If a grand experiment takes root and gets the support of horseplayers everywhere, wagering on horse races will become the best gamble in the world, bar none.
Independence Day was opening day at Ellis Park, a second-tier track with a first-tier attitude when it comes to catering to its base; the two-dollar bettor. Over 7,100 fans, second largest in track history, welcomed racing back to its Kentucky summer home.
What are the chances that an opening day success will portend how a moribund industry might revitalize itself?
The Triple Crown, Breeders’ Cup, Saratoga and Del Mar notwithstanding, racing is a sport where fans participate with their wagering dollars 11 other months of the year. Winning and losing money is the way fans keep score.
There is only one immutable rule when it comes to wagering: the deleterious effect of parimutuel takeout on horseplayers.
Two such players, one a professional bettor and handicapper, the other the most talented track-owning handicapper in the world, united to make a difference. What they created was a new spin on a popular established wager.
For the first time ever, horseplayers now have a positive expectation on their investment. The bet is the universally popular Pick Four. The spin is a four percent takeout. To repeat, a four percent takeout!
A dozen horseplayers converged for a weekend seminar hosted by Equiform founder Cary Fotias and myself. One of the attendees was Ron Geary, who had an idea that he could turn Ellis Park into a kind of Saratoga of Kentucky. He put his money where his idea was. Some background:
In 1990, Geary, a bankruptcy specialist, was brought in to turn around the Louisville-based ResCare, a company with annual earnings of $60 million and 1,500 employees. When Geary recently retired as president and CEO, ResCare had 40,000 employees with annual earnings of $1.5 billion and is traded on NASDAQ.
Geary is still ResCare’s Chairman of the Board but now has time to devote his energy and turn-around skills to his first passion; horse racing. Last year, Geary bought Ellis from Churchill Downs Inc. In less than a year his grand experiment is to see whether a second-tier track can influence an entire industry with a single bet.
Takeout is a passionate subject for Fotias, who has given presentations on the subject all of the country as one of the original members of the NTRA’s Players panel. Having graduated with an MBA in finance from Indiana University, Fotias has spent the last 16 years crafting his figures and betting on the races. But until Geary came along, he wasn’t able to find a willing accomplice.
Geary, meanwhile, is a native hardboot who graduated from the University of Kentucky, where a statistics professor conducted field trips to nearby Keeneland to show his class how this whole supply-side economics thing works. Clearly, he learned those lessons well.
But it’s his career as a weekend handicapping phenomenon that sets Geary apart. He’s qualified as a finalist in the DRF/NTRA Handicappers’ Challenge in each of the last three years, the only time he’s attempted to qualify. While never winning the championship, he is one of a handful to secure a Top 20 finish on two occasions.
At Fotias’s suggestion, Geary began putting the pieces in place for a Pick Four wager with a four percent takeout at his new racetrack. Parenthetically, the normal withholding on this wager at the majority of American racetracks is 25 percent.
Together, the handicapping tandem correctly reasoned they had little to lose. Last year, the Ellis Park Pick Four handled $18,000 daily, next to nothing. After a decision was made to try this experiment, Geary won the cooperation of horsemen and the Commonwealth to lower the take.
Each understood, too, the enormous upside potential. All that remained was the cooperation of simulcast outlets. Of course, that was the area of great difficulty in achieving cooperation. Too many racing entities don’t understand supply side economics. They think churn is something you did with butter.
But finally even unsophisticated bet-takers began to fall into line and the great experiment was on. The wager is available at most of the 1,100 outlets nationwide serviced by the Churchill Downs network.
Parenthetically, if the Ellis Park signal is unavailable, demand it from your neighborhood simulcastor. If you can’t support an idea aimed to help you win, what will remain is staring mindlessly into a VLT because everyone should reap what they sew.
The Pick Four pool at Ellis opening day was $19,975, nearly 10 percent higher than last year’s average without benefit of pre-publicity and against major top-tier competition. Maybe there is, after all, something to the economic notion that a free market will determine the point at which supply meets demand to maximize profits.
The winners of the Pick Four races paid $9, 4.80, 6.60 and 37.00, respectively. A straight $2 parlay would have returned $1,318. The winning $2 Pick Four paid $10,858, roughly 800 percent higher despite the fact the bet is offered in 50-cent denominations. Digest that for a moment.
Here’s another way of looking at the wager. Unlike betting to win, the parimutuel takeout, about 17 percent in many major jurisdictions, is extracted each time a win bet is placed. In inter-race wagers like the daily double or Pick Four, takeout is extracted once.
This makes the effective takeout rate on the Ellis Park Pick Four one percent per race. Now, if your handicapping is skilled enough to safely eliminate one 30-1 shot per race (on balance, a 30-1 has about a three percent chance to win), you have an expected positive return of two percent per race or eight percent for entire sequence. Think of it as free money.
Now how does that stack up against the 50 percent withheld by your state’s lottery?
Horseplayers must support this bet to send a message to an industry that only talks a good game. If 2,000 high-rolling off-shore bettors wagered only $200 into the Ellis Pick Four, daily handle on the bet would reach $400,000. If 20,000 $2-bettors wagered $20 into the pool whenever they went racing, potentially giving them 40 combinations at 50-cents each, we’re back at $400,000.
In the Pick Six pool at Hollywood Park last Monday, horseplayers spent $7.5 million chasing a $3.2 million carryover. The resulting $10.8 million Pick Six pool was the largest in North American history.
We’re not talking Kentucky Derby or Breeders’ Cup here, just pedestrian week-day product. This total was amassed despite the much higher degree of difficulty, a 25 percent takeout, and a $2 minimum bet. Without a large bankroll, the majority of Pick Six players had little or no chance.
Not so the Pick Four, not now that one track is gambling that by making you happy and giving you a fair chance to beat the odds they can grow their own business. And send a message to the industry at the same time, that the horseplayer counts.
But unless bettors show that they really care and are willing to support a wager that gives them a real chance to win in the long term, horseplayers will have no one to blame but themselves.