Tuesday, January 01, 2013
A Welcome New Voice in the Wilderness
LOS ANGELES, December 31, 2012--Every once in a while I encounter some fresh thinking in cyberspace that yields a "Butch and Sundance" moment: "Who is that guy?"
Apparently others have been asking that question about a blogger who calls himself The Electric Horseman (TEH), and writes a blog called Horse Racing Must Evolve
Indeed, it was a friend who asked if I were familiar with that individual so I decided to Google his work.
TEH appears to be addressing racetrack management in a series of pieces he has written, all of which contain concepts worth contemplating. In the earliest one, he looked at the way tracks treat their on-track customers as compared with on-line customers:
"When over 20 or 30 years you create a scenario in which invisible customers and their machines sitting at home and online are afforded all of the advantages, and you do almost nothing to correct that giant, industry-wide blunder, you are dooming only yourselves and the industry you are perceived to want to preserve."
"... [Racing] can sure stand to lift more than just a (the?) single finger toward the new and/or novice fans that bother to pay the extra daily costs required to attend the races live. Horse racing, unlike all other sports, continues to maintain an environment where its on-site crowds are put at a decided disadvantage while in direct competition with those who stay home to watch online or on TV!!!"
"At the root of your parimutuel wagering, you are extracting 14-30% of every dollar wagered on your product. Your "whales" and other preferred customers are beating that number steadily over time, and often by a whole lot. This in turn ratchets-up the effective take-out on the newcomers and the novices, who are left dangling, often with no clue about a sport that demands considerable understanding before a person can be competitive. "
So, I was surprised when he wrote the following: "There is exactly nothing wrong with the core parimutuel takeout at most North American racing venues ..."
Subsequently he revealed an anti-professional player agenda with anti-HANA (Horseplayer Association of North America) undertones:
"This isn't about the mutuel takeout, no matter what is constantly trumpeted by those whose lone interests lie in trying to beat the game over the long haul. Those individuals, who have now become a giant liability to horse racing, can't seem to understand that it is their own very existence amid a game otherwise marketed to numbers- and colors-players, which is maintaining a giant wedge between horse racing and the mainstream gambling public."
"Horse racing has perhaps unwittingly tipped the playing field so far toward its high-volume and repeat customers that the dire consequences will eventually clear-out race tracks all together. In what other arena does a business make things so relatively easy for a small segment of its customers that they STAY HOME in order to maximize their relative perks while at the same time the on-site customer suffers a great disadvantage as a direct result?"
Later, he ventured into the realm of horse racing's future: "... With future audiences so accustomed to having so much done for them, it is exactly WRONG to imagine these same audiences wanting to regress 40 years (into O.T.B. environs?) where they should then be expected to go through the laborious task of being left alone to learn all things Horse Racing, practically on their own.
"The scores and scores of minute tasks which fall under the label of "handicapping" will simply need to be effectively done for them (at modern computer speed) in order to draw significant interest from audiences of the future."
There is much more at that blog that merits digesting and debating. You don't have to agree with him to appreciate his attitude and accomplishment. Interestingly as it turns out, the blogger Pull The Pocket shares some of TEH’s concern for newcomers and gently excoriated the SCORE-64 bet we discussed here recently at HRI.
In his piece, The Jackpot Obsession
, he wrote, "It's called the "64" where a pick 6 ticket can be taken but it can have no more than 64 combo's for a dollar.
“The hope is that newbies can participate in jackpot bets, because (as we all know) syndicates and big players tend to shoot for large jackpot bets, and crowd out the little guy. Noble I guess, but this fixation on jackpot bets, especially for newbies, really kind of irks me."
In the spirit of to each his own, one of PTP’s "fixations" is betting exchanges: "Betfair is very popular with new players because you can trade (a version of scalping), dutch, and grind out a little scratch with (if you are good) zero takeout."
I wonder how soon newbies become "very good" at exchange betting. Unlike TEH, though, PTP is a huge HANA supporter and is also one of the good guys.
Roger, who occasionally comments at HRI, interestingly proposed a $1 Pick 6 non-carryover wager capped at $64 as an alternative to the $2-minimum carryover Pick Six bet. Reiterating, the “Score-64” wager offers multiple-tier payouts with no carryover along with the lower minimum and greater transparency on how the bet was won; a teachable moment.
What seems to attract the most opposition to this vision is its proposed 64-combination limit per ticket and the minimum cost for each combination.
Perhaps having the number of combinations alive announced to the public after the fourth leg, similar to what is being done at Gulfstream with its Rainbow Pick 6, would provide a hint as to the potential tiered payoffs and help build further interest. This could help churn via the dutching of marginal contenders in the final two legs of the sequence.
The considerable success of the 50-Cent Players Pick Five suggests that the average bettor would be more likely to play this new wager at that level of investment.
A 25-Cent minimum eventually night make it as popular as the Dime Super, a pool that continues to grow while no longer cannibalizing the Trifecta pool to a major degree. Of course, the downside is limiting the prospects of a life-changing score and watering down potential payoffs at the tiered 4-winner and 5-winner levels. Either way, continued dialogue is a good thing.
Written by Indulto
Tuesday, December 18, 2012
Playing With Partners
LOS ANGELES, December 18, 2012--To bet or not to bet.
One issue unaddressed by the New NYRA board members--once they understood that they themselves were not considered corporate officers and therefore would not be prohibited from wagering--was why shouldn't the new CEO, whoever that might be, be a horseplayer?
As good a start as David Skorton made in his debut as Chairman of the Board the New NYRA, the suspension of executive wagering privileges sends a sorry message to NYRA customers: The NYRA Board wants horseplayers’ business but they don’t want their executives engaging in the consumption of the product which might otherwise enhance their understanding of customer issues.
As a horseplayer advocate, I resent any restrictions on any horseplayer’s ability to participate in the greatest gambling game known to man, whether it prevents one making a bet in the privacy of one’s home due to State laws prohibiting Internet betting or in a CEO’s office due to a misguided mischaracterization of what it means to be a horseplayer.
Don’t misunderstand: Not all employees should be allowed to bet. The Drexel Frat Boys, for instance, permanently eliminated workers with totalizator access. Mutuel clerks shouldn’t be able to bet on credit or evade taxes as they once did at NYRA either.
There is a practical solution to this issue, however, which is simply to require all NYRA employees permitted to bet to do so through NYRA Rewards accounts, thereby subjecting them to the same scrutiny as their customers. Indeed, the opportunity and capacity to partake of the product via wagering should help NYRA executives understand and improve it.
I’m sure Churchill Downs thinks they improved their product by offering the Twinspires Player’s Pool which allows their customers to collectively conquer a Pick Six, even if they can’t brag about either their own handicapping skills or the return on their investment.
Indeed, on the day after Pearl Harbor day this year, the Aqueduct Pick Six carryover pool was attacked by a an undisclosed number of bettors -- each contributing whatever he/she was comfortable with -- toward the $21,704 total wagered on their behalf. (The actual tickets and a payout breakdown are available here
The good news was that they took down the entire 6 of 6 winner’s share of $259,488 plus 71 5-of-6 consolations worth $169 each for a total payout of $271,487 and a gross profit of $249,783.
The better news was that everybody will be assessed only their fair and legal share of taxes on their respective winnings. There will be no "ten-percenter’s" services required, as was recently
The not-so-good news, however, was that after a 25% tax of $21,623.50 was withheld from each 6 of 6 ticket, the net profit was $206,616.50. Each Player’s Pool “share ”paid $95.19 for each $10 wagered, in effect odds of 8.5-1 odds. (One might assume that participants eligible for cash rewards/rebates did slightly better).
The bad news is that only three handicappers were privileged to have their participation paid for. If any CDI employee, including any of the three accomplished handicappers profited from an investment in that pool, directly or indirectly, then perhaps this ethically dubious situation is just what Skorton had in mind.
The worst news for the winners is that without the ability to form partnerships that legally distribute tax liability, law-abiding players, who share payouts requiring IRS form-signing in order to cash out, must find a way to balance each other’s liabilities. (This is especially difficult if only some, but not all, are subject to state income taxes that don’t allow gambling losses to be deducted from gambling winnings).
There is a larger ethical conflict here, to wit: Was an even larger carryover prevented due to a corporate bet-taker’s creation that gives it an unfair edge over the competition, which not only works against the best interests of competing bet-takers’ customers participating in that pool but also that of the host track that might have lost had the additional handle that might have chased that pool on site?
It’s my understanding that, perhaps for that reason, the Player’s Pool is not permitted to operate on California races.
According to Brisnet
, ’access to the insights of its own expert handicappers, a huge bankroll, and a little bit of luck, makes the TwinSpires.com Player's Pool a must play. "I can't wait to help TwinSpires.com players take down another Pick 6,"’ said one executive.
But what happens when the Player’s Pool, having a big advantage over serious individual players, isn’t as profitable? It could result in a windfall for the successful competition. The more common result, however, is it likely will lower the rate of return to its own syndicate members because fewer participants will diminish economic leverage.
Larger questions remain: How did this result stack up against prior plays? Should prospective participants be privy to the Player’s Pool’s long-term performance? Do customers have access to those historical results? , but I was unable to locate, My own Google search failed to locate any summary of how the Player’s Pool has performed over time.
Of course, any player, betting anywhere, should be able to form an ad hoc partnership with any combination of other players with each individual taxed only on his/her designated fair share. After all, if such a pool is allowed at one ADW it should be allowed at all without restriction.
Unfortunately the Federal tax code remains unfair. Withholding status is still not determined by the gross profit instead of the cost of a single combination. Now it appears that “Fiscal Cliff” negotiations could negatively impact a horseplayers’ ability to deduct gambling losses against winnings on his Federal return. The NTRA is on that case.
Obviously, technology already exists to support what should be considered an enhancement to the social aspect of racing, which would by extension make small bankroll players more competitive with whales in exotic pools. Now is the perfect time for a grass-roots movement that bonds individuals together to better compete with whales of any stripe.
Written by Indulto
Monday, December 10, 2012
The 2013 Prep Season: A Gift That Keeps On Giving
LOS ANGELES, December 9, 2012--When the American Graded Stakes Committee announced a net reduction of 8 graded stakes for 2013 to 457 -- 111 G1s (-1), 148 G2s (-3), and 198 G3s (-4) -– they earned the DRF’s seal of Good Grading from publisher, Steven Crist
, who wrote:
"Defenders of some of the downgraded races will have their quarrels, but at least these were thoughtful and defensible decisions made in consultation with a wide-ranging and geographically balanced group of racing officials, owners, and breeders. That is a sharp contrast to Churchill Downs’s new Kentucky Derby qualifying system, which threw the graded stakes system out the window in favor of a corporate-driven marketing plan to boost the importance of races at tracks owned by Churchill while punishing its rivals The idea that winning the Grade 2 Louisiana Derby is literally 10 times more important than winning the Grade 1 Breeders’ Cup Juvenile is utterly preposterous to anyone not employed by Churchill, where officials have said they consulted with no one else about the new scheme,"
"The Graded Stakes Committee swiftly acknowledged it made a mistake with the Hopeful after just one year. With any luck, Churchill Downs will do the same and come up with a more fair and reasonable Derby-qualifying system just as quickly."
I must commend Mr. Crist for keeping the Illinois Derby Issue (IDI) alive, albeit indirectly, as the preceding was at least the second time he has weighed in on the subject. What I find preposterous, however, is that earnings were the basis for Derby eligibility for so long, and that the ability to win a single race as a two-year-old could guarantee a start in the Derby as a three-year-old.
At least that error in judgment has been corrected.
What I find shameful and embarrassing to the sport is CDI’s having eliminated the Illinois Derby at Hawthorne Race Course as a Kentucky Derby qualifier which was no error but rather a deliberate act.
The main problem with Churchill Downs controversial changes is not the way points are allocated – or even that most previously qualifying races were eliminated – but that the single glaring exception to the strategy for elimination of races appears to have been designed to disrupt the operation of a business competitor.
Doubts that eliminating Hawthorne’s signature event as a traditional stop on the Derby Trail was somehow related to competition for racing dates with CDI’s Arlington Park were dispelled when Hawthorne officials subsequently offered to move their race to a date accommodating CDI’s newly defined points assignment intervals, but were rebuffed by CDI officials.
Assuming a National Horse Racing Commission (NHRC) existed, should it, and would it, have addressed CDI’s IDI? Consider this hypothetical: "Conduct detrimental to …" is a familiar phrase used in conjunction with disciplinary actions by major league commissioners in other sports … why not in racing as well?
The lack of a centralized racing authority prevents uniformity which is the key to fairness in racing. Since support for it has been elusive, some are seeking Federal intervention, seeking a means of possibly establishing policy in advance of a commission’s existence.
My previous remarks requesting greater transparency from Horseplayers Association of North America also apply to Bladerunners
, another "grass roots" racing reform movement, this one to establish an NHRC.
I haven’t signed on yet because the only issue I ever see their point man, Sean Kerr, pursuing publicly is the medication issue from an anti-Lasix posture. I hope this is not another case where a self-appointed elite group is determining objectives without sufficient feedback and support from those who would be affected most by their policies and actions.
Perhaps a representative from Bladerunners might interact with HRI readers publicly regarding the IDI to discuss whether or not it would make a good candidate for advancing their agenda. Maybe he/she would also consider discussing whether plans include level playing fields for horseman AND horseplayers through a) uniform medication rules with consistent enforcement and b) uniform rewards to all pari-mutuel participants by lowering direct takeout while simultaneously eliminating rebates for a privileged few.
Some wrongs can’t be righted but when trying a universal solution chances of doing the right thing are increased. The Genie is already out of the bottle with regard to alternative legal gambling and off-track wagering. But surely the equitable and impartial aspects of the game can be shoved back in.
The first Saturday in May is now less than five months away. Can enough outrage at the IDI travesty be encouraged by the media to force CDI to alter its stance in time for Hawthorne to move its race backward? Probably not. The Illinois Derby will likely morph into this year’s most lucrative Preakness prep not called the Kentucky Derby. They could run it on the same day Churchill opens with its Derby Trial, offering a two-turn alternative with a larger purse.
Thus, the Hawthorne situation would still be news on the day of the last Derby qualifier when all eligible horses resulting from CDI’s grand experiment will have been determined.
By moving its race forward, Hawthorne could provide the media some fuel to expose some of the CDI rhetoric in the final few days leading up to the Derby, inviting comparisons between Derby winners in such far flung regions as Illinois, New Mexico, and the United Arab Emirates. The ramifications of the 2013 prep season could linger long beyond May’s first Saturday.
Written by Indulto