Wednesday, December 21, 2011

When Will the Industry Finally Bet On Itself?

SARATOGA SPRINGS, NY, December 20, 2011—It matters not which side of the exchange betting argument you’re on, the fact that several jockeys were recently barred for “race-fixing” in Britain does little to advance the cause of Betfair or any other outfit to bring an alternative form of horse betting to America, even on a limited basis.

In fact, the latest just might have killed the chances of ever getting exchange betting in this country.

But let’s be honest. In games of chance such as horse racing, or other more popular sports in which betting is part of the landscape--albeit underground--there’s always someone willing to take an edge. Just ask Tim Donaghy.

Or ask Mark Cuban if he thinks “the whistle” once cost him an NBA championship. Come to think of it, why do “Jordan rules” exist?

Can any NFL bettor recall an incident when one bad call didn’t tilt the course of a winning pointspread?

Judgment calls, whether tied to gambling results or not, will always be subject to suspicion. Why is it widely accepted that some umpires give pitchers the low strike zone, or others three inches outside? Isn’t a strike a strike? Need I go on?

How about “fixing” a horse race? Try having the trainer not draw the feed tub before his horse races that afternoon? How about having him give the wrong instructions and watch the jockey as he burns the horse out on a needlessly fast early pace?

But the easiest way to make a score at the track, honestly or otherwise, is betting against a bad favorite, something that’s done each and every day without having the outcome predetermined.

But isn’t this why it’s called gambling in the first place?

In a poll taken after the jockey fix story broke in Britain, seven out of every 10 bettors said they “trusted” horse racing as a wagering sport.

In a Racing Post online story, British Horseracing Association official Paul Scotney said that racing is generally perceived in a favorable light. This came on the heels of a BHA investigation that found 11 people benefitted from betting against losing favorites never allowed to do their best. All were banned for a period of from six months to 14 years depending on their involvement level.

Scotney would not lay the blame on the exchanges, however, telling the Post “betting exchanges offer another way of cheating and that's a fact - anyone can lay a horse to lose. But I think if [exchanges] didn't exist there would still be people trying to cheat simply because there is money involved…

“I do want to stress that we are not talking about racing having a serious problem, but I think it's important people out there see that if there is cheating we will go after [the cheaters…] and throw them out of racing.”

It’s widely accepted horse racing needs to develop other wagering paradigms because handle is down 25 percent in recent years, trending to fall under $11 billion this year, the lowest since 1995. And those are not inflation-adjusted dollars.

If exchange betting, which wagering company Betfair and the Thoroughbred Owners of California are pushing for some time in 2012, is met with resistance, fixed-odds betting is another possibility to help grow handle.

Neither concept will jumpstart sagging handle if not given an excellent chance to succeed. Only through lower takeout could that occur quickly and more effectively.

Takeout on the Betfair exchange in Britain averages about 3%, depending on the size of the winnings. [An exchange pits one bettor against another, establishing a narrow range of market prices upon players can bet either on or against the odds. Takeout is extracted only from the winner.

If enacted in California, the hold would be 10 percent. A big improvement over standard pari-mutuel rates, yes, but whether that number is low enough to truly jumpstart the new concept quickly is arguable

There is another option, recently discussed at the annual Arizona University symposium and widely perceived as a safer “risk” to bettors; fixed-odds wagering. The concept is based on pari-mutuel principles but allows bettors to lock-in the win payoff at the time a wager is placed.

Fixed-odds wagering could stand alone, but given that the industry and many of its fans are resistant to change, it probably should be used to complement the existing pari-mutuel model. Both options can be made available at racetracks, bet shops and online.

By creating a fixed-odds market, overall handle could grow because of the arbitraging possibilities fixed-odds betting affords. It also is a way to eliminate last-minute odds fluctuations since the price you take at the time you bet doesn’t change.

Fixed-odds wagering should be explored as an alternative to exchange betting if the latter isn’t embraced, for whatever reason. It’s time for the industry to take a chance.

Written by John Pricci

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Wednesday, December 14, 2011

As “Luck” Would Have It

SARATOGA SPRINGS, NY, December 13, 2011—I must have missed the memo that said David Milch was supposed to create a dramatic piece meant to promote horse racing and attract new fans to the sport.

Hopefully that cause is not lost already, on Milch or anyone else, but neither should it be one person’s responsibility to change the course of an industry that for too long ignored or treated its fans poorly, many of whom have either left or in the process of leaving.

There recently appeared on this site a piece that tried to put the checkered career of the recently retired Patrick Valenzuela in some perspective by recalling a movie line, “wasted talent,” to help describe the life of one of the most gifted race riders the sport has known.

Well, here’s another quote, delivered by George C. Scott as General George S. Patton as he surveyed the human carnage of a battlefield the morning after an epic conflict had been waged: “God help me but I do love it so.”

And yet another, this from an honest-to-goodness Kentucky Derby-winning Hall of Fame horse trainer, Leroy Jolley, who, after the tragic “Great Match” that took Ruffian’s life, said: “We don’t play this game in short pants.”

In that spirit, then, I believe the pilot episode of HBO’s “Luck” captured the game at its core; the highest of highs, the lowest of lows, all in the same race.

Now everyone can sit back, relax, and watch a narrative unfold.

I spoke with one of my daughters the morning after the sneak preview and, somewhat surprisingly, she became emotional. Her favorite part of the game, like mine, takes place on the backside during training hours. For her, it’s about the animals.

In all the reviews I read online, it was very surprising that more wasn’t made of the breakdown; the gruesome view of a bloodied left foreleg hanging by a thread, the mercy killing that followed, all of it commencing with one horrific snap.

“Oh no,” I cried out when I heard it. I've felt the anguished passion expressed by jockey Ronnie Jenkins who explained to the triple-bug apprentice as they walked back to the jocks’ room: “You never get used to it. That’s what the Jim Beam is for.”

If all eight episodes turn out to be as good as the pilot, it’s very clear that series creator Milch, who’s owned horses for a few decades, gets it. This game is dangerous on so many levels and never discriminates between the animals and the people around them.

It’s the textbook backdrop for what lead character Ace Bernstein and his people have in mind; “the perfect Trojan horse,” his intention to turn a failing racetrack into a casino cash cow.

For anyone that didn’t see the pilot episode, pay no attention to the few naysayers and nitpickers. It’s scary how many scenes were pitch perfect, like ‘the Old Man’ sitting in a lawn chair and talking to his grazing “big horse.” Not to mention thr eclectic, talented cast.

Anyone who has seen Dustin Hoffman play Meyer Lansky or Dutch Schultz knows how menacing and volatile his criminal persona can be. Dennis Farina has deceptively great range, from Lt. Mike Torello, to “Bones” Barboni, to “Empire Falls” ’ Walt Comeau.

Who doesn’t love John Ortiz as the “crafty” Turo Escalante? Does Nick Nolte’s “the old man” remind anyone of Frank Whiteley Jr.? Is Richard Kind a jocks’ agent in real life, too? I think I know that guy.

And Gary Stevens, the Hall of Fame jockey? Stevens seems a natural born actor with more than a modicum of intensity in front of a camera.

The racing scenes were amazing, too, snapshots of real life on the racetrack, right down to closing the tailgate on a vet’s SUV. Shedrows were captured authentically. Tight cuts to horses racing, training, galloping; great job. Then there is the postcard that is Santa Anita.

There was one scene that did hurt the eyes, however. It was one of the early shots of a racethat looked more like a morning gallop with horses all over the track than an actual race, something I’m sure went unnoticed to an untrained eye.

The people I really know best in “Luck” are the gamblers,of course, and a degenerate lot they are. I’ve seen more than my share. I grew up, hung out, with guys like them. I guess I was more of a nerdy DG, believing there was more to the game than just action.

Jason Gedrick’s character Jerry, like many of the guys I knew, would bet on anything. I hope Jerry’s character doesn’t become too prominent a player in the piece. Too many sidebars about high stakes poker with “ricers” would distract from the racing storylines.

There was one egregious error that, for a work so rooted in honest detail, was a careless, unnecessary mistake. There were nine runners in the final race of the Pick Six sequence. Hence, the 3 x 1 x 4 x 5 x 3 x ALL ticket would cost $3,240, not $846.

Michael Mann, whose visual style began by watering the streets for scenes shot at night on the original hit series “Miami Vice,” gave that show the slick, modern look that’s become standard fare. The quick-cut, tight shots convey action and urgency at once. I wish Mann were directing all nine episodes.

As the pilot showed, there are many sub-texts that should keep the series moving at a fast pace. When coupled with greed, intrigue and danger, the beauty of Santa Anita should enable "Luck" to continue to be a visual treat as well.

“Luck” is an action drama made by a racetracker for other racetrackers and non-racing fans alike. It conveys the sense of a bubbling underworld of excitement that only horse racing can provide--moments capable of blowing up in a minute flat, going from zenith to nadir and back again.

One final thought: To hell with the learning curve. Viewers that become engaged with “Luck” will want to catch-up on the lingo. Those who aren’t, won’t. Racing’s not going to convert those people, anyway. You don’t choose this game. It chooses you.

Written by John Pricci

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Wednesday, December 07, 2011

Curb Super-Exotic Madness or Continue Losing Handle

SARATOGA SPRINGS, December 7, 2011—A very interesting blog entry on the Horseplayers Association of North American site Tuesday indicating that, according to details in an exchange wagering application made by TVG in the state of California, the churn rate for wagering in the U.S. has fallen from a bellwether 7 times starting bankroll per wagering session to 4.

How alarming is this? Let's count the ways.

The example that was given for this phenomenon is easily understood and, if you missed the original blog post, it bears repeating:

If a crowd of people show up at a racetrack or simulcast facility with $100,000 to wager collectively, at a churn rate of 7, the crowd would push $700,000 through the windows. The same crowd and starting bankroll with a churn rate of 4 would produce $400,000 in total handle.


First and foremost, of course, are takeout rates which, with notably few exceptions, have been climbing steadily for a decade. The continued plummeting of U.S. handle is clearly tied to this factor.

The pari-mutuel hold is inexorable. To put it in yet another way: The less money returned on winning bets, the less money bettors have to wager in return.

The second factor contributing to the loss of handle is what is termed cashable bets
Every bettor, myself included, wants to win a lot for a little. The proliferation of super-exotic bets has fed this a-lot-for-a-little approach, especially bettors with limited bankrolls—virtually all bankrolls are limited to some extent.

Super-exotic bets are, by definition, exotic or high risk. They yield for bigger payoffs—scores, if you will--allowing players to stay in the game for longer periods of time, a cushion to absorb losing sessions that are sure to come.

My super-exotic weakness is the superfecta. For me, the degree of difficulty is more than commensurate with the added degree of difficulty, superfecta payoffs often returning four or five times more on average than a winning trifecta.

But bets such as the Super High 5 are bankroll killers, sucker plays. It's extremely ratre to see a three-digit ALL payoff in the superfecta. Empirically, it seems there almost are as many High 5 carryovers as Pick 6 carryovers.

But large High-5 payoffs seldom approach large Pick 6 returns. Given that the Super High 5 is priced at a one-dollar minimum, it’s one play most bettors really can't afford to make.

When it comes to takeout increases, greedy horsemen’s groups and unsophisticated off-track interests notwithstanding, the industry often falls victim to legislators who cannot pass a sensible state budget much less understand the nuances of the pari-mutuel system.

However, with tracks needing state approval to conduct its business, there is little that racetracks can do to stem the tide of quick fixes so popular in states where pari-mutuel horse racing is conducted.

But there is something tracks can do, and that’s to stop worshipping at the altar of super-exotics. There should be fewer of them, not more. If a track offers Pick 4s, Pick 5s and the Pick 6, wagers like the Rolling Pick 3 become not only unnecessary but churn killers.

The Pick 3 is the quintessential trap. In practice, it’s much more difficult to win than it appears at first blush. Further, if a track is offering the exotic Pick 4, 5 and 6, there’s no need for a Rolling Pick 3. Rolling Doubles are much more player friendly and still offer a chance for a sizable payoff because takeout is extracted once, not twice, as is the case with parlays.

Another benefit to offering bets that players can win more often is the positive effect it would have on ever-sagging pool liquidity. Further, it is imperative to offer fractional wagering on any sequence involving a three-tier payoff and that includes the trifecta.

Tracks think they are doing their big customers a service by keeping minimums higher so that whales can throw more money to insure a win in a difficult sequential wager. But only by returning more money to winning bettors more often and increasing churn, can pool liquidity—and handle—stop reversing itself.

This helps big and small bettors alike, just as lowering takeout would act as a disincentive to competitive offshore rebate shops.

Written by John Pricci

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