8 February 2009

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."
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.”
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.
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."
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."
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.'

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.


Anonymous said...

The idea used to be to improve the breed. Name one state bred program you think is successful. The most successful that I know of is Florida. There is extra money in open races that goes to a Florida-bred. In Indiana and Illinois they give you probably 3 races and then it's down to the bottom claimers where they are lucky to win once every two years. I'm going to make it a point to compare the handle on state bred races to open races at Presque Isle, Ind. Downs, Oaklawn, etc. Gamblers know an inferior product when see one. I have seen the owners of many state breds who seem content to let their horse remain a maiden so they can pick up the inflated place and show purse money available in state bred races.
Americans to Fort Erie. Do you know what happens with crossing the border this year. If a passport is required it will cut down on the people making the trip. I hope they come to their senses.

Anonymous said...

RG, improving the breed doesn't grow the game. I know the intentions are well meant with the point though.
If improving the breed was that important, then there is no point having Ontario breds at all.
But getting back to growing the game, you need more owners who bring friends. Owners need a reasonable chance of breaking even, and then they expand.
Size of field matters to bettors. I'm sure that field size can be large enough if Ontario sired claiming races are run.
You can't compare anything with Presque Isle regarding pool sizes. They were hardly available at any ADW's last year.
Personally, I like Ontario sired races from a handicapping standpoint, but I don't like the Woodbine track takeout.
And yes, you make a good point about the passports. There are no miracle cures coming Fort Erie's way.

Anonymous said...

The more restrictions in a race, the less likely I will be betting that race. Ontario sired races are usually very poor races to handicap and wager on. Woodbine, more than most other tracks is a apurely spot play type of track. Maybe 5 or 6 races a week are bettable. As for HPI and WEG, it's been almost 2 years since I have put a dollar throught their system. I will bet offshore to get my rebate.

Anonymous said...

Bullring, I like conditioned races more than open ones. My bounce rules seem to work best in those type of races, and I often can come up with a second or third choice that is a huge overlay for exotics.
But aside from that, it is no secret that slots subsidize the game, and you would figure that Ontario residents should be the ones who benefit the most. Money should used for state bred claiming races, because it will cause more owners to buy Ontario, and that is what is needed to get the breeding industry to at first start showing some profits and then improve their product.
If you want to focus on mainly non restricted races, you can play many races at many tracks during a day.

Anonymous said...

cangamble, I can't think of a worse race to bet on than a 1X for Ontario sired hroses where the combined 8 horse field is 8-167. The Ontario sired stakes program creates a group of a few horses who simply take turns beating eachother all year, or maybe will create one standout horse who goes off at 1-2 every time. I could almost handle Woodbine's takeout if the racing product wasn't so poor. Add in the polytrack and Woodbine essentially unbettable.

Anonymous said...

Everybody seems to overlook the fact that there are not enough stalls to stable these so called ontario bred horses at Woodbine. If there were more new people would get involved.

Anonymous said...

Anon, are you saying that there is no room for new owners?
Typically, new owners may own their horses at Fort Erie if Fort Erie stays open.
Racing in Ontario desperately needs new owners.
If more Ontario races are written, either/or at Woodbine or Fort Erie, they will be given some sort of preference, if stalls become an issue.
I'm talking about writing 5, 10, and 20k claiming races for Ontario breds or Ontario sired horses. The 5 and 10 wouldn't get any preference at Woodbine right now regardless.

Anonymous said...

How long have you been writting about the management of Woodbine we all know that it costs about $30,000 minimum per year to run a horse at Woodbine with a well established trainer with a smaller trainer i can get it done for halve the price, yet he cannot get a stall for my horse but my horse can be stabled with the well known trainer give me a break. even though my horses is eligible for Woodbine
and you say racing in ontario desperately needs new owners try and hang on to the old trainers.

Anonymous said...

Anon, what is needed and what Woodbine does is many times two different things.

Anonymous said...

woodbine is the worse place to go, people loosing their money ans life, also being threate like a criminal. The OPPs in the casinos they beleave they are goods and can do and say anythink to offend people. Personal experience.