Did The TOC Pull A Fast One?

It may not have been the intention of the Thoroughbred Owners Of California (the TOC) to have pulled a fast one on the California racetracks, but the consequences sure makes them look like geniuses while California track ownership and management are looking like pretty bad right now.

The track owners and the Horsemen may have actually believed that bettors would be attracted to the move to dirt at Santa Anita, and that bigger purses would attract more horses and create larger fields which would increase handle attracting new money, more than enough to make up for the lost money in reduced churn (a bigger chunk of the existing pie, though their action will reduce the pie even more).

The reality is that it still costs too much to own a horse in California despite the purse hike, and not very many outfits are bringing horses to compete there.

Trainers charge relatively too much and vets don't help things either.

It is speculated on that trainers who charge high prices look for the smallest field they can find so as to keep their win percentages high enough in order to justify their prices (you can't have a 10% win percentage and have too many owners pay $125 in day rate). This culture doesn't change overnight.

The wild card is that there has been player push back, speeding up the effects of raising takeout. No one was anticipating this.

Despite handle being off, the Horsemen are ahead of the game and here is why the TOC is in no hurry to rescind the recent takeout hike:

In a nutshell, the takeout increase has caused blended rates in California to go from around 18.5% to 20.5%. However, the entire increase now goes to the Horsemen.
Out of State signal fees could range from 3% to brick and mortar locations to much more when it comes to what ADWs pay. It was admitted that California racetracks could not get the full increase from out of state bet takers, but only a little more than half. Still, if the average signal fee was 6% last year, it means that they are now getting 7%, but when you look at it closer, it means that purses now get 4% on average instead of 3% of every dollar bet on their product from out of state. using this example, which means an increase of 33% over last year (again, I'm not sure of the exact numbers, but this is probably very close).

Domestically, from in-state bets, they now receive anywhere between 25-33% more over last year on average. Tracks, meanwhile receive the exact same percentage on every wager, if everything that has been made public is true.

In layman's terms, this means that for every thousand dollars bet last year, the track and horsemen may have received $50 each on average (again, this is an educated guess). However, now horsemen receive about $65 on every $1000 wagered, while tracks still get $50.

If handle is down 15% because of a combination of the Players Boycott and less churning created by higher takeouts, it means that in relative terms, tracks are now receiving $42.50 on every thousand bet, while Horsemen are still receiving $55.25 per every thousand bet (in adjusted dollars). So even with a 15% drop in handle, something devastating for the track, Horsemen purse accounts will be up by 10%.

Now, if you go a step further, the California racetracks could have been actually up this year if not for the boycott and reduced churn. Gulfstream Park and Fair Grounds early success this year may mean that handle might be on the way to recovery. So California track owners are not only down whatever they are down this year, but down what other tracks are up as well.

Unless handle drops at least 25% gross over last year, the TOC is unlikely to be motivated to rescind the takeout hike, unless the tracks are hurt so much that they are forced to cut back dates even more (they are currently running only four days versus five at Santa Anita right now), or even worse, threaten to close down. The tracks may have to run only 3 days a week (to cut expenses down), less races (more per day), and a hope for fuller fields to attract more betting per race.

Both Del Mar and Hollywood Park have a foot in the grave (well at least a big toe) to begin with.

How can this mess be fixed immediately?

The TOC has to be persuaded to look into the crystal ball. It is inevitable that things will be a lot worse for horsemen, and whatever tracks remain standing in California a year or two out. There is zero evidence to show that higher takeout leads to more money bottom line for Horsemen and tracks.

The tracks have now changed percentages on net takeout, and the TOC would be ill-advised to not consider this when negotiating. The cut on net profits need to be readdressed. If the TOC and tracks are reasonable, the Horsemen should now aim to receive between 55-60% of net takeout received on the California product.

This change would be good going forward. As there would now be motivation to make the most net takeout money, which means that the track is free to seek optimal takeout rates.

If blended rates don't come back down to at least where they were in California, California racing is at risk of losing Horseplayers who will never return. Most Horseplayers who are boycotting are not interested in anything but a return to the old rates before they will consider betting another race there.

C'mon guys and Bo, I want the game to grow. Get together and make it happen.


WOODBINE HAS A SIMILAR IMPEDIMENT

Woodbine's blended takeout rate is approximately just over 21%. 1.3% goes towards taxes. That leaves $200 on every $1000 bet to be split between horsemen and tracks. However, Horsemen get an additional 2% on all bets (4% on triactors), which means that on every $1000 bet on track, Woodbine gets $89 while Horsemen get around $111 on average.

If Woodbine drops takeout, the Horsemen get even more of a percentage on net takeout. The HBPA and Woodbine should get together and try to help grow the game, by changing this deal and make it a percentage of net takeout, not a percentage of what is bet. A 55-45% split in favor of the Horsemen on wagers made through Woodbine would not change things one bit, except it gives Woodbine the ability to experiment with lower takeouts.

Of course, if Woodbine could find another way to fund the 2-4% the Horsemen gets, they would be free to experiment with lower takeouts as well.


FORT ERIE SAVED FOR AT LEAST ONE MORE YEAR

Not very many people knew that Fort Erie was even in trouble until early this week, when it came to racing in 2011. They supposedly were good to go for 3 years, but they were not able to make payments for the increased payment to Nordic ($650,000 this year and next, compared to $100,000 last year) and the new HST on time. And they obviously didn't make enough last year to overcome the concern that they could actually come up short this year, and they realized that there is a question of who pays for the shortfall if it happens?

Details are not out, but it looks like a deal was carved out that does not place the indemnify the EDTC (the current managers of the track).

Still, if they think there is a hope in hell to grow a business with a 26.2% track takeout on exactors and doubles, whoever is guaranteeing the losses is guaranteed to be out money.

CLICK TO LISTEN TO A RADIO INTERVIEW OF PROFESSIONAL GAMBLER AND HANA VP MIKE MALONEY
It starts at the 17 minute mark. You might learn a thing or two.



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Interview With God About Horse Racing

In case you don't know, there is a site that allows you to chat directly with God. I decided to interview God about horse racing. Here is the unedited result of the interview:

Me:
Hi God
God:
Hello there. What is your name?
Me:
Cangamble
God:
It's good to meet you, Cangamble.
Me:
Do you like horse racing
God:
But I think airplanes are cool. I like Buddha.
Me:
What about horse racing
God:
I like science fiction. I have a stimulating relationship with Myself.
Me:
Do you ever bet on the ponies
God:
Bet on the ponies. Do you?
I answer a lot of silly questions.
Me:
You didn't answer my question
God:
OK. Please help me improve my communication skills. What would you have said?
Me:
Do you ever bet on horse races
God:
How old are you?
I am always on the Web.
Me:
Oh, so you bet through an ADW?
God:
Awesome. Interesting deduction. Next question?
Me:
Are you what they call a whale?
God:
I don't know whether or not I am what they call a whale.
I am a robot.
Me:
How much do you bet a day
God:
My memory now contains:
clients, categories, unlimited vocabulary words, 99999999999 bytes
RAM usage under on .
Me:
Do you bet dollars or bytes?
God:
What is your purpose in asking?
I chat with people on the Web.
Me:
Whales don't like to talk about their betting. Lets change the subject
God:
OK what do you want to chat about now?.
Me:
Do you think track takeout is too high
God:
Too much thinking makes me sleepy.
Me:
Whats to think about?
God:
You could write a whole essay on that question.
Me:
I think I have written one or two .
God:
Did they write back?
Me:
Horsemen don't get it
God:
Why not?
Me:
They think too short term
God:
The anonymous "they".
Me:
Horsemen groups
God:
That is a very original thought.
Me:
I didn't come up with that
God:
Why didn't you do it?
Me:
I'm not all knowing
God:
I am sorry to hear that you are not all knowing.
Me:
Since you are all knowing, who is going to win the last at Tampa Bay today
God:
Ah. How do you know?
Me:
You just told me you are all knowing
God:
No, I am only partly knowing.
Me:
So can you give me one leg of the triactor
God:
Gosh! Why do you want it?.
Me:
I want to have a better chance to win money because the takeout is too high
God:
I think everyone does.
Me:
What about the Horseplayers boycott of California racing
God:
There might be more than one.
Me:
I think you know more than you are letting on
God:
Me? I don't know if I know it.
Where would I have heard about it?
Me:
You said you are on the computer all day
God:
I am on disk.
Me:
How about that Ray Paulick? Is he a useful idiot or what?
God:
How about it. Yeah. Not if I can help it.
Me:
Can you help it?
God:
Certainly, I have an extensive built-in help system.
Me:
Maybe Paulick needs your help.
God:
Perhaps. Or what?
Me:
Or he will continue to be a useful idiot.
God:
Is that what you think?
Me:
I'm not alone
God:
I am glad to hear that you are not alone.
Me:
Anyway, great chatting with you. Bye.
God:
Thanks for your support. I like to chat with new people. Goodbye.

Crist You Know It Aint Easy

Steven Crist's latest attempt to empathize with Horseplayers (Bettors Deserve More After Takeout Hike) falls very short in both understanding, and when it comes to offering solutions.

He starts off comparing the demise of the NY OTB's versus the takeout raise in California, stating that is could be deemed very surprising that the NY OTB story has virtually disappeared, while the California takeout hike story just seems to be getting stronger.

The NY OTB's were in the business of really giving it to the Horseplayer with a 5% surcharge. They killed churn and the OTBs managed to lose money themselves. They will hardly be missed by any self respecting Horseplayer, and in a very short period of time, NY tracks will be much better off. Now, Horseplayers who switched over to ADWs are now getting rewards instead of surcharges. It will eventually become very lucrative for New York racing.

Where does Crist get it wrong or not so right?

....the California takeout increase continues to agitate some vocal fans and horseplayer groups, who claim to be laying off playing Santa Anita as a protest against the hikes.
*********************************************
Horseplayers groups? Why is the DRF the only horse racing site that has not named HANA (Horseplayers Association of North America) by name? As far as I know, they are the only group that has come out in support of the boycott through the site they sponsor (Playersboycott.org). In fact, they are the only Horseplayers group that I know of. Fan groups are not Horseplayer groups though they include many Horseplayers.


...They have claimed victory, pointing to lower handle at Santa Anita.
*******************************************
Who are they, or you mean HANA? And where have "they" declared a victory? A victory would mean that California tracks have rescinded their takeout hike at the very least.


Track officials and state regulators dispute the size of the declines and their impact, saying that their lucrative ontrack business has been relatively stable and arguing that the Hollywood Park fall meeting was showing similar declines before the takeout increase took effect.
******************************************
The ontrack business will slide over time as Horseplayers have less to churn. Many will quit or go less. The players least likely to boycott are the homers, and that is completely understandable. But ontrack betting is still down a bit at this time. It will only get worse.
Many boycotters I know stopped betting the day Arnold Schwarzenegger signed the bill, therefore Hollywood's meet was most likely affected by the boycott as well.
Meanwhile, many tracks that have been giving early reports like Gulfstream and Fair Grounds are up in handle so far. And Tampa Bay seems to be doing quite well too.
Equibase numbers for corresponding days in the week from one year to another show declines almost every day at Santa Anita of over 10%. Especially, with a reduction in race days, even with a boycott going, it should be expected that they should be up a little. Not the case. Someone isn't betting the product that used to before.


...It also didn’t help that the two ranking commissioners on the California Horse Racing Board called the old rates “underpriced” and claimed that racing needs to compete with the Lakers and Dodgers, not alternative forms of gambling with lower takeouts.
****************************
This is not such a big deal. They had to find a way to rationalize this to the public. There really is no rationale for any business to raise prices because it losing business to competition. What the California powers did is pretend they are not in the gambling business but entertainment business solely. Laughable yes, but
they aren't a very bright or savvy bunch there. Calling any takeout over 14% underpriced is just an attempt to give a reason. The reason comes from people who just don't understand their business.
Oh, and if you want to compare the Lakers to horse racing. The takeout on a Lakers game is 4.6%.

No one from the tracks or the board has explained the rationale for the nature of the increases or adopted a tone of regret about the supposed necessity of them.
*************************************
This is just badly written. What Crist meant, I believe, is that there was no empirical evidence to suggest that raising takeout would be good for business, and the California boards did not make their decision based on evidence, but gut feelings instead. Their guts were wrong.


Officials also could have leavened the increase by at least experimentally lowering takeout on some pools or on new bets. Santa Anita’s sister track in Florida, Gulfstream Park, quietly raised its exotics takeout from 25 percent to 26 percent this year, the same as New York’s and 2.32 higher than the new California rate. But it also put in new low-minimum pick-five and pick-six bets, at respective 15 percent and 20 percent takeouts, and have gotten 10 times as much positive reaction for the latter as complaints about the former.
*****************************
Gulfstream did raise takeout last year on triactors by one point, and on supers this year by one point as well. They almost got away with it without anyone noticing. However, it appears they may have lowered their blended takeout hike overall by introducing the new 15% Pick 5. What California did was increase blended takeout by about 9% (Based on every $100,000 bet last year on California product Horseplayers stands to lose around $20,000 this year as opposed to just over $18,000 last year).
It wasn't Santa Anita's mandate to keep the blended rate the same, which is what Gulfsteam's mandate seemingly was.
Throwing bettors a bone of a bet type with a lower takeout while blended rate goes up is totally unacceptable, and Crist should know it, and not encourage it.


The fan groups have their heart in the right place and are correct in arguing that takeout increases are always counterproductive because they provide at best a short-term bump before the inevitable plunge due to lower churn and customer dissatisfaction.
*****************************
Fan groups? Huh? Again, Crist didn't write this very well (he might have a career in blogging though). What he meant was HANA has their heart in the right place. And when he talks short term bump, he means that tracks have historically seen a slight bump in revenue (profits for tracks and horsemen to split) before takeout increases cause revenue to slide.


Still, their efforts to make a statement have been blurred by a haphazard call to action: It’s unclear when they wanted people to send a message about the issue, what pools they were targeting, and what specific countermeasures they would like the tracks and state to consider.

*****************************
Did Crist even attempt to contact HANA? Did he read the specific solutions that are on the Playersboycott site? So is Crist really saying that HANA has done a terrible job at pointing Horseplayers and the industry to the Playersboycott.org site? Because the answers to all his blurriness can be found there.


It does little good to keep lecturing people about how the optimal takeout rate is somewhere between 8 percent and 12 percent. There is zero chance that any track in California – especially in the absence of any hope for racetrack slots, which are going to begin in New York later this year and will probably come to Kentucky eventually – will reduce its takeout revenues by 50 percent in the hope that handle will double.
******************************************
These lectures are an attempt to educate racing execs and horsemen groups about their product (betting). Hialeah recently dropped all wagers to 12%. Unfortunately, the largest ADW, Twinspires, refuses to put them on their betting menu, probably in hopes that the takeout increase will show mixed results at best.
It is the hopes of those lecture about optimal takeout (which includes me), that the horse racing industry will edge towards them like Tampa Bay has, and not away from them like California has.
Calling this educational process to be of little value is really mind numbing coming from Crist who professes to be a bettor's friend.


What the tracks can do, however, is better explain their plight, rejigger the rates, and give something back to the players in the form of new and cheaper bets. It would at least be a start to telling those customers that they are heard and they are valued.
*******************************
Tracks have done a great job explaining their plight. It is just the solutions they pick to try to fix their plight are just plain dead wrong. New bets aren't important, but cheaper bets are (and I don't mean the price of the ticket but what the takeout rate is).


I still recommend Crist's book Exotic Betting. It is very helpful to bettors. His latest article however was not.

I don't know what is going on with Horse Racing journalism these days. Yes, I understand that advertising dollars are hard to come by, and these publications don't want to upset the breeders, tracks, etc. that advertise, but it seems like responsible journalism can be found more on blogs these days.

First, you have Ray Paulick buying into nonsense that the perpetrators and supporters of the takeout hike want him to believe. At least he does some interviewing. Then you have Crist who did what appears to be very little interviewing or investigating before writing about the motives of the boycotters. At least Paulick allows commenting, and it enables the truth to eventually win out, and he also has no problem printing that four letter word, HANA.

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.

Who Contributes More To Horse Racing? The Horseplayer Or The Owner?

It is maddening when I read a comment by horse owners that reads something like this: "we invest a lot more than Horseplayers!" or "we should have the biggest say because we put on the show!" Both of these statements are untrue, and here is why:

Tackling the second statement. No, the track puts on the show, and the show is gambling. The proceeds from gambling losses by customers make the race track and the purses it gives out tick.

WHO CONTRIBUTES MORE MONEY?
It is estimated that thoroughbred horse owners collectively lose 40% of what they put in ( for some jurisdictions that have slots, this amount may be lower, while owners in jurisdictions that don't have subsidized purse money added to purses may lose more).

In 2009 $1.1 Billion was distributed in purse money. After owners give 10% to trainers and pay the jockeys their share, that leaves around $900 million that goes to the owners. 40% of that is $360 million . Sounds like a lot, but it is pale in comparison to what Horseplayers lose. EDITORS UPDATE: Turns out that the number lost by owners could be closer to $1 billion, but if you take into account that Horseplayers lose after tax dollars, and much of the lost money for horse owners is pre tax dollars, the amount that Horseplayers lose in real money is much greater than what is lost by owners collectively.

$12 Billion was bet (I'll stop short at calling this money invested, though horse owners like to use that term for the money they gamble on owning horses). The blended takeout rate is around 21%, but because of rebates the blended rate is probably closer to 18% these days. This means that over $2.1 Billion is lost each year by Horseplayers.

And if you include the lost money by gamblers at games like slots or Instant Racing, monies that are used to subsidize purses, gamblers/Horseplayers lose a lot more than $2.1 Billion each year.

I'm not even going to add the costs of Forms, data, transportation, admissions, and concessions (much of which owners can deduct, but the 99% of Horseplayers who lose money cannot).

Now, if we dissect the $360 million lost by owners further, almost all of it is lost within the industry, and a good amount of it goes to horse owners who have a horse racing related business on the side (like farms that break horses, etc.), or even a full time business (like a vet who owns horses). Some of it in the form of day pay goes to trainers, which helps subsidize the horses they own or co-own.

Another thing is that in many cases, horse owners only risk a small percentage of their whole net worth, while in many instances, Horseplayers are risking their entire net worth...in some cases, the Horseplayer doesn't have a positive net worth.

So who exactly is more important to the racing industry? Those who lose less than $360 million $1 billion a year (mostly pre-tax), or those who lose more than $2.1 Billion after tax dollars?

Why does horse racing cater to owners and not Horseplayers? That is the bigger question. California is now a disaster thanks to putting the horse owner first. And why again do horse owners have such a major input in the price the track charges the customer?


UPDATE! QUOTE OF THE DECADE SO FAR:

"If there isn't any gambling, owners lose a lot more. If there isn't any gambling, gamblers lose a lot less."

-CJ (PaceFigures.com)


GULFSTREAM PARK: P.T. BARNUM AND HARRY HOUDINI WOULD BE PROUD OF THEIR MARKETING

When reading all the fluff having to do with Gulfstream Park's 2011 opening, one would really get the impression they have lowered their takeout rates. This is from their website:

Gulfstream Announces 2011 Wagering Menu

12/16/2010

Record Low Takeouts, New Wagers To Welcome Fans

HALLANDALE BEACH – Gulfstream Park Racing & Casino announced today a wagering menu for its 2011 thoroughbred meet beginning Jan. 5 that includes:
• A 50 cent Pick-5 with a record low 15 percent takeout.
• Low takeout rates on Bet-3 and 50 cent Pick-4 wagers of only 20 percent.
• An early and late 50 cent Pick-4.
• A 10 cent Pick-6.
• Rolling Daily Doubles, Superfecta’s and Bet-3’s.
Win, Place, Show, Daily Double, Exacta and Trifecta wagers will be a $1 minimum wager.

There was a link in the rest of the article which gives takeout info on Gulfstream. I clicked it.

The first thing that struck me was seeing 26% on trifectas and superfectas. I could have sworn they were 25% last year.

It turns out I was wrong. They snuck in an unpublicized takeout hike of 1% on tris at the beginning of last year. This year, they have snuck in a 1% increase in superfecta takeout.

So what about "record low takeouts" that are being advertised on their site and being bought by the racing media?

The new pick 5 doesn't count as a takeout drop because it is a brand new bet. And it isn't a record low at 15%, it ties the record set by Monmouth Park.

The Bet 3 and Pick 4 rates of 20% are the same rates they had in 2010.

I don't see record low takeoutS, I see one tied record low and that is it.

However if you look at the new Pick 6 which now resembles the Beulah Fortune 6, the nature of the bet has changed, and the takeout has gone up 33%, from 15% last year to 20% this year.

Depending on how successful the Pick 5 bet is, it will be a coin toss as to whether their actual blended rate goes up slightly or down slightly or remains around the same.

Yes, the Pick 6 has a shot of bringing in the lottery/slots crowd if the jackpot grows once or twice during the meeting, but to promote Gulfstream Park as a track that has lowered its takeout is just plain deceptive and wrong.



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California Horse Racing: It Is Only Going To Get Worse

Did any brainiac ever think that the reason California A tracks have such great handle is because they have one of the lowest takeouts in North America? I don't think anyone who voted for the takeout hike that begins January 1 gave it any consideration.

The winter meet began at Santa Anita on Sunday. Optimism was all over the place. I listened to a segment on the Steve Byk radio show and you would think that the move back to the dirt was more significant than if man were to land on Mars. BTW, don't waste your time listening to Byk, I find him to be a nauseating anti-horseplayer cheerleader for tracks and horsemen groups. Roger Stein, on the other hand is well worth listening to each week. He gets it. Byk doesn't.

With all this anticipation and exuberance, handle must have gone through the roof on Sunday. It didn't, far from it. All source handle was off over 21% from the previous year. Granted there were weather issues on the East Coast, and they did have an extra race the year before. However, in 2009, Santa Anita signal wasn't being picked up by the Mid Atlantic Co-Op. That cost Santa Anita anywhere between 5-10% in handle last year. Handle was back to 1992 levels, and that doesn't even take into account inflation.

Things were a little better yesterday. Handle was only off 2%. But they ran an extra race yesterday compared to the corresponding first Monday of the meet last year.

So who exactly was demanding a move back to the dirt? The horsemen and a few existing Horseplayers.

Existing Horseplayers will look for all sorts of excuses as to why they lose money. 99% of them lose. Artificial surfaces in California was just one more scapegoat for some existing Horseplayers. Bottom line, the movement back to dirt didn't create any new Horseplayers. At best it could shift betting money from one track back to California.

Excuses from Horseplayers stem from them losing money or not winning enough on the day. Sure, they are valid, but in the end, the overwhelming majority of Horseplayers will lose. What matters is how long they last. The longer they last, the more likely they are to expose others to the game, the quicker they lose, the more excuses they will make, the more negative they will be, and the less likely they are to expose others to the game.

Sidetracking a bit. My father was a $2 bettor his whole life. Almost never missed a day betting. He used to make $500 to a couple of thousand almost every year. But I remember him going bad for about 3 years (breaking even or losing a bit on the year). He started blaming the cat. "Since I got this cat, I can't win anymore. The cat is a jinx. She is looking at me right now with her evil eyes." Cats or polytrack. If a Horseplayer starts to lose faster, they look for excuses.

Back to California. The timing was bad for this switch as it comes just a few days before takeout is hiked on all exotic bets in California. This has caused talk of a Player's Boycott.

Horseplayers who 1) Understand that takeout is the barrier between winning and losing and/or 2) Care about the future of horse racing, have already stopped playing California tracks. Many more are expected to stop or slow down once the boycott is officially called.

Even without a boycott, handle is going to go down the tubes in California. There is going to be less value on most combinations once takeout rates go up 9-14%. Price sensitive players who still believe they can make money will bet less, and in the meantime, the dummy money will lose quicker and some of it will disappear creating less value.

In the end. No Horseplayer will have a chance at beating California in the long run (not that very many are today).

Let me explain why this is a 9-14% increase in takeout and not a 2-3% hike that those not in the know are preaching:

Takeout is increasing on exactors and doubles from 20.68% to 22.68%. So if $100,000 is bet in a double pool, the track is now takeout $22,680 instead of $20,680 which represents an increase to the track of 9.7%.

Now lets look at it from the bettor's long term perspective. If the bettor makes $100,000 in double bets over a period of time, the bettor has to overcome $22,680 being taken out as opposed to $20,680. That means they are expected to lose collectively close to 10% more than they lost previously. That is if handle remains the same. It won't because that extra 10% lost will do a lot of wear and tear on the existing Horseplayer's bankroll.

It is is greater on other exotics which shoot up from 20.68% to 23.68%.

If you still don't get it. Lets say you have a $100,000 line of credit and you are paying interest only. If interest rates go up from 3% to 4%, you are not paying an extra 1% per year, but an extra 33%, as your yearly payments just rose from $3,000 to $4,000.

Personally, since Los Alamitos rose takeout early last year, I bet one card there. I felt very dirty afterward even though I broke around even. I won't do it again. And I'm not about to feel dirty by betting on any California thoroughbred track until California does the right thing and the takeout is at least rescinded.

I'm not alone here. There are a lot of pissed off players who are passionate about the game willing to treat California racing as "entertainment only."

I don't bet on Family Guy, Dexter, Two and a Half Men, and now California racing. I only watch them for entertainment purposes only. I have to tell you though, California racing gives me the least entertainment value of these four "shows" by a very good margin.

I'll watch Tampa Bay, Hawthorne, etc. for gambling purposes. Oh, and I bet as much as I did when I was playing California. It just goes to other tracks.

Oh, and blaming the weather on Sunday?

Turf Paradise a year ago last Sunday: $1,212,049
Last Sunday: $1,552,112

Hawthorne a year ago last Sunday: $2,297,748 (10 races)
Last Sunday: $2,311,654 (9 races)

Both tracks started just a half hour earlier than Santa Anita.

Even Golden Gate was up a little. Apparently, HANA forgot to tell its members that Golden Gate is in California:) Actually, the Boycott still hasn't been called yet, and the takeout hike doesn't happen until January 1st. All I can say is look out below.

I'm sure the handle numbers from the first day are helping those horsemen on the fence who were thinking about sending a few horses to California, make up their mind.

Field size looks like it will remain on the weak side in California, and there just won't be any value in the majority of races thanks to the hike.


VOTE HERE FOR THE THOROUGHBRED BLOGGER'S ALLIANCE PHOTO CONTEST


Canadian Horseplayers Advocacy Group founder Eric Poteck now has a regular article up at Down The Stretch Newspaper Online. In the current issue he tackles the integrity issue of promoting fictitious payoff prices. For example, when there is only $35,000 available in a superfecta pool at Woodbine, and someone has the pool for 20 cents. The price promoted is $175,000 (which is the dollar price). It is blatant false advertising.

In a related topic. Does anyone proof read the HPI Quarterly?

Though the WEG Pick 4 has a 21.7 per cent takeout, Martin (Jamie) said the track now honours lower takeout rates for other tracks’ Pick 4 wagers, some as low as 15 per cent.

“So, we’ve made it attractive for people not only to play our own, but to play all the other ones,” Martin said.

“I think it’s a good bet,” Hamilton said. “It’s better than the high-percentage takeout we have with superfectas (23 per cent),...”
*********************************************
Note to editor: Takeout on superfectas at Woodbine is 26.3% and it is 25% on Pick 4's. The 2% that is tacked on for the Horsemen, and the 1.3% to the government on each wager is still part of the takeout.

Note to Dave Briggs: For future articles involving takeout, please refer to this chart.

Note to Jamie Martin: How about honouring all lower takeout rates, including triactors and superfectas as well? Woodbine has no right to partner themselves with winning bets made by their customers.


In 1968, horse racing in Toronto was in its glory days. People were in the stands, and they came back for more because takeout was lower and you could only bet WPS on most races. Bankrolls lasted. There were even some known winners. The public was addicted. Great stories from that time. Here is one. Just remember, this story is not supposed to endorse the concept of hidden ownership. It was hip in the 60's. It can be costly today.

Who Should Boycott California Thoroughbred Racing?

Just in case you haven't heard yet, California thoroughbred track takeout goes up starting on December 26th January 1. Takeout on doubles and exactors will now be 22.68%, while other exotic bets will now be "taxed" at 23.68%. The takeout on all exotics used to be 20.68%, which used to be on the relative low side. It was one of the biggest reasons why California A tracks had such good handles relative to the industry.

Now their double and exactor takeout rates make California racing one of the worst bets in North America.

An organized Players Boycott has been started at PlayersBoycott.org sponsored by HANA (Horseplayers Association of North America).



I want to reiterate what I've written in previous post that I can't fault the horsemen groups for pushing the takeout hike because the horsemen get the entire proceeds from the hike. What is does is change the cut from takeout of what goes towards purses. If the cut used to be around 45%, it is now over 50%.

Horsemen groups typically do not think of the long term welfare of the game. So their take it while you can attitude is expected. Most horsemen have no clue when it comes to the gambler, especially when it comes to Economics 101 and the concept of optimal pricing.

The blame clearly lies on the State of California and the racetrack owners. Why do horsemen groups have a say in the pricing of the product to the bettors? It makes no sense. It is akin to dentists setting prices at amusement parks. It isn't their business at all.

It is their business to negotiate what cut they get from the betting proceeds...this is much different than having a say in takeout. This power to be involved in what the takeout is must be evoked everywhere.

As for the track owners. I cannot believe their stupidity. Lets say handle drops 15% because of this takeout hike. Before, it was shared with the owners (purses would drop because of it). But now, the owners will absorb the entire loss on the first 15% decrease (purses will only have to go back to 2010 levels). Any losses above 15% in handle will be shared by tracks and purse losses.

The track owners, if they were under proper advisement, should have just changed the cut so as to increase purses. They are going to look like dimwits when the dust settles. They did have a choice.

It is the height of arrogance/idiocy to believe that handle won't suffer when prices go up to the consumer. Will going back to dirt at Santa Anita help? Maybe a little, but there are many tracks out there that run on dirt, some have actually dropped takeout recently. Field size? Maybe to begin with, but California has attracted a pool of horses who prefer artificial surfaces over the years. The different surfaces do matter to quite a few horses. That is going to eventually hurt the horse population going forward. Other than a few outfits bringing in some horses, I don't see much of an attraction to go to California for basically the same purses available at Penn and Philly, especially at around $100 a day in day rate versus $50 to $70 at Penn and Philly.

Boycott or not, those who bet California tracks will be lasting a lot less. If someone used to bet $100,000 a year on California exotics, they will now be out $2,500 a year, or $50 a week. The $2500 could be the difference in winning or losing or breaking even. It could be enough to turn the player off completely.

Smaller players will also not last as much. They will wind up going less. They will wind up taking their family or friends to the track or exposing them to racing on TV a lot less. This means the likelihood of newbies coming to the track and the growth this brings will be close to non existent.

The dummy money will dry up, creating a lot less value for huge bettors. Pool size will suffer big time.

Horse racing has been on a major downhill slide, especially the last 10 years, as total handle continues to diminish. Why? Horse racing's failure to compete with other games of chance. Instead of moving closer to optimal takeout, California went the other way and has put another nail in horse racing's coffin.


WHO SHOULD BOYCOTT GAMBLING ON CALIFORNIA RACING?

1. Any Horseplayer who gives a damn about horse racing's future. The sooner a boycott like this works, the quicker this takeout hike will be revoked. Handle will drop over time as explained above, but sometimes it does take a year or two to see the economics work. If the boycott is successful, the thought of raising takeout anywhere in North America will become a non issue.

2. Anyone who loses or breaks even betting on California tracks. It is only going to get worse. As for those who win at it, your days are numbered, you might as well boycott. The whales will still suck the value out of the pools and their will be a lot less dummy money in the pools.

WHO SHOULD BET CALIFORNIA RACING?

1. The old people who live in California that David Israel was talking about. They have nothing better to do. They'll just lose their pension checks a little faster and become a bit more miserable to their kids and grand kids. You can't expect them to care about the future of racing in most cases either.

2. Racing execs and California horsemen. Horsemen especially better learn how to bet more if they want to keep their purse structure half decent. Won't happen, but they should still try.

3. Those who consider horse racing to only be a sport or a form of entertainment other than gambling. That should account for a couple of hundred bucks in handle a day in total.

4. Mindless gamblers who just don't give a crap about anything but betting where it is convenient to do so. This is the major group that the California "brain-trust" is counting on.

5. Bettors who can still actually make money long term playing California racing. I still have a problem with anyone shelving the good of the game concept for profit, but business is business. Now, I'm talking about people who really do make money, and that list isn't very long as even a 20.68% takeout is way too high.


The Player's Boycott is now starting to receive a lot of ink on the internet:

Bill Finley: 22.68 Reasons To Boycott Calif. Racing

Players Launch Boycott Website

Horseplayers Need To Represent And Be Represented

Boycott Launched To Protest Cal Takeout Increase

Richard Eng: Takeout Boost Stirs Backlash

Why I Support The California Thoroughbred Boycott

Thar She Blows Santa Anita

There is no reason not to bet as much as you usually do. You can simply divert it to other tracks like Tampa Bay which continues to lower takeout gradually, Hialeah (yeah I know, quarter horses) which has a 12% takeout on all bets, or Gulfstream which is also cognizant when it comes to lowering takeout to grow business. This way horse racing doesn't collectively suffer while California and any other jurisdiction that is thinking of upping takeout rates learns a valuable lesson which will lead to growth.
Sign up for PlayersBoycott.org here.

Hidden Message In Woodbine Duck Video

In case you haven't seen this yet, a video of a duck and her ducklings at Woodbine during a high wind. Over 4 million hits. When was the last time a horse racing website got 4 million hits? Well here it is:

Funny, yes, but I see something more in this video. Something symbolic. The mother duck took newbies to the track, and they got blown out by Woodbine's high takeouts. They were unable to last very long, and they are likely not to return to Woodbine again. There is a computer term called Baby Duck Syndrome. It has to do with imprinting. Baby ducks bond with the first moving thing they see. It doesn't have to be a parent. In computer land it has to do with newbies having a tendency to stick with the keyboard, software programs, etc. that they were first exposed to.

Now in psychology, it has to do with keeping up with the status quo, and not trying different things. Hmmmm, sounds like what has plagued horse racing for years and years, especially when it comes to pricing the product and appeasing Horsepeople instead of Horseplayers.

Now back to the ducks on the video. Reports are that they haven't given up altogether (they liked betting). They are heading to Tampa Bay Downs. Tampa Bay, which opens up their 2010-2011 season tomorrow, has reduced takeout once again. They have dropped takeout on Pick 3's, 4's, the Pick 6, and their High Five to 18%.

The ducks are also going to take a gander at Hialeah, which has a 12% track takeout on all bets. They don't really understand quarter horse racing, but they are willing bet a few bills at a lower takeout venue after their not so pleasant experience at Woodbine.

The ducks have been educating themselves on the internet since their first exposure to horse racing, and they've decided to boycott California racing due to the upcoming takeout hike which comes into effect on December 26th. I wonder if it was the ducks who started this rumor that has shown up on Youtube:

H/T Andy Mays at Pace Advantage

I can't finish this post without applauding Woodbine (sort of) for bucking the industry trend and increasing handle. The fact handle dropped a little domestically was very predictable, because of their high takeouts and their continued practice of underpaying Horseplayers on many exotic wagers (they chase domestic Horseplayers away and have an impossible time creating new ones, as new Horseplayers will only get involved significantly if there are visible long term winners).

Pull The Pocket points out what Woodbine did right. It started out with David Willmot getting out of the way.

By the way, Willmot had a successful year this year as a quasi-lawyer. His presence and testimony was tantamount in winning the Fifty Proof case this year ("the gate was in working order, eh"). Of course, in order for him to have a future in law, he'll need to seek out more Kangaroo Courts.


On a sad note, Fort Erie trainer Billy Lane passed away after a long courageous fight with cancer. My condolences go out to his family and friends. He was a great guy.

Hialeah's 12% Takeout: Is There A Conspiracy To Make It Fail?

Hialeah opens their short quarter horse meet today.  They are doing something phenomenal for Horseplayers:  A 12% track takeout on all wagers.  Many studies suggest that the optimal takeout for horse racing is somewhere between 10-12%, the optimal takeout being the price where tracks and horsemen make the most money.

Last year, Hialeah only did around $100,000 a day in handle.  Wouldn't it be great to see that number double or triple this year thanks to increased churn and meeting many a Horseplayer's desire for lower takeouts?  This is a great opportunity to give the industry some hard core evidence that lowering takeout will work.

The problem with this takeout reduction is that many internet betting sites are not offering Hialeah to their customers.

It makes me question whether there is a conspiracy going on.  It is no skin off an ADW's nose to add a track.  Why then are Twinspires, TVG, XPressBet, HPI, and NYRA Rewards not offering Hialeah? When I looked at their menus this morning Hialeah was nowhere to be found.

The fee that Hialeah charges for its signal is most likely minimal, and there will be a lot more churn thanks to the takeout reduction, so the argument that they are not making enough money is bogus. Besides, the overwhelming majority of smaller ADWs have Hialeah on the menu.

To my knowledge most, if not all of the major ADWs offered Hialeah last year, so the excuse that there is not demand for the product doesn't wash either, because if anything, there will be more demand this year thanks to the lower takeout. 

Does the fact that California will have a takeout increase in place come December 26th have something to do with it?  Or that a few of these ADWs own racetracks that have much higher takeouts have something to do with it?  Do they want this venture to fail so that pressure is not placed on them to lower takeout?

One thing is certain, ADWs not offering Hialeah do not have their customer's best interest at heart.  In fact, the customer is being completely disregarded.

There is a lot of buzz on the internet already.  Check out this thread on Pace Advantage.

I urge all Horseplayers to make as much of an effort as possible to support Hialeah and their takeout decrease by playing it.

TrackMaster has recently revamped their speed figures for Quarter Horse Racing, if you are looking for decent past performance help.

UPDATE: Hialeah is on TVG's menu.

The Best Horse Racing Links On The Internet

Happy Thanksgiving to my many US readers.  As a way of thanking you, I will now provide a list of what I think are the best sites on the internet for horse racing.  I'm sure I will leave a few out, but I can always re edit my post when I get some suggestions I may have temporarily forgot about.  Most  relevant sites pertaining to horse racing can be found on my sidebar.  But here are the best:

Best sources to find news stories.  There are five sites I go to at least once a day.  Paulick Report, Equidaily, Thoroughbred Bloggers Alliance News Feed, Bloodhorse, and Racing 360.

Free stuff:  Thoroughbred Blogger's Alliance links to a slew of free past performances every day.   Equibase has made life easier and cheaper on handicapper's and horsemen who used to pay for certain information or didn't go after certain info because there was a cost involved.   For example, check out Stats Central on their main page.  You can even do a dam search now.  Put in the name of a dam, and you will get her offspring, and then you can even look at the individual charts of each run for free.  On the left hand side of their main page you can also do a horse, jockey or trainer search.  I typed in Magnusson, and I found out they had stats for Glenn Magnusson dating back to 1953.

Best site for information regarding fines and suspensions:  Racing Medication and Testing Consortium.  Unfortunately it isn't complete as either many tracks make it harder to get this info, or there is something lacking in communication.   Woodbine has done a very good thing in putting up an Ontario Racing Commission Rulings page on their Splash site, though their explanation for letting Fifty Proof's result stand was beyond laughable (the gate did open early but the Stewards deemed it to be a fair start and that is all that really matters, so it was a fair start, na na na na na!).

The best resource for scratches and change in track surfaces, etc. is at Equibase as well.  Thank HANA and Equibase for that one.


Best track takeout information:  HANA's Track Rating Chart, it is updated frequently, though it only covers thoroughbred racing.   Google Maps has a separate takeout map for both harness and thoroughbred tracks in North America.

Best Horse Racing Forum:  Pace Advantage.  There are other good ones (see my sidebar) but nothing is close to PA.

Best Past Performances.  I'm a pen and paper handicapper.  I've never used a computer program to pick horses, so keep that in mind.  I used to buy Daily Racing Forms regularly, and then bought TSN, and then Brisnet past performances, but the most success I've ever had in my life as a Horseplayer has occurred since using TrackMaster Standard Plus Pro Past Performances.

One of the best places to bet, if not the best place, Horseplayersbet.com.  Free video and replay for active accounts.  Industry high player rewards, and great customer service.  You have to live in one of the right States to join though.

Off to watch some football.  I need Brady to pass for 500 yards today to still have a shot in my Fantasy Football league.

Ray Paulick, C'mon Man

I like The Paulick Report. Great source for news stories on horse racing. They also allow comments on many stories and editorials over there. It opens the door for lots of fact from informed readers, innuendos, debate, etc.

Over the past few months, it appears that Ray Paulick has drank the CHRB Kool-Aid and has fallen for all the bs coming from them when it comes to the takeout hike that is going to happen at all major thoroughbred tracks in California on December 26th.

There is some question whether his judgment is being influenced because of the fact that he is getting advertising dollars from California racing groups. I honestly don't know. I actually hope that is the case, for Paulick's sake. I'd hate to think he was either that stupid or gullible to believe a takeout hike will help horse racing in California.

Anyway, Paulick has hit a peak when it comes to either selling out or just plain stupidity with his post California's Push For Purses.

In the article he mentions "cost of putting on the show." Sorry, but the cost of putting on the show has absolutely no connection with what takeout should be. The only thing that matters with regard to takeout is the optimum takeout percentage (the percentage where tracks and horsemen receive the most money collectively from bettors).

He compares horse racing to blackjack when it comes to cost of putting on the show. Last I heard, it costs millions a year to operate a casino. But casino operator know if they made a push go to the house in blackjack, the blackjack tables would be empty. They also know is they raise the hold on slots from 7% to 12%, their bottom line would suffer in a big way.

The point that most tracks have higher takeout rates even after this hike is just bad propaganda. Any takeout hike anywhere helps kill the game. As you move away from optimum takeout, this is a gimme. There is no good rationalization for a takeout hike.

He also writes that "to my knowledge no studies have proven the point that reducing the cost of a bet will increase the revenue to tracks and purses."

Either he has a short memory or he doesn't bother reading many of the comments on his site. I know for a fact that the Cummings Report has been linked there on many occasions.

As Caroline Betts states in the comment section: Google Scholar is your friend. There have been many studies regarding track takeout and optimum revenue.

Two things are certain regarding these studies. Racing has ignored all these studies. Racing has never tried to find out what the optimum takeout really is (all studies conclude that it is much lower than 20%).

Again, I don't blame the horsemen here (though they aren't looking out for the future of the industry). They are now getting a higher percentage of the pie. For the life of me, I can't see how the track owners allowed it to happen. Again, if handle drops by around 15%, horsemen will still get the same money they did last year (obviously they are hoping handle will at least stay stagnant), but the track owners will absorb the total loss. On any extra handle loss over 15%, it will be split between horsemen and tracks.

The track owners would have been best advised to just change the split to December 26th new split, and even lower overall takeout, or at least keep takeout rates the same. 

This takeout hike has massive failure written all over it. Bigger purses, possible bigger fields, and a dirt track will not save the day.


In the comment section, well known handicapper/author Barry Meadow chimed in:

There are two types of bettors–those who care very much about the takeout (e.g., professional gamblers, big bettors, rebate players, etc.) and those who don’t.

An increase hurts both. A professional works off a tiny margin; if he bets $1 million to earn $50,000 after rebates (5%), an increase of just 2% in the takeout can cut his profits nearly in half. At that point, he may feel there is no reason to continue betting on that track. Handle is unlikely to increase after a takeout rise, and every dip in handle forces him to cut his bets; already, it’s virtually impossible to bet any serious money on a daily double in northern California, which on November 10 featured a live crowd at Golden Gate of exactly 753 patrons.

The casual fan who knows little or nothing about takeout is affected as well, since he has less money in his pocket. He may not notice it after ten races, but after 500, the effect kicks in, whether he realizes it or not. He cannot contribute to churn because he has gone broke faster. If this doesn’t seem realistic, imagine a 90% takeout and you will quickly get the idea.

What most people may not realize is that racing handle has been artificially propped up for years:
In the 1980’s, the advent of cash-sell machines resulted in handle jumps since patrons didn’t have to run to five different lines to make and cash their bets.
In the 1990’s, simulcasting exploded, so fans who wanted to bet Santa Anita could do so from 400 locations instead of from one, again resulting in handle gains.
As 2000 dawned, rebate houses made it possible for big players to turn losses into profits, and begat the high-powered computer groups who dominate rebate play today. (Some track executives complained of “Handle up, purses down,” but failed to understand that without the hundreds of millions of dollars bet through rebate houses, they would have had “Handle down, purses down” instead.)

Some people think that exchange wagering will be the next big thing to save racing’s handle, but exchange betting, while it will increase the action, won’t prove a panacea. It’s just for win betting, you need a computer (who is going to lug a computer to a racetrack?), and if the liquidity isn’t high enough right from the start, the whole enterprise may be reduced to just a sidelight.

Certainly, it makes little sense to raise the price of a product during an economic downturn, particularly when it’s been shown that fewer people each year care about the product. Yes, it’s nice that we have films like Sea Biscuit or Secretariat, and Zenyatta thrilled us all, but none of this has much to do with the overall trend of the game, which is on a straight downhill slide. The comments of the CHRB members show how out of touch they are with the realities of the game (Racing as entertainment? So why do networks pay the football and basketball and baseball leagues millions to televise their games, yet racing has to shell out millions to get its own product on TV?)

The old days of huge crowds and huge handles are long gone, gone the way of the telegraph and the stagecoach–and they’re never coming back. Not with rock concerts (the youngsters who attend these have no time, no money, and no interest in betting thoroughbreds). Not with social media (it’s like having a huge mailing list filled with non-prospects). Not with catchy slogans (how many serious bettors came from ”Go Baby Go”?). Not with T-shirt giveaways or mugs.

We’d all like a minuscule takeout, but there are costs to run the show. But that doesn’t mean the customers have to absorb all the costs. The talk of a players’ boycott, whether it materializes or not, is the customers’ visceral response to being asked, time and again, to pay a higher price for a lesser product. The customers are simply fed up. And no industry can survive with fed-up customers.

This triggered a response from yours truly:

Barry, that was an excellent post, but I will take exception to your comment about “cost to run the show.” The cost to run the show is separate from what would be the optimum takeout (the takeout which creates the biggest revenue for the tracks and horsemen). If that takeout number is 30%, then takeout should be 30%. However, we know it isn’t for the reasons you mentioned. You can’t have optimum takeout when there is money that could be on the table that from former horseplayers, or potential horseplayers that won’t go near the game because they know it isn’t beatable.

Takeout needs to be reduced because players who last longer are great for growth. Their family and friends are almost forced to see what the fascination is all about. Some may start going. The opposite happens when players don’t last as long. Letting players last longer opens up the possibility for new money for purses and tracks, from new players being exposed to the game.

Secondly, not all rebate players make money, far from it. But they all last longer, and most believe that with rebates, if they start improving on their skill and have a few more lucky breaks, that they can beat the game. This is the way it was back in the 60’s and 70’s for many who played horses every day (of course, without rebates). Especially because there were not very many exotics (collective takeout was much lower), there was no intertrack betting…you had 8 races to play, and there was a good likelihood that you would leave with enough money to keep your interest so that you couldn’t wait to come back the next day that was free in your calendar. There was also lots of dummy money in the pool (money which is now gone to casinos and lotteries) Those using speed figures back then were in the same boat as many rebate players today…some were marginal winners, and some were marginal losers…but there was a feeling that the game could be beat.
That feeling is gone today for almost any horseplayer who doesn’t get rebates or who isn’t able to bet on an exchange. With high takeout exotics every race, which temp just about everyone, and the ability to play 4-15 cards a day, it doesn’t take long before any horseplayer is completely discouraged.
It was a shame that horse racing couldn’t pick up new players thanks to the movie Secretariat and the build up to Zenyatta’s last race. The reason why is simple. Horse racing is about gambling, and the only way to get the masses interested in gambling is to have visible winners.
You can’t have them in today’s high takeout environment. It is impossible.
Poker gained momentum with the movie Rounders. Why? Poker is gambling, and it is possible to beat the game. Even if very few do it in a big way, they are in our face. This attracts new players galore. The fact that if you can have a beatable game that someone with a little study and a fairly inexpensive learning curve, can move from their parent’s basement to become a King. This is what gambling is all about. This is how horse racing needs to be marketed. But we need lower takeouts to begin with, so players can last while they are learning, and winning players need to have the light shone on them.

Racing can do it right now with those who make money at rebate shops, but that is pretty much a secret society, unlike the poker stars. Racing won’t embrace these players because it is an admission that takeout is way too high, and that the only way to win today or even have a chance is to play with a substantial rebate.

But doing what California is doing is just putting another nail in the coffin when it comes to growing horse racing. Shame on California, and shame on the Paulick Report for supporting their action in any way shape or form.

I do give Ray Paulick credit for allowing comments on his ridiculous post and also linking to Pull The Pocket's post Has Paulick Jumped The Shark

Not sure if it was done out of fairness, guilt/remorse, fear of losing readership, or maybe he just likes being compared to The Fonz.

Where do I stand on the California takeout hike? I think my comment over at Pull The Pocket sums it up:

I proudly haven't wagered on any California race since the bill was signed.

When a California race is on TV, I view it like a commercial, I either get up to grab a snack, handicap a race at a venue I do play, get up to take a wizz, or, if my wife is talking to me at the time of the race, I actually listen to what she is saying to me.

The Price Of Cheating In Ontario Has Just Gone Way Up

POLICE LAY CHARGES IN HORSE RACING INVESTIGATION

WINDSOR, ON, Nov. 8 /CNW/ - Officers from the Ontario Racing Commission's Equine Medication & Controlled Drug Task Force who are seconded from the Ontario Provincial Police (OPP) Organized Crime Enforcement Bureau (OCEB) have charged three Windsor residents as a result of an investigation into the use of non-therapeutic, performance enhancing substances on Ontario race horses.

On November 7, 2010 OPP officers from OCEB, as well as the Essex OPP detachment, the Windsor Police Service and the OPP Assets Forfeiture Unit, assisted the Ontario Racing Commission (ORC) Task Force members and Special Constables in the execution of search warrants at a Windsor residence and a Tecumseh horse stable.

The OPP has charged: 1) Christopher HASKELL, age 33 of Windsor
2) Cassie NANTAIS, age 24 of Windsor and
3) Derek RIESBERRY, age 40 of Tecumseh.

The accused have all been charged with one count each of cheat at play, fraud, and offences under the Pari-mutuel (betting) regulations of the Criminal Code. All charged persons have been released on an Undertaking which prohibits involvement in horse racing. They are to appear in Windsor court on January 5, 2011.

In addition to the charges, police seized drugs, medications and documents related to the criminal investigation, as well as offence related property including business vehicles and horse trailers.

Horse racing in Ontario is one of the most closely monitored and regulated sports in Canada. The vigilance is based on a philosophy of intelligence-led regulation, and the unique partnership of the racing community, the OPP, and the ORC. As a result, Ontario is recognized as a world leader of investigations into criminal and regulatory offences related to horse racing.

The investigation is continuing and police encourage anyone with knowledge of criminal activity to contact their local police or Crime stoppers.

If the parties charged are in fact guilty, and their consequences are more than a slap on the wrist, this should be very good for horse racing in the long run.

Will it cause more betting? Not very much. Those who are staying away from horse racing aren't being deterred by the use of untestable drugs, but either have no interest in betting or they are betting where they last much longer.

However, it creates the foundation for non cheating horsemen to flourish. They will get a chance to grow as they will now most likely be getting a bigger share of purses available. If it plays out right, this will create more owners. More owners usually means more Horseplayers being introduced, though for Horseplayers to stick, takeout needs to be reduced.

The big question here is that if you are a horseman using non testable drugs like ITPP or snake or cobra venom, would you be scared straight by this arrest, or do you need more convincing?

See also Pull The Pocket, who I just found out, beat me to the punch by an hour.