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:)

All Signs Point To Yes For Ontario Horse Racing

The much anticipated OMAFRA Report on horse racing's future in Ontario has been completed. It should be public by the end of the month.

Listening to an interview of panel member John Snobelen it is easy to be very optimistic to believe that racing in Ontario does indeed have a future, and possibly a very good future.

It is my understanding that those interviewed by the panel gave the panel an entire picture of how exactly horse racing works in Ontario as well as giving them a very good idea of how much economic impact horse brings to Ontario, and how disastrous it would be if horse racing were left to stand on its own at this time.

Even though Ontario Premier Dalton McGuinty was able to legally coat his Teflon skin with more grease by quitting and proroguing the House, Snobelen made it pretty clear that the report does not need to be voted on. However, McGuinty could easily defer OKing the recommendations until a new leader is voted on, I still think, listening to Snobelen, that the government will rubber stamp the recommendations understanding the sense of urgency here.

The report will most likely not be to everyone's liking. I expect the track owners to have most of the profits that were earned via slot revenues to be cut drastically (I expect rental agreements with slot racetracks to be large enough to pay for real track expenses in most cases). And then you have the entitled horsemen (you know who you are), many who won't be satisfied unless they wind up getting 125% of the former deal.

I did send in a few of my blog posts in lieu of not being asked to advise the panel directly:) I trust they were read and given serious consideration.

Here are my predictions:

In all likelihood, I think it might be realistic to think that we will see something like a three year deal (where the money comes from isn't important only that it will be a true subsidy this time most likely). I think we'll see anywhere between $100 million to $150 million per year go towards purses and breeding.

I think we'll see a focus on money going towards Ontario bred/Ontario sired horses.

I'm hoping to see major incentives to increase handle as well, something sorely missing from the original slots deal.

Although sports betting will likely not be as popular as they think, I do think it will be mentioned as an additional source of revenue (though it on par with slots and can be called a subsidy whenever the government wants to end the deal). Sports betting will be good for a track like Fort Erie, as long as sports betting has the same juice bookies demand, and as long as the US doesn't have legal sports betting.

I also expect to see wagering terminals to pop up in more locations as well as a provincial or national horse racing lottery to be recommended. This would actually turn into a potential windfall for the industry, and create new Horseplayers.

Speaking of Fort Erie, from what I have heard, the panel is well aware of the necessity of having a B racetrack. Hopefully, Fort Erie will be on the list for a stand alone subsidy, even if it means racing only 60 days a year, it will buy some time for the track to be sold to someone who is interested in horse racing as well as it buys time in case the proposed new Speedway is actually built.

I think we'll see a slight shrinking overall, but it might only affect the hit and run outfits who bring in a horse for one big race and then exit stage right.

The reality is the industry (harness and thoroughbred) can handle a 20% shrinkage as long as the remaining 80% focuses mainly on Ontario bred and owned horses, or American outfits that set up shop in Ontario. All good for the local economies.

Horse Racing Isn't The Only Game That Can Improve

On this blog, I've been known to be very critical of how horse racing. It isn't because I like to complain, it is because I love the game and want to see it grow. I don't just focus on the problems, but I also offer solutions.

I'm going to diversify my criticism now by identifying problems and also give solutions for the four major sports.

I used to be a sports fanatic. I think I may have missed only a handful of Toronto Maple Leaf games on TV from age 4-21.

I got into baseball too, not so much as a spectator, until the Expos got a franchise and had some TV exposure other than Saturdays when I was usually at the track with at least one of my parents.

I always was an NFL fan, never the CFL (inferior game with with inferior rules). And same with basketball, which was the only sport I actually excelled at (trying not to be too modest).

I started betting on sports in the mid 70's while in my mid teens. It made the games more interesting, and I found it to be a good connect since I was always into stats. My betting on sports and poker probably hit a peak by the time I hit 25. I still bet a little but focused more on just horse racing.

I started losing my interest in 3 of the major sports (hockey, baseball, and basketball) by the time I was in my late 30's. A lot of it had to do with other priorities and being tired of spinning my wheels when I bet the odd game, but it also had to do with the games themselves and player loyalty. The blame shouldn't be on the players, but the system that allows players to be lured to play for other teams.

When the Blue Jays won their last championship and half the team exited for greener pastures, I gave up on baseball. There were other reasons too, which I'll cover.

As for hockey, I gave up on it when the Leafs traded Steve Sullivan. I've always been a big fan of the finesse player and hockey seemed to be focused on size. To me, it lost its personality. The overtime rules also made me grimace.

I lasted with basketball longer. But when Vince Carter whined his way out of Toronto, I gave up on it as well. Again, too many roster changes for my liking all in the pursuit of the green back.

The NFL however has been a staple in my life and continues to be. I don't bet on it anymore, except for Fantasy Football (which is a form of betting), that is. Players can still stick with a team for their entire career, or at least most of it. I'm not sure why that is (I don't look really look at the rules of free agency in each sport or salary caps, etc.), but the other major sports should adopt the same exact policies that the NFL has.

The NFL has never been shy about making changes to appease the fans and also to make the game safer for the players.

I'd say that integrity of the sport is well looked after in all four sports (on a scale of 1 to 10, the NFL would be a 10 and horse racing would be a 1).

Here is how I would improve each of the four major sports (and if implemented, I could be won back as a fanatic):

NHL
Flaw: Player loyalty
Solution: Adopt NFL rules

Flaw: Overtime rules; Giving each team a point after regulation time if there is a tie. This rule makes me sick. It is Far Far Leftist mentality, something that I can't live with. I'm no fan of the Far Right either:)

Solution: No point for a tie. No more ties ever. Play sudden death 3 onto 3 (not including the goalie) until a goal is scored. No friggin shootouts either. 3 on 3 play almost guarantees the game won't go on forever either, which I think is one of the major concerns the league has. It will also force teams to have finesse players in the lineup.

MLB
Flaw: Player loyalty
Solution: Adopt NFL rules

Flaw: The strike zone and the foul lines. I sat behind the plate of a Blue Jay game and couldn't believe how far out to lunch the umpire was. His strike zone was a good foot to the left of the plate. We have the technology available, strikes and fouls should not determined by subjectivity but objectivity. I don't mind beeps when a ball ends up in the catchers glove to determine whether that ball was in the strike zone or not. Laser technology needs to be implemented to win me over.

NBA
Flaw: Player loyalty
Solution: Adopt NFL rules

Flaw: Too many dunks. James Naismith wouldn't even imagine dunking when he invented the sport, and even though it was cool in the early 70's it makes the game boring now.
Solution: My gut reaction has always been to raise the basketball height to 11 feet, but that is just wrong, plus it will discourage young kids from ever playing because the height of the basket will created too much awkwardness when it comes to learning the game. I think a better proposal would be to make a dunk shot worth only one point. I really think that would stop dunking and make the game more pure.

NFL

Flaw: Tough to find a flaw, but I did. Extra points are too easy. So far this year, there has been only one miss (not sure about how many non attempts due to bad snaps, but it isn't more than a handful). It is a scoring play that totally lacks drama.

Solution: Kick the extra point from the 23, making it a 40 yard kick. Sure, most will be converted, but many will be blocked or missed. No more gimmes. As for the two point conversion, yes, it is a little more exciting, but it rubs me the wrong way as it takes the kicker out of the equation. I like the concept of opting for two points, so the simple answer is to give the team the option to convert a kick from the 35 (a 52 yard boot). Oh, and I hate the freezing the kicker nonsense. It makes the game more juvenile than it has to, kind of insults my sports intelligence. Plus, I don't think it is advantageous at all (I think the percentages are pretty constant with or without the freeze). Unless it is to prevent too many men on the field, I would bar the opposing team from calling a time out to freeze the kicker.

I'll take on horse racing in the very near future:)

What The New Deal In Ontario Should Look Like

I've written many blog pieces on how to grow horse racing in the past. Now I felt like I need to put together a proposal on how to sustain and grow horse racing in Ontario.

I used the stats in the Horse Racing Industry Transition Panel Interim Report. I trust these numbers much more than I do Dalton McGuinty and Dwight Duncan's numbers, which lowballed those employed in the industry at around 5,000. Hey wait, if they used that number to help make their decision, why isn't there an inquiry sign up?

Back to business. Here are the important numbers (not including quarter horse racing which distributes $5 million in purses, fully funded by slots):

$260 Million goes to purses in Ontario each year.
$170 Million in harness purses.
$90 Million in thoroughbred purses.

$158 Million comes from slot revenues.
Approx. $45 million for thoroughbreds.
Approx. $113 million for harness races.

Approx. $102 Million comes from wagering on horses.
$45 million from wagering on thorougbreds.
$57 million from wagering on harness races.

Included in the above numbers is money that goes into purses through the HIP program. That money comes from slots and betting mainly.
$15 million to thoroughbred purses (another $4 million to breeders etc.)
$25 million to standardbred purses (of which $3.5 million is funded by owner/breeders)

Thoroughbred races per year- 2,150
Harness races per year- 14,400
Quarter horse races- 350

Now for the juicy numbers (from the 2010 OLG annual report and the performance highlights):

Gaming revenues from slots: $1.73 Billion.
Key stat is on page 6 of first OLG link. It shows that after operational expenses and commissions (note: they don't use the term subsidy) at OLG Slots at Racetracks earned a net profit of around 46.5%. This number is very important.

Financial Reasons For Dropping The Slots At Racetrack Program


From a business perspective the move to cut out racetracks was sound and rational, however, the government isn't in business to make moves which are solely profit oriented (the government is elected to weigh in social costs, job impact, etc., all of which were ignored here).

The other thing is that the sound and rational business decision was based on many key false assumptions. For example, the OLG and Liberal government believed it would be a slam dunk to place a casino in Toronto, they also believed that tracks would accept market rent to keep slots in place, they also believed they could do all this without significant public push back, and the numbers used in their studies were absolutely ridiculous ie using 5,000 as the number of exployed by the industry.

One thing the government and OLG is correct about is that they shouldn't be operating casinos. Just like with teachers and other public employees, they let salaries get way out of hand. Using that 46.5% net profit number, it means that operational expenses including promotions, wages, etc. was a whopping 28.5%. And that is just for operating slots. Imagine how much it would cost them to expand to table games and the renovations that go with it. The government has to get out, and they know it.

28.5% for an industry that employees around 4,000 slot workers province wide. Meanwhile tracks and racing outfits employ at least 6 times that amount (not including busineses that have a major reliance on horse racing's existence) and their take was 20%.

To show that this decision was really made in haste though, the OLG has not specified what they want their new cut to be. Should they have figured it out. It seems they are letting the markets decide. It makes it very tough for the horse racing industry to ask for a fair amount going forward.

How appealing would that number be for new operators? 5% will still wind up going to municipalities, and expenses will be on the high side because the rental agreements with racetracks will be much higher than anticipated, as well as the expenses to renovate and expand. Table games take up space and aren't nearly as profitable as slots, yet they will cannibalize the slot players as well.

Online gaming in Ontario is also in the horizon and that will keep a lot of slot players home too. And then there is political uncertainty. Governments can obviously do what they want when it comes to gambling...they own it.

So even though a new operator can cut a lot of government fat out of the 28.5% that is currently on the books, a new operator looking to make a profit is most likely going to ask for at least 40%-50% of the total revenues. Kind of defeats that whole purpose.


NOW THE PROPOSAL

It is important to realize that the Transitional Panel didn't state the SAR program should end because the government needs the money. No, the panel decided that the funds were not being used in a worthwhile enough manner, and that the industry was overfunded (especially the tracks themselves), but mainly that the industry's lack of growth was due to lack of benchmarks. They called the slots partnership a subsidy, yet they realize that once gone, horse racing needs a subsidy to survive. Why they didn't just recommend a 6% for tracks 8% for horsemen solution really escapes me, why the need to invent a new subsidy if that is in fact what the partnership was?


Cutting Race Dates

With Windsor bowing out so far, we can reduce harness racing numbers by 88 race dates (6%) of the total, $6 million in total purses (of which $2 million came from betting and $4 million from slots).

Woodbine thoroughbreds has already cut 6.5% of its dates this year. I think there has to be less racing going forward, but I don't think it needs to be a drastic cut of anything of over 10% to begin with, and then the market can determine the correct number of race dates going forward.

Along with a 10% reduction in race dates, it can be assumed wagering will drop by only 7% (if dates can be given out in a more effective manner). However, it needs to be assumed that purses also are reduced by 10%, though the purse structure will remain close to the same).

How Much Money Is Needed

$236 million is needed for purses to sustain the industry
$93 million will come from wagers

So where will the $143 million needed next year to allow horse racing to keep its head above water?

RENT or allow racetracks to operate casinos at their own tracks (if they can operate a track, they can operate a casino). No need for the government to cut a check. The government just needs to make sure that all tracks hire capable casino managers (many will be available from the former OLG staffs), or tracks can hire experienced gaming management companies.

If it is rent, rent needs to be around 16% of slots revenues (8.5% to purses, 7.5% to tracks, which includes 1% that must be spent on industry racetrack promotions and innovations).

If tracks are allowed to operate the casinos, there could be automative savings by overlapping employees and security. They wouldn't need as much of a cut as a private operator would, which means the government could get more than from an MGM for example. Tracks could operate and expand for something closer to 20%, add 5% to municipalities, 8.5% for horsemen, 8% for day to day racing operations, profit, and horse racing innovations, and the government could get close to 60% of the gaming revenues.

CONDITIONS

Racetracks must justify salaries and bonuses going forward to the government (who will still be the watchdog for horse racing and casino gambling). The government can assess these expenses and give tracks a lower percentage if they feel compensation is too high.

Racetracks must invest 1% of the total gaming revenues towards innovating new products such as a racetrack lottery similar to the V75, paying for kiosks across Ontario to place in variety stores as well as developing sports books.

The HIP program needs to be larger. Ontario bred horses means that more money goes back into the Ontario economy creating even more jobs. Perhaps, too high a percentage goes to foreign breds and foreign owners. Buy Ontario should be emphasized, and that means more Ontario bred races, including claiming races. This will increase the worth of even the lowest least productive Ontario bred, and if their prices go up, so do sales prices at Yearling Sales. Of the $236 Million that will be available in purses, 30% should be allocated to Ontario bred restricted races for all three breeds (this is close to double of what it is currently).

The HIP progam should be paid out from either rent or from gaming revenues. Right now there is a restriction on racetrack's ability to experiment with lower takeout (tracks can lower or increase takeout without a problem, but the way percentages change with respect to what the track gets because of HIP, inhibits tracks from lowering), allowing horse racing to compete with other forms of gambling. This is because HIP monies are mostly funded by a percentage of total handle, at the very least, HIP from horse race betting needs to be determined as a percentage of total commissions made on wagers by the racetracks. The result will also allow tracks to make more money on each wager as a percentage of handle, and it will give them more incentive to grow handle.

As gaming in Ontario expands with the internet and more non racetrack locations, gaming revenues at racetracks are bound to drop. Horse racing needs to expand their product. A weekly lottery with a takeout of 35% (10% going to stores and the government) would help immensely by exposing more potential gamblers to horse racing, and of course raising more money for the industry. These dollars can eventually be used towards marketing and innovations in a separate account. If successful, the government get back another 1% of gaming revenues from the racetracks that were earmarked to this cause.

Horse racing should also get a proper cut on sports betting. In fact, sports betting can be separate from the casino operation and belong mainly to the racetracks done on the racetrack side of the operations.

Purses for Grade 1 races that attract international entries that come in for a couple of days should be capped at $500,000.

25% of the 8.5% (around $36 million) of totals slots revenues for purses needs to be put in a separate fund (for purses only). 5% (approximately $7 million) is to be used to subsidize tracks and fairs that don't have slots (like Fort Erie right now), while the other $20 million is distributed out to track who show specified improvements in total horse race betting handle. This will keep racetracks on their toes looking for new customers, and also it will force them to cultivate customers once they have them.
Best way to increase handle is to lower takeout.

Bigger fields generally mean more handle. Take this years purse for each class, but only give out 70% for field sizes of 7 or less. For thoroughbreds add 10% for each additional betting interest that races. So a 14 horse race with no entries at Woodbine will go for 140% of this year's purse. For harness races, 80% of the purse for 7 horses or less, 90% for 8 horse races, 100% for 9 horse races, and 110% for 10 horse races.

Finally, Fort Erie should get a gaming zone, if not to put slots back in, for table games and especially sports betting. Sports betting in Fort Erie will attract many from NY State.

Edit: A B thoroughbred track in Ontario is a necessity. Owners need an out if their horse can't compete on polytrack or if they can't compete at Woodbine bottom levels. If an owner's only options are to sell an underperformer very cheap, or have to race it in the USA, many will leave the game. It won't be fun, and the downside will be greater. That is why Fort Erie must be looked at as a special case.

Transitional Report: Too Vague To Help The Industry Right Now

On Friday, the much anticipated Horse Racing Industry Transition Panel Interim Report finally was released. I skimmed through it on Friday, and read it again in much more detail this morning.

It is encouraging that the panel is very fact driven, though they are still missing a few pieces of the puzzle which I'll get to later on.

I think a lot of their realizations and conclusions regarding the industry's apathetic attitude towards growing a customer base and that slots revenues were earned without any meaningful earmarks are completely right on the money.

I do take exception with what I believe is a faulty premise, which is being used as the reason why they think the slots program shouldn't be reinstated, and that is that the revenues that went to the industry from slots were public funds (hence a subsidy). They also state that the main reason tracks and horsemen were given 20% was to stabilize the industry. That is only one third of the real reasons. The other two were that slots would cannibalize horse racing (one could argue that because of slots the ability of the industry to attract new Horseplayers over the last 14 years was hindered tremendously as well) and that racetracks would be an acceptable location for slot machines. Referendums on gambling almost always wind up against casinos and the government knew they could smoothly start making money without public uproar by locating slots at tracks. In fact, right now the OLG still believes that tracks are the most acceptable locations for slots as they are negotiating rent deals with many racetracks.

The problem I have with calling these funds public monies is that it is after tax dollars that are being lost by patrons. The OLG even called the money that went to tracks and horsemen "commissions" (see page six here). Much like variety and gas store owners get a commission for selling lottery tickets. Did you know that over $200 million is paid out in commissions to those who sell tickets in Ontario each year? And to throw another curve ball at the panel: Do store owners have prerequisites on how to spend their commissions? Are those dollars received public monies too?

The panel is wrong when stating racing would die out completely if the government sticks to only handing out $50 million over the next three years. Ontario could sustain one thoroughbred track and a couple of harness tracks, whether it is Woodbine, Mohawk, and Western Fair, or if Woodbine decides to exit, Fort Erie, Western Fair and either Rideau Carleton or Flamboro Downs. Wagering, if focused on three tracks would be significant enough to carry three Ontario racetracks, and one would expect to see full fields and lengthy schedules. However, 20-30,000 jobs would be gone, and that is horrible public policy even by the worst dictatorship government.

I'm with the panel, $50 million is not nearly enough to give horse racing an opportunity to become self sufficient and save most of the full time jobs.

I think the panel underestimated economic impact because money that goes to horsemen, track employees, etc. go into the local economies and could make the difference whether places like hardware shops and restaurants make a profit or not.

Another thing the panel missed the boat on is that most owners lose money. Less tracks, less horses, less race dates means less owners. Owners do get the majority of purse monies, but by the time they pay the jockey, trainer and vet, they wind up going into their own pocket. This is actually another funding source that the panel overlooked. It is important because much of this mad money might be invested offshore or in investments that have low multiplier effects associated with them. If someone earns 40k a year, all the after tax money is going into the local economy for the most part, but for someone making $150k a year, well that money could get locked into long term investments or again, go outside of Ontario.

Another problem with the report is that it states the SAR program should end, but that another source of subsidy needs to be established, or even a "new" partnership when it comes to sports betting should come about. What makes being a partner in sports betting any different that being a partner is slots? Slots can't be your partner, but a sports book can? Sounds like something Jackie Mason could do a skit about.

And another thing that irks me is that the panel failed to discuss the OLG's plan to privatize going forward and compare it to the SAR program. Are the profits that the new operators going to make "public funds?" Will they have to be accountable to the government regarding these profits? I think not. It appears that public funds will now become casino operator profits. Should this be a major focal point as to whether the slots at racetracks program should end? We obviously cannot trust the government (very faulty, as Dwight Duncan insists there are only 5,000 industry jobs) or OLG numbers, as much as changed since they were put together in March (ie a slam dunk casino in Toronto).

The panel also doesn't realize that the HIP program, the way it is set up now, it detrimental to growing a customer base. Reason being, it is a percentage of the handle currently. It needs to be a percentage of the takeout commission instead. The reason why takeout decreases aren't tested in Ontario is because of the current set up, and in order for horse racing to compete with other forms of gambling and experience customer base growth, takeout rates need to drop, probably significantly.

Unfortunately, although there is a compelling argument to reverse the slots at racetrack program decision, and reimplement it with much needed earmarks, the government is unlikely to reverse things now. The problem right now is that even though there are probably very good legal reasons to go after the government, and some are still being pursued like MPP Lisa McLeod taking the case to the Auditor General, or the Ombudsman's possible recommendations when they come out, the horse racing industry can't afford to wait any longer. The industry needs to work with the government in order to have even a slight chance at transitioning. But getting the industry to work together with the government will most probably more difficult than herding cats in 15 separate locations around the world at the exact same time.

The report that came out should have at least hinted at how many dollars would be needed to sustain the industry. In light of the financial vagueness, I see no point in having the September Sales for either harness or thoroughbreds. The right thing to do is to move the sales to November or December.

Next piece will be on where to go from here.

Check out Pull The Pocket's take on the Interim Report.

Also check out A View From The Grandstand's take.

Cancellations And Pool Manipulation

Last night in the 6th race at Emerald Downs there was a sudden drop in odds on number 2, Lonely and Free, from around 13-1 to 1-9. It appears that a $10,000 win (correction: it was a $100,000 wager) bet did the trick. The seven, Zippin E., was the prohibitive favorite from the time the odds opened to around 3 or 4 minutes to post (might have been 5 or 6 minutes to post) when the big wager on the two was made. The exactor pools, and the place and show pools on the two horse were reflective of a medium long shot.

The large bet wasn't pulled until the horses were in the gate. This had to lead to many other ticket cancellations. Who wants 1-9 on a long shot? And by looking at the final pool numbers, it is pretty clear that the two wound up taking a higher percentage of place money instead. The 1-9 scared off any other new bettors on the two except in exactors and probably triactors for when the bet was cancelled and the race went off, Lonely and Free went off at 52-1, though he was probably around 12-1 or so in exotics.

The thing is, the horse almost won, leading throughout the race, only to get caught by the number 4 horse in the last few strides. The winner, Have N A Wild Time, went off at 6.5-1, but wound up paying more to place than the two, who went off at 52-1.

Was this manipulation intentional? Well, you have to figure that if someone is placing a $5,000 or higher wager, they are going to try to make sure they buy the right ticket at the right track, whether the wager was made online or at racetrack or simulcast center. Also, the fact that the bettor had $10,000 either on them or in their betting account leads one to believe that the bettor was a sophisticated Horseplayer (this is assuming it was one person and one wager). However, keeping the wager in until the last moment was risky in case the cancellation couldn't be made in time.

Whatever the intent, whether it was a mistake or manipulation, this type of thing flies in the face of the integrity of the game and can turn bettors off. Unless a teller made a mistake, you can't blame the bet taker unless it is a known repeat offender, this kind of "mistake" can happen at any track or through any ADW or simulcast center.

So what is the solution? Stop cancellations? I don't think so. Real mistakes do happen, and tellers need to be protected. As long as cancellations are allowed for certain instances, cancellations have to be available to all.

How about this? On any win, place, or show wager of $100 or greater, or any exactor or double wager with a $10 base or greater, allow 90 seconds to cancel whether it is on track or online. And to avoid any temptation to manipulate, these wagers do not show up in the pools until the 90 seconds are up or the bell rings to end betting, whichever comes first.

I realize that this gets us away from real time odds even more, as late odd fluctuations are already upsetting to many Horseplayers, but it might actually lead to less fluctuation, as big bettors using robotic programming to wager as late as possible will have less real time info to make decisions, which means they will have to speculate stressing other factors than current odds. I do believe they'll still wager the same amounts they do today, they will just be more creative and will probably spread out their wagers more.

I imagine the hard part of my idea is to get the racetracks on board with it, and then get the tote companies to implement it. If it is too costly, you can just about forget about it.

One more thing, cancellations do not matter to the integrity of the game when it comes to blind pools like triactors, superfectas, Pick 3's, Pick 4's, etc. so they can be unlimited without any worry, and not subjected to time constraints. Late scratches having to do with a horse being used in a triactor or super by someone with a limited bankroll create a need to be able to cancel, so that another horse can be subbed in by the Horseplayer.

Time To Change The Claiming Game

The new California rule that gives the new owner an out if the horse claimed is euthanized on the track just hits me as wrong, mainly because there might be occasions when a horse might be put down even though there is some ambiguity to the extent of the injury. In other words, it may not have been put down if the rule didn't exist, or if the claim wasn't made.

It got me thinking of a solution, and I think I've come up with one, not only one that will save the lives of some horses but one that will fire up the claiming game possibly bringing in new owners, something the game desperately needs.

Claiming races are very important. They allow horses to compete against their equals, and allows owners to either try to lose their horses or buy horses whom they think they can do well financially with in the future. The claiming element allows for racing partnerships to exist which means those with little racing background can get involved in the game for a commitment of a few thousand dollars. Some of these newbie owners wind up buying more horses, and even get into buying yearlings and even get involved in breeding (it happened to me, though I had a more than a little racing background).

New owners are likely to bring newbie friends and family to the track the odd time to see their horse run, again, this is good for growth, as new gamblers and owners can come out of it.

General claiming rules haven't changed much over time. Owners either talk themselves into claiming a horse with potential or a trainer talks the owner into a horse with potential to claim. The claim slip is dropped prior to 15 minutes to post time in most jurisdictions, and if you are the only claim in on the horse, or if you win a shake when 2 or more claims are in on the same horse, the horse becomes yours.

Technically you own the horse after the race is official, but in reality you bought the horse when the gate opened. This means that the purse money earned in the race goes to the former owner. It is really an odd way of doing things, if you think about it. In most instances in the real world, you own it when you buy it. Take stocks for example. I guess, you can compare the current system to buying a home in a fluctuating real estate market, the only difference being, the home doesn't have much of a chance to be worth nothing by the time the deal closes.

It is 2012, and Ebay is still hot. Why not change the claiming game to reflect the times and save the odd horse as well? My idea is to have an auction after the race is official. This could rejuvenate the claiming game and bring in a brand new clientele as well, as an auction would increase buyer confidence in a big way, because the new buyer is now buying in real time.

The way it would work is pretty simple, horses are still put in claiming races with the same tags that exist today, however, after the race, any of the horses can be "claimed" by auction. The owner has the option to place a minimum price on the horse below the claiming price or use the claiming price as the minimum bid. The old owner is not allowed to bid on their own horse, nor can the trainer of that horse.

For example, a conditioned non winner of two $10,000 claiming race is over. The winner ran hard and the time was decent. The second place finisher was only beaten a neck, but still has the non winner of two condition. The third place finisher was beaten another 3 lengths as the favorite. The rest of the field was back at least another 3 lengths.

The owner of the winner, knowing that the horse will have to go against non winners of three next time, and that the horse has a pretty high vet bill puts a minimum price of $7,500. Bidding starts, the horse goes for $9,000. The owner of the second place finisher really doesn't want to part with the horse because it is next to a cinch to win for $10,000-$20,000 next time out, so the bidding starts at $10,000. The horse sells for $14,000. The old owner is disappointed that he won't be in the picture next time out, but getting an extra $4,000 for the horse is acceptable. The third horse had good form but showed he belonged for $10,000 only. Because horses have to move up 25% of the auction price, in order for the new owner to run for $10,000, a price of more than $8,000 can't be paid. The old owner knows the first and second horse can't run in the same class race next time out, so he puts a minimum price of $9,000 on the horse. The horse doesn't sell.

As for the rest, some owner might just want to get rid of a horse and put price of $1,000. These horses can easily be bought by new owners looking to run for $5,000 or less if they think the horse could win for that next start.

One other thing this auctioning process will do is to prevent outfits from stealing. For bettors, they can make better inferences as to the wellness of a dropper, and will become more confident when making selections.

I believe that auctions after the race would bring more people to the track, mostly potential buyers. Trainers will required to make decisions on the horses action during the race, and even try to determine soundness by the way the horse jogs back to the unsaddling area. Trainers with good eyes will get more business.

I also think there is room to do both, keep the pre-race claiming (EBAY Buy It Now!) and also have the auction afterwards. Of course, if a horse is claimed, it is up to the new owner to put the horse in the auction or not. If claimed though, the new owner does not have the option to put down the horse to void the claim.

Speaking about voiding the claim, all auctioned horses get tested. If a positive occurs, the new owner has the option to void the claim as well as get compensated at a rate of $100 a day by the old owner. This could help deter those taking a chance on pre-race concoctions.

Problem Gambler Lawsuits: No Wonder OLG Wants To Privatize

Michele Mandel wrote an article in the Toronto Sun that probably has the execs at the OLG cringing because of the timing. It has to do with a potential $3.5 Billion class action lawsuit on behalf of more than 11,000 problem gamblers who self excluded themselves yet were able to get by casino security and continue to feed their habit.

Now, I want to make something clear, I do realize that for some, gambling is an uncontrollable addiction much like drinking for some and biting nails for others. However, the liability should fall squarely on the individual gambler when it comes to their falling off the wagon. However, in the case of the OLG, because it is a branch of the government, they wound up going too far, and basically signed a check their butt couldn't cash. They put perfume on the fact they were gambling enablers by starting a self exclusion program that did put the onus on themselves to do impossible things in order to keep problem gamblers out of their gambling dens.

It is obvious that the way it was set up, the OLG was completely liable for problem gamblers who got through the front doors of casinos. Why? According to Mandel, they settled 9 lawsuits with an average payout of $167,000. This is a bad precedent when it comes to future lawsuits and especially the $3.5 Billion pending class action suit. If it is allowed to happen, it is very likely that the OLG will be forced to make a huge settlement.

The timing of this hitting the media might make the OLG's quest to find new operators very difficult. Even though technologies have improved, and self excluded gamblers have a much harder time getting into a casino today versus 5 years ago, the precedence set in Ontario may not be worth the risk of operating a casino. The OLG, by ridding itself of operator status is attempting to clear itself of future liabilities, but they will be forced to impose major sanctions against those operators who allow problem gamblers to slip through the cracks as their role to govern casinos will expand. The new operators will most likely take on the liability of future lawsuits, and even though they will argue that they did their best in keeping problem gamblers out, and that they, as private operators, shouldn't be held as responsible as a government operated casino should be, precedent is still precedent.

Rumour has it that things are not going swimmingly in the OLG's quest to find suitors to operate casinos. Political uncertainty, potential referendums, bad press, and tremendous backlash from the horse racing industry has turned Dwight Duncan's Golden Mile into a Sewage Plant.

Speaking of Duncan and his ruthless web of deceit, it appears that he did have a plan to put a casino at Ontario Place and misled (umm lied perhaps) when pulling the plug on the Ontario landmark. Duncan at the time probably "thought" it was a slam dunk, and probably promised some cronies that they were going to get very lucky.

I have to say that Dalton McGuinty and Dwight Duncan give me the creeps. I'm half tempted to move to Kitchener, just so I can vote against the Ontario Liberals in the upcoming by-election.

Australia Racing: Organized Crime and Corruption Today And Yesterday

Here is a documentary spurred on by the current murder investigation of Australian trainer Les Samba.