14 January 2011

Lots Of Excuses But It Boils Down To Track Takeout

There are lots of excuses out there as to why horse racing doesn't grow, and in fact is in retreat.  Online gambling has exploded world wide, while horse racing handle has sunk and continues to sink.  Down another 7% last year.

The economy?  Sure, that might explain a drop off the last couple of years, but what about the 7 years prior to the recession?  More and more people now have the ability to make a bet by computer within minutes of turning a computer on.  

Drugs?  Horse racing has always been plagued by having a negative image due to drugs or race fixing.  Back in the 60's it wasn't enhancers though, but drugs that caused favorites to become sleepy during the race.  Still, drugs in horse racing do not cause current players from betting less.  Sure, they may skip races that have a suspected drug trainer in it.  But they will still bet the same amount they were capable of betting over time.  Bottom line, if drugs were cleaned up tomorrow, it wouldn't create one single Horseplayer, or cause handle to rise.  Those who don't be have no idea what Lasix or Bute is, let alone snail or cobra venom.

Tote Integrity?   Again, this is just an excuse that Horseplayers, who have to lose 18% (when factoring blended rebates) of what they collectively bet.  Odds dropping significantly from one minute to post versus the final odds, are just something to talk about.  The boogieman named "past posting" is probably so insignificant, that to spend oodles of money to prevent it makes no sense whatsoever.  Don't get me wrong, if horse racing is to grow, tote integrity will matter, but it doesn't matter right now.  There are flaws in the system, and most will be corrected by the new TRPB initiative, however, this will not create new Horseplayers or increase handle over time one iota.

Quality?  Yes, Horseplayers generally are attracted to quality races (not me though), however, quality by itself will only be a disaster for the industry.  Small outfits are the backbone of the horse racing industry.  And think of a game where only the best horses get to race?  What happens to breeding?  Less horses by far.  What happens to horses that decline?  Early retirement.  It is hard to keep a quality horse population up when fewer will be  bred and there will be a huge shortage of owners as well.  Not only that, but governments will stop giving horse racing any incentives or allow the game to be subsidized by other forms of gambling because the industry will not have that many jobs in it anymore.
By increasing the quality or getting rid of the "bad" horses, there would be even less Horseplayers today, as small owners bring friends to the tracks, and that creates growth, small tracks create some Horseplayers as well.  The fact is that movie Secretariat and Zenyatta's quest for immortality didn't create one single Horseplayer (so it seems), tells me that quality will not save the game.
Another thing when it comes to quality, most horses bred today have a lot of royalty in their blood line whether they races at Santa Anita or Beulah Park.  Drugs probably hurt the quality aspect more than anything as they seem to cause horses to race less, and even injured earlier by raising the bar on how much faster a horse has to be today in order to compete.

 There is only one thing that will reverse the trend in horse racing, and that is to lower the price of the bet (the takeout).  HANA recently did a piece every racing exec or Horsemen Group's member worth a salt should read:
How Do Sports Bettors & Poker Players Feel About Horse Racing?

In order to optimize purses, an optimal takeout must be sought. Every academic study done on this topic suggests that this takeout should be no higher than 14% and probably as low as 8% for WPS at least.

Another important read is an article on Mike Maloney, someone who bets on horses for a living, he also a VP with HANA.

In the article, he repeats my constant message, that winners need to be created in order for the game (though Mike doesn't mention it, he means winners who don't get rebates). Horse racing needs a Chris Moneymaker. And that is impossible when the blended takeout rate is over 21%.

Another interesting point made by Mike was that takeouts were lower when horse racing was virtually a monopoly. What other industry increases their prices when they are forced to compete?

He also explains that takeout matters even though most people are not cognizant of takeout. Great read.

Bottom line, drugs and tote integrity, etc. are just excuses for why a Horseplayer temporarily loses money, but it is inevitable for them to lose money collectively, so there will always be excuses. Sure, it would be nice if the only excuse they can use is I'm not that good of a handicapper and/or bettor, but no matter the excuse, collectively they will lose.

The important thing when it comes to growth of the game is how fast they lose. The quicker they lose, the least likely they are to come back. The more likely they are to find other hobbies. The longer they last, the more likely horse racing will become a priority in their life, and they have the capabilities to expose their friends and family to the game.

To hook new players quicker, it would help immensely if we had a few Chris Moneymakers as well.


The_Knight_Sky said...

CanGamble writes:
The fact is that movie Secretariat and Zenyatta quest for immortality didn't create one single Horseplayer (so it seems), tells me that quality will not save the game.

I don't think Rachel did either.
Guess that's 3 strikes and we're out. :(

Anonymous said...

This is off topic but you know a lot about Fort Erie.

I just read an article on Kentucky.com...Horse industry could suffer under Ky.'s immigration proposal(SB6). I feel the same as many of the commentors that both legal and illegal immigrants have taken over most of the work on the backstretch and farms in the US. It makes my blood boil when I read what the horse lobbyists put out that Americans don't want those jobs. They did them for many years before horsemen found out they could get immigrants to do them for less money and accept any kind of living conditions.

I used to watch Fort Erie and it always seemed to me that many of the grooms bringing the horses to the track were young ladies who seemed quite competent and happy.

Are there many immigrants working the backstretch in Canada?


Cangamble said...

RG, there are very few immigrants in the backstretch at Fort Erie, as for illegal immigrants at either Woodbine or Fort Erie, I doubt it. The ORC is pretty good when it comes to diligence with licensing.
Woodbine has many legal immigrants working the backstretch.