Horse Racing Handle Is Swirling Down The Toilet

Handle, Purses Down Double Digits
"According to the Thoroughbred Racing Economic Indicators provided by Equibase, wagering on United States races in January 2010 was $917,083,595, down 12.03% from $1,042,532,063 a year ago.

U.S. purses, up 3.46% to $70,667,466 in January 2009, were down 10.04% in January 2010 to $63,574,094.

Part of the decline in handle and purses can be attributed to a 7.98% decrease in race days—individual programs at each track—from 376 last January to 346 in January 2010. But clearly the national economy, declines in many gaming sectors, and overall malaise in Thoroughbred racing are factors."


The horse racing industry has done everything it can to avoid the inevitable fact that they are not a competitive form of gambling. Collectively, when takeout is brought up horsemen and racetrack execs remind me of little children who plug their ears and stomp their feet while humming "mummummummummumummummummu" out loud.

Yet, as we've seen with Los Alamitos recent action to raise takeout, the industry is still under the delusion that they will make more money if they raise the cost to the consumer to bet. Economics 101 is the complete opposite. When you want to increase sales (handle), you are supposed to have a sale (lower the takeout).


Now Kentucky is talking a bet tax as well to be imposed on their internet bettors.

Rumblings are that the horsemen in California are now looking to raise takeout at some or all of the major California racetracks.

Many racetracks, led by Tracknet, are trying to push up host track fees (according to DRF's Matt Hegarty), which inevitably causes rebated horse players to get squeezed. They wind up betting less, and it becomes more and more rare to find winning horseplayer, which are crucial to the game right now if it intends to grow.

When will the insanity stop?

The horse racing industry desperately needs lower prices for the players. The Horseplayer needs last longer. The longer they play horses, the less they will play other games of chance (the more money they will collectively lose playing the ponies), and the more likely they are to draw in friends to their hobby as well. This means growth.

Create visible winners, and younger people will automatically become interested in the aspects of handicapping. This too means growth.

Everything else is futile. When will the racing industry wake up? When museums put in a horse racing exhibit next to the dinosaur section?



MICHAEL GILL UPDATE
Michael Gill got barred from racing at Penn. Some (or many) Gill horses are now getting offers on them. The irony is of course, that jockeys will now ride the same horses they deemed "unsafe."
For a real ugly take on the Gill situation check this out:

HT Equidaily
Gill still runs horses at Philadelphia.


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Los Alamitos Handle Down 25% First Night After Takeout Hike

Last night, handle at Los Alamitos was $577,000. Compared with last Thursday night, which saw $767,000 bet, handle was off by 25%. Yesterday was the first night in which the new 2% takeout hike on all wagers was implemented.

The weather may have contributed a little, but out of state wagering on Los Alamitos was off $120,000 (26%). This has nothing to do with weather, and all to do with player protests. Price sensitive players especially saw their potential profits drop, and those receiving rebates saw the net takeout rise on Los Al, which means that other tracks that don't increase track signal fees, look more attractive.

Had we seen a takeout increase that was not publicized, we would have seen very little change last night. That being said, had it not been publicized, over a few months we would see handle drop off because players would not have as much to play with.

Prior to HANA's (Horseplayers Association of North America) inception, Calder raised takeout in April 2008 with little publicity. I did pick up the news and wrote "Calder Raises Takeout: What Imbeciles."

So what has happened to Calder since?

Calder's handle 2007 $490 Million (172 Dates)
2008 $378 Million (160 Dates)
2009 $334 Million (152 Dates)

In today's climate, the takeout increase will affect the Los Al regulars the most and contribute to bettors playing less, where some may take bigger breaks from the game and again.

I stress this, when they are not playing, there is no likelihood they will bring others out with them and that they will not expose others to the game period. This hurts short term handle and long term growth as well. This is what happens when you move away from optimum takeout rate (which according to studies is 12% or lower).

I do think that HANA has made takeout a big issue to players who may have not been cognizant of it a year or two ago, so more people are getting it.

Gamblers are always looking for excuses why they don't win. They blame themselves for making wrong decisions, they blame the ride, they blame drugs, disqualification which are all valid, but all the above would be a lot easier to overcome if takeout were reduced.

Players generally don't say they are losing because of the takeout, because that would mean that they should question why they are betting horses in the first place.

Before last night's slaughter, Los Alamitos track owner, Ed Allred, was quoted as saying "This is something that's alien to my thinking," said Allred, a noted bettor and horse owner. "This is a sad thing for me to do......If this is a disaster, I'll be the first one to change it," Allred said. "The night simulcasting is hurting."

I feel sorry for Allred, however if a track is hurting to begin with, it needs to try to lower takeout. Perhaps this experiment will teach track owners and execs a lesson in Economics 101.

It should be noted that new Chairman, Keith Brackpool, of the CHRB, was the only person who voted against the takeout hike (which passed in a 6-1 vote). Unfortunately his vote was worth as much as Bo Derek's vote.

In a recent interview he said, "It's a slippery slope, I don't like it."

I think it is important to note that yesterday's protest was not a protest against the takeout rate (Los Alamitos' rate is still lower than many other tracks out there), but a protest against the hike, and it was not intended to be a one day event. Time will tell if it was a knee jerk reaction by angry players, or if they will keep it going until the takeout change is reversed.

It would be great if it is the latter. It is about time that horseplayers got together and said WE'RE NOT GONNA TAKE IT ANYMORE:

To join HANA, sign up here, it is free to do so, and the more members HANA has the more HANA will have a seat at the table going forward.

Interesting observation regarding Tracknet and their attempts to increase rates that tracks and ADWs pay for their product.

There could be a shift going on amongst price sensitive players from Tracknet tracks to non Tracknet tracks, because non Tracknet tracks allow the player's bottom line takeout rate to be much lower in many cases. They are feeling the squeeze, and other options are readily available.

I've noticed that Tracknet tracks are not doing so well of late when it comes to handle. For example, Fairgrounds all source handle was down 31% in November and 28% in December.
Much of the blame has to do with the fact that the Mid Atlantic Cooperative's refusal to sign a deal with Tracknet mainly because Tracknet wants to increase the fees it charges for its tracks.

In the meantime, horseplayers are learning that other race tracks do exist, and their signals are available almost everywhere. Tracks like Tampa Bay Downs, which reduced takeout on a few bets this year, have been benefiting from this and the fact that it looks like the horseplayer has finally woke up.

It will be interesting to see what happens in the coming months.

UPDATE: A couple hours after I posted this, Tracknet and the Mid Atlantic Cooperative have come to an agreement. It is hush hush as to who caved.

What If The Mob Ran Horse Racing?

I'm a huge Sopranos fan. I miss the show. And I wasn't happy with the ending. But that is another story.

What if Tony Soprano was the racing czar? How would racing look today?

He might charge the mooches (horseplayers) a vig (takeout) of 20% or greater.

He might allow his mob friends and his best clientele to have access to gamble at a reduced vig, as long as they keep it a secret.

He might start up a side business where he can negotiate fees track's charge for their signal. Of course he would expect a good cut for his service, at the expense of the mooches and even the good clientele.

He might turn a blind eye to people who might bet once a race starts.

He might expect and demand a cut from bets that aren't made on horse races.

He might take an extra cut from gamblers who cash winning tickets.

He might make it difficult on tracks that don't want to pay what his side business is asking and then exclude them from the mainstream until they wised up.

He might show a loss on race tracks that have close to $10 million in handle a day, and then give the Feds a hard time when they want to look at the books.

He might charge a higher vig to certain people than the track actually charges.

He might give high percentage trainers a slap on the wrist if they get caught with a positive.

He might give trainers a two to five year head start to use performance enhancing drugs that aren't being tested for.

He might make it easy for customers to bet on credit, who would be charged 20% plus if they don't pay back on time.

He might complain publicly that anyone competing against him his acting illegally, even though they are not.

How Were You Introduced To Betting The Ponies?

How Were You Introduced To Going To The Track And/Or Betting On The Ponies?
Neat little poll over at Pace Advantage. Not really surprised by the results to as of this writing:
Parent(s) brought you to the track 34.02%
Someone you knew had interest in horse ownership 2.06%
Relative other than parent brought you to the track 16.49%
Friend(s) brought you to the track 26.80%
Corporate/work function 1.03%
Got a job at the track 3.09%
You just decided to play horses one day 16.49%

The days of family and friends bringing newbies to the track is pretty much a dead issue these days thanks to the vast amount of betting competition and entertainment competition available to the general population.

Unfortunately, horse racing hasn't been able to adapt to the change. Back in the good ole days of 20 years ago and earlier, players were able to last longer because they could only bet on one track, the collective takeout was lower as well (triactors were not available much, and superfectas were only available at a few venues if at all), there was dummy money in the pool (that have left for lotteries and slots), and there were actual winners who acted like carrot sticks in attracting the odd new customer.

Horse racing needs to market their product for what it is: GAMBLING. And this means that the game has to be beatable by at least some. Takeouts need to be reduced and rebates need to be embraced in order for racing to grow from here.


Rumour of the day
Woodbine is going to become a publicly traded entity. This gives them the ability to go to the market to raise funds for things like their Woodbine Live project.
Lets hope it is only a rumour because horseplayer's needs will become even less of a concern to Woodbine if this happens. Is this what Willmot meant when he said he is getting out of the way? I was hoping it meant that he is going to get out of the way to allow Woodbine to grow the right way (drop takeouts and create more demand and more growth).

As I've stated before, Churchill Downs/Tracknet operates like Woodbine South. They act as if they are a quasi monopoly, and the horseplayer gets the short end of the stick, as the company is driven to make profits, not necessarily grow the game. The only people who benefit are the suits and the shareholders. Oh, and if Woodbine became a publicly traded company, the horsemen would also start to see what getting the shaft is all about.


Mountaineer To Be Dark in January and February in 2010
The horsemen aren't happy, but it could have been worse, because there was a request made that four months be dark.

Lots of B horses from Ontario grind it out at Mountaineer. They can still race at Charles Town, Penn, Turfway, and Beulah. But the purses at Turfway and Beulah are so low they hardly worth it. That being said, look for full fields at those two venues, and possibly good betting opportunities.

Horseplayersbet.com offers betting on all the above venues, and just added Tampa Bay Downs to the betting menu. Really decent player rewards are available to all Horseplayersbet.com's customers.


Fort Erie Still Up In The Air
Anxious horsemen and fans are still hopeful that Fort Erie will run next year. Rumours that the government is trying their best to make it happen are out there. I can't see the government directly funding Nordic Gaming. There may be ways to circumvent this though.

The obvious way is to give Fort Erie a bigger cut of the casino revenues on the basis that it's survival is necessary to the entire thoroughbred industry in Ontario.

For instance, if a harness track closed down, the impact would only be local, as more and more harness tracks are looking to reduce dates anyway due to terrible demand. If Fort Erie shuts down, where are horses who can't poly or just can't compete for bottoms at Woodbine go? The States? Well that won't sit well with most owners, and many will get out of the game. And this will kill the breeding industry which is already on life support in Ontario.

The government needs to announce that without live racing, the slots MUST SHUT DOWN!
The reasoning is very simple. Precedence. What is to stop a harness track from deciding to stop racing if they are losing money because of racing?

By not announcing what will happen to slots, the government is allowing Nordic Gaming to be in the driver's seat regarding their stubbornness when it comes to overpricing the track. A new owner would definitely solve the problem regarding the government having to do anything on this issue, at least in the near term.


Quit Your Day Job And Become A Stooper
$45,000 a year isn't the worse job in the world. I wonder if Mrs. Dubiel is still alive. She walked around Greenwood Race Track with a cart full of tickets. I think she got me a couple of times, and I was pretty careful.


What is up with Trackus? In the fifth race on Sunday at Woodbine, the second place finisher apparently went faster than the winner. It is possible that Trackus takes into account each individual horse from the time they break the beam and hit the finish. So it is possible that a horse who breaks well will run a slower time from beam to finish than a horse who breaks slower from the gate.


New Contest At Santa Anita: WINVIVOR
$2500 up for grabs starting January 1st. Contestants have to pick a winner each day, or they are out. It is free to enter.

Not a bad move. It might attract more people to handicap Santa Anita, and maybe attract new players, but probably not many. Woodbine has had the 123Racing contests going on for a while, and it doesn't appear that they are attracting new customers.