Are Super Trainer's Percentages Going To Drop Thanks To Delahoussaye Indictment?

The Grand Jury is learning a lot about how trainer's cheat and hopefully they will learn how broad the cheating is.  From milk shakes to cobra/snail venom to Red Bull to EPO/DPO to plugging horses in, it is pretty clear that if a trainer like Darrell Delahoussaye, who didn't have tremendous stats, was cheating as much as it is alleged he was, those trainers with stats exceeding 20% have to be using undetectable drugs or illegal methods to keep their stats so high.

I really like the fact that this has now turned into a criminal matter.  It rightfully is.  Not only is the cheating trainer cheating the betting public, but they are cheating the horsemen who are not cheating, by stealing purses using illegal substances and methods.

Hopefully, racing commissions across North America will take this as a wake-up call and become extremely vigilant and aggressive towards the cheating trainer.  I know that as a bettor, it almost sickens me to watch certain trainer's horses consistently run against biases and rebreak when the real running starts even though they exerted much energy early on in the race as well.  Almost like they have an oxygen bottle on their back instead of a jockey.

The heat is on right now.  And I think we will see some nervous super trainers turn it down for at least a little while, probably counting on the heat to go away like it usually does.

In other related news, Anthony Adamo is suspended pending the outcome of a Pennsylvania  ruling against him.


CALIFORNIA LOOKING TO RAISE TAKEOUT ON EXOTICS

HANA (Horseplayers Association Of North America) was first to put this confirmed rumor out there regarding the proposed takeout hike on exotics at California racetracks.  

Raising takeout works only if the amount bet over the course of a long time remains the same. Anyone who believes that this happens has no idea the way things work.  Though that is the assumption being made and being pitched to politicians.

Gambling is all about churn. The more a horseplayer cashes, the more they wager. The less they cash, the less they wager. This is true of blackjack, slots, horse racing, you name it.

There is an optimum takeout price for every form of gambling, and it differs from gamble to gamble. This is the price where the house makes the most money bottom line long term.

Horse racing has never tried to discover this optimum price. Other forms of gambling have, through trial and error, from blackjack to sports betting to slots.

Double the slots takeout, and the house will make less money bottom line. And all they have to do is have half the betting. Problem is they won't and they know it. Players don't last, and when they don't last long enough, some go less, some quit, and some find other ways to lose their money. More importantly, the less a person lasts, the less likely they are to expose friends or family to their habit. This also helps for growth, and this is why slots gets extra players. Many of us have been dragged to a casino by a friend or family member or many of us dragged a friend there.

Tracks that already have sky high takeouts have seen less and less live players because they simply wiped them out.

A takeout increase in California, no matter how large or small will have the same affect. Some players will lose what they would have regardless of the takeout (a fixed player), but many will wind up losing a lot less over time because they will give up or go a lot less.

Looking towards the future, any track or tracks that hike takeout are just killing the sport even more by taking out more players.

One thing is for sure, more new money won't be lost when you raise the takeout. Collectively existing players only have so much to lose regardless of the takeout. However, by taking out the growth factor and factoring players quitting or going a lot less and finding other things to bet on. California horsemen will wind up with purses lower than ever before over the next couple of years.

Most players don't openly care about takeout, but it affects everyone's play just as it does with slots. Slot players don't have a clue. Why not up the takeout from 6 or 7% to 15%? Won't the casino make more money? Of course not.

The big players who don't look at takeout, will have their bankrolls erode faster, and over time, they will become less enthused about their hobby. It has happened everywhere any takeout increase has occurred. In fact, it has happened to the collective fans, as over the years, more bet types (with higher takeouts) have been introduced, coupled with the fact players can bet a lot more than 8 races a day.

Owners understand the concept that bigger purses (ie more money that is given out for win place and show fourth and fifth) means more owners as owners last longer, and more even make money (more partnerships too, growth occurs, more new owners get in the game). What happens when you lower purse money available? Less owners and less horses. The same thing happens when you give less money to the players, you eventually create less players. Give players back more money and you have a growth scenario.

Roger Stein discussed the proposed takeout increase on his show at the 50 minute mark of yesterday's show (July 31).
Listen here.  Roger and his guests made great points about how negative track takeout increases are.
I wish they would start thinking takeout decreases instead and applying the same logic they were using as to why a takeout increase is idiotic.

Pull The Pocket has a very good post on the contrast between the mentality of horse racing versus those who get it (in this case the California Lottery Corp.)   If you've read my blog in the past, you may have seen the post I made regarding California dropping the takeout on Scratch N Win lottery tickets.  This occurred in the spring.  Sales have been brisk ever since, and players are churning like crazy and they are actually losing more money than ever before because their odds got better.  Revenues have jumped 16%.  The state and the lottery company are making more money bottom line, just by giving back more to the customers.

Tracks that hike takeout despite all this are helping kill the sport even more.  The future will be here soon enough, and if you think it is bad today, it will be worse in a couple of years unless takeout reductions occur.

Even with all the logical points made, it seems like most of us have resigned to the fact that this takeout hike will happen.  Just as it did at Los Alamitos (so far we've seen a 27% reduction in live handle there, and it will only get worse).

Personally, I'm with a few others on this.  Let them do it.  I know what will happen.  And maybe, just maybe, the industry will get it.  My only reservation is that this will prolong the decline and stifle growth for another couple of years until they finally realize that lower prices are DEFINITELY NEEDED.




Rick Cowan Optimistic Fort Erie Can Become Viable 
Interesting article citing many of the obstacles new COO of Fort Erie has to overcome to turn to the track around.

One thing that really caught my eye was this:
Player rewards: While Players Club members earn rebates for their slot machine play, the Ontario Lottery won't allow them to use cards to get rebates on horse bets. However, Cowan said, "We are looking at a rewards system" for horse bettors.


There are two obvious choices here.  One is to have their own ADW servicing the Niagara region.  The second is to simply reduce the track takeout.

The track takeout affects the live customer the most.  The higher the takeout, the less they cash, the less they have to bet back, and the less they last, and the less they desire to come back to the track that quickly.

Those playing Fort Erie at tracks, OTBs and ADWs across North America would play more if takeout was reduced, and Fort Erie advertised it well.  There is a lot more awareness these days regarding takeout than ever before.  Plus, the venues that have Fort Erie's races pay a constant signal fee.  The takeout is really insignificant as Fort Erie gets a set percentage on every bet regardless of whether it is WPS or a triactor.

Lowering takeout will create growth potential both amongst the local on track bettors and those who play from other venues.  It is a win win situation.  Problem is getting it through some of the horsemen's thick skulls.
 

If California Wants Bigger Purses

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

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

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

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

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

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

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

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

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


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

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

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


Nick Eaves Has It Upside Down

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

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

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

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

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

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



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

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


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

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


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

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

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

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



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

Schwarzenegger Signs Amendment To Allow Tracks To Terminate California Racing

I was really alarmed when I read the article, Governor Signs Bill To Help Horse-Racing Industry:

The bill (Bill 517) by Sen. Dean Florez (D-Shafter) allows a thoroughbred association or fair to increase the amount it deducts from horse-race wagering. It also provides the groups more flexibility to spend the money on improvements, including the purchase of tracks and training areas, and allows winnings that are more competitive with those offered in other states.

Legislative analysts estimate that a 5% increase in the amount taken out of wagers would generate $200 million annually for the horse-racing industry.

*************************************************************
This just goes to show how out of touch with reality governments are when it comes to horse racing. They are assuming that $4 billion that is now being bet will remain to be at least $4 billion bet. They have no idea what churn is, and how that $4 billion may turn into $3 billion if takeout in California rises a full 5%, which would lead to a bottom line decrease to the state and to the racetracks.

One commenter (Scott F.) on the article said it best:

"How does this actually help the racing industry? Bettors don't have bottomless pockets - if they lose their money faster, the total pie gets smaller and these players give up and go home. A bigger chunk of a smaller pie will be worth far less than a small chunk of a bigger pie. Yet again, wagering laws decided by people who have never placed a bet, or have certainly never tried doing it seriously. Basic economic theory of elasticity of price applies here."

As an aside, I don't recall any racetracks in any futuristic movies starring Arnold Schwarzenegger:)

Upon doing a little more digging, this bill doesn't mean that takeouts have to rise. Thanks to Equidaily for posting the actual old bill and the new revised bill to help clear the air.

In a nutshell, California had the 10%-25% takeout limits prior to the signing. But what this new bill does is give the power to the racetracks to be able to raise, or even lower takeout without any red tape from the government.

The only hurdle standing in the way of a takeout change is the California horsemen groups. They have to approve any changes before changes are made.

However, after reading the politician's take on the bill in the LA Times article, I would have to say that this was signed with a takeout increase in mind.

As for the Horsemen Groups veto. Don't count on it. In Ontario, racetracks have had the same powers California tracks now have. They can raise or drop takeout without red tape. However, horsemen groups stand in the way here when it comes to growth through lower pricing.

The reality is Woodbine has noted that the horsemen agreement actually stands in the way of a takeout decrease as they get an additional 2% on all bets placed and an additional 4% on triactors. What that means is if we look at the old takeout for triactors at Woodbine, the government got 1.3% out of the 28.3%, Woodbine received 11.5% (42.6% of the amount of takeout available to horsemen and track), the horsemen received 15.5% (57.4% of the available takeout money).

Theoretically, if Woodbine were to drop their takeout to 21.3% on triactors, the agreement would make it so that Woodbine would get 8% (only 40% of the amount of takeout available to horsemen and the track) and the horsemen 12% (60% of the amount of takeout available) on all triactor bets made.

If takeout were to decrease even more, the ratio the track gets would decrease even further.

It is the horsemen who are unwilling to renegotiate this contract to make it more equitable.

This also has implications on rebates given to its customers. The horsemen group is double dipping here because the rebates come from the track's money. When the rebate is churned, the horsemen get a cut on that money too.

In other words, horsemen groups don't help the game when it comes to lowering takeout and allowing the game to grow.

Maybe the horsemen groups need to be educated more on the matter.

Gambler's Book Club recently put up a podcast of an interview with icon handicapper/author Steve Davidowitz (click here, and then click the "Listen Now" button on the top right). At around the 8:30 minute mark of the interview, Davidowitz is asked about track takeout. He said there was a secret study done around 20 years ago (who knows, maybe it was 30 years ago) where takeout was changed from 14% to 17% and back again for a couple of years (Note: he didn't mention what track or tracks participated in this study). He did however state that the results were that when tracks lowered takeout, handle increased, and when they upped it, it dropped. In the long run, tracks made more money with the lower takeout.

To be honest, I never heard of this study until I heard the interview. But all one has to do is look at the success of Betfair to show that by allowing players to last longer, the players all of a sudden become more obsessed. Obsessed with the idea they can win, and the fact they last so long, it really kills other competitive forms of gambling in that player's life, not to mention it also increases the likelihood that the player will expose others to his or her obsession.

I can tell you for a fact, that the reason most players stop betting is that they run out of money. That has always been the case. But when you consistently run out of money too quickly, you increase your already negative expectations of the game (even if this is done on a subconscious level). This is the reason why slots take out an average of around 10%, not 20%.

When horseplayers sit on the sidelines, they lose interest in horse racing. And very importantly, they wind up not exposing new people to the game when on the sidelines.

The last track I know of that raised takeout was Calder back at the start of 2008. Calder recently had to slash purses. Now, instead of dropping takeout, the track has decided to put its effort into promoting its casino. Personally, I have not bet on a Calder race since the takeout increase was announced. If one track were to close tomorrow, I would like it to be them.

HANA (Horseplayers Association Of North America) is obviously against any takeout increases anywhere. We are pondering putting up an ad in The Daily Racing Form to help inform the public, horsemen and racetracks of the insanity that appears likely to transpire as a result of this bill. From the HANA President:

This bill does not in itself change takeout rates. However, we are obviously concerned by the implications and the tone of the press releases.

HANA, on behalf of horseplayers everywhere, is currently seeking further information as to any immediate consequences from this change of law.

HANA is extremely dismayed to see the same false economics continue to be thrown about, that suggests prices can rise while sales remain constant.

A price increase would obviously only have one effect -- to further accelerate the mass exodus of players and their wagering dollars from this game.


Jeff Platt

President, HANA


To help HANA out, please become a member (it is free and will take you a minute to fill the form), and if you want to contribute to the cost of the ad campaign, feel free to donate here.

California Moves To Rescind Idiotic Anti-Rebate Rule

OK, So They Don't Mention HANA, But We Know, Nudge Nudge Wink Wink

Us troublemakers at HANA (the Horseplayers Association of North America) scored a small victory, as we pestered the California horsemen into moving towards rescinding their idiotic anti-rebate stance. Not so much directly, but on both the Pace Advantage and Del Mar forums, HANA members used common sense and told it like it is. Many of us sincerely avoided betting California tracks because they have shunned rebate shops in the past.

The main argument is why should California horsemen and tracks care what an ADW does with the money they bring in after they pay for the signal? They were perceived as either protecting non rebating ADWs or protecting major off shore ADWs, or both, all at the expense of dissing price sensitive bettors.

Rebates are here to stay. It is apparent that tracks will not drop takeouts, at least in the near future, so the way they have to compete and grow at this time, is to allow ADWs to rebate to their heart's content.

The tide is turning, as racetrack execs have at least taken notice of their customers. That is one of the goals of HANA. Click here to join for free.


Speaking of rebates. Ian Meyers has left Premier Turf Club. The unofficial reason cited was that the other partners wanted to take the ADW in another direction (huh?).
Does this mean that they will give lower rebates? Are they shopping around to be bought out? I guess we will find out.
Ian was a hands on man. He genuinely seemed concerned about his customers. And many PTC customers did business there because of Ian. Mind you, the rebates offered were outstanding (probably thanks to Ian). I wonder if they still will be.
Also, it is rumoured that Joe Riddell has left the company. They were the only two partners I knew about. Obviously, there are another couple of partners now running the show.


Brothers Charged in IRG Investigation
IRG was an offshore ADW owned by Youbet (they bought it in 2005). Allegedly, the Jalinsky brothers were laundering money as well as deciding what bets to book and what bets to lay off.



Scientific Games Pondering Offing Racing Operation
The company operates many betting kiosks across North America, and got themselves in trouble last year because number 20 (Big Brown) was not included in any of their quick picks. Auto-tote is also a subsidiary of Sci Games.


The Walls Are Caving In At Magna Entertainment
Magna has received its first notice. This one from PNC Bank: “failure to comply with certain financial covenants relating to the financial position and results of operation of MJC and related entities.”

The bank reserves the right to come in for the kill at any time. I don't think this should be looked at as an opportunity for Stronach to try to get himself out of this mess though. I think the PNC didn't act yet because they are waiting to see what the Bank Of Montreal does on March 6th.

The resignation of three directors in the last week or so has made MEC non compliant to be trading on the Toronto Stock Exchange. The stock will be headed to the pink sheets from NASDAQ very soon as well. In other words, future financings are completely out of the question, and the company continues to bleed money. As each day goes by, there will be less and less for creditors to collect, so it is just a matter of weeks before we see a full fledged bankruptcy. I can't see it going Chapter 11 either, because of continuous operating losses. This means that tracks will be put on the selling block very quickly. But are there buyers out there?

For more on MEC, read The Business Of Racing.



Tragic News
Fort Erie owner/trainer Gordon Cowie died suddenly yesterday. He was only 44.

Cowie amazingly won an allowance race last fall with El Gran Brett, a horse that was getting beat up at Fort Erie in 5,000 claiming races. A private purchase for Cowie, the horse ran 2nd for him first time out in a 4,000 claiming race Sept. 7. He won on November 28th in an 8,000 open claimer with one week to go in the season. Cowie decided to run him back December 6th in a non winners other than maiden or claiming. He won. The purse was $76,000. And because he was a private purchase, and not a claim, and was Ontario sired, Cowie got the full share of the winners portion.


Fountain Of Youth
Free past performances for the race.
I don't do much handicapping for this blog (and after you see the results of the following picks, you'll probably see why).
This is a very interesting race. The controversial This Ones For Phil makes his first start in over a month. I just see "bounce, bounce, bounce" today for Phil. The undefeated Taqarub also has over a month between races, and he definitely ensures that there will be a hot pace. The best horse in the race could be Capt. Candyman Can. He looks like he has good tactical speed, and the mile looks to be a piece of cake for him. Two longshots could wind up in the exotics. Break Even Edison, second race off a layoff. Last year he produced a very good speed figure for a mile at Aqueduct. Also, Take The Points had a real good late pace number going today's distance at today's track 4 weeks ago. And besides, I really like his name.

For more free past performances check it out at Thoroughbred Blogger's Alliance



The newest issue of Down The Stretch Newspaper is available online. Lots of news and updates with a focus on the Ontario horse racing scene.


ORC signs agreement with State of Illinois Racing Board to share investigative information
'This information will include such things as:

* Investigative files of police officers, regulation agents, and civilian investigators, including interview reports, notes, and background checks;
* Veterinary records, such as reports, x-rays, samples, and invoices;
* Photographs;
* History before administrative tribunals and in court, including decisions, findings and orders.'




Reminder for Canadians. Jockeys continues on Animal Planet tonight from 9-10PM