PEGRAM: I CARE ABOUT CALIFORNIA RACING, BECAUSE WITHOUT CALIFORNIA RACING THERE IS NO NATIONAL RACING
In an excellent article featured in the Daily Racing Form, Jay Hovdey captures the essence of larger-than-life California owner Mike Pegram. He describes Pegram as anything but a political creature, visualizing his difficult times sitting in corporate McDonald’s meetings as a franchise owner and imagining what his commandments of the game must be.
Now Pegram finds himself on the Thoroughbred Owners of California board as the highest vote getter in the most recent election, inspired by the late Robert Lewis who Pegram says "got more things done in the late 90s than anything we’ve seen since."
Will Pegram’s fresh perspective be exactly what California needs to move in a positive direction? We certainly hope so. As Pegram himself says, "I care about California racing, because without California racing there is no national racing, just like you need Kentucky to be healthy and New York to be healthy."
Read it at the Daily Racing Form
Tags: daily racing form, jay hovdey, McDonald's, Paulick Report, thoroughbred owners of california
July 8th, 2010 at 8:42 am
Everybody cares about California racing, but everybody’s hands have been tied in knots by the California Horse Racing Board and its recent state governors, who have sold the sport out in favor of Indians (ANY Indians, if they have money to give their campaigns).
The National Football League has not only survived but propspered without a team in Los Angeles, formerly home of one the most storied franchises in all of sport, the Rams. A selfish owner and a short-sighted Board of Supervisors conspired to flush the Rams out of the second biggest market in the land.
Racing in Los Angeles would be a good thing to see survive, but it is not necessary to the total health of racing in North America.
For racing to get back in public and private favor with gamblers and horse owners, it will have to free itself from government involvement and private shenanigans.
Writing as a native Californian, it pains me to write this, but I fear the trend toward doom in the once Golden State is inevitable.
When John Harris, who has had a hand in leadership for much too long, is focused only on winning a $20,000 bonus for one of his California-breds breaking its maiden and has lost the plot of the greater picture, it more or less sums up the problem.
California is an island made up of lots of tiny little islands. It’s been that way for years and now the players are all suffering.
July 8th, 2010 at 8:50 am
Mike Pegram is correct in his assumption that horse racing in California and across the nation for that matter, can be save or turned around, whichever cliche that you might like to apply. But it won’t be with gimmicks, add-ons or political mandates! It can be accomplished without drawing additional cash from some temporary gimmick! The problem with Cal racing and racing nationally is that it does not have the intellect or experience with the game to address the root problems and the leadership to muster the co operation necessary to apply the necessary changes. Most of horse racing’s so-called leaders are part timers and hobbyists at best, with the exception of the high paid alphabet heads who do not have the experience or knowledge to understand and rationalize the problems. The solutions are basically simple but powerful!
Pegram is in a better position on the horse side of the equation rather than the bureaucratic or regulatory side of the impetus! It appears now that TOC may be ready to morph back into its real reason for existence and away from the power grab, shake-down,divisive policies of the past. Good luck on the mission!
July 8th, 2010 at 9:03 am
California racing is just about over. There is nothing on the horizon that can save it.
Even if someone has a great idea it will have little chance of being implemented. The State, the CHRB, the ADW’s and the track owners all have each other in a “headlock”.
On top of all that there aren’t enough horses and there isn’t enough purse money to attract any more horses or to get the Breeders in the state up an running again.
July 8th, 2010 at 9:21 am
Not so sure that California holds the key to the future of racing nationally. For most people outside the Golden State, Kentucky, NY and Florida more likely are of greater significance.
Cal racing seems to be a private club where for many years the members have walked around patting each other on the back only to find post-it notes on there once they got home .
TVG and HRTV would sure miss Cal racing though.
July 8th, 2010 at 9:36 am
Whether it be in California or any other state, racing can only be turned around by new leaders who bring strong entrepreneurial skills to the table. Barry Irwin is correct, entrenched “leaders” like John Harris (and most other trust fund babies who are in charge there) need to be permanently retired from their posts, which they have used primarily for self-centered reasons.
Pegram, Siegel, Sanan…these are the only people who can actually make things happen.
July 8th, 2010 at 9:54 am
60% of California racing revenue is sucked dry by racetracks in other states, that pay only 3-4% to the CA tracks and keep 16-17% of every dollar wagered. The main problem now isn’t the ADW’s that are paying 6-8%, it is the other racetracks in their role as bet takers.
California cannot solve this problem by itself and the other tracks taking the bets will not give up getting 16-17% of the California tracks’ money. (CA tracks like the 16-17% too).
TOC needs to take off the California hat and use its strength with its national owners’ base of over 8,500 men and women who started a horse in CA. That’s more fire power than the less than 100 owners of racetracks in other states keeping their money.
There has never been a national racehorse owners initiative, so TOC joining owners in every other state and laying down the capital to push through correction to the enabling legislation, the Interstate Horseracing Act, will solve CA’s problem. And, by the way, it will solve the national problem at the same time.
Mike Pegram is right about Bob Lewis and the early days of TOC. I am very familiar with the promise it held. The owners’ movement would have spread nationwide if not killed by the short-sighted, defensive commercial breeders in Kentucky.
As Bob Hope says above, artificial gimmicks are a waste of time, when we don’t have much time left. Once an individual track can control its own national and international distribution, without middlemen sucking out all the money, then racing has a chance to pay for the investment in infrastructure and talent.
I’ve been in those McDonald’s meetings. Mike needs to start thinking like the corporate guys and how they ruthlessly and successfully control distribution and pricing over the objections and whining of franchisees.
July 8th, 2010 at 9:55 am
Brainwashed, politically correct fools will never admit the devastating impact illegal immigration has had across the board in Califronia, including horse racing.
Two generations of native born American women were told to have only two children in order to preserve resources and the environment. They complied.
But then the banks and developers and yes communist facilitators engineered massive importation of illeals to make lots of money off of but not have to really pay for, dumping health, housing, education and welfare costs onto the broader population.
Frosty Woolridge is correct to note that immigration has gobbled up huge chunks of arable land and consumed huge quantities of water and energy.
California lost breeding farms, traffic congestion made cross town trips more onerous, the bankruptcy of border hospitals - at least 70 - took its toll as Mexican born women responded to U. S. welfare with a much higher birth rate here. By the way, the racisim in this mess begins and ends with the rich Mexican elites.
The bankruptcy of the California state budget reflects the greater bankruptcy statewide as quality of life has deteriorated and numerous employers have fled the state.
Racetracks are being obliterated in California because of the huge population pressures. Horse populations are swept aside by human hordes. Racing vbegins with the horse. And the breeding and training farms of Riverside and environs have been swept away.
The pessimistic outlook for horse racing is for now justified by the much larger picture. Always strapped for more cash to feed the lavish state retirement programs and illegal entitlement programs, California turned its back on racing for competing casino venues with higher turnover.
While in state racing may have been torn apart by the cited private club mentality, the southern tracks themselvs have proven to be a world class stage that drew quality horses from around the nation and the world.
They used to go to Hialeah too, another area that was reshaped by uncontested foreign invasion. Reality is not politically correct to talk about and never will be because a brainwashed population has been conditioned for decline and destruction.
July 8th, 2010 at 10:14 am
Accentuating the positive….
the reduction of racing meets conducted at the California Fairs is a step in the right direction.
Just a few years ago there were about a dozen such racing meets which detracted from the quality in NorCal racing Furthermore these state fairs are not what many bettors around the country look forward to.
While the consolidation is a step forward, the continuity of the racing calendar in the northern part of the state is still lacking and should be corrected.
While I understand that there fair racing can be a diversion that serves to expose horse racing to new fans, but to have a lengthy list of such venues is counterproductive. At the moment there are six major state fairs slated for the calendar year 2010. And then there is the Fairplex meet downstate.
In tune with the less-in-more concept….
I look forward to a further consolidation of the fair meets and perhaps one or two of them
will grow to the point where it can serve as a racetrack that complements the racing at Golden Gate Fields.
July 8th, 2010 at 10:20 am
The ability for California to thrive and grow will be largely affected by the racing schedule that the collective grouyp of tracks deploy. The incessant and inevitable expansion and contraction of the horse population, the economy, and the appetite for new gaming has been ignored for the sake of continuity and tradiiton. We must reduce the amount of product offering, refine it to hiugher quality, and present the best cards we can every day.
If California is going to be the winter and summer haven for derby preps and seaside racing on the grass, then so be it. Can CA also be the fall championship meet and be a northern and southern, year round circuit on its own? Not anymore.
We haven’t lured enough new stables to CA, we have run too many of them off. The longer term outlook required by the breeding industry has been shortened by a host of factors, and the ability to recover the horse population is predicated on those same factors; few to none of which we have any ability to change.
I’m not as doomsayer, i’m simply suggesting that we look at the product we offer the public and start treating it like a true consumer product instead of like a private hobby.
Power to Pegram if he can get some McD’s thinking into the TOC. And the TOBA. And the TRA.
July 8th, 2010 at 10:27 am
………………IMPORTANT NOTICE TO ALL CA OWNERS, TRAINERS AND BETTORS……………….
I urge all owners and trainers to NOT RACE IN CA until the CHRB can figure out what to do and establish a plan to INCREASE PURSES and remove the CRAP TRACKS……………….
I also urge bettors to stop wagering on CA RACES until the CRAP TRACKS are gone and REBATES are provided to ON-TRACK BETTORS…………………………
Noone at the CHRB or RACETRACK MANAGEMENT will listen until they figure out that without us, CA horseracing CANNOT OPERATE AND SURVIVE!!!!
REMEMBER, IT’S AS SIMPLE AS THIS:
NO HORSES = NO HANDLE = NO PURSES = NO TAKEOUT = NO BETTORS = NO RACING!!!!
July 8th, 2010 at 10:51 am
JJ
Did you forget to take your meds again?
July 8th, 2010 at 11:41 am
Be Like Mike. Is it possible? Everyone is stuck in the tar pit and it will be difficult to move people outa there. The CTBA is offering $10K and $20K bonuses to its maiden winners. Fat welfare to fat cats. Instead, that money should be made available to those breeders at risk of loosing their properties and forced to give away their Thoroughbreds, further enriching killers and depleting racing. Thoroughbred rescues could also use a few of those bonuses. What a single Calbred maiden winner gets from the CTBA can feed 50 to 100 horses for one month.
I totally agree that crap –deliquent, abusive, ugly– racing should be eliminated. Racing should be enjoyable to humans and horses. Instead of big macs (sorry Mike) and bonus fries, racing should offer healthy, elegant, tasty treats.
July 8th, 2010 at 11:45 am
“Without Calfiornia racing, there is no national racing.”
Does anyone else think that California is still an important part of the national racing scene, that if Calfiornia racing dies it’ll take the rest of the country with it? Because I sure don’t.
And, as a California native who cut his teeth on the racing at Golden Gate Fields, Bay Meadows, and the Northern California fair circuit, it pains me to say that.
Now? Bay Meadows is gone, Golden Gate makes do with 5 and 6-horse fields, and the fair circuit needs mule racing to fill its cards.
July 8th, 2010 at 12:57 pm
i agree that the focus should be positive. what is accomplished by the constant “racing is going to hell” posts?
July 8th, 2010 at 1:44 pm
I must have missed something. When did we ever have “national racing?”
If we had “national racing” there’s no way a market like California would be left out in the structure of that brave, new landscape.
The fact is, we don’t have “national racing.” California, Kentucky, New York, New Jersey, Florida, you name it - everyone’s on their own. Apparently, that’s the way they want it.
I’m afraid Pegram is going to be so busy bailing a boat where the water is above the bilge pumps, the 1st order he might be giving is “man the lifeboats!”
Would that there was “national racing.” I’m pretty sure then, there’d be California racing.
July 8th, 2010 at 2:05 pm
Caring about CA racing and a “fresh perspective” are both fine, but what is needed is a solid, achievable and coodinated nationwide plan to address the problems that California racing (and all racing in the U. S.) have. And a plan that can be implemented without the infighting and protecting of one’s turf that you currently see from all of the groups involved in racing. There is no silver bullet or magic pill. The keys to resuscitating racing and get it to thrive again are the same as in all industries: ie. customers (fans) who are increasingly satisfied with the product (which would lead to increasing the number of fans) and product producers (owners, tracks, trainers, etc.) who are satisfied with their chance to profit through their endeavors and hard work (which would lead to a better product).
What kind of ideas should be in such a plan? Here are just a few. There are many more. Everyone in racing has them.
> Better customer service. Some examples would be dramatically more attractive facilities, more attractive and interesting wagers, larger fields and a reasonable takeout (whatever that is).
> Promotion and marketing. Bring in new fans who would otherwise not think about horse racing. Contests, advertising, TV exposure. And, it is essential that they have a positive experience once they come. Many tracks look like dumps. Why? Because the track managers take the very short-term view that they can’t afford to clean them up. In reality, they can’t affort not to. Few people want to come back even if they are willing to try it once. Focus on the entertainment value of watching the races. Most like to gamble but racing cannot really compete as a gambling endeavor; it is simply too expensive to put on the show.
> More positive press. Don’t ignore the negatives, but there is little press about what is great about horse racing. And constantly work to reduce the negatives such as horse breakdowns and corruption (and advertise those efforts to the public).
> Getting the horse racing factions to work together. A lot of people see horse racing declining and, as such, think very short-term as to what they personally can get out of it. This is a very difficult problem, but the infighting and finger-pointing needs to stop for racing to have any chance of returning to prosperity. (And some people, unfortunately, don’t care.)
> Get away from the idea that slots will save racing. The slots can, at best, give racing some breathing room. But racing needs to be able to stand on its own. Those running the slots will eventually toss racing aside. (It’s already happening in states like Pennsylvania and West Virginia where the state governments raided money from slots intended for racing for their own budgets.)
> Horse racing needs to reduce the level of government involvement somehow. State governments are busy trying to raise revenue at every turn and care little about racing’s long-term prosperity.
July 8th, 2010 at 2:30 pm
It’s funny to read how many of you feel disrespected by the California heading, it must be true if you’re so passionate about it.
July 8th, 2010 at 3:23 pm
are the problems in CA anything more than track marketing problems? Is Pope’s solution the only one out there?
July 8th, 2010 at 9:45 pm
In California, as elsewhere, the sleeping giant has awakened.
No, this is not the racing equivalent of “Dune.”
Racing and breeding have had problems with corruption, scheduling and over all bloat. These problems have been pointed out time and time again. None of the leaders would listen. So now the sleeping giant that has awakened–the freaking MARKET–if finally taking over.
TOO MUCH RACING? No problem. Because fewer owners want to pay training bills, there are fewer horses, hence fewer races and fewer racing days.
CRAPPY COMMERCIAL BRED YEARLINGS? No problem, fewer will be bred and still fewer bought.
STOOPID RACING SURFACES? No problem, they will soon start to be replaced.
The MARKET will solve these problems, because the people that could have made a difference would not.
July 9th, 2010 at 5:00 am
While Mr. Pegram seems likely to do a better job than some of his predecessors, his plans for Los Alamitos apparently attracted little support from his peers. Why should we now expect him to elicit greater creativity and cooperation from an owners group that appears to discriminate against its members who train their own horses.
But, hey, getting support from horsemen is no easy task. Just ask Mr. Pope. His appetite for bet-takers is exceeded only by his alienation of bet-makers who resent his half-baked preference for takeout as a large piece of a small pie to bite-sized portions of huge batches of home-baked cookies.
Mr. Siegal seems to play his cards closer to the vest. Does he really have an ace up his sleeve or is he bluffing as some racing fans suspect? Was his apparent game saver at the buzzer of the CHRB meeting inspired or conspired showmanship?
I hereby challenge the current three-way tie here for most consistent purveyor of gloom and doom for California racing between Barry Irwin, Jerry Jam, and Andrew A. It’s important to remember that there’s no situation so bad it can’t get worse.
July 9th, 2010 at 10:40 am
Yes, market forces is taking care of stoopid, arrogance, excess, greed and corruption and will continue to correct an industry which refuses to get rid of its self-inflicted cancers.
Tragically, innocent horses often pay the most brutal and highest price.
July 9th, 2010 at 10:59 am
Barry Irwin is right, the market will likely decide the fate of racing.
My campaign to put the host event in control of its distribution and pricing isn’t a sexy, new topic for those wanting a better sport, but until we solve the most basic problem, you cannot move on to the next problem on the list.
The racing distribution channel today is a “buyers market”, meaning the retailers are setting the price they will pay the producer of the races. They don’t care what ramifications come from driving down the price of racing, they just want to maximize revenue.
We have the same problem in the dairy industry. There is too much milk being produced and thus the retailers drive the price below the costs of production. The individual dairy farmers can do nothing to change the buyers’ market, so Congress stepped in and put a price floor on milk to keep dairy farmers’ jobs, against the will of processors and retailers and against the will of all the people who want discounted milk.
If you are a free market guy or gal, you don’t like those price supports. (but, you might like a glass of good cold milk)
Our racehorse owners to date have all the commitment to the sport of commodity dealers who have their milk hauled to the processors who package the product. If it brings a good price that day great, they win. If it doesn’t, they lose. Whatever happens, they don’t get involved in determining the market for milk.
The breeders are the same way. They sell their milk to the commodity dealers and may express support for a good milk market, but don’t get involved.
Everything in North American racing is left to the processors and retailers — the tracks and bet takers. They want the lowest price, regardless of the quality of milk. Young people aren’t drinking much milk, so no one is going to build a new processing and packaging plant. It’s better to just take the money till it runs out.
If you want to leave the sport in the hands of tracks and bet takers, do nothing and the market will play out.
If the racehorse owners want to become more than commodity dealers and get involved in determining the market for milk, then they better get together and do it quickly, before the country loses its taste for milk and the processing and packaging plants close. That’s going to make it tough on the dairy farmers — breeders.
Push for a price floor in the IHA if you want to support this agricultural industry. Get it back on its feet and transition to let each host track start operating in a free market, taking bets direct and enjoying an on-track revenue model.
July 9th, 2010 at 11:26 am
It is difficult to speak of horse racing as milk or as a commodity in a static sense. Horse racing is as flexible as its promoters! Saratoga, for instance, does not compare in creature comforts, geographic location or aesthetics. It is over 100 years old with much of the original structures; difficult to get to; located in one of the most expensive locations in the U.S. and with no place to go when it rains! But it is the most revered; highly attended; the lowest demographic. What’s the appeal? Saratoga has been developed on a reputation of having great racing! What’s that? Well its getting extremely difficulty to support that expectation in recent years. Why’s that?
Because if you set out to have junk racing you can achieve it as well as good racing, especially when you inherit 100 years of planning and promotion. But we are now under the pretense of good racing with that hallowed ground being compromised and contradicted for reasons that are not readily identifiable! Pope is right in part when he states “until we solve the most basic problem, you cannot move on to the next problem on the list.” It seems that identifying them is the problem!
July 9th, 2010 at 11:48 am
Interesting marketing concept some of you espouse,
California 30 million people…don’t need them!
New York 15 million people…going down…so what!
Texas fast growing state ..15 mil. contracting down to one track..its about time!
Michigan 9 million people …on its last legs…let it go!
Mass & New England 20 mil.. No slots for Suffolk..adios damned Yankees
Georgia, Carolinas 20 million… growing fast..racing is not there, never been there..so what!
Now for the strategy:
Lets look to the future, and focus our growth strategy on Kentucky 4 mil, New Mexico 2 mil, and Louisiana 3 mil.
Brilliant!
July 9th, 2010 at 12:08 pm
#24–there is an unlimited market, but zero marketing. Fairmount Park in St. Louis is a e.g. 80+ year old owner, zero marketing dept–I’d suspect the racing secretary does what there is–zero advertising in the St. Louis Post Dispatch or on St. Louis TV, Zero internet adds, no ADW, no bill boards, no signs on the interstate telling you how to get to the track, no help or concern from the NTRA or any other alphabet org., and, no one does anything or seems to care in a 3.5 million metro area, except Mom and Pop trainer i.e..
For Pope, I’d wonder–why is a track unable to form its own ADW and take 100% of the profits from that ADW–Twin Spires. Where is it written that track revenue is dependent on some off shore wagering site?
July 9th, 2010 at 12:48 pm
Because of our so-called leaders’ failures, Mr. Irwin’s statement in #19 is probably right … the “market” will eventually ‘fix it.’ Unfortunately, there won’t be much left when the market is finished. We won’t like the “fix.”
That’s the way it is with the market. It has no toleration for inefficiency and will destroy the non-producing elements … which is pretty much all of racing. Those who are fans of the market know not what they wish for if they merely wait for market factors to take over. And
those phony leaders we have in charge hasten what Mr. Irwin called our “doom,” with every second they delay in creating a new blueprint.
July 9th, 2010 at 12:52 pm
#23, Bob unfortunately our racing really is like milk, a homogenous product of 70% claiming races. Racing screams for a brand name, but a brand name must stand for something more than ordinary. Saratoga’s facility and community are a great brand, but 90% of the revenue on its races are from somewhere else that doesn’t get any benefit from the brand, so the racing product stands by its homogenous self. It used to be great, now it is the same milk.
#24, adding to the sarcasm, I also like the slots-driven small markets of Iowa, West Virginia, Delaware Park to send our best racing stars.
#25, the tracks no longer market because they cannot make anything on their product. If they could distribute their product nationwide and get 20% for it, like on-track, they would differentiate their product, brand it and market the hell out of it. Or at least that’s what I would do.
Del Mar formed it’s own ADW too, in contract with XpressBet I believe to be able to “kick-back” a portion of the bets to every state demanding to be paid off through “source market fees” where the bet is made. That’s the current driver, “where the bet is made”, not “where the show is produced”. As you can guess, no other business operates that way.
July 9th, 2010 at 12:59 pm
Some good points Ratherrapid, some of which have been researched! Tracks can and do have their own ADW’s. But let’s take a look at what happens when they do. Like many other business that are conducted with little or no experience, service becomes the key to success.
Does the clerk pick up the telephone on the first ring and identify the play? Is the clerk familiar with what’s playing that day in terms of tracks? What happens when the track goes into receivership. When regulatory bodies refuse to treat the player’s as a contract for payoff everything is is question. What happened in New Hampshire where they confiscated the players’ money? At Santa Anita where they refused to pay settlements for $4 million, directly effecting the player. We have been unable to make regulatory bodies to understand that 70% of the monies bet is not the property of the racetrack. It belongs to the players’ pool and cannot be used for payroll, water trucks or purses! Until we understand the rules, off-shore ADW’s or ADW’s separated from the racetracks have a better reputation. Good service and guaranteed payment on winning wagers have not been establish by the regulatory bodies and racetracks and remain a questionable service!
July 9th, 2010 at 1:11 pm
Bob, we can fund a national, state-of-the-art tote system that can settle all wagers immediately because it is the pool. Money in, money out to every winning bettor, not to middlemen who have no place in a parimutuel system. It can immediately pay taxes to each state where the wager is made, similar to internet sales.
The enabling off-track legislation can mandate a small percentage of every wager be used to establish such a tote trust and the cash flow will assure it is updated.
That’s what I would like to see. It would go a long way to establishing wagering integrity and performance.
July 9th, 2010 at 1:29 pm
F. Pope txs for the reply, but, raises the Q–why does the Delmar ADW have to sell the Delmar signal to anybody? Delmar ADW can Internet Market without an act of Congress. When was the last time we saw an XExpress Bet add anywhere but on Paulick? (i know, i know, the Blood Horse.) i know nothing about marketing, but, something seems amiss here.
July 9th, 2010 at 1:40 pm
Fred Pope, Good info, Please, Give us a breakdown in simple terms.
Where does the money go? Bettor, state, host track, purses
$100 bet at track A, on a live race at track A..20% take-out. Where does the money go?
next, $100 bet at Track B, on a race at track A..20% take out. Where does the money go?
next, $100 bet at track A on a race at track B..20% take-out. Where does the money go?
finally $100 bet at TVG on a race at Track A..20% takeout. Where does the money go?
Are there other scenerios we should fully understand? Thanks
July 9th, 2010 at 2:21 pm
#31
Let’s leave state taxes out, each different. In each case, 80% to winning bettors.
1) 10% to track A, 10% to Track A purse account
2) a) 3% to host track A, (1 1/2% to track A, 1 1/2% to track A purse account.
b) 17% stays with track B as bet taker (8 1/2% to track B, same to track B purse account)
3) Same model as above.
4) ADW’s have different models, different splits for each state where bet is made.
a) 4-7% to host track A, (2-3 1/2% to track A, same split to track A purse account)
b) 1-2% Kick back to state where bet is made (payment to tracks/purses/etc. in that state)
c) 11-16% to TVG for taking bet. They decide discounts, rebates, etc.
As you can see, bets made between tracks keep all 20% in the industry. That sounds good, but they pay the least to the host track putting on the show, which is the distribution mistake. In the short term, if they will change and split the takeout with the host track/purses, it will give the host a reason to package and present races that can win in the off-track market, such as Monmouth now.
Most ADW’s pull more than half of the 20% takeout out of the industry. The ADW’s are cannibalizing the tracks as bet takers, but the track owners don’t seem ready to change the model and start making their money as the host selling to the other tracks, ADW’s, OTB’s and casinos at a higher rate.
Hope that helps. It is hard to understand because it doesn’t make sense in the real world.
July 9th, 2010 at 2:36 pm
#30.
I don’t know all the costs involved in a track operating an ADW (see #28 above). Twin Spires model where nothing but kickbacks go into purses in the state where the bet is made, is incentive enough for CD.
Perhaps Del Mar will be transparent and disclose their costs of operating an ADW that is to split its “profits” with purses. The reality is the tracks themselves still take about 60% of all the off-track handle.
My point is the host track should be able to accept wagers from any state where parimutuel wagering is allowed without kickbacks (source market fees) to the state where the bet is made. Such tailored fees are not paid on internet sales of goods, just sales tax on the transaction.
Once again, a national tote/wagering trust would be able to accept wagers at any track for a very small fee and settle with all parties immediately.
July 9th, 2010 at 2:51 pm
To Fred Pope,
A track gets the 20% takeout for live racing…and all the expenses of maintaining a track facility and staffing, and security and parking and stabling space and racing office staffing, and liability insurance and property taxes…etc etc?
And the same track gets 17% (takeout) for placing a simulcast bet in a tile floored room with a bunch of TV monitors, and minimal other expenses?
If I have that right, why would any track ever hold live racing except to meet state racing days requirements?
Also, does the purse account always get 50% of the tracks on-track, host track or simulcast fee?
Thanks
July 9th, 2010 at 3:17 pm
#34 I think you understand.
One item you left out of the expenses of the track facility owner is the costs of taking the bet, through tellers or automated machines. That’s their part of the 50-50 deal with the owners who provide and pay for the talent.
When off-track started, the expense of taking the off-track bet somehow found its way into the owners’ side. Why? Today an off-track bet via internet can be far less than the costs of a teller.
When the TRA recently reported that just over 6% of the 20% takeout on all handle is going to purses, a big red flag should have gone up asking if the tracks were getting the same percentage —6%. Because when both sides are added up, they come to a lot less than 20%.
Where is the other 7-8% going?
7-8% of $12 Billion is a lot of money.
July 9th, 2010 at 3:50 pm
You have some good analysis Fred but history is against your plan. Who developed simulcasting? Who pioneered off-shore development, currency exchanges; satellite investment; credit betting? Not the tracks! They were reluctant from the start. They still have approx $10 million invested in decoder boxes that they turn on every day while the signals leak around the world. ADW’s spent their money; pushed into new markets and offered exceptional service.
You speak as if the racetracks are ready, willing and able develop new markets….they are not!
What is the difference between the alphabets and the independent ADW’s participating in wagering opportunities? The former are more interested in control and not service! That is why we see CD buying YouBet; Betfair buying TVG. Why did Track Net Media fail? Tracks have struggled with any form of innovation or service. Now they are even losing their ability to card quality products. The industry is digressing, rapidly!
July 9th, 2010 at 4:28 pm
Bob, I still pin it on the off-track revenue model, which favors where the bet is made over where the show is produced.
All the smart money, the best and the brightest, migrated to where the bet is made.
I agree with you about the tracks. There is not a sport, or racing country, where the facility owners control the sport. Except here in North America.
That’s why a national wagering trust, where the host event is in control of its distribution and pricing is the structure needed.
Then the smart money and the best minds will migrate to where the show is produced.
The other elements of Product and Marketing Communication can then allow the host event to be something more than the facility owner. The Breeders’ Cup is one example.
July 10th, 2010 at 11:50 pm
Thoroughbred owners are such a large part of the overall problem that it’s absurd that anyone with half a brain would play up any single one of them as having any kind of altruistic motives. Somebody should put a salary cap on Thoroughbred ownership and make it a real competition instead of a tax write-off joke for people who make millions on crappy hamburgers and ugly storage facilities.
July 11th, 2010 at 9:16 am
Some people still care about California racing ? Why ? Go back to dirt and then we will talk. California racing is right up there with Ohio racing.
July 12th, 2010 at 7:01 am
Mr. Pope,
Your concept of a national wagering trust could be worthwhile provided that the net result is a level playing field for all bettors by 1) featuring an equal effective takeout rate for every participant in each pari-mutuel pool, 2) reducing those common takeout rates, even if they are initially higher for players that were formerly rebated. and 3) making subsequent further takeout rate reductions possible – along with purse increases – when handle reaches defined levels.
I agree that the host track should receive the lion’s share of the takeout on wagering in its pools, but if your plan is to increase the horsemen’s share by minimizing bet-taker shares without also making the game more competitive with other forms of gambling for recreational players, I doubt any significant increase in total handle will occur, although some tracks should profit if some others closed.
In my opinion, Federal involvement in the trust would be more than justified if enabled wagering on races at all U.S. venues via the internet from any home in any state. If it could also impose standardization of racing rules and their enforcement across states, product quality would also improve.
Increased access to a fair game conducted uniformly could reverse the decline in racing’s popularity, but today’s customers have to be treated differently by horsemen, tracks, and government. Mutual respect and cooperation seems like a good place to start.