Friday, December 17, 2010

Horseplayers Need to Represent and Be Represented

SARATOGA SPRINGS, NY, December 16, 2010--With apologies to Gil-Scott Heron, the Revolution will be televised, and those watching will be the revolutionaries themselves.

Santa Anita Park, newly installed dirt track and all, will open for business in nine days, the day after Christmas. It’s always a welcome rite of winter, a reason to get excited about Thoroughbred racing again.

But if the revolutionaries keep their promise, all they will be doing is watching, not betting, striking a blow for horseplayers everywhere.

It’s very difficult for any grass roots organization to make a difference in the big picture. These days there’s just too much cynicism, too much apathy, too little character and too many powerful interests to go around.

But horseplayers, those of whom are still betting, apparently ARE made as hell and, not only are they not going to take it anymore, but collectively, big bettors and small, are taking proactive measures to do something about it.

The organization that’s spearheading the boycott is called PlayersBoycott. When the Horseplayers Association of North America, HANA, recently polled its membership, 70 percent of organization voted to officially support the PlayersBoycott organization. HANA now has over 1,700 members.

“I also polled my customer base and asked what appropriate action should be taken in light of the takeout increase at Santa Anita. Over two-thirds voted to support the boycott,” explained HANA President Jeff Platt.

“The customer matters. We can send a clear message to the California Horse Racing Board and the Thoroughbred Owners of California that a vote for higher takeout can have repercussions.

“We’re not just lashing out in anger. We want to shine a light on the issue so that the CHRB and TOC understands that the players need representation.”

A majority of the membership of these two groups have promised to boycott the Santa Anita races because of the increased takeout rates, which have gone up two or three percent depending on the exotic pool tier.

Platt, a serious player, will support the boycott. He also received commitments from several batch-wagering computer syndicates to not only support the boycott but take proactive measures as well, taking out ads in trade journals, the Los Angeles Times, etc.

Some computer bettors would sacrifice short term gains for long term profits. “We believe in lower takeouts for everyone,” said one syndicate manager. “If takeout was lowered to acceptable levels, we wouldn’t need rebates.”

Only after polling its membership did HANA openly lend its support to the upcoming boycott. Computer syndicates cannot take this tack, however. If they are large enough and become public, they could become fair game for running afoul of anti-trust laws by acting in restraint of trade.

Resultantly, this action needs to be taken by a grass roots advocacy group such as HorseplayerBoycott which can attract more horseplayers so that their greater numbers can make a difference.

Organizers project that a successful boycott by computer bettors can effect the handle by as much as 10 percent, although it still could be considered a success if it didn’t reach that figure. Several thousand names in support could make a difference.

What’s clear is that if horseplayers don’t look out for themselves, no one in the industry will--at least not in California if events in 2010 mean anything.

In January, the CHRB decided to raise the takeout for the Los Alamitos quarter horse meet. It asked HANA to monitor the effects the takeout increase would have on handle.

CHRB Chairman Ed Allred said at the time that if takeout were adversely effected, he would rescind the hike. Allred resigned shortly thereafter and could not act on that promise.

On-track handle at Los Alamitos was down 27 percent year over year. But when that result first came up for the revenue, CHRB ordered that the handle comparisons would be measured on a handle-per-day, not a year-over-year basis.

The skewed figures presented a completely different picture, that handle losses were minimal. At a meeting with the CHRB in the spring, HANA objected to the change in methodology.

The change in methodology was covered up. HANA later learned that the CHRB had lobbied the legislature behind its back, seeking a takeout increase on Thoroughbreds.

After the CHRB, TOC and the racetracks found that there was a backlash to the increase, track managements at Santa Anita, Hollywood, Del Mar and Golden Gate worked hard to kill a bill that also contained a provision lobbied for by Betfair to allow exchange betting.

The Betfair provision was approved but an agreement was fashioned delaying its implementation until 2012 while further study was conducted.

At the CHRB meeting in October, when it was learned that a takeout increase for Thoroughbreds was signed into law, the news was greeted with a standing ovation, according to HANA.

“It’s clear that the CHRB is nothing more than representatives for the owners and trainers, not the players.” said Platt.

“The industry has spent hundreds of thousands of dollars on research and chooses to ignore recommendations made on the positive effects of reduced takeout.

“When the Lottery takeout was lowered in California, the amount of revenue to the general fund increased by $50 million. That also happened in other states.”

When asked, Platt conceded he was aware that a return to dirt would be supported enthusiastically by horsemen, resulting in larger fields and a potential for lots of carryovers, making it difficult to weigh the effects of a boycott.

“I expect there will be euphoria at the start of the meet but it will be short lived, with or without a boycott. As the meet progresses and the higher rate will takes its toll, you will get a negative effect on handle at the end.”

The Horseplayers Association of North America, with the support of computer bettors, and making a concerted effort on the behalf of horseplayers from every region in this country.

They are looking for a few good men and women to lend their support to the cause. Simply click through to and add your name to more than a thousand horseplayers and computer syndicates. Be part of a solution. The money saved might be your own.

Written by John Pricci

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Thursday, December 16, 2010

Add to New York’s Troubles an Unnecessary, Mindless Distraction

SARATOGA SPRINGS, NY, December 15, 2010--With the year winding down and compilations of “the year in review” have begun to appear, one news organization dubbed 2010 “The Year of Hubris.”

So, why shouldn’t New York Racing Association executives join in on the party? However, before dancing on perception’s grave, there are other considerations that need addressing.

One of the biggest acknowledged reasons for New Your City Off-Track Betting’s failure is that in both perception and reality, the organization was a patronage haven for the politically connected. The weight of that bloat and inefficiency ultimately brought the company down.

Meanwhile, NYRA employee morale had reached its nadir in 2009 as it began addressing its own inefficiencies while it scrambled for money to keep its doors open and pay horsemen their purse money.

According to NYRA data, its unionized work force was trimmed by 160 jobs and when administrative employees are added to this total, by next year the NYRA will have seen its work force diminished by 262 workers, about 22 percent.

With 78% of the new workforce providing 100% of the labor needed to run what is still considered America’s #1 Thoroughbred circuit, a 3% pay raise, with a 5% boost for senior managers, even in these economic times, is not unreasonable over what will become a three-year duration.

Additionally, the fact that remaining employees have seen their health premiums escalate by one-third and, paid below industry standard in many cases while living in one of America’s most expensive regions, and have taken on added responsibilities, is defensible on its face.

However, the by-product of the action taken by NYRA executives to increase its salaries by 5.5 percent is a disservice to the entire racing community already reeling from an approximate $30-million hit taken by NYRA and the state’s breeders. And this excludes ancillary businesses.

The executive pay increases has led to more cheap shots from the usual places; the editorial boards of New York City tabloids and the New York Times, which after 40 years even now refers to OTB as a “failed bookie” rather than a parimutuel outlet. It still portrays racing patrons in the same stereotypical fashion, as degenerates and losers.

In a recent editorial, the New York Post referred to NYRA’s declaring bankruptcy in 2008 and collecting a $105 million “taxpayer bailout” that same year and “snagged” another $25 million this year with a state guaranteed loan.

OK, for the moment let’s forget for the that the newspaper business loses money, too.

There was no mention in any editorial I saw that the “bailout,” like the $25 million loan, were advances against future VLT revenues, not “bailouts,” a hackneyed headline grabbing buzzword.

There was no mention that the three NYRA tracks, now owned by the state, is the same state whose legislators cost New York’s citizens hundreds of millions in revenue by delaying the VLT franchise process for nearly a decade after the measure gained approval in 2001.

There was no mention of the $375 million paid to New York State upfront by the VLT franchise operator Genting Group for the privilege of conducting gaming and the construction of a new high-end revenue generating facility on Aqueduct Race Track grounds.

And there was no mention that since NYRA’s inception in 1955, horseplayers recently have contributed on average $2-billion a year to New York State’s urban, suburban, and urban economies.

This excludes revenues from the state’s regional OTBs that does about one-third of its business on the NYRA racing product.

That’s significant dollars for the people of this state; not bad for a “dying business.” And the only way this revenue stream will stop completely is if Albany kills it dead. It’s had plenty of practice doing just that.

It’s been documented that NYRA executives do not get paid an industry standard when compared to other major racetrack organizations. In the private sector, their salaries would be chump change. But those arguments would miss the point here.

“Imprudent; tone deaf; a stick in the eye; blinders on; unconscionable; irresponsible; indefensible” are just some of the words or phrases used to describe the executive raises issue a mere 24 hours after the country’s largest parimutuel retail company went out of business. To this list add the word arrogant.

Is this really the message that New York racing’s top executives want to send to the citizens of a state which itself is in a hole for a projected $9 billion in the fiscal year 2011-2012, not to mention high unemployment, rising costs, and a cut back in basic services?

Isn’t this comparable to the federal government’s extending tax cuts to the richest Americans in exchange for an extension of unemployment benefits and tax cuts for an already overburdened middle class? These pay raises might not be as disproportionate, or the situation as dire, but in the minds of many it’s certainly analogous.

Given all the issues confronting racing, even as it’s future is charted by those same politicians New York’s new chief executive has promised to eliminate widespread corruption from their ranks, did Thoroughbred racing, given recent events, really need such disheartening, boneheaded distraction?

Written by John Pricci

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Wednesday, December 08, 2010

New York Racing’s Same Old Song: It’s Either Sadness or Euphoria

SARATOGA SPRINGS, NY, December 8, 2010--This is not to minimize what happened 69 years ago Tuesday, God knows. But December 7 has another reason to add to its infamous legacy; the beginning of the end of the modern era of racing in New York.

Unknowing editorial writers at major New York dailies, most of which have been calling for the shuttering of New York City Off-Track Betting for years, are probably still dancing in the newsroom.

You can get those “good riddance to bad rubbish” headlines ready now.

The problem is they knew very little of what they were talking about, just like some Albany legislators, who look at polls and editorials but never inside themselves if they can help it.

What happened Wednesday, on balance, was not a good thing. It might be good sometime in the future. That’s if the future doesn’t run out of racetrack.

Of course, everyone knows about OTB’s past. The New York Racing Association had a chance to embrace the concept in the early 1970s, but figured it wouldn’t have the kind of impact that it did.

Who wants to bet in some seedy storefront when you can come out to the races and enjoy a day of sport? But they forgot the business they were in, a market they once had all to themselves.

Now racing finds itself in a position where without help from their competitors--off-track betting and casino gambling--it couldn’t survive without first changing the business model in a significant way. And pronto.

Create a new paradigm, lower the cost of the gambling product to effectively compete with your rivals, or die. As “Larry the Liquidator,” who knew how to use other people’s money, once instructed:

“You know the surest way to go broke? Keep getting an increasing share of a shrinking market. Down the tubes. Slow but sure.” Has anyone perused national betting trends in this brave new Millennium?

Everyone, including headline writers, knew the problems associated with the City-OTB model: Excessive patronage; gross inefficiencies; too many vice-presidents driving too many company cars; betting parlors allowed to go to seed, etc., etc.

But many of those vice presidents and most of the cars have been history for some time now; so are some of the worst, most inefficient stand-alone parlors. There have been layoffs and buy-outs. OTB was making some headway; slowly, yes, but surely.

Following bankruptcy, a plan was hatched for modernization. No plan is perfect, but elements of a new vision made sense. It isn’t right that the NYRA was left holding an empty bag that was supposed to be filled with 27.5 million dollars.

Statutory law notwithstanding, 35 cents of every dollar was bet on NYRA races at NYC-OTB last year, nearly a quarter of a billiondollars worth of handle. The contentious shotgun marriage came down to this; these spouses needed each other.

As part of the reorganization, the NYRA gladly would have let NYC-OTB off the hook for the $27.5 million in exchange for rights to OTB’s phone betting and Internet business in perpetuity.

So would have the state’s other racetracks, albeit to a far lesser degree. It might have taken some time to get even but this was going to be a home run ball grooved right down the middle.

Every track in the state depended on NYC-OTB handle. Without it, it will interesting to see how long some of the tracks can keep opening their gates. How many race days will their barn areas be able to support if horsemen can no longer make a living?

City-OTB may not be too big to fail, but they were big enough so that every track in the state that benefits from their handle can.

The New York State Racing & Wagering Board already has begun studying the possibility of rule changes to facilitate phone and Internet wagering at venues that already come under NYSRWB aegis.

The bill that would have made the reorganization of NYC-OTB possible was approved by the State Assembly, but failed to pass the Senate Tuesday.

With Democrats in charge of the Senate’s Lame Duck session until January 1, an alternative Republican bill was not put on the floor for a vote. Three Senators never bothered to even show up.

A pox on both sides of the aisle.

It is unknown what effect an 11th hour proposal made by the State’s other regional OTBs--seeking a reduction in statutory payments to the tracks while keeping their phone and Internet operations--had on the voting process. But it likely didn’t help.

The NYRA balked loudly saying that without the $20 million in statutory payments from the other OTBs, it would be forced to close. So, what are the current real world consequences?

Oh, not much. Only 800 more people out of work and the State, already $10 billion in the hole, according to State Senate Conference Leader John Sampson (D-Brooklyn),* now on the hook for $600 million in pensions due NYC-OTB employees

*updated to original post Dec. 10, 2010

Which reminds us of a song, specifically the third chorus of "Summer, Highland Falls" written by New Yorker Billy Joel:

“And so we'll argue and we'll compromise
And realize that nothing's ever changed
For all our mutual experience
Our separate conclusions are the same
Now we are forced to recognize our inhumanity
A reason coexists with our insanity
And so we choose between reality and madness
It's either sadness or euphoria.”

Written by John Pricci

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