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

Comments (15)


Tuesday, December 07, 2010

Life At Ten: Justice Delayed, Will It Be Denied?

SARATOGA SPRINGS, NY, December 6, 2010--It’s been over a month since racing fans lost millions of dollars on a horse that had no business entering the starting gate for the Breeders’ Cup Ladies Classic.

If it weren’t so shameful, it would be laughable that the non-effort of Life At Ten is likely to still be under investigation when the next scheduled meeting of the Kentucky Racing Commission takes place next week.

L’Affaire Life At Ten will have required more than six weeks of study when post race blood testing, which could have been performed in a matter of hours with results known in a matter of days, was deemed not important enough to solve the vexatious logistical issues of a testing barn.

We have no problem doing our jobs just as long as it’s not too inconvenient.

It was bad enough there was an utter disregard for the betting public given the inaction of officials in the minutes before the Ladies Classic. But then to insult everyone’s intelligence with self-serving, conflicting reports of the events only added to the frustration.

Fans and media are expected to believe that it will take six weeks to talk to the 11 veterinarians on the grounds during Breeders’ Cup weekend, when the need was to talk with only one, state veterinarian Dr. Bryce Peckham whose job it is to safeguard the horses, riders and betting public.

What were we all to believe? That jockey Johnny Velazquez asked Peckham to look his filly over carefully because: (a) he had just told a national television audience that his filly was not warming up properly after trainer Todd Pletcher told him Life At Ten was unusually “quiet” and to warm her up vigorously; (b) that he couldn’t follow those instructions because his filly was severely cramped and not striding normally or (c) that the conversation with Peckham never took place at all?

Was Life At Ten fit to race because when observed by the three veterinarians stationed at the gate she showed no signs of being lame and was racing sound?

Any jockey will tell you there’s more to “racing soundness” than simply the absence of lameness. And there is no excusing the stewards, after being informed what Velazquez said on ESPN by a veteran producer, for not picking up the phone and asking the state veterinarian to examine Life At Ten closely.

Unfortunately, the scenario gets worse.

Not long after the fact, a spokesman for the Kentucky Horse Racing Commission said chief steward John Veitch, a former trainer and Hall of Famer, interviewed Pletcher, Peckham, Churchill’s head starter and an outrider--but never interviewed Velazquez?

How could Veitch not have spoken with Velazquez earlier? Was it because, according to the KHRC, Velazquez did not bring the filly’s condition to the attention of the three veterinarians at the starting gate? But Pletcher said Velazquez did speak to the vets. Was the KHRC covering for the vets and chief steward? Was Pletcher covering for Velazquez? Both?

The KHRC spokesman confirmed that ESPN producer Amy Zimmerman called the stewards prior to the start and told them about the Velazquez’ horseback interview with analyst Jerry Bailey, an all-time riding great.

The spokesman also said that when the stewards watched the feed, the interview was ending and only heard Velasquez say that the filly wasn’t warming up well, and that no mention was made by ESPN to the stewards of issues that would have necessitated a post time scratch.

ESPN analyst Randy Moss, with three decades of industry experience, and Bailey were on the set interviewing Velazquez on horseback pre-race, trying to inform the audience what it all meant.

Reporting was their only responsibility. Advising the stewards on how best to perform their jobs in real time would have been totally inappropriate on several levels. This is known as shooting the messenger, only in reverse.

Zimmerman informed Moss that she called the stewards and was led to believe they were watching the ESPN feed. Moss surmised that between Velazquez’s “not really” reply to Bailey--when asked if the filly was warming up any better-- and Veitch’s response to Zimmerman’s call, that a conversation between the rider and vet certainly would take place at the starting gate. Moss was “stunned” to learn that that conversation never took place.

Veitch contradicted himself by indicating he hadn’t spoken to Velazquez when he questioned everyone else then indicated Velazquez told him the filly was dull warming up but thought she'd pick up when she got to the starting gate and the adrenaline took over.

Obviously that’s not what happened. "She didn't want to run today," Velazquez said immediately after the race. "I tried to get her to go in the warm-up and I couldn't even catch up to the pony. She was never interested in running at all." Because the stewards did not err on the side of caution when apprised of the Life At Ten scenario, we had a series of events in which many bad decisions were made. There has been so much conflicting testimony that it’s near to separate fact from fiction.

Allegedly, neither Pletcher nor Velazquez expressed serious concerns to racing officials or any racetrack personnel. Chief steward Veitch neither observed Life At Ten on the track nor did he inform Dr. Peckham what he had learned about the filly’s condition from the Velazquez interview. And it wasn’t a refund situation because, said Veitch, “[Life At Ten] got a fair start…a horse must be impeded on some way,” completely missing the point.

Three veterinarians stationed at the gate didn’t see ANYTHING out of the ordinary with Life At Ten, and can’t be held accountable because “not acting well is a gray area,” difficult to define in terms of scratching, said prominent equine surgeon Dr. Larry Bramlage.

The Kentucky Horse Racing Commission issued a statement that said it takes seriously the safety of horses and jockeys from the time it enters the track until the race is over, stating that its veterinarians and stewards “acted properly in all instances…”

Where does the betting public figure in this equation? And if the KHRC is as serious as they purport themselves to be, how does it exonerate its stewards and veterinarians before conducting an investigation that will take five weeks to compete? Makes you wonder whether this can turn out to be anything other than a whitewash.

The Breeders' Cup issued a statement explaining that its races are conducted under the aegis of the host site and the racing rules of the state in which the event is conducted. Fair enough.

But if the KHRC fails to mete out justice in this case, Breeders’ Cup Ltd. must put a framework in place for acting unilaterally, or in concert, changing protocols so that it shares responsibility should an adjudication process become necessary.

It’s too late to help the bettors of Life At Ten. But owner Candy DeBartolo should have her starting fees refunded. It wasn’t her fault, just as it wasn’t the public’s, that three strata of professionals who should be a last line of defense--the jockey, the state veterinarian and, most significantly, the state steward--abdicated their responsibility.

Fairly or not, the Kentucky Horse Racing Commission will make a jurisdictional decision that will extend far beyond its own borders. At stake is nothing less than the perceived integrity of Thoroughbred racing nationwide. The hope is that the KHRC will take a macro view, not a myopic one.

Written by John Pricci

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Thursday, December 02, 2010

Improving the Bottom Line Not Rocket Science

ELMONT, NY, December 1, 2010--Location, location, location, is the mantra of any successful business enterprise. In this economy, there’s another: Pricing, pricing, pricing.

Irresponsibility and officiating notwithstanding, the success of the recent Breeders’ Cup World Championships was a perfect storm. Call it when tenets collide.

Attendance and wagering on the 2010 festival at Churchill Downs increased by double-digits over the 2009 event at Santa Anita Park. How can that be?

The fact that there were 16 more horses over the two days to wager on, and that dirt is a more popular wagering surface than synthetics, cannot be overstated.

The Thoroughbred industry in Kentucky--nursery to the world doesn’t seem so apt these days--is in trouble but Louisville, not your average tourist destination like, say, Southern California can be, does know how to make fans and punters feel right at home.

Face it, because of their size, and apathy, LA and New York just can’t or doesn’t want to get behind a racing event the way the Derby City does. It’s not more complicated than that. That’s the location part.

In total there were 163 starters in 14 races, a Breeders’ Cup record. The common and separate pool handle for Saturday’s 11-race card was $118.6 million, an increase of 23% year over year. The $54.7 million wagered on Friday was an increase of 8% more than was bet on the 2009 Ladies Day program.

That’s all good, but there’s more.

The real interesting increase was in international handle. Despite the decline in international starters from a record 35 in 2009 to 24 this year--a trend likely to continue at dirt venues--pools outside the U.S. and exchange betting in the UK totaled $196.3 million.

Total attendance for two days was up 8.5% from 96,496 in 2009, reflecting Friday gains of 11 percent and almost 24 percent on Saturday. In addition to betting revenue, Breeders' Cup and Churchill Downs attracted 11-million ancillary dollars.

Looking inside the numbers, it’s reasonable to posit that the increased number of micro wagers received a warm response. Pricing is very important to parimutuel viability. The more the merrier, no matter what the level of play.

Breeders’ Cup followed the betting menu available at Churchill Downs, as it did for the first time in 2007 at Monmouth Park. The hope is that wherever they go in the future, they will insist on menu that includes fractional wagering.

In addition to the now commonplace Dime Super, 50-Cent wagers were available in the Pick 3, Pick 4 and trifecta pools. There were handle increases in every pool except the Pick 3s, which was flat or down slightly. Considering gains in the Double and Pick 4 pools, something had to give. It was the Pick 3.

One of the statistics that stood out were percentage of handle figures in races where fractional wagering was NOT available. Consider:

In Friday’s centerpiece event, field size increased from eight starters last year to 11 in 2010. While Ladies Classic W-P-S handle increased by over $500,000, the percentage of straight handle for the day decreased from 35.1 to 32.2 percent. There is no fractional wagering in the W-P-S pools.

Saturday’s Classic had 12 starters, the same as last year. Total straight Classic handle was up $2.5 million, but percentage of W-P-S handle for the day slipped from 35.0% to 32.5% of the grand total. What could this mean?


Nowhere is fractional wagering more significant than in pools with a higher degree of difficulty. While the trifecta is a long standing exotic familiar to all horseplayers, trifecta betting featuring a 50-cent minimum increased from 16.3% to 17.3% on Friday, from 16% to 17.3% Saturday, as percentage of total play.

On balance, the Pick 4 is America’s favorite super-exotic horizontal wager. On Breeders’ Cup weekend, the 50-Cent Pick 4 showed percentage-of-handle gains; from 4.9% to 5.8% Friday and from 4.6% to 5.4% on Saturday, increases of 15.6 and 14.9 percent, respectively.

The common thread with respect to the success of micro wagers is, of course, the leverage a lower base wager provides, allowing all players to compete on equal footing with the bankroll endowed in high risk-reward scenarios.

No one wants the big players to be ignored; that‘s foolhardy. But the only way to grow the popularity of the game is to make it more affordable for the rank and file to compete.

There’s no reason for the masses to be at a disadvantage in a zero-sum parimutuel game. The marriage of a racing extravaganza to a player-friendly betting menu helps to grow the game.

Wouldn’t it be great if the results of this year’s Cup at the bottom line helps point the way forward for an entire industry?

Written by John Pricci

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