Horse Racing Needs To Try Optimum Pricing Before Cutting Dates

Nick Eaves was recently on Trot Radio, and what he had to say was not very popular amongst harness horsemen in Ontario at all. He has pretty much concluded 100% that harness racing (even Woodbine Mohawk) needs to cut dates because there just isn't enough demand for the product.

I'm not saying there isn't too much harness racing in Ontario today, but what gets me is that the element of pricing is huge when it comes to demand, especially today when there are all kinds of competition in the gambling industry.

How can a reasonably intelligent sounding man, who runs a gambling empire avoid Economics 101 so much? It isn't just Eaves, but his predecessor as well, and virtually almost every race track exec in North America.

To date, Woodbine Entertainment has not even attempted to find the OPTIMUM PRICE when it comes to takeout. Surely, a company that sells a product (gambling) in a competitive environment has to understand that at different track takeouts, you end up with different bottom lines.

Take McDonald's for instance, they know that if they charge $3 for a Big Mac, they make more money in the long run than if the price was $6 or even $1. This happens with experience of moving prices up and down.

The slot industry has found out the OPTIMUM PRICE as well through trial and error. Of course, it can be a little different in one place than another, depending on the customer base, but it generally always falls between a house take of 5% to 10%.

At 15% or 20%, even though the patrons mostly don't have a clue about the slot payback rates, slot operators make less money in the long run because players go broke quicker, which works towards giving them a stronger negative experience. After all it is gambling, and if you walk into any place with a bankroll and lose it too quick, you'll find other ways to bet or quit betting altogether.

The longer a player lasts, the more apt they are to expose friends and family to their gambling habit. This increases the bottom line of the casino....or hopefully, the racetrack when they finally discover OPTIMAL PRICING. Again, lowering takeout in horse racing is a long term thing. It isn't an overnight savior. It took 30 years for racing to find the bottom, now it is time for it to rise up again. Lowering takeout will help the momentum.

Seriously, how can Keeneland have takeouts between 16%-19% and Woodbine have takeouts between 17%-27% if OPTIMAL PRICING has been attempted?


THE COST TO PUT ON THE SHOW FALLACY

One of the biggest crocks heard is that racing can't drop takeouts because the price of putting on the show is too high.

Takeout price and the cost to run a track are two separate entities. The best way to illustrate this is using a slot operation.

Slot operations are not cheap to run. Many are open 24 hours a day, 7 days a week, and employs many full time staff (employee benefits, maternity leave, etc.). It takes a lot of electricity to run these places as well. Lets say it costs $25 million a year to operate a casino, and lets also assume they at least break even at every hour of operation, so there is no need to cut hours. The casino has an average house take of 8% on their slots. This means, to break even slot players must bet at least $312,500,000 a year. At 8% they do find that people bet $450 million a year (yielding a profit of $11 million). However, at 10% where the break even point would only be $250 million, they find that people bet only $330 million, which yields a profit of $8 million.


Now what does the cost of the operations have to do with how much people will bet? Simply, it doesn't mean squat. The slot operator, using OPTIMUM PRICING, realize that they make more money at 8% versus a 10% hold. The cost of the show is irrelevant, it could be $25 million, $10 million, or $35 million, it just doesn't matter. It is all about the the takeout rate or hold rate, and how much the customer loses collectively at different hold rates.

More of today's customers are aware of track takeout when it comes to horse racing, but even if they weren't, the psychology of losing too fast will always be there. Horse racing needs to attempt to find the OPTIMUM PRICE point. Cutting dates first is just giving up without even trying, and just putting a band aid on the demand problem.

In the Trot Radio interview, Eaves also made mention of the HIPS 2% (4% on triactors) tax that increases the takeout, a horseplayer has to pay. I think it is a great idea to change the way HIPS is funded, and take it out of slots instead. A 2% decrease on WPS and exactors and doubles would be great, if Woodbine can pull it off. A 14.95% takeout on WPS would be the lowest in the land, giving them a fantastic competitive edge.

More importantly, getting rid of it off the parimutuel side would enable Woodbine to experiment with other takeout reductions more easily as well.

I don't get his churn comment? Of course, in the old days when there were fewer exotics, and a lower collective takeout because of it, churn would be higher. But to say churn isn't that good anymore is a bit misleading. Horseplayers generally bet until it is all gone. They might play other tracks, but that is how it works.

Also, the polytrack has led to bigger average payouts (thanks to bigger fields and the fact the polytrack creates more chaotic results than dirt), so fewer people are getting money to churn. So it might take the player who cashes a big super or tri longer to churn back, but they generally do so over time (the churn is coming back from fewer sources than in the old days). And the best churn days are when exactors pay $20 and winners pay a fin. But again, with most of the money coming from simulcast or ADW, people will generally bet the next race coming with the money they cash, regardless where they cash it, so sometimes Woodbine benefits, and sometimes it doesn't. It should be a wash in the end regarding timing of players cashing and betting back.

When you take out $25 out of every $100 bet versus $16, there is going to be a lot less churn regardless. That is the bottom line.


HANA at Keeneland On Youtube
I'm proud to say HANA is getting the exposure it deserves. We are starting to get a seat at the table, and I think our efforts are beginning to pay off, as tracks have actually come to us and ask for suggestions (and why not, we represent the customers, the people who pay for the purses and the track operations):



Incidentally, HPITV viewers may recognize Mike Maloney, as he has shown up on a video that HPITV airs having to do with handicapping.


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If California Wants Bigger Purses

There is a strong rumour that California is strongly considering increasing takeout at their major tracks (even in light of the fact that Los Alamitos is suffering since increasing their takeout rates). The horsemen are in panic mode right now. Let me try to settle them down with some legitimate suggestions:

Increasing takeout is not the answer. Every study out there concludes that the optimum takeout (the takeout where tracks and horsemen make the most most money bottom line) is maximum 14%, according to studies done. Most suggest 10-12% the optimum is 10-12%. The farther a track is away from the optimum rate, the more it is costing both the horsemen and the tracks.

Why is a lower rate more profitable? It is a matter of horseplayers lasting. The same concept is true of slots. Slot operators have found that they make more money (the public loses more money collectively) at 8% instead of at a 16% takeout, for example. If a slot player has a hundred bucks to blow, and say they only last 2 hours on average, they go home more discouraged than if they last 4 hours. The longer they last, the more likely they are to believe the game is beatable too. What happens is that when they are discouraged, they are less likely to come back so quickly. On the other hand, the more they come back, the more likely they are to focus more of their expendable entertainment money on slots, and the more likely they are to expose friends, family and even coworkers to their hobby. This is true of horse racing too.

California already has some of the best takeouts in horse racing. But they are not promoting this fact very well. Promote it. In fact, drop takeout on WPS to 15% and tell everyone. Drop takeout on exotics by a half a point to a point too, and promote it.

Secondly, California could benefit from an ADW owned by the horsemen to capture a bigger percentage of the bets made by Californians. But they need to do it right. Offer rebates. Attract back the Californians that are betting offshore. Get the money back into your pools. Promote the ADW. Get people at the track to sign up. Again, rebating will attract these players too. White Label solutions are available. They don't even have to invest in the technology. The state laws may need to change though, regarding rebates.

Third, sell your signals to whoever wants them. Horseplayers with accounts at ADWs that don't have California content, don't play California. Online horseplayers generally play where their money is.

Fourth, more tracks to bet on at tracks. California limits their on track customers to something like 32 races a day from all over the country to choose from. Give horseplayers their choice back. If takeouts are lower, players will bet more, and show up more often, and churn more.

High signal fees also hurt California. There is a trend out there now to increase these. What is happening is that price sensitive rebate players are shifting to tracks that charge lower fees. This is a reality. Dropping these fees would most likely increase the bottom line as well.

Follow the advice above, and betting and purses in California will go up substantially.


Another thing that California and other tracks can do to increase handle is to stipulate in their simulcast agreements with Woodbine (HPI) that Woodbine pays actual track odds on all exotics to prevent them from jacking up the takeout on exotics that have a takeout of less than 25%. Pull the Pocket stresses the point here. An example from a few nights ago: The 15% pick 4 paid this at the Meadowlands:

$1 Pick 4 (Pool $101,888) (1-1-6-10) $4,605.90
At Woodbine for the same bet:
$1 Pick 4 (1-1-6-10) $4,064.05
The money bet through HPI or at Woodbine is commingled. It goes into the pools.
There is no good reason for this. Stating the takeout is too low doesn't cut it. Don't take the signal if you don't want to compete fairly. And the excuse makes no sense, because Woodbine pays off track odds on many WPS pools that have takeouts of 16% or less. Quit ripping the customers.

What ends up happening, and California or The Meadowlands, if you are reading this, is that many Canadian players avoid playing these type of races at Woodbine, and have very few options to play them anywhere else. And I know this for a fact, that not only do they stop playing the triactors, they stop handicapping the races altogether.


Nick Eaves Has It Upside Down

Nick Eaves is doing a wonderful job of alienating industry members and he isn't even the head cheese yet.

First, he was nonchalant when it came to knowing the Fort Erie situation when it looked like there might not be racing this year at the Fort and he seemed to not care and be OK with its closing, yet he seemed concerned about Quebec harness racing.

Now he is pissing off many Ontario harness horsemen with his "Too Much Product, Not Enough Demand" stance. This is a dangerous way to think, but it is typical of what happens when tracks receive monies from other forms of gambling other than racing. Horse racing becomes a necessary evil.

The reason there isn't enough demand needs to be dealt with, not the too much product. Livelihoods are at stake here. You don't cut jobs before you try cutting prices first. And by prices, I mean the takeout. Woodbine's culture and failure to compete, contagious in all of racing I might add, has caused the lack of demand by failing to compete, or even try to compete with other forms of gambling.

Economics 101: When demand drops, the price of the product (takeout) should drop.

Cutting dates before cutting takeout is a band aid solution, and it will not help create any more demand. Cutting takeout will create more demand.



Barry Irwin Calls For A 12% Takeout Across The Industry As Well As Other Suggestions

I disagree with Irwin that contraction is needed. It might be needed, but lets reduce takeout or embrace rebates first. I also disagree that selling horse racing as a sport over a place to make money will do much. Horse racing is not NASCAR, and never will be.
Horse racing must focus on the winners, the owners and partnerships that make money, especially the smaller outfits, and it should focus on winning horseplayers as well, which at a 20% collective takeout rate is an impossibility right now.


Popular Horse Thorn Bird Is Dead or Is He?
The thing is that he supposedly died months ago, and his now bankrupt owner, Ahmed Zayat, collected lots of insurance money on him.

Bizarre is the fact that trainer Mike Mitchell said "It's a small chance" that Thorn Bird could have been entered in the Breeder's Cup, apparently after the horse was put down, or maybe he wasn't.


Horse Racing In Alberta In Terrible Shape
The economics of owning a horse in Alberta just don't make sense. With 1000 thoroughbreds in training and 500 standardbreds in training, there just isn't enough money to go around. Less than $11 million is given out in purses there, and the horses aren't good enough to ship in order to race all year round.

The article says it costs $20,000 a horse to train. That is possibly on the high side depending on how many horses are trained by the owners there. But lets say it is $15,000. After paying the jockey, only $10 million is distributed in Alberta, and the total cost to own horses in Alberta is between $22-30 million.

Unless you have a real good horse, it makes no sense economically to own a horse in Alberta. The odds are stacked way too much against you.

Alberta is another victim of a jurisdiction that failed to compete for customers with other forms of gambling. High takeouts created less and less players over the years.



Sad News: Woodbine Icon Michael Burns Sr. Passed Away At 84
He started taking pictures at Old Woodbine (Greenwood) in the mid 1940's. A picture from last year won the Sovereign Award a couple of weeks ago. He is also in the Canadian Horse Racing Hall Of Fame as a builder.

Woodbine Cares More About Quebec Racing Than Fort Erie

In an interview yesterday on The FAN, Nick Eaves showed complete indifference to the plight of racing at Fort Erie race track.

Eaves (Woodbine's Big Cheese In Waiting) actually said to host Mike Hogan (who admitted knowing next to nothing about Fort Erie or Quebec's current situation) that "I don't know anything you don't know," in regards to the future of horse racing in Fort Erie. All I can say is WOW. He went on to say that the future "doesn't look terribly bright."

Actually Eaves may be correct about Hogan knowing as much as he. Eaves stated in the interview that Woodbine sold Fort Erie because they had the foresight regarding competition coming from Niagara Falls and Buffalo. The reality is that the sale of Fort Erie came around 2 years before slots came into the picture at racetracks in Ontario. Reportedly, Fort Erie was sold for $10 and the assumption of $1 million in debt.

Woodbine was simply consolidating their operations at the time. And the sale of Fort Erie looked horrible on Woodbine once slot machines were added to the tracks. The new owner's (Nordic Gaming) share of slot revenues peaked at $17 million in 2001. Woodbine gave away a lot of revenue for next to nothing.

It makes me wonder if Eaves is either ignorant of the sale or if he was being disingenuous (by trying to sugarcoat Woodbine's past moves) in the interview.

Had it not been for 9/11 and SARS, Fort Erie's stream would have been much higher in the next few years. Even Willmot and Eaves couldn't have predicted those two events:)

Had Woodbine still owned Fort Erie today, they would not be in trouble of shutting down, and I doubt the operation would not be losing money because the revenue streams would be much different.

Getting back to Quebec. What does WEG have to gain by Quebec racing? For one thing, they get back the revenue they have been losing because Quebec gamblers cannot bet through a Canadian based ADW (ie HPI). WEG is losing half a million in handle per month right now.

Quebec gamblers do have options. They can play on Betfair, William Hill, offshore bookies, and even US based ADWs that take Canadian customers.

I find it funny that Eaves sticks to the line that all other betting (outside of betting at HPI) done by Canadians is illegal. Again, it is not the case. William Hill (a large bookie across the pond) even advertises on The FAN radio station. The only thing that would be illegal is for a company in Canada to have its server in Canada and take bets from a Canadian (unless of course we are talking about an Indian Reserve in Canada, which is not considered to be in Canada as far as the law goes).

It is clear from the interview that WEG cares about one thing and one thing only: How much they can take from whatever source they can take it from. When speaking about growth, Eaves attention was on Woodbine Live, which will do zero when it comes to growing horse racing, other than give WEG a bigger revenue stream so that they can inflate purses from non horse racing betting.

Weren't slots introduced to racetracks in Ontario to help sustain the industry in Ontario?

How is putting Quebec ahead of Fort Erie helping Ontario's industry?

The harness situation firs. For one thing, there are 20 harness tracks in Ontario, and without slots there would be one or two. So yes, slots do create quite a few jobs on the harness side. If one track were to close, there wouldn't be that much of an affect when it comes to the job situation, as the industry is leaning towards less dates anyways right now. And many tracks don't race that many dates to begin with. But to my knowledge, no Racino is looking to close up shop at this time on the harness side anyway.


Why should Fort Erie be a major concern to Woodbine?

Again, lets go on the assumption that slots at racetracks are there for the purpose of helping out the horse racing industry in Ontario. This is something that WEG has lost total sight of.

Woodbine runs 8 months a year and this allows for many full time jobs to be created at the racetrack. From trainers to their staff to those in the feed business to breeders to those who work inside the track, horse racing allows people the opportunity to make a living.

There are three major sources of revenue that keeps the operation going: Revenue from betting, revenue from slots, and the amounts lost by owners collectively (a number that isn't as high as it used to be thanks to slot revenue enhanced purses).

In Ontario, the big show is Woodbine, but the reality is that many horses bred and/or owned in Ontario can't compete there. Some horses simply hate the polytrack, while others are just inferior or become inferior over time. Every horse is a split second away from an injury, minor or major, that can affect whether or not it can race at Woodbine competitively.

Owners of race horses know this, especially the smaller outfits.

So what happens if Fort Erie were to close down?

There would be no B track, and no dirt track in Ontario for owners to have as a safety net. When the horse is either a bad form or just not good enough for Woodbine, their only choices are to sell the horse for next to nothing or ship them down south and try a cheap dirt track there.

This will create less owners at Woodbine, let alone all the B horsemen that will be out of work if Fort Erie were to shut down.

Less owners means less demand for horses in Ontario. This means breeders will suffer even more, to the point that many will just have to close down shop. Less farms will be caring for horses as well. There will be less horses to feed.

This will also cause less betting and less interest in horse racing, as many B owners especially like to form partnerships and come to the track when their horses run, and many of them bet too. They also bring friends. This is one of the biggest angles to actually growing the game.

Meanwhile, Woodbine has done an excellent job in getting Kentucky breds and US outfits to come to Ontario. Again, is this what slot money was supposed to do? Give many of the big purses to foreign entities? And now Quebec's situation is more of an issue than Fort Erie's?

Doesn't in give Ontario horsemen a warm and fuzzy feeling that revenues from slots and potentially from Woodbine Live mainly go to $2 million races that are won by foreigners, while breeders and B horse owners continue to get the shaft?


The reality is that Woodbine must know that losing B horses will be devastating to the Ontario thoroughbred industry, and it makes me wonder if WEG wants Fort Erie to die so that Ajax Downs can host the B meet.

Ajax Downs is not going away, so no matter what Woodbine will have to split betting revenues form their home market. But if Fort Erie goes under, they get the Fort Erie home market to themselves. It might not be much, but either is Quebec. But both situations only add to Woodbine's revenue, and that is all it seems that WEG is about these days: How much more they can grab for as little cost as possible.

There is no question that Nordic's refusal to ask fair market price for the track has been a major obstacle and extra cause for uncertainty regarding Fort Erie's future. The government must tell Fort Erie "No Racing No Slots." This will take Nordic out of the driver's seat.

It is ridiculous precedence to have slots without racing. What is to stop any track from giving an ugly looking set of books in order to make the same claim in the future? I'm sure there are some harness tracks that are close to break even right now. If they were to show a loss thanks to the racing operations, does that mean the track owner can close the track and keep the slots thanks to this new potential precedence?

One more thing, regarding yesterday's interview. I don't think the proposed auto track in Fort Erie would be competition against the racetrack. In fact, it would cause more Americans to get passports or Nexus cards. As well, it would create more jobs in the area.

More people would visit Fort Erie Slots and maybe even the track, because many people will want to kill time here instead of waiting in a lineup to cross the border, plus for real big races, many fans come days in advance to camp out.

OK, so if you want to hear Nick Eaves for yourself, click here.

If you want to read more about the interview, click here.

Handle Up: Why Woodbine Bucked The Trend

Woodbine execs probably know better, that their recent announcement about the handle increase for 2009 for thoroughbred racing, isn't as good as it seems, or maybe they don't.

"All-sources handled totaled $361,435,208, compared to the $337,660,570 from the 167 dates in 2008. The daily average handle this year was $2,164,282.....Most of the $23.7 million increase came from U.S. sources. TVG, the national racing channel, offered Woodbine racing for the first time beginning on June 19."

Now let me give you the rest of the story.

Handle at thoroughbred tracks in North America in 2009 will show a drop of around 10% when final numbers come out in early January, so Woodbine's increase of 7% was against the trend.

Bad economic times is most likely to blame for the drop, however, even during the economic upswing prior to the bursting of the bubble, horse racing was barely holding steady from year to year when it comes to total handle.

So why did Woodbine do so seemingly well? There are a few reasons, and all of them helped.

1. Being featured on TVG definitely increased Woodbine's exposure. Horseplayers tend to bet races that are shown on TV. When a track gets featured, players become more familiar with the horses, jockeys, and trainers.

2. Probably the biggest plus for Woodbine was that they were not involved in signal blackouts, and other games that were being played out in 2009 by racetracks and horsemen groups. Woodbine's signal was available at every major ADW in the USA without disruption. When a player can't bet on a certain track, they will gravitate to another track. Tracks like Woodbine and Delaware were major benefactors in 2009.

3. Woodbine's seeded Pick 6 experiment caused handle to increase during its short run, and may have helped Woodbine's long term exposure in the USA. Woodbine lost money on the deal, and even with the increased handle and exposure, their bottom line has suffered.

4. Field size of 9.1 horses per race (up a little from 2008) is attractive to almost every bettor on the planet. It leads to bigger payoffs. And if a bettor hits something really big, he or she might actually overcome Woodbine's monstrous takeouts (their Win Place Show and Exactor takeouts are reasonable in today's market, but that isn't what I'm talking about here).

5. Mine That Bird put Woodbine on the map in a few more households in the USA in 2009.

6. $2 million races might help with exposure a little bit. But horseplayers collectively are more into bigger fields and reasonable payouts in the long run. When you do the math on days that have the big races, sure handle is up considerably, but the reality is the track loses a lot of money on those days if one looks at their cut of takeout versus what they give out in purses.

7. CHANTAL SUTHERLAND! The series Jockeys put her on the map. Male bettors (and maybe a few female bettors too) are all aware of her stunning good looks now. The fact she was the second leading rider at Woodbine this year, and brought home some nice prices, especially earlier in the year, definitely got more Americans playing Woodbine. I get lots of hits daily because certain individuals search "Chantal Sutherland nude."

8. Woodbine dropped their takeout on triactors from a whopping 28.3% to a whopping 27%. Now this probably didn't get US players to play more, however, the limited details announced regarding Woodbine's handle seem to indicate that domestic handle was close to even versus 2008, and dropping the takeout definitely helped. The increased payouts Canadians received when cashing triactors were most likely churned back on Woodbine races. Not so much in the USA, where players were more likely to churn the monies back into a race at another venue. As an aside, is it coincidence that tracks that increased their takeout in the past 18 months or so like Calder, Aqueduct, Belmont, Pimlico, and Laurel have seen high teen decreases in handle in 2009, almost double the trend?

9. Another thing that prevented domestic (on track and HPI account wagering) numbers from following the downward trend in North America was the fact that Woodbine were reportedly more aggressive in giving more of their biggest bettors large "secret" rebates in order to keep them from betting offshore or with a US ADW (most don't take Canadians, but some do) and even perhaps Betfair. This definitely increase churn on their own product domestically, maybe even by enough to make up the difference of losing 10% versus staying even in domestic handle. I know that when I receive a rebate in the neighbourhood of 7%, my handle increases three or four fold. But keeping big customers doesn't increase real growth. What Woodbine needs to do is give their smallest players the same rebate. It will keep them in the game longer, and then and only then do you have the foundations of growth. See "The Pie" over at the HANA blog.

10. Woodbine appeared in the US version of the Racing Form. Of course, this will help handle. It is amazing they were only up 6% when considering everything on this list.

Lets keep things in perspective here. Woodbine's $2.1 million daily handle isn't very good when compared with Hawthorne's $2.7 million daily handle. Hawthorne gives out less than half the purse money Woodbine does, so it deflates the racing quality argument that Woodbine likes to make. Hawthorne is available not just at major ADWs but all ADWs, especially the ones that give larger player rewards that savvy bettors tend to flock to. Hawthorne having a traditional dirt surface probably helps Hawthorne's cause at least a little as well.

There is also no mention about whether betting was up or down when it comes to Woodbine's customers playing other tracks. My guess it that it is down. Their practice of ramping up takeouts on triactors and superfectas, etc. at many US venues, which wind up shortchanging Woodbine/HPI customers, can only hurt them in the long run. Many players will avoid such bets, and may inevitably be driven offshore by Woodbine's utter callousness on this issue.

Woodbine with their quasi monopoly on Canadians should be doing a lot better. Perhaps, with David Willmot finally stepping down and being replaced by a younger and brighter individual (Nick Eaves), more betting incentives and initiatives will be made to attract more Canadians to play the horses.


For more on the topic of Woodbine's increase, which includes comments of players who either like or dislike betting Woodbine check out the 3 pages of comments at Pace Advantage. Here is a sample, by this dude named Dean:

"I lost respect for Woodbine several years ago when they raised their takeout from 14.75% to 25% on their pick 4. They did not tell anyone; it was a takeout raise of the worst kind.

But, their product is good, and this year let us remember that they offered out that huge seeded pick 6 (probably not a good idea with a $2 pick 6 and lack of whale money) but they did offer that low take bet. If next year they offer out a reduction in take, or a few other horseplayer centric items, I will gain a lot of that lost respect back (just personally as a player).

I think about six years ago now I think it was Maury Wolff, or maybe Andrew Beyer; they were speaking of Tampa bay downs. The quote from them was something like "excuse me about Tampa but with their huge takeouts I don't think they want me as a customer"

But now look at Tampa because they lowered takeout (and have for several years) and had a sea change in horseplayer respect. A lot of players love Tampa for what they have done and their handle is doing really well.

Anyhow, long winded crap from me that tracks can change and earn some respect, imo. All they have to do is try."

At Woodbine, The Monkeys Run The Zoo

Nick Eaves, President of Woodbine Entertainment, must be Willmot's puppet
At a recent gaming conference held in Reno, Nevada, Bill Eadington, a prominent gaming authority, stated that racing is in trouble, and that current models are not the way to go. Nick Eaves said "I'm not sure there is a problem. I think we're overstating the problem. The discussions should be about solutions and realities......
between 1990 and 1998, pari-mutuel wagering at Woodbine went from $930 million to $770. "In 2008, it is at $870 million."
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No problem? It looks like Woodbine has developed an aim low and always be satisfied philosophy. Lets look at gambling in Canada and compare it to parimutuel wagering at Woodbine: $13.6 billion in gambling money was lost by Canadians in 2007. In 1992, only $2.7 billion was lost.

And lets not also forget the fact that anyone in most regions in Canada can now bet through HPI. And thanks to their collusive contracts with most ADWs in the US, Woodbine has held a near monopoly on Canadian customers who want to wager on North American race tracks.

Of course, I stated "near" monopoly. Customer friendly sites that offer much lower rakes and takeouts have come along to spoil things for Woodbine and their culture of entitlement (a term that pops up in the Sadinsky Report).

Woodbine has failed to compete for new business, and has slowly lost their regular customers. One of the reasons their betting has somewhat stabilized is because of the secret deals they offer their biggest customers. All that does is increase the handle and keeps that customer playing at Woodbine. It does not create new business.


More from Eaves: “You have to invest in your product, too, and not only in the brick and mortar sense of the word, but invest in the customer. Keep the ones you have and get new ones.”
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How is Woodbine keeping old customers? By having a 28.3% takeout on triactors? By offering a piddly rebate to their HPI customers? How are they competing for not only their old customers, but new customers? Glitz doesn't do it. The reality is that 1 in 1000 HPI accounts show a profit over any 365 day span makes playing at HPI a joke. There is absolutely no buzz created, and no reason other than convenience to play there. And convenience by itself doesn't grow the business in the long run, especially in today's internet age.

Eaves said it is more difficult for racetracks to keep the customers they have when there are other gaming options at the facility. He said that more racing customers bet on other forms of gambling versus casino players who try racing.
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D'uh. Thanks for finally stating the obvious. Give Eaves a banana, he has earned it. So how will expanding casino gambling increase the amount bet by customers on parimutuel horse racing? Lets face it. Woodbine is now in the casino business. They've given up on trying to grow horse racing, but they will never admit it.


Eadington on the other hand knows his stuff as he states facts about slots and horse racing, and basically explains what is happening at Woodbine, without mentioning Woodbine: “Racing is overshadowed by the revenue that slots generates...This is the challenge racing has. It has to overcome that fundamental that the racing customer is diminishing in importance. Over time, you will see management who are specialized in managing a gaming operation."

Eadington also brought up this point: (contrary to the general perception that horses, horsepeople, owners and breeders are the foundation of the industry), "the demand from customers is what is essentially important. That is the essence of the argument that must be dealt with or else you are swimming upstream and the current will push you back ultimately....Legislators are going to look at racing and say, 'is this worth saving?' The vulnerability is very, very strong. Especially under these harsh economic times, you'll see a lot of revisiting of this whole model."



Fort Erie Update
Dalton McGuinty lent Fort Erie Mayor Doug Martin an ear yesterday
Martin came out of the 45 minute meeting optimistic, but he has been optimistic about just about everything in Fort Erie lately, so I take with a grain of salt.


Another article states Fort Erie Needs More Horses.
George Smitherman, Ontario's Minister of Energy and Infrastructure, said "they need to focus on finding ways to attract more people to come and watch them race."
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To get more horses at Fort Erie, you need more owners. To get more owners, you need bigger purses. That is why the government needs to increase what Fort Erie gets on slots from 10% to Nordic and the horsemen each, to 17.5%-20% for each.

That keeps Nordic breaking even, and the increase in purses will get more owners to bring horses to Fort Erie, and get more owners into the business again.

Small owners and partnerships need a better chance of breaking even. The more small owners there is, the more of a chance they will bring friends and family back to the track.

I want to add that the rule where you don't get the full purse on Ontario breds once the horse is claimed is another huge deterrent to potential owners. It also helps create less owners in the long run.

That rule needs to re examined by someone who understands how to grow the industry. It really isn't very well thought out.

For example, what incentive does a new claiming outfit have in claiming an Ontario bred over an American bred? None (unless it is good enough for Ontario sire races). And they feel like they are getting ripped off if they buy the Canadian bred on top of that.

Many outfits will buy try to buy the horse after the race if interested in order to bypass the rules, and that isn't what the game should be about.

And to stay on the point of growth and buying Ontario breds at sales, the more owners there is, the more likely yearlings will go for higher prices. The reality is that most new owners enter the game via the claiming route first. If they are successful or even break even, they may start dabbling in the CTHS sales.

What is needed is state bred claiming races which give yearling purchasers more of an out when risking money at a sale.

Increasing the amount the lower end Ontario breds are worth will push up what all Ontario breds are worth collectively. Why is Ontario one of the only jurisdictions that doesn't run state bred claiming races?

Back to Smitherman:
"It's not just about having a race track in operation for the purposes of subsidizing horses running around a track."
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Reality check: Without slots Woodbine would be close to dead today, and probably every harness track in Ontario would be out of business. The industry needs subsidies to survive, much like many farming businesses do as well.

Not that slots are that great, I've seen studies that state where ever slots pop up, parimutuel betting decreases on average 30%. And that is a lot, considering that when two people go to a track and one person bets slots and the other horses, and they both lose $100, the track and horsemen only get $10 each from the slots bettor, but they get around $48 each from the race track gambler.

High takeouts which have persisted in the industry coupled with losing horseplayers to slots (unsophisticated bettors), has made it near impossible for sophisticated horseplayer to become long term winners or even allow them to break even. Thus the shift from horse racing betting to games that offer a lower rake or takeout like online poker sports betting and exchange betting.

This is changing as more and more players are clued in when it comes to rebating on horse racing. But will Woodbine or Fort Erie follow the trend and go that way?
Fort Erie doesn't even have their own ADW. That alone could make them another half a million plus a year.

Also from the article:

'Niagara Falls MPP Kim Craitor said some new opportunities have arisen that are being pursued.

"There are a number of players who have come on board and want to be part of the solution, so it's not just going to be the government," said Craitor, not wishing to go into further detail because things are still being worked out. "That track has to be made into an entertainment complex, a place where people want to go."

The property, he added, needs to offer a broader attraction. The days of going to a track just to watch horses race are gone. Craitor said the government is looking at the entire industry, not just what is happening in Fort Erie.'

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Again, other forms of gambling can have a cannibalistic affect on parimutuel handle. However, if other forms of gambling bring in players who wouldn't have been there to begin with, that is another story.

Sports betting, even making it parimutuel, could work to get Americans to come over the border to bet on the Bills and Sabres, for instance. These bettors may also play horses as well, while waiting to see if they win their sports bets.

I'm leery of table games like blackjack and poker because of the proximity of the Buffalo casino and Niagara Falls. These games might just take away people's horse racing money, and if the government gets an 80% split on the money made, well that will hurt the purse accounts and what the track makes even more.


Reminder: the HANA bettor friendly countdown continues. Click here, as the Top Five are just around the corner.