Tuesday, January 08, 2019

2018’s Mixed Signals: Business Very Good; Not So Optimistic Outlook

Tis a pity that sometimes progress cannot be stopped; such is the dual-edged sword of the Internet in general and social media in particular.

Argue what you will about government encroachment into our lives, then don’t you feel a tad less safe about today’s not-so-friendly skies, or needing to pay your bills later rather than sooner?

Actually most honest people would agree that Internet giants Facebook, Google and, yes, Twitter, too, need to be reined in for the good of society and, as facts prove, for the democratic republic, too.

However, the Internet and social media should prove a boon to data-dependent racing and has to a significant degree. Otherwise, how does one explain, surprisingly and contextually, recently released prodigious handle figures for 2018?

Many industry observers admit that handle figures are not the metrics they once were to reflect the success, failure, or the general popularity of horse racing in the modern era.

Just like the country’s immediate fate, things are not headed in the right direction. The result of a recent poll taken at a large racing website show that 52% of the sport’s stakeholders are pessimistic about the game’s future.

Yet, national handle increased by more than 3.3% last year. That might not sound like much but, in context and in our view, it was huge.

The facts is that 2018 was the first time that national handle topped the $11 billion plateau in the last eight years, the largest percentage growth this Millennium.

Another metric, daily handle, increase by a rounded 6.6%, a figure that was at once logical and counterintuitive. A daily increase makes sense because there were fewer racing days conducted compared to 2017, yet fewer races resulted in greater overall handle. Less proved to be more.

Staff and contributors here at HRI believe there is too much racing and that the sport could generate more excitement if the product were more of a premium: Bettors and track surfaces need down time and circuits need seasons.

There is no question that the repeal of the onerous 300-1 one-ticket-multi-bet mandatory reporting, and a higher reporting and mandatory withholding threshold jump-started handle early on and will continue to do so, albeit at a lower rate as time passes.

And the successful promotion of mega-events and multi-day racing festivals also have spurred betting interest. Further, credit must go to the recent proliferation of universally available horizontal wagers that requiring heavier investment to compensate for the higher degree of difficulty.

What is lost is the fact that these wagers are a dual edged sword, and not only because of higher takeout rates associated with jackpot horizontals.

The reality is that rank and file horseplayers are ill equipped, financially and psychologically, to handle the long losing streaks between windfalls, already happening to a large degree. Those who would deny this are either obtuse or disingenuous.

Not given its proper due is the increase in the number of fractional wagers available, which at once helps the rank and file cope with a pragmatic higher level of wagering approach while smaller denomination tickets also decrease the chances of mandatory reporting of windfalls.

Also not credited is the popularity of Rainbow wagers, rightfully attacked because of the initially high takeout rates but are seldom given credit when the jackpot on the 20-Cent wagers effectively lowers takeout and regularly produces windfall payoffs of the small four-figure variety.

The same large bettors who complain that factional wagers lowers payouts ignore the fact that without rank and file they would only cannibalize each other--algorithm-batch-betting whale vs. algorithm-batch-betting whale.

Indeed, had tracks not embraced fractional wagers in high-risk horizontal wagers, overall handle would have stagnated. And a lot for a little is a much easier promotional sell than hang-in-there and grind-it-out.

If it were not for all this, how could one explain Gulfstream Park handling over $2 billion last year, an increase of nearly $123 million, or how on-track play rose by $118 million despite two fewer live racing dates? There must be something that bettors especially like about Gulfstream’s wagering menu.

New York Racing Association tracks, which only recently expanded its horizontal betting menu but limited access to the Pick 5 exclusively to its own ADW, lost almost $78 million year over year but still cleared the $2.1 billion barrier despite fairly significant extenuating circumstances.

There were six less racing days in 2018 compared to 2017, 52 fewer races, including 95 others that were rescheduled from turf to the main track with its
inevitable reduction of betting interests and options.

The NYRA wisely intends to adopt a jackpot format sometime in the future but lamentably resists lowering exacta minimums to 50-Cents, prevalent virtually everywhere else.

Twitter Giveth But Mostly Taketh Away

Social media certainly has given rise to the instant racing expert whose default is to criticize before diving deeper. Critics wasted no time, e.g., in predicting gloom for the 2018-19 Santa Anita meeting yet were reticent to recognize a record opening day.

Over 41,000 fans welcomed Thoroughbreds back to Arcadia attracting $14,489,402 from all sources, $3,463,535 of that live. Both records, but the Twitterverse chose to concentrate instead on the poor performance of the new Roulette wager.

Thank goodness there was no social media when Trifectas and Superfectas were first introduced.

Handle figures on the Roulette wager were appallingly low but like a good doctor it is doing no harm. The wager will require much more time and promotion to be impactful, if at all. Then does it need to be?

Most everyone wants to see a greater accent on promoting the gambling side of horse racing to attract new fans and sports bettors racing hopes would cross over. The Roulette is a novel step in that direction.

The wager, a grouping of three sets of horses within a race, is not intended for even the established recreational player; it’s intended for the newbie who hopefully will learn about horse racing as he goes.

In rooting for several horses simultaneously, a novice can learn to see the many dynamics that occur within a race; learning race watching techniques and, by extension, trip handicapping: Learning works best when it’s fun and interactive.

Bettors won’t win a lot playing Santa Anita Roulette--in many cases next to nothing at all. Then neither will the newbie pay a steep price for an education. The bet is not a score maker nor a handle generator but it does show some promise. To wit:

Personally I like new bet but that’s because I’m 1-for-1, the win coming in Saturday’s Sham Stakes.

As the HRI Faithful know, I chose Gunmetal Gray to win the Sham given his experience and class relief. I thought, given the circumstance, that 5-2 would be fair odds. I reasoned that Coliseum, given the hype machine surrounding the Baffert brigade, would be a dramatic underlay at about 1-2 or less.

So I thought I’d spin the wheel. At 7-2 on the ML, and the projected 5-2 ante post, I bet BLACK to win, getting a three-ply coupling that included “the longer Baffert” and 10-1 Savagery. Then I took a cold saver exacta of Coliseum over ‘Gunmetal’.

Gunmetal Gray won, an overlay at $9.40. BLACK paid $7.80. Pre-race I would have been happy to accept 5-2, as stated above, especially on a three-ply “entry.” Whether I ultimately outsmarted myself, or made a good strategic wager, is open to debate.

There surely will be similar opportunities to bet against problematic underlays. I will 3-1 all day on what I perceive is a match race. The one thing I didn’t like was betting blindly. If probable odds were available, I couldn’t find them.

But there is only one true lesson here: Rushing to judgment is easy; it’s patience that’s hard.

Written by John Pricci

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