higher churn than win. Sort of reminds me of this Seinfeld scene:


How to get field size up for thoroughbreds? Take the normal purse structure, give out only 70% for 6 horse betting interest fields or less, 80% for 7 horse fields, 90% for 8 horse fields, 100% for 9 horse fields, and add 10% per betting interest over 9 horse fields. A field of 12 would be going for 130% the base purse. It only makes sense that if a horse beats 12 it more of an accomplishment than beating 5, but what really makes sense is that field size is probably the biggest factor when it comes to the relative amount bet in total on a specific race. Now just to get the Horsemen on side for this one:)

Just remember, lower takeout is the Horseplayer's friend, and what is good for the Horseplayer is good for the growth of the industry.

Wynne Announces Reinstatement Of SARP

At 11:58 PM last night, Ontario Premier Kathleen Wynne called an impromptu press conference at her home porch. Dressed in pink bunny pajamas, complete with floppy bunny ears, Wynne announced that the Slots At Racetrack Program has been reinstated at all Ontario racetracks that are willing to accept a new split. Asked what the new split is, Wynne said it was not something she can discuss at this time, referring to the Ontario Liberal Party main platform: "Keep Ontarians in the dark as much as possible." She added, "we might have a conversation about the splits in the future, possibly sometime before 2017."

Upon hearing the news, the OLG released chair Paul Godfrey. OLG President and CEO Rod Phillips stated that Godfrey was pissing away money marketing dollars faster than a slots addict. Phillips also went on the record saying he has been a "little" deceitful when it comes to the OLG Modernization plans and the creation of more problem gamblers, "although only 2-3% of Ontarians are problem gamblers, they account for close to 50% of the slots revenue for the OLG."

Don't feel sorry for Godfrey though, he quickly applied for and got a job with organ grinder Guiseppe D'Angelo. D'Angelo, who works the corner of Dundas and Yonge was looking for a replacement for his recently retired monkey Gonzo. D'Angelo said that "Godfrey is perfect for the job as he is a natural when it comes to getting suckers to part with money, and the bright side is that I don't foresee myself having to scoop up after him either."

Happy April Fool's Day!

Countdown To The End Of SARP: One Final Proposal

What a colossal mess hit and run artists Dwight Duncan and Dalton McGuinty created by mandating the end to the Slots At Racetrack Program, using false assumptions, without doing their homework first. With only 6 days until the end of SARP, the Ontario horse racing industry is still in limbo regarding race dates and purse structure and even location, when it comes to the future of the majority of racetracks. Never mind time is running out on another breeding season as well.

It has become evident that even the Transition Panel has bitten off more than they can chew, having only landed racing agreements with not-for-profit tracks. They have been trying to broker deals since December, but hit a major speed bump.

As I understand it, based on what has been put out there in the media and interviews, for-profit tracks have all signed deals with the OLG when it comes to renting out the slots facilities, however, if they choose to get a racing subsidy, rent counts towards their revenues, therefore, in most cases, if they don't race, they make money from rent, but if they race, the best they can do is break even. No matter how much a racetrack owner may love racing, if you are a businessman, you pretty much have no choice but to take the rent money only. Even if there is a possible rainbow at the end of all this junk, a track can always race again in the future if there are profits that can be made from racing.


Can the government justify giving a for profit-track a profit using tax dollars? That is question that we will see answered in the next few days....maybe.

I don't understand how the brakes weren't applied on the end of SARP. The lie by the quitter Dwight Duncan, that there were only 5,000 people in the industry was enough evidence for the government to back down on the decision until further due diligence was done. And then when OMAFRA came up with their conclusions that a major subsidy would be required to keep horse racing on life support, considering all the potential lost jobs, a capable government would have just adjusted the SARP program. But the inept, larcenous McGuinty government was still calling the shots back then.

And now, we are seeing major resistance when it comes to putting a new casino just about anywhere. What this really is saying is that will of the Ontario people are OK with casinos at tracks, in other words, tracks are perfect business partners when it comes to OLG slots, and they should be treated as business partners.

Is there time for a solution? I'm not sure. With the OLG already accepting RFP's for Gaming Zone operators to step in and replace many of the overpaid overcompensated OLG workers, I'm not sure that if a new government was elected today, that they can stop it. But then again, I'm not a contract lawyer.

THE REALISTIC SOLUTION

I've had plenty of time to think about solutions. I don't think giving a subsidy from tax dollars is acceptable at all, nor does it address the future beyond two or three years, as well as there is no incentive for for-profit tracks to continue.

What would I do if I was Premier Wynne?

I would extend the SARP program for 4 years, giving ample time to integrate a possible horse racing lottery, sports betting, Instant Racing, etc. as new sources of revenues so that horse racing can stand on its own. It is my belief that slots are dying a slow death anyway, and racing needs to market horse racing as a competitive gambling game.

I would change the SARP program to 7% for horsemen and 7% for tracks (this saves face sort of). The reality is that at least a good 20% of the industry is gone at this time anyway thanks to the past year's uncertainty.

I would mandate that the entire horsemen's share of slots goes towards Ontario bred races and breeder incentives. This eliminates the $30 million government subsidy, as well as the necessity of the extra 2% the TIP program receives from wagering (which inhibits tracks from experimenting with lower track takeouts). Too much of slots money went to foreign players. Nothing wrong with reciprocation, but it was way too much and took away from Ontario breeders and owners and trainers. Betting revenues can be used to fund open races very effectively.

I would mandate that of the 7% tracks receive, that 33% of it is used towards local marketing and province wide marketing and developing. The balance is to be used for racing operations and some of it will be profit (for for-profit tracks).

I would split racing gross revenues for live racing 55%-45% for the horsemen-racetracks, the same split for home market (simulcast and exported) wagers based but using net revenues instead. I would also add that if a track decides to rebate their home market customers, that 45% of the rebate is deducted from the horsemen share as this incentivizes the tracks to do this which will be great for growing the customer base.

I would mandate that track takeout for Ontario horse racing can not exceed 16% for WPS, 19% for Doubles and Exactors, and 22% for all other wagers (this includes the 1.3% the government receives). This will allow Ontario tracks to compete with all North American tracks and handle and customer base is sure to grow. Even Ohio has a 22% cap on takeout.

Allow tracks to be able to match offers from outside operators in order to run their own casinos. If they can run pari-mutuel wagering, they should be able to handle slots and table games too.

Finally, I would offer slots back to Windsor, Sarnia, and Fort Erie. Taking slots away from these tracks didn't help the numbers at the stand alone casinos. In fact, Windsor casino just announced major layoffs today. If it means that under the 7%-7% proposal, along with slots, that Fort Erie can only race 40 days, so be it. If everything I've put out here is done, horse racing will grow, and Fort Erie dates will eventually grow too.


Update: Wynne just announced that there will be racing at for-profit tracks Fort Erie, Flamboro Downs and Georgian Downs.

Ontario Horse Racing: It Is Transition Time

Horse racing in Ontario is still in the Wild West despite yesterday's announcement by Temporary Premier Kathleen Wynne who stated she "wants" to see horse racing to be part of the OLG's Modernization Plan. The good thing is that this is a definite policy shift by the beleaguered (very well deserving) Liberal government, but when you consider that the OLG is strongly considering privatizing everything (something the PCs, the number one opposition party in Ontario, also would like to see) and the fact that the Liberals may not be in command a year from now, if horse racing doesn't come together extremely quickly get the ball rolling with specific signed deals, what Wynne stated yesterday might only be nothing more than words of appeasement.

Horse racing in Ontario is good to go for the next 3 years (at approximately 75% of what it was last year), running on monies generated from betting and an actual government subsidy that will mostly be used to pay for racetrack expenses other than purses. Since tracks don't charge admission (if they did right now, no one would go), don't make much off concessions, and other than a handful of Woodbine races, the don't receive any corporate ad monies, their only source of income is through betting, now that slot revenues are no more.

One question of many I have is that Wynne stated racetracks have three year deals with the government regarding subsidies, yet Woodbine stated they have a two year deal. Which is it?

The biggest question right now for Ontario horse racing to immediately deal with is who is going to represent it when it comes to selecting and implementing new revenue streaming ideas that will definitely need to be in place two or three years from now in order to ensure that horse racing remains viable. Horsemen groups historically in Ontario have had a huge sense of entitlement, and even with the dose of reality that has happened over the past year, I have read many recent comments by horsemen who basically state that nothing other than reinstatement of the SARP would be acceptable. They are definitely not customer driven, and horse racing's biggest problem right now is that they don't have nearly enough customers. Racetracks are supposed to be customer driven, but because of slots revenues, customers were placed at the back of the bus. So who is going to lead horse racing into the future, and can there be a leader with all the childish infighting that happens? Whoever it is will definitely need to start understanding the gambler's psyche, if horse racing is survive and potentially grow.

Something I do find a bit troubling is that since the SARP got its walking papers from Ontario racetracks, I have yet to see anything substantial from any Ontario track that would make me want to gamble on horses more, with the exception of HPI allowing some fractional wagers to coincide (almost) with some US tracks, but that was something they were working on prior to the end of SARP. I realize that the whole industry has been suffering from deer in the headlights syndrome for a year now, but there has been no takeout reductions the past 365 days, and comparatively, especially harness B tracks, takeout rates compared to US tracks are sky high. The biggest complaint I hear about from friends is not getting paid track odds on many US exotics. Smaller bettors may not care so much about this, but the bigger bettors do, and all this practice does is chase them away, and racing like many businesses runs by the 80-20 rule where 20% of the customers do 80% of the betting.

Ontario horse racing's future is now dependent on having more customers. The problem horse racing has is that it has too high a learning curve for a game that is perceived as unbeatable (thanks to high takeout rates). Slots is a no-brain required type of gamble that gives the player the illusion of winning, even when they are not, and even though slots is not beatable ever in the long run, it awakens the same parts of the brain as crack does for crack addicts. I find it sort of disgusting the Ontario government is actually looking to expand slots to where there are more people and especially on the internet, but I'll save most of my thoughts for a future post. Poker found success because it is perceived that if you are good enough you can actually make a living as a poker player, which means that there is a perceived chance that even a casual player can make some money long term. The learning curve is nowhere near as much as horse racing, and the cost to learn is nowhere near either. Racetracks in Ontario need to lower takeout and give gambler's more psychological satisfaction. The more they have in their wallets, the more they tend to play, the more they tend to come back.

The best way for horse racing to draw in more customers is to have a weekly lottery similar to the V75 in Sweden. This can bring in a whole new audience of lottery players who may be inclined to learn more about selecting horses in individual races. But the powers that be, whoever they are, need to think ahead about keeping these customers once they have them. In order to be succesful, I think the lottery would need to hand out at least $1.5 million on non carryover weeks as a grand prize. This would mean some pretty aggressive marketing at lottery kiosks across Canada, and it is something that could easily attract US bettors at racetracks and ADWs.

Instant Racing (historical racing machines) is another way to generate more revenues and possibly attract new fan interest. They aren't slot machines, but they appeal to the same type of crowd. The 10% takeout ensures high churn and gambler satisfaction, and these machines have been very successful where there are no slots to compete with (hint: Fort Erie).

As for poker rooms, expanded gambling (roulette, blackjack, etc.) and sports betting, I don't see the justification of a gaming partnership with the OLG for anything other than racetrack related gambles is any different than the slots agreement that has now ended. I find it an insult to my intelligence that the OLG is supposed to partner up on all other gaming except slots in order to help out the horse racing industry, and yet the Transition Panel has stated that this is a possible solution, while saying the slots program was wrong.

Besides, there is little money that can be made from sports betting and poker (too labour intensive) to satisfy the needs of operating a racetrack.

So right now, there is more hope than there was a couple of months ago, but the industry better get their act together, get signed commitments from the OLG and Ontario government, and get these future ideas rolling NOW!

Catch Up Time

I haven't posted for awhile. I could probably write a few blogs about each of the following topics, but I'll keep things as brief as possible.

Thoroughbred Handle Was Up For The First Time Since 2006

Before breaking out the champagne bottles, handle still didn't outperform inflation for the 2012. When will the industry get it, they have a great game, but takeout is too high which means horse racing is not competing with other forms of gamblers. The industry wants to grow, but just keeps their collective head in the sand when it comes to takeout.

Should Horse Racing Executives Be Allowed To Bet?

Integrity issues if executives bet? Is that a joke? I've never once thought that if a racing executive bets it affects the integrity of the game. Horse racing needs more bettors, not less. Don't look for conspiracy theories to prevent those who may want to bet from betting. I look at this like I look at gay marriage. Homosexuals have as much right to be miserable as heterosexuals if they choose to get married.

It is a given that Stewards shouldn't bet on races they are overseeing because they can change the outcome of the race. But when it comes to executives there are quite a few others that bring about a higher level of integrity issues than them.

For instance, vets who know which horses got work done or treated before a race, which horses are close to being lame, etc. Some tracks only have 1 or 2 vets in the backstretch. Still, at an average 21% takeout, even with their knowledge, they would be lucky to grind out a profit, and that is why they probably don't wager much.

Then you have trainers, jockeys, backstretch workers and their immediate families who have a special inside of whether their horse may be ready to fire today or whether their horse got a vodka shot in the knee.

How about those who work at hyperbaric oxygen chamber centers? I'd love to have their info. In fact, I think it is about time that these treatments become public knowledge. Just as Eric Poteck pointed out, in this ESPN interview on giving Horseplayers a bigger voice, the NFL, which publicly shuns gambling, caters to the gambler more than horse racing does. Who are the injury reports for? If an NFL player sprains his toe on a coffee table, we hear about it, but if a horse pulls up in a workout, forget about it unless it is voluntarily disclosed.

Horse racing has lots and lots of integrity issues and conflicts of interest when it comes to racing and attempting to place Horseplayers on an equal playing field, but racing executives not being allowed to bet? C'mon Man!


The Ontario Horse Racing Situation

It is January 11, 2013 and the racing industry is as clueless as to what happens after March 31 as they were around a year ago when the announcement that Slots At Racetracks were coming to an end. There are no dates announced, Woodbine trainers who usually ship in early February have no clue when training will start there.

The Liberals, who are minority leaders in Ontario have to elect a new leader in a couple of weeks, and there is faint hope that if one of a few certain candidates win, the end date of March 31 will be at least postponed until further review.

The Ontario Bingo Hall Should Be Scandal

Regarding Bingo Halls. I was wrong. Even though I was perhaps the first to figure out that something unsaviory was occurring with Bingo Halls, the OLG and the McGuinty-Duncan Liberals, I also believed the cut the government was getting was profit equal to the same percentages of profit the government (through the OLG) received from the SAR program.

However, Darryl Kaplan's Standardbred Canada piece, The Ugly Truth Behind The OLG Bingo Expansion, points out, in the OLG's own words, that the Ontario government receives zero in their coffers from this gambling expansion, which if I'm correct, now changes the minimum age for slots players (yes those things are slots no matter how much bull the OLG feeds us that they are not) to 18 from 19. Go get that tuition money OLG!

So here you have a business that was losing money, unlike the more than successful racetrack slots program, and the owners of the Bingo Halls will most likely clear more than 20% of gaming revenues now (47% minus expenses to run the hall), similar to what tracks and horsemen split at tracks under the SAR agreement. This is scandalous, but the OLG knows they are big advertisers with the dying print media, so very little will probably be done or written about it.

How did Boardwalk Gaming know to buy up Bingo Halls the past few years when Bingo Hall revenues were on the decline? Psychic I guess. I'd love to see the email trails.

Is money the Bingo Halls getting "a subsidy," "their portion of a business agreement," or "taxpayer money." I wish someone would directly ask Dwight Duncan while he still has a job.

Ontario Industry Really Should Have Focused On The Negatives Of Gaming Expansion

Most communities do not want expanded gambling. Ontario is comfortable with slots at tracks and racetracks, but predictably it is beginning to show that the public does not want stand alone casinos in their neighbourhoods. Even OLG Chief Huckster Paul Godfrey admitted he wouldn't want one in his neighbourhood (is this guy a moron or what?).

Barrie residents do not favour having a casino either.

The social impact of having casinos everywhere is terrible. This was proven in Russia recently:

Gambling has been a major policy problem for the Russian government since the early 21st century. The problem was the rapidly increasing number of slot machines and gambling houses, including casinos, spreading all over the country. This caused a great concern for the government. According to city officials, after the year 2002 there were 58 casinos, 2,000 gaming rooms and approximately 70,000 slot machines in Moscow.[1] It became a greater problem for the government because the younger population was widely exposed to the obtrusive advertising of gambling houses. Teenagers missed school to crowd around slot machines hoping to win some money. This behavior affected the society’s welfare in a way that was external to the market, thus, giving rise to a negative externality. Experts from the Russian Association of Gambling Business Development claimed that approximately half a million people on a regular basis indulged in gambling in the capital city of Moscow. At the same time, city psychiatrists, who met with people addicted to excessive gambling, provided quite different information arguing that the number was much higher. “The head of the extra-hospital aid in the National Narcological Scientific Center Taras Dudko says that the number of people regularly going to Moscow casinos, bookmaking offices and gambling houses is over 1.5 million people”.[2] Additionally, money laundering was another concern of every city government that failed to collect estimated tax revenue from gambling businesses, that kept the profits and did not share them with the city by avoiding tax payment.[2] These were the major rationales for the government to get involved and implement a policy on gambling restriction. One of the policy solutions to solve the gambling problem in Russia was proposed in the form of limiting the number of gambling establishments throughout the country. Additionally, the Moscow officials proposed to bar slot machine parlors within 500 yards of a residential area, which would force operators out of all urban areas in the country in order to protect the young generation from being tempted to lose money using slot machines.[3] The major policy problem about excessive gambling in the Russian society and their people’s continuous discontent with the spread of gambling houses all over the country finally led to the implementation of federal policy. Russia closed down its casinos overnight as gambling was banned nationwide. Thus since July 1, 2009, according to the Federal Law № 244 “On state regulation of organization and management of gambling”, the gambling business in Russia has been allowed only in four designated zones.[3] The ban was to protect the health of society, and was expected to put an end to the era which witnessed an eruption of gambling fueled by a lawless business culture, which caused great costs to the society.

The reality is that slots and other video casino games are the crack cocaine of gambling. Players, due to the frequency of "wins" when at a machine are under the illusion that they are winning or close to winning. Because the game is not parimutuel, long term players have zero shot of winning, unless they win a very infrequent super jackpot (which isn't even an option at most terminals). It is a mindless wager, and prays upon the gambler in a way that is completely different from those who play thinking gambling game like sports, poker, and horse racing (which are conceivably beatable because there is an element that after the house edge there is still room for good players to beat not so good players. When it comes to lotteries, at least gives the person the dream of winning huge, nowhere near as addictive as slots and not as costly for the overwhelming majority of those who play.

When it comes to horse racing, it is probably the least addictive form of gambling these days with its collective 21% takeout. Wins are not as frequent, and even if a newbie decides to give it a try, it doesn't take long to realize that you will end up broke most days you go to the track, and the learning curve is huge and further investigation leads to the fact that there aren't any visible winners who beat that takeout rate, so why learn?

Potentially, horse racing is the greatest gambling game in the world, but again not at those prices.


Fort Erie 2013: I'm Not So Optimistic Now

Although my sources are giving Fort Erie hope, when I read what FELRC head James Thibert recently stated, I'd have to say it might be a longshot.

Less than a month ago he was quoted:
“Selling the track is not a requirement to race, it would just help because it shows the potential for new investment."

However, earlier this week, Thibert was quoted: "If a buyer can be found, the track can stay open."

So what changed? Reading between the lines, and I could be wrong, I hope I'm wrong, the transitional panel may have said no to Nordic Gaming getting a dime in leasing profits from the transitional fundings, and Nordic Gaming may have come back and stated, "then there will be no racing at our track."

And if the Horse Racing industry gets its major wish, which is to get the dead date of March 31st postponed, I doubt it means Fort Erie would get its slots back or its deal back from the last 3 years. Would transitional funds still be available? I can't see that if the SAR program is extended.

Quick update: Thibert was quoted again, stating the track doesn't need to be sold. Also, he states the $16 million price tag is too high for potential investors, and I see that. There is plenty of land between Niagara Falls and the Peace Bridge, the racetrack location isn't very special. For international companies, land is still cheaper in NY state, and for retail, well the Welcome Centre that was built across from the track some 10 years ago was a dud right from the start. And then you have the element of Fort Erie's biggest employer shutting down, well that will only cause all real estate prices in the area to plummet, and many businesses will either go under or think about it.

From that it might be a good idea to give Nordic some lease money until a buyer comes along, but it appears that the only buyer interested in Fort Erie right now, would be one interested in buying a track, and with Ontario's current horse racing climate to consider, nobody will be buying a track until there is much more clarity.

Update 2: In the article linked above in Quick Update appears to have leaked out that Western Fair is getting $10.5 million in transitional funding. Is that per year for 3 years, over three years or over a longer period of time or a one time funding? Is that for the track to operate? Or is it to be split with purses? Will takeout commissions only fund the purse account? Who knows, but maybe this slip up will lead to answers quickly.

Shh! I Know How To Grow Horse Racing

In order for horse racing to grow, not decline, not go sideways, it needs to be customer driven. The industry also needs to finally concede that the customer is not the Horseman but the Horseplayer.

The industry has to kiss the Horseplayers' butt. Not only are they the major source for revenue, but they are the ones most likely to bring in new Horseplayers.

So what needs to be done? I'm glad I asked.

TAKEOUT

In the real world of business there is a concept called optimal pricing. Optimal pricing is a good thing, not a bad thing, it is the price that returns the net revenues to the business (in this case it the takeout rate(s) that makes tracks, horsemen and breeders the most money). The industry has not made any serious effort whatsoever to find the optimum price (takeout rate) for the various wagers they offer. Sure, we've seen takeout reductions by some tracks, but what is needed is an across the board cut by the main tracks in order to properly find the price points.

Why does takeout mean so much? The lower the takeout, the more money cashed by the Horseplayer. The more money cashed, the longer they last, the more likely they are to focus more time and resources to the game, and the more likely their focus becomes contagious with friends, coworkers, and/or family members. They don't even have to know what the takeout rates are, it all psychological and has to do with gambling satisfaction, the same concept that is used by casinos in high churn games like blackjack, slots, roulette, etc.

Lower takeout may actually create the odd visible winner. Horse racing has none that I can think of who beats a 21% takeout rate. Visible winners works well for poker. Millions lose billions of dollars, but there is a carrot dangling in front of all gambler's faces, and that is that the game is perceived to be beatable. Horse racing is not perceived to be beatable long term anymore because there are no visible winners.

Slots has a hold (the same as takeout) of around 7% on average. If takeout doesn't matter, if optimal pricing doesn't matter, why isn't the casino hold on slots 21% on average like it is in horse racing? You gotta give the player the psychological fix and/or give them the impression that the game is beatable in their mind (this happens because of all the wins a slots player has during their time at the machine).


It stands to reason that the bets that result in the higher cashing rates should have the lowest takeout as they produce the largest churn ie show, place and then win, followed by exactas, doubles, and then the other exotic wagers (the new dime superfecta bets put them now on an equal scale with exactas pretty much). In actuality, when you take breakage into consideration, show wagering is probably the worst bet out there even though WPS is typically has the lowest takeout rate associated with it.

Knowing what I know, I think WPS has an optimal takeout rate that is closer to 8% than 16-20%. Exactas and doubles would probably make tracks the most money if rates were closer to 12%, and so on.

And why is breakage still be gobbled up by tracks? Anyone who wagers these days knows that the industry is capable of calculating to the penny. Thanks to fractional wagers it is not uncommon to have and odd amount like $6.14 in your ADW account. If the industry is serious about nurturing their customers, they should immediately start paying off to the penny, especially show bets. In fact, to eliminate bridge jumpers, something tracks do not like as they can produce negative pools, why not make the minimum payout $2.01? Who is going to risk $1,000 to make a $5? Sure, it means changing some state laws, but since this will coincide with eliminating breakage, it shouldn't be hard to pass in most jurisdictions.

Tracks already know that the more a Horseplayer cashes, the more they bet back. And outside of big windfall cashes, all the money cashed winds up churned back into the windows. The idea of optimal pricing should be a no brainer.

Until takeouts are slashed across the board industry wide (I won't hold my breath), the industry should begin to embrace rebates because the odd rebated player makes money betting horses. With poker shut down, you'd figure that horse racing could attract some of these out of work players, but rebating for the most part is still a secret. If embraced horse racing could promote winning Horseplayers, but unfortunately embracing rebates is an admission that takeout is way too high.

Tracks in states that have source market fees that make rebating impossible should fight to have these impositions removed. Everyone should be able to get rebates if they want them and the track or ADW wants to give them out. Even though the thought of rebates causes some in the industry to shudder, the top racing execs know that if they elimated rebating, handle would dry up and valuable players (most who lose a lot of money each year) would finally say enough is enough.

DRUGS

Drugs are perceived as bad by the general public. Does it hinder growth? It would if horse racing were to attract more newbies by reducing takeout. Does it hinder the current Horseplayer? I'd say that many avoid betting or bet less on races that have super trainers in it.

Overall confidence when it comes to wagering has definitely eroded due to trying to guess which horse is drugged up (with legal or illegal untested drugs) or which horse had a hyperbaric session (which is legal, but produces milk shake like results in many cases) or two.

From a Horseplayer's perspective it would be nice to know when a horse got an oxygen treatment, or when a horse had a medical procedure. In the NFL, where gambling is illegal nudge nudge wink wink, if a player stubs his toe on a dining room table, he shows up on the injury report, but when a horse gets its knee tapped, it is a mystery to everyone except a few insiders. There is no way this game is catering to the Horseplayer when such an edge is given to the backstretch in these cases.

One thing is certain, horses raced a lot more in the 60's than they do today. Is the racetrack drug culture weakening the breed? Most likely it is a major cause we see a reduction in starts because these drug treated horses who run well with lots of time between races but are dependent on drugs to race well wind up in the breeders shed. Drugs have also increased recovery rates needed by horses who were given the drugstore treatment.

Racing needs to reduce the amount of drugs that horses can race on and it needs to be transparent to the public when it comes to treatments horses receive.

Cheaters need to be clobbered when caught. Whether they use a non tested drug or a masked drug that is not on the list of drugs allowed, they need to be criminally charged, simply defrauding the public will do. That is the only true way to deter the cheaters from ruining the game.

Cheaters put pressure on other horsemen to cheat in order to stay in business. This deters owners from expanding operations (unless they are a cheating outfit) and new owners from entering the game, as well. New owners are a great source when it comes to bringing newbies (friends, family, etc.) to the track so that the game can possibly nurture some new customers.

BREEDING AND STAKE RACES

By catering to the breeder, horse racing has contributed to its own decline. With so many stake races for 2 year olds and three year olds, the breeder is inclined to produce horses that are best suited for sprints to a mile and a sixteenth, and horses that peak early in their careers as well. This has totally weakened the breed. The fact that many of these "shooting stars" wind up in the breeder's shed at four makes it difficult to find horses bred for longevity today.

Longevity is an important way to lure in the general public. Quick name 4 top three year olds from 2007? I can't think of one. How about 2011? Blank again. I might remember if there was a Triple Crown winner, but the drugs horses get today and the fact they are a weakened breed from 3 decades ago makes running so quickly between races impossible if winning each race or consistency is a goal. Familiarity with horses like Cigar, Forego, and even Zenyatta is a big way to attract newbies to the game.

There are way too many stake races, and especially too many Grade 1 and Grade 2 races. Again, the high amount of stake races out there is to appease the breeders, not grow the game. To get the public buzzing throughout the year, and not just Triple Crown and Breeders' Cup time, the best need to race against the best. Not the best in New York running against in New York, or the best in Chicago running against the best in Chicago. Nation wide familiarity needs to be the goal here, not fake black type. Many grade 2 and grade 3 stake races mean about as much as the city auditions that American Idol has.

There should be only a couple of big races each weekend tops. And way less two year old races, and a lot more money should go towards 4 year olds and upward.

I remember La Prevoyante's perfect two year old career even though I was on I was only 11 at the time. She ran in the top two year old Stake races for fillies (against boys too in some cases) that were out there. They were all known Stake races at the time, why? Because there weren't that many Stake races out there. And even though her life ended tragically at four, she was able to race 12 times as a two year old, and 39 times lifetime. And I still remember her name.

When it comes to breeding and strengthening the breed, and creating horses the public will be familiar with for more than a year or two, there should be a rule that horses cannot enter the breeding shed until they are 6 (mares 5). Yeah, I can hear the jeers from the breeders, but this about what is good for horse racing's growth, not about quick fixes in order to turn money over as quickly as possible. Eventually, if implemented there will be a lot more money for breeders and in purses as the customer base will grow.

FREE PAST PERFORMANCES

Having free past performances available, with basic info going back 10 lines that include track variant based speed figures can only increase overall handle and nurture new players. The information provider (Equibase) should be paid by tracks, ADWs, and Horsemen. They are the three groups that benefit from higher handle. Some ADWs give out free past performances today for those who wager a certain amount, while other ADWs give out decent rebates and let the player decide how to spend those rebates, so at least there is an understanding that free past performances and/or rebates cause players to play more.

Tracks should have free past performances for their particular track available at their websites.

You can get free statistics on any major sports on the internet in order to make "illegal" wager decisions or legal fantasy decisions, but the customer has to incur an expense to get information play an unbeatable game?

NATION-WIDE LOTTERY

A great way to get more customers is to have a nation wide lottery where tickets can be bought at store kiosks, online at ADWs (the races involved must be carried by all ADWs), and at all tracks, there should be no reason why someone who wants to buy a ticket can't. The lottery should go once a week (Saturdays). A Pick 8. Field size must be large in order to possibly have carryovers, so races need to picked with weather reports in mind.

A website should be created with free past performances for all the races involved. A quick sheet giving the top contenders for each race should be available at tracks and store kiosks. Players can do quick picks, contender quick picks, or pick their own. Consolation prizes can be awarded to those who pick the most winners on carryover days, or the second most winners when the pool is won, as well as those who pick the first four or last four winners, thus keeping the player's interest alive for many of the races.

A nation-wide lottery a sure fire way to get more people introduced to horse racing.

One more thing, there are way too many carryovers out there today that would take a meet to make it worthwhile in attracting serious attention. Get rid of them. I believe they hurt the carryovers worthy of attracting big money and possibly new players. If a bet doesn't attract at least $15,000 on a day without it being a carryover, it should not be a carryover bet.

Thoughts On The Agenda Interview With OMAFRA Panel

I've developed quite a few thoughts after watching the Steve Paikin interview a couple of times.

First off, some ommissions and misinformation.

No mention of the fact that the OLG is now in direct competition with horse racing. It is an obvious conflict of interest. Ontarians only have so much is discretionary funds, especially those who are inclined to gamble.

Been over this one before, but calling the money the horse racing industry received under the SAR program tax payer dollars or a government subsidy is completely wrong. It WAS a business partnership, that helped both the government and racing industry out when it was drawn up, and the money collected by tracks and horsemen were not taxpayer dollars, but their share of gambling losses from customers. However, since the business agreement has been made null and void, any new deal will probably wind up being a subsidy (from tax already collected). Purses were subsidized, but not with taxpayer dollars, but the government got away with propaganda that even Paikin has bought into.

It still bothers me the fact that the $345 million that the tracks used to get will not automatically wind up in the government coffers as much of it will wind up as profit for the new operators. Something that was not mentioned in the interview or by the Liberal Party during their horse racing bashing propaganda campaign.

I still don't get how the panel can conclude that the SAR program was wrong, yet they concede that new forms of gambling such as Instant Racing or sports betting (which they didn't mention in the interview, which means that the OLG has probably told the committee forget about that one) or a lottery similar to the V75 is needed to sustain the racing industry in Ontario. Seriously, what is the difference if racing gets additional funding from slot betting at their establishments or Instant Racing betting at their establishments? The only case on the SAR program being wrong is the fact that there was absolutely no incentive to anyone from racing management to horsemen groups regarding growing the horse racing customer base. One could argue that the OLG didn't want the racing industry to grow their base either, but that might be giving the OLG too much credit.

The amount of money available has turned into an inside joke (watch the interview below). It is a secret. But I believe there is a cap number, and it has been OKed by the government. There is some confusion, because $50 million over three years was initially offered to replace the $345 million per year that will be taken out. The panel stated that $50 is too low (over a year or three years?) and $345 million is too much. It makes me believe that the cap could be close to $150 million a year.

I do like the new deal going forward in that the focus is now on growing the customer base and attracting new Horseplayers. This concept was completely forgotten, even before slots were put into Ontario tracks. The industry is going to be forced into being competitive with other forms of gambling, and if they take it seriously, it means we will see take-out reductions which will lead to higher gambler satisfaction from customers.

Questions, Questions, Questions!

Are they serious about giving 100% of wagering revenues to fund purse accounts and have the government subsize the racetracks (paying for everything from backstretches to utilities to management bonuses?). If a track has no upside financially to make a profit, then their only incentive to keep the track open is to employ their personnel. Sounds way too altruistic. And if this is true, the direction of racing in Ontario will have the horsemen actually running the tracks (something that doesn't sit well with me because horsemen groups tend to be completely ignorant when it comes to growing the game through new customers and increased handle).

The other thing that may happen with Woodbine, Mohawk and the Great Canadian Gaming tracks is that they could become the casino operators. That would allow them to be profitable, but then if that is the goal, why would they care or focus on horse racing? Good for the OLG, bad for racing.

The government will most likely come up with benchmarks for racetracks in order to keep their subsidies in place. But how long will the new deal be, and is that enough time to sustain horse racing?

$150 million a year should be enough for tracks that still want to operate in Ontario to operate. For example, it is estimated that Fort Erie which operates for 7 months a year with 75 plus racedates and an active backstretch costs around $10 million to keep their lights on without taking purses into account. This brings up another interesting question. Since around $5 million from wagering (home market wagering and signal fees from exporting their product) winds up in the purse account, under the old deal, some of that came from a split with HPI and close to another $5 million from wagering went for track operations, does this mean that Fort Erie will get around $10 million to put into their purse account if the panel allows them to race next year?

Currently, tracks get less than 50% of horse betting revenues, while horsemen get around 50% (into purses and breeding programs). Are tracks going to sign a new deal giving them 100% (after provincial and federal taxes)? One thing about a new deal is that allows tracks to play with takeout rates easier (as the 2% extra that went to horsemen put a damper on experimenting in the past since it was on each bet and not on gross revenues). But who will have the say on betting if the horsemen get all or most of it? Again, that is a scary thought.

Any hoot, it is December 5th, 2012 and there are still no dates for Ontario racing in 2013. There has to be some concrete news coming out very very shortly.

Here is the TVO video if you haven't seen it yet:

The Case For Fort Erie And Some Quick Math

A couple of weeks ago OMAFRA released the "Final" Report by the Horse Racing Transitional Panel, as the panel attempt to come up with a solution to keep horse racing going in Ontario.

The Final Report turned out to be a "blue-print" to move forward, not what the industry needs at this time, which is real numbers, real dates, and solidified game-plan.

The bottom line after reading the report is I would not consider small ownership of a racehorse in Ontario on the thoroughbred side, and when it comes to standardbreds, I don't need a horse as a pet.

Under the new blue print, the only standardbred people who have a shot at breaking even are owner/trainer/drivers (not owners or trainers or drivers). The reality is that as a gambling game that needs to depend on horse race betting to survive, it has as much of chance right now as the rotary phone business does. Sky high takeouts have murdered their customer base, and the sense of entitlement from many of the horsemen that led to them not even springing a pittance of their portion of the slots revenues in the past to market their product has helped Ontario harness racing lose a generation of potential Horseplayers. To be fair, most racetracks did very little to try convert slot players to horse race bettors either.

A horse racing lottery is pretty much the only thing that can save harness racing, unless the impossible happens and they get the slots revenues back.

Sports betting has a low margin associated with it if done properly, and if done the Pro-Line way, it will attract very little volume. As for Instant Racing, it sounds like a good idea, but it won't compete very well with slots. Instant Racing has been successful has been places that don't have slots near them. But if the horse racing industry gets all or most of the cut, it could help some, and if put in certain locales like Fort Erie (which do not have slots anymore), it could be the difference in making racing viable and not dependent on a government subsidy.

Speaking of Fort Erie....

The Report basically treated thoroughbred B racing as not important, allocating only 30 racing days, and then to make things even worse for the thoroughbred industry, it seemed to not care if racing continued at Fort Erie or moved to Ajax instead.

This nonchalant attitude towards B racing makes me wonder if the panel is really focused on the future of horse racing in Ontario. Now I'll explain:

Horse owners are great for horse racing and the economy of Ontario. The more the merrier. Horse owners generally lose money, even with the large purses in Ontario, so they are collectively adding disposable money to the backstretch. They also tend to bring newbies to the track too, something that racing sorely needs.

Now lets say an owner (or even better, a small partnership) buys a horse for $15,000 and after a few attempts, finds that their horse can't handle the polytrack or is just noncompetitive against Woodbine horses. What is the option? Sell the horse real cheap to someone who will take it to the States? Take it to the States themselves (and find out that isn't why they got into horse ownership to begin with, that they want the option to view their horse race live)? Or race it in a limited 30 race date campaign at Fort Erie, or even worse, Ajax Downs?

All the above options will lead to the owners getting out of the game almost as quickly as they wrote their first check to get into the game. Less owners means less buyers. It inevitably means less breeders and less Ontario breds. Pretty soon it will just be a Woodbine full of Kentucky bred horses. The short fields we see today for higher claiming races, where certain trainers enter two horses to make a 6 horse race go, only to scratch one on race day, making the race close to unplayable will become more and more common.

The future will be bleak. Less race dates, less horses. It will become a Sport of Kings again, because only Kings will be able to afford to race, and betting handle will go sideways at best.

How about the argument that B racing could just be added to Woodbine like the old days when their was only one circuit in Ontario? Not feasible. Horses ran a lot more back then, so a smaller population worked OK, and owners didn't pay $85 a day plus another $400 a race on drugs back then either. Unless 5 claimers can run for $22,000 purses, it just won't work, and again, there is no alternative for horses who can't poly.

Fort Erie makes all the sense in the world to exist, as does a season of at least 52 dates (racing at least twice a week from May 7th to October 29th next year). Day rate at the Fort is generally $50-$55 a day, making it somewhat affordable for smaller outfits, or cheap enough for a bigger Woodbine owner to keep their horse filling races in Ontario.

Fort Erie has an established backstretch that can hold over 1,000 horses. Many A horses are stabled at Fort Erie, many two year olds that either can't get a Woodbine stall due to too much demand at Woodbine or as a place that is much calmer than the Woodbine backstretch (again, an option for a high strung horse).

Ajax Downs does not have a backstretch that can accommodate B thoroughbreds. This means that horses will need to ship in to race and not be able to train there regularly. So lets say that an owner can't get a stall at Woodbine and has to run off the farm to get into a claimer. That horse will have zero chance of beating a horse stable at Woodbine dropping down from 10 claiming, for example. In other words, it wouldn't happen, so those potential off the farm horses and owners will disappear very quickly.

Another huge knock against Ajax is that it is a 5 furlong bullring. Bettors would much rather play a mile track than a bullring any day of the week. Off topic, I commend Charles Town for lowering takeout in order to help grow their business (and it works) but they are still at a disadvantage due to size of their course.

The thing that is reportedly holding Fort Erie back is track ownership. I don't see the government giving Nordic Gaming a profit for letting horse racing run, and I don't see Nordic Gaming allowing horse to race if they don't get some money. I hope I'm wrong, or I hope that the track is sold soon to a company that is interested in owning a racetrack.

The report stressed that handle must eventually pay for at least the purses. Again, with sports betting, a share in a new lottery and Instant Racing, taking into account that Fort Erie handles 400k-500k a day right now, there is potential that it could be self reliant.

Sure, takeout needs to be drastically reduced, especially on exactors and doubles which are currently over 26%, if Fort Erie is to attract serious bettors as well as cultivate new local bettors. I'm not sure that the racetrack can be optimally managed by the EDTC as they just don't seem to understand or focus on the bettor. They've done an OK job keeping the track from sinking, but more is needed going forward. Perhaps, I should cut them some slack as they have been operating on a beer budget knowing 2012 could be their last year. Alternatively, it might be better if Fort Erie was managed by Woodbine (Woodbine needs Fort Erie to exist as explained above) or even a bettor friendly HBPA (I think they might get the fact that they need to attract bettors in order to survive the future, and they definitely understand the horsemen side of things).

Quick Math

The Report gave Woodbine 160 days. Woodbine has found out that Thursdays are not economical (and they optimally fill cards for four days of racing a week as opposed to five) and have done away with them the last half of this season.

In 2013, if they were to race from April 5th to December 15th and race 3 days a week in April, and four days a week the rest of the year, plus 4 holiday Mondays, they only need 148 dates.

According to the numbers presented by the panel and taking into account that they state racing needs to be more communal going forward, there is a surplus of $4.8 million in purse monies which can be directed to B racing instead. Fort Erie makes around $5 for purses from their home market bettors a year (this is based on over 70 race dates), so lets assume 60 race dates, cutting the Woodbine surplus to $4 million (because of less race dates) and Fort Erie to $4 million, there is $8 million available for purses. Fort Erie could comfortable run 60 days with $130,000 available each day. At over $14,000 a race, they should have no problem filling races better, attracting bigger fields, and this would snowball in even more wagering.

To succeed, Fort Erie needs to run a niche racetrack. $4,000 to $10,000 claiming races only. They also need to give incentives to have larger fields and take away incentives to fill short fields. This can easily be done by only allotting 70% of base purse amounts to fields of 7 or less, adding 10% of the base purse to each betting interest above 7. This means a 12 horse race, which will attract a lot more betting, will run for 120% of the base purse. Besides gearing a purse structure to more betting, I think that the owner of horse who beats 11 horses should get more than someone whose horse beat only 6 horses at the same class level.

Fort Erie is the only answer to sustain thoroughbred horse racing in Ontario, but the problem is whether the question is really being asked. Horse racing is now in direct competition with the OLG after all.

Standardbred Canada, C'Mon Man

Remember when the now disgraced and humiliated Minister of Finance Dwight Duncan started spewing lies and half truths about the Ontario horse racing industry in the spring? The way I look at it, if you have to resort to falsities to make your case, it either means your case is weak and you need to lie, or you yourself are ignorant of the facts. I think it was a mixture of the two when Duncan went on his selling of the end of slots at racetracks campaign.

I believe the large motivating factor was that he and Ontario Premier Dalton McGuinty were sucked in to Paul Godfrey's Toronto casino pitch, and desperate to reduce the deficit, Duncan and McGuinty forgot they were working for the good of the people of Ontario when they made the decision that facts and due diligence weren't important.

Duncan stressed that the government couldn't afford to give the racing industry a subsidy any longer, calling the revenues tax dollars. During the 14 years tracks and horsemen received a cut of slots revenue, it was clearly a business partnership, not a subsidy, and definitely the tracks were not receiving tax dollars. Even the OLG in their financial reports referred to monies that went to tracks and horsemen as "commissions."

When introduced, the Ontario government was looking for revenue sources, and knowing that slots could easily be introduced at established gambling centers (racetracks), and also knowing that if people voted for slots gambling, the vote would be no in most jurisdictions if done outside a track, a deal was struck. It was also known that cannibalization would occur (the tracks would lose some customers, some of their customers betting dollars, and also lose potential long term customers who would never be nurtured as Horseplayers).

Clearly, what we are seeing right now that if referendums (which the Liberal government made "not mandatory") were introduced, there would barely be a casino built in the future outside of a racetrack locale. Even without referendums, the OLG is having a very difficult time selling many towns and cities on the idea of casinos not located at racetracks. I don't think they had a clue it was going to be this tough. I'm sure Godfrey convinced Duncan and McGuinty that expanded gambling outside tracks would be a slam dunk. The reality is that in most instances, the only place a casino is accepted in Ontario is at a racetrack. This fact means that the OLG is reliant on racetracks to keep their revenue streams, and going forward, it means money coming from whatever new deal can hardly be called a subsidy.

So what does this have to do with Standardbred Canada? Well, they are using Duncan like tactics when it comes to selling their case. On one point in particular. And that is something I've written about here in the past, the percentage of net revenue that the OLG actually makes, both now, and going forward.

My beef with Standardbred Canada is that they perpetuate deceit in stressing that Bingo Halls will receive 47% of gambling revenues going forward, while slots at tracks only resulted in 25% being kept by the tracks, horsemen and municipalities, while also stating that the OLG (the government) made 75% under the old deal.

They are blurring the truth in a big way. Bingo halls are to keep 47% of revenues, however, that is after the bingo halls pay the expenses. If you check out page 16 of the OLG Annual Report, you'll find that the OLG pays the expenses at the racetracks for the casino operations, and after they paid these expenses, as well as the 25% the horsemen, tracks and municipalities received, they wound up with around 48-49% net income.

My frustration over this came to a head a few days ago, when Standardbred Canada decided not to allow my comment to be added on one of their stories, "Burgess Pens Letter To Auditor General."

Here is the rejected comment. It is completely factual, and Standardbred Canada clearly wants to perpetuate the deceit, so they didn't print it:

"Although I agree that the Auditor General should really look into this case, I get tired of seeing the 47% versus 75% case being constantly made. The reality is that after expenses the OLG received around 47-49% net from the Slots at Racetracks Program (thanks to the governments way of overpaying, expenses to run the operations were over 25% on average, which is on par to what they are offering the Bingo Halls right now).
The AG should look into the buying of Bingo Halls over the last few years as well as the fact that Bingo Halls have been on a major decline while Slots at Tracks have remained pretty much the same in recent years as far as net income received by the government is concerned. Why the preference to Bingo Halls? And where was the social and economic impact study that should have done before even considering ending the SAR program?"

I'm not sure if Mr. Burgess is ignorant when it comes to net incomes or if he just bought into Standardbred Canada's propaganda without thinking about it.

It is kind of disturbing that horsemen would be ignorant of these things. Stating the OLG made 75% of slot revenues would be like Dwight Duncan stating that the owner (in harness racing) makes 90% of the purses, overlooking the fact that owners pay day pay, shipping, vets, etc., which in many cases reduces that 90% to a negative number.

Anyway, Standardbred Canada deserves the slap. C'mon Man!

One last thing. The recommendations by the Racing Panel will be released by OMAFRA very shortly (maybe even tomorrow), and I'm optimistically expecting it to be good for Ontario horse racing and rubber stamped immediately. I think we'll see a some shrinkage, but nowhere near the alleged shrinkage George Costanza experienced when coming out of the pool in a classic Seinfeld episode:)