RACING’S VALUE: WHERE’S THE BEEF?
By Barry Irwin
The "we" referred to by the bloodstock agent and partner in family owned Glencrest Farm of Central Kentucky were those folks that sold a bill of goods to newcomers by telling them that racing was a financially viable pursuit.
Greathouse made a very insightful comment, one that I have reflected upon for the last 3 decades.
As he pointed out, one only has to look at other equine sports to see how they have presented themselves. Trainers of sport horses, dressage horses and show horses rarely if ever promote their sport to participants based on how much money can be made. The ones that do are not around very long.
Yet, by and large, the cost of keeping a three-day event, dressage, jumper or show horse in training is not insignificant. Any parent of a son or daughter with a horse in training at a local riding academy or stable knows precisely what I mean.
Those involved in these disciplines, however, willingly pay the costs because they receive value from the enterprise. That value, in most instances, is not derived from the earning of prize money or the resale of their animals.
Not that these horses lack value. A top dressage horse or jumper or event performer or even a very good child’s pony can be quite valuable in terms of dollars. The best of these animals sell for prices in the hundreds of thousands to the millions of dollars, especially if they are World Equestrian Games or Olympic quality.
But somewhere along the line, marketers of Thoroughbreds shook the genie out of the bottle and promoted their horses as a means by which one could expect to make a buck.
And it wasn’t just the hardboots of Kentucky, the sharp-tongued bloodstock agents in Florida or the fast-talking middle men in California that focused on the dollars.
The scholarly Joe Estes, a staid, analytical and proper gentleman whose bent for statistical analysis made The Blood-Horse the must-read trade magazine of the Thoroughbred industry, in 1948 developed the Average Earnings Index as the measurement by which sires were rated and ranked. It was all based on how much money the offspring of those stallions earned on the racetrack in a given year.
Clever marketers grabbed the ball and ran with it. Racing, a prospective owner could read and see and hear, was a good way to get rich.
For sure, there is money to be made in the Thoroughbred industry. Owners of farms, especially the majors like Coolmore/Ashford, Darley, WinStar and Lane’s End, need to operate on a sound financial basis and they prosper.
Support staff for horses such as trainers, veterinarians, hospitals, rehab facilities, training centers, transportation and insurance companies all make money. Just as they do in all other equine disciplines.
But the people Greathouse was referring to are the consumers of the horses, and the notion that has been floated for the past century in the United States that owners of racehorses are involved in a money-making venture. We would be better off today, he said, if we had never introduced the notion that one should expect a return on investment in a racehorse.
Can and do some owners of racehorses make money?
Of course.
But the percentage is so small that anybody getting into the game must be realistic and understand that these successful owners are the exception, rather than the rule.
If the marketers of racehorses promoted the enterprise based on racing’s intangibles, rather than the tangibles, it would be better for all concerned. Expectations could be better managed and the inevitable turnover rate of owners would decrease. Also, a lot of pressure would be taken off of the marketers themselves.
So if one cannot count on making money by racing horses, where is the value? Where’s the beef!
NO. 1 REASON TO BUY HORSES? THE THRILL OF RACING
I have been forming racing partnerships since 1987, so I have learned a lot about why people want to race horses. Invariably, the prime motivating factor is the prospect of racing a good horse and experiencing all of the magic and excitement that goes along with it.
The thrill of racing is the number one reason why people buy a racehorse. Yes, there is a lot of posturing about wanting to make money and getting the best deal, but mostly, in my experience, those people making this type of chatter feel they must treat it seriously, because they fully realize (consciously or even subconsciously) that they are totally indulging themselves and find a need to justify their purchase of a racehorse.
I know that many reading this will scoff at what they have just read, but I know it to be true in virtually every instance. And here is another reason I know that money is not the primary reason that people buy horses: even if these folks that are so concerned with dollars are offered a reasonable profit, they invariably do not take it. They will come up with any number of sound reasons for not accepting the profit, such as the tax man’s bite or capital gains holding periods. But in reality, they do not sell because they bought the product to consume it, not primarily to profit from it.
For these people, who form the vast majority of racehorse owners throughout the world, the value is not in the vaunted and much ballyhooed ROI, but in the intangibles, such as pride of ownership and race day thrills.
Have I taken the time to write the preceding 1,000 words just to make a point that people buy racehorses just for the excitement of it all?
C’mon … gimme a break! This is just laying the groundwork. Now, here comes the good part.
Racing is at a critical crossroads in its history, much like it was a third of the way through the last century, when horseracing’s very existence was threatened by those seeking to outlaw it.
The pari-mutuel system of betting, despised by those who wanted to bet with bookmakers, changed the entire face of racing and offered a financial boon to troubled states at a time when the nation faced a worse financial crisis than it does now.
Today, three forces threaten to shut racing down or at the very least, reduce it to a pitiful sideshow. The entities are, in no particular order, racetracks, state governments and gaming interests. In some instances, the racetracks and the casino interests work together. In the future, all three have financial reasons to join forces and work against horseracing.
Right now, there are plenty of people inside of horseracing that see the way to stemming the downward slide and growing the sport is to get in bed with the casinos. There already has been enough evidence on record to indicate that the casinos represent a Trojan horse. They want access inside a racetrack in order to gain a foothold, which they can use to entice both the racetrack and the state to eliminate the expense of horseracing.
Horseracing interests have spent entirely too much capital, time and energy trying or getting into bed with interests whose ultimate goal is to snuff out the game.
Given that the people attracted to horse ownership find more value in the sport than the money involved, I would like to suggest that racing consider making two adjustments that can lead it on a different path, one that hopefully can go some way in establishing a more viable future for the game.
PROMOTE THE SPORT, NOT THE FINANCIAL REWARDS
If I am correct in my contention that the sport trumps the dollar, let’s start by reframing the goals of horse ownership by concentrating on promoting the sport and not the financial rewards to newcomers.
Those marketing horses can take a lead from the top racing partnerships like Dogwood, West Point and Team Valor International. When communicating with newcomers, these outfits stress the intangible aspects of the sport and let neophytes know right up front that if they are getting into racing with the expectation of making a fortune, they are being unrealistic.
Believe me, we are selling our sport short if we think that we must rely on greed and the false promise of life-changing riches in order to attract newcomers and keep them. People, guess what? This sport really is this good!
Secondly, and more importantly, if the sport does indeed trump the dollar and purses are not the end all and be all of the game as we have been told, I suggest that it behooves racetracks to stop pursuing partnerships with casinos and return to their original purpose, which is to promote the sport of horse racing.
I think the non-profit racing associations would be more receptive to this concept, as the for-profit groups seem bent on providing the most return to their shareholders no matter how adversely their actions impact horseracing. Some tracks right now act like they would like to stop producing a live sport altogether.
In the final analysis, the only way our game is going to prosper at a high level again is for the sport to thrive, because it is the sport that provides the driving power, not alternative gaming. Casinos are great for racetracks. They are not good for racing. In the short run, horsemen will be compensated. But in the long run, the casinos will drive them out of business.
MAKE PEACE WITH HORSEPLAYERS
Racetracks that want to stay in business should promote racing. Otherwise, they should not apply for a license and go into the casino business and leave racing alone, so that it can find others to promote it that have their heart in it.
High purses are good, but they are not critical. Racing for years has prospered in many locales where prize money has been very low. It is not ideal to have low purses. But one of the reasons racing in America in particular could use a high purse structure is that expenses to have a horse in training are too high. A lower purse structure, however, could have the benefit of giving a break to gamblers that have supported our enterprise for years.
For racing to prosper again, here is what needs to happen:
1. MEDICATION: racetracks need to take charge of all veterinary supplies to gain control over the use and cost, so that the public is better protected from unscrupulous practitioners and owners can have their horses treated by drugs at as close to cost as possible. Vets can make their money diagnosing and treating horses, like human doctors have forever. They should not look for their compensation from middling strapped owners on the difference in the wholesale and retail price of drugs such as GastroGard and hyaluronic acid.
2. FEED: racetracks need to buy the feed and make it available to horsemen at as close to cost as possible to lower the expense to owners.
3. TAKEOUT: it should be reduced on all wagers to 12 percent, with the state getting 2 percent and the horsemen and the track getting 5 percent each. The states have been greedy for too long and they mostly have budgets inflated by expenses for racing commissions that are woefully inept. Horseplayers have carried the game on their backs for far too long and we need to cut them some slack. It is more important to cater to the bettor than to have higher purses.
So by adjusting to lower purses, horsemen can accomplish a lot. They can make peace with horseplayers. They can keep the casino wolf at bay and improve the chances for the longevity of the sport. And they can concentrate on promoting the game, which in the end is the only thing that can offer it salvation.
In conclusion, racing needs to do whatever it can to concentrate on the core activity, which is racing. The sport must be promoted first and foremost. Secondly, the game must realize that contraction is its friend. By reducing the number of horses bred, the number of tracks in operation and the sheer number of races run, the concentration in quality will only aid the game. Bad horses, bad racetracks and lousy races help nobody. There are too damn many tracks that are nothing but an excuse to have simulcasting.
If by having lower purses the result is that the game contracts, so be it. That way, at least we will find a viable level at which the sport can be sustained. The subsidies from gaming are temporary, no matter what the law says, because as we have all seen, when state budgets get low, the legislators simply amend the law and grab what they need.
Racing must change its focus to promote itself, seek its viable level and send out the best product we can to the bettors that support our game. We need a new model. The present one is broken. It is time to get real.
Tags: barry irwin, gaming revenue, Horse Racing, Paulick Report, racehorse ownership, racing partnerships, Ray Paulick, Slot machines, team valor international, vlts
February 8th, 2010 at 8:02 am
Lots of good points except where does the $ come from to have better facilities and create a better fan experience? People want entertaiunment in clean attractive places. There aren’t enough of those although there are some.
cb
February 8th, 2010 at 8:05 am
While no one could disagree with any of the 3 points made by Mr. Irwin, it is unrealistic to think that racing will be catapulted into financial soundness or to a level of NASCAR on these three points. It is, however, a start to a discussion. No arguments on racing or how to market the sport and inclusion of horseplayers (whom many in the upper levels of racing have consistently disparaged or ignored entirely.)
Still, regarding Kentucky…. there is no motive for breeding farms to survive and continue operation based upon a feel good theory on the “sporting” nature of the sport. Those farms who struggle now because breeders find it more lucrative to breed to Pennsylvania horses, due to the slots enhanced purses for Penn breds. For these struggling farms, it is far more financially rewarding to get out, and let a developer turn thousands of acres of Bluegrass farm land into more tacky, tasteless subdivisions and malls. Are we willing to accept that as destiny, that we need no financial infusion to help thoroughbred racing?
The old guard wealthy like to spout off about racing for the sporting nature of the sport, but they do so at the expense and with much laughter directed at some average, everyday people who choose to be a part of the sport & just hope the investment in the sport pays for some of the expenses. It’s a rather snobby statement to act as though the rich aren’t worried about their money and that small time stables should only race for the thrill of the game. Most people in racing aren’t making money off purses, but do hope that some of the investment is returned via purse money, and that is what is ailing and lacking right now.
I love the sport for racing’s sake, as do many of my friends. In tough economic times, it means all of us are buying or partnering far less horses, but we haven’t retreated completely. Still, it would take far more than a feel good theory about sportsmanship for many to enter a treacherous racing market on that feel good theory.
We need to study, examine closely what makes racing so great in terms of fan support in Japan, Australia, and Hong Kong and see what models we can employ here.
But still, there needs to be something done to help breeders, a significant part of Kentucky’s economy, or we will see more jobs lost. The state has offered all kinds of tax breaks and special tax incentives for companies to locate to Kentucky, so why can’t it work towards maintaining a large and viable employer of thousands which results in even more hobs within communities where farms & racing are located.
What major feel good gesture is going to save those jobs???
February 8th, 2010 at 8:18 am
Barry,
I was enjoying your article all the way to the final couple of paragraphs. Your insight was dead on about the virtue of the “sport”. Your analogy of the industry to adopt a lower purse structure, and in doing so reducing the take out IS the beginning of the end. Remember Barry, this sport begins with the the breeding side of the business. There has to be a reason to breed, nurture, vet, break and train a thoroughbred. There are too many mom and pop breeders out there that never properly take care of their foals. An adoption of your proposal would eliminate the proper care. You would reduce the thrill of the sport due to races filled with poorly broken and trained animals. A dangerous thought. Leave the take out alone, let the HANA whiners and rebate players find another game. If this drops handle, so what. The sport needs to market its product to the lottery players anyway. Bringing the masses back to the sport is far more important than catering to a handle full of spoiled. It may be the Sport of Kings, but every kingdom had its serfs. Serfing is the key.
February 8th, 2010 at 8:21 am
The so-called “Old Guard Wealthy” to whom you refer left the sport when Mr. Supply Side Economics took away their tax breaks in the mid 1980s. Other than The Phipps Family, Edward Evans and The Farish Family, one would be hard pressed to find another such representative of the Old Guard willing to play the game on a significant level.
February 8th, 2010 at 8:32 am
Your “2/5/5″ takeout is great. However, where do the leeches aka TVG and the rebate shops come in?
For someone as well versed in the industry as you are to gloss over the problems that no on track handle presents is rather scurrilous.
February 8th, 2010 at 8:42 am
Too many tracks, too many races and too much mediocrity. In Ohio - for example - having three Thoroughbred tracks cranking out an inferior product is ridiculous. And the slots proposal from Ohio Democrat Gov. Ted Strickland that is staggering around like a drunk on New Year’s night does absolutely nothing for the purses or breeding bonuses….it’s about a bailout for the state’s declining financial structure and a handout to track owners.
The sport of racing has to change - and drag the industry into the 21st Century - or the marketplace implosion will cause an economic tsunami that won’t stop at the shores of practical solutions…since they ended up being “tabled” by one of those blue-ribbon committees of “experts” that indusry groups parade around to thwart any solid reform.
February 8th, 2010 at 9:09 am
Excellent article Barry. I agree with much of it. As at least one other poster has noted, we need to look overseas at successful business models to refine our own.
I agree wholeheartedly on the ’sporting’ aspect of racing and of containing vet and feed prices. But the regulation of medication - and the penalties that run from its misuse - in this country stand out in contrast to how it is handled abroad. And therein lies the greatest difference: Foreign racing is controlled by central authorities which 1. allow no race-day medication and 2. punish severely and uniformly those who transgress. Here we have 38 different authorities and many of the people governing those bodies would not know one end of a horse from another. I know you have suggested in the past making tracks responsible for some of these issues, but I see no uniformity or discipline arising from this. Tracks will do what is best for them, not what is best for the wider, national interests of the ’sport.’ Will they kick out a trainer with the biggest string on the back-side? History says not in this life-time (although the recent Gill affair offered some hope.)
Take-out makes racing a lousy betting proposition. I agree it has to be lowered, but how do you corral 38 jurisdictions? Again, best of luck herding cats.
Less racing? Absolutely. Major successful foreign racing destinations offer one (or less) meet a day, building anticipation and excitement toward major weekend stakes. There are too many races, too many tracks and too few interesting fields. The temptation to medicate becomes overwhelming when owners (and trainers and vets) face the pressure to race year-round. If only economics would allow us to rest our horses November to February in the north-east as trainers or yore would do. However, a return to those days and practices will cause a tremendous and painful shake-out in all levels of the industry, affecting everyone from the breeder to the feed supplier. And may be coming anyway given falling handles, track closings and shrinking fields.
As for slots, I respect your argument that allowing alternative gaming into a racetrack is a form of consorting with the enemy, but I think tracks have to become entertainment destinations offering all types of gaming and entertainment to compete with casinos. And slots can subsidize the sport while it (well, we live in hope), sorts out its multitude of problems. For how long, well that depends on how desperately States want to protect green space and an historic industry and how effective we are at making our case for survival.
The upshot of all this is, and I know I have harped on this before, we need a NASCAR, MLB, NFL-type commissioner or central authority to rule racing with a firm hand and discipline. So many disparate voices, forces and powers make it dysfunction times 38! Sounds trite, but united we stand. Divided we fall.
Thanks to Ray, again, for providing stimulating debate on ways to save the sport we love.
February 8th, 2010 at 9:14 am
Dear Mr. (or Mrs.) No Way …. without people actually betting on your prescious horses, you would have no reason to breed them at all. Sounds like a good plan.
By the way, you would need to find 100,000 lottery players to make up for just one smaller rebate player. Good luck with that.
And people wonder why handle is going down … ignorance is bliss I guess. At least Mr. Irwin is coming around to the fact that the players need a takeout reduction, and he’s hit upon the other thing that horseplayers want most, to get the medication under control. Do both of those, and there will be plenty of purse money (and breeder’s awards) to make everyone happy.
February 8th, 2010 at 9:14 am
Maybe I should have included “the nouveau riche” in conjunction with the Old Guarde.
Yes, I agree some people don’t race for the thrill, but most do. Smart people who know & love the sport accept the risks & realize the $$$ aren’t going to pour in per dollar of equine “investment.” Horses are a poor investment vehicle. Short of Gill, everyone else knows this isn’t a for profit venture. Some people do get lucky, though, because a well bred but not fashionable pedigree wins multiple Grade 1s and is sold to a major overseas player.
I want to know who you want to throw out of the business of breeding and the sport, which farms are you willing to sacrifice,and how many jobs and farms plowed under in Kentucky alone, as this isn’t the good old days of “darkies” working for a master, when racing was THE sport of landed gentry in the Bluegrass. Breeding good horses takes staff, good staff and with minimum wage laws, hard pressed to make the model work so a farm can still operate, when…as you noted…the tax breaks went away. What is the incentive year after year to sweat out the bad times like now? To sustain a payroll and jobs because one has a long time affinity for Kentucky’s racing and breeding heritage is a noble gesture. Seems that people keep forgetting there are humans in these jobs and not theories or ideas.
This Utopian vision of how the sport should be excludes any discussion of what is sacrificed by the idea that no one should even envision any profit from the sport. Someone does, and it is still the same old interests in gambling. So why not slots IN ADDITION to an improved model.
And what do I have to gain…nothing, except to preserve farms and the thoroughbred heritage here, without which our state would be hard pressed for tourism dollars and additional tax revenue generated by said farms and farm jobs. I don’tmake my $ in racing or breeding. I have rarely seen any profit from my involvement and still stick around, but this Utopian idea doesn’t give many any incentive to stay involved or to get involved. It still feels like a snub by some of the upper echelon who don’t want small time investors like me in the sport. I am not a Michael Gill, but in trying to run off the Michael Gills of the sport, your Utopia of Racing without any purse enhancements is going to choke off the people who likely outnumber your old guard & new money players in the sport.
February 8th, 2010 at 9:23 am
Nice article Barry. As an owner I agree that ownership costs must come down. The training cooperative you speak of with the feed and medicine should also be extended to training. A group of owners should put a trainer on salary and win bonus. Day rate pay just gets exploited, and anything other than emergency medical treatment by vets should be capped at a couple hundred dollars a month at most.. Those surprise multi-thousand dollar vet bills are what really discourages the small owners. It upsets the business plan when you get a vet bill for over $2500 for routine maintenance when the horse is healthy!
Barry what do you think is the lowest monthly price we can get a horse trained for in good care? Closer to $1000 a month than $3000 would pull in a lot more owners. How do they do it in South Africa and South American countries for well under $1000 a month? Maybe that should be an owners minor leagues and just bring them over here if they are good enough to justify the training expense.
February 8th, 2010 at 9:29 am
No Way, there is No Way the masses are going to be attracted to this sport until winners are created. This game revolves around gambling. Those who don’t realize this have their head in the sand, and it is this “thinking” that is the biggest cause for why horse racing is dying today.
Players need to last longer. When they do, they handicap more, watch more races, and even bet more than they would have. When this happens they are likely to expose others in their circle to possibly play as well.
The young people play poker. Why? Partly because their bankroll lasts. Mostly because they know of real examples of young players who got out of their parents basement and into a mansion by being good at poker.
As long as the No Way’s have a say in horse racing, there is no way horse racing will grow.
As for government taxation. I’m not sure that many jurisdictions out there charge more than 2% on bets today. I think if takeout were reduced by 1/3 rd for example, the taxes should also be reduced by 1/3rd.
As for less racing. I think that is a band aid solution. I think if takeout is reduced, there will be plenty of money for purses, and most of the existing tracks today will be profitable and purses will increase as well.
Growth also comes from the small owners, who bring friends to the track when their horses run. More owners, more demand. More owners, more newbies are exposed to horse racing.
But everyone needs a carrot stick whether it is the possibility to make money as a horse owner to the possibility of making money as a bettor. We need visible winners.
February 8th, 2010 at 9:39 am
Barry,
I’ll offer a little confirmation of your general argument - that the experience outweighs the financials. I bought 3% of a racehorse - a little rehab project of a nice athlete who had his fair share of problems that we were trying to bring back.
We laid out all of the financial scenarios and it’s safe to say that over the 16 months before we gave the horse away to a good home, our result came in at “worst case.” Three races, all with disappointing results. Numerous setbacks. And ultimately, the realization that our rehab project was not going to work out. Financially, a total disappointment.
The experience, however? Awesome. At the end, I said, “This has gone as bad as I could envision…when do we do it again?” We had a great time and I’m looking forward to doing it again. Unfortunately, there’s not a real good venue for doing it at my price point (that means no Team Valor or Dogwood) through the current partnerships that are out there. I realize that there are a lot of partnerships out there…but I doubt I’m getting a real good offering at a good value.
February 8th, 2010 at 9:45 am
Hanging On: plenty of North American-based owners treat South America as a minor league type of situation in order to prove stock in a locale where horsemanship is excellent and expenses are low. We do it in South Africa, where the costs to train a horse are about $600 a month. Many racing locales have cooperatives or control over drugs, feed and labor. Each locale treats owners and trainers differently. In some countries, trainers are treated like royal or gods, while in others they are treated like employees or laborers. Owners in some locales are tolerated, while in other locales they are treated very well. Culture usually is the determining factor.
February 8th, 2010 at 10:03 am
I agree with the thrust of your article. You have put a lot of quality thought into the future of our game. I think there are only two things that would move these ideas forward,a complete economic collapse of horse racing or the creation of a central authority to stand up and direct a new business model.
The industry has been in financial inequity concerning the various segments for too long,and the fan base has been treated as though they were a necessary evil.
The answer is not slots or other crutches,the answer is to rebuild the fan base by lowering the take and let horse players last longer and give them a chance to profit, and clean up the integrity issues.
Horse racing should not be the States game,the Breeders game,the Racetracks game or the Horsemans game, it should be our game or the peoples game.
The people love horse racing for a multitude of reasons. Lets give the people a chance to prove it again.
That is something that Seabiscuit knew all along.
rwwupl
February 8th, 2010 at 10:03 am
Barry.. so do you bring any of your young stock you buy to South Africa or the like to get started or do you just buy them there once they look promising? I noticed in Joe Defrancis article recently that his only involvement in ownership right now was in a group of horses in South America, which just amazed me as he is back bidding for Laurel and Pimlico. What’s the average cost to buy one of these Southern Hemisphere runners off the track? And the cost to ship them here? is Puerto Rico or Panama an option or do you really have to go way South to find the excellent horsemanship countries? Also.. can you have enough fun watching them run on TV in these countries? is there even anywhere to watch them on the web?
February 8th, 2010 at 10:10 am
Another note on these slots situations. it is interesting here in Maryland that the law has earmarked a percentage of slots to the purses but there is the huge battle now over the location at the mall or at the racetrack. I would rather have it at the mall than have the racetrack owners get involved inn the casino. Just let that money flow to the purses, breeders and the facility improvements and the horsemen will be happy. That’s all the owners want. They don’t care where the casino is as long as they are getting a purse and breeding enhancement. So the fact that the Maryland Jockey club is trying to delay the whole deal to rebid the license to get it to Laurel instead of the mall who won the bid, is just shooting the Maryland horsemen in the foot again! Just amazing the thinking here…
February 8th, 2010 at 10:34 am
Nice Mea Culpa, Barry. For years you’ve made a lot of money bilking sap owners for YEARS selling the myth that you can make money owning horses. Not only that, you were one of the first “syndicates” that allegedly scored HUGE commissions off the sale of horses to your clients. Potential example: Actual horse price $150,000, syndicated for $400,000? Sound familiar? How come you never make mention of Clover Racing Stable?
In my opinion, you’ve been part of the PROBLEM, not the solution!
February 8th, 2010 at 10:35 am
I live in New York City and you have a better chance of spotting Osama Bin Laden than advertising for Belmont or Aqueduct. Zero.
If I’m a horseman at these tracks, I’m pissed off that the product I work hard to create is getting no marketing help. How do you expect to sell a product without earmarking some portion of your budget towards advertising?
People barely know horse racing exists in the media capital of the world. It’s a shame because this sport is dead here.
February 8th, 2010 at 10:38 am
Right on the money! The racing industry is driven as much by big betting pools as it is by large purses. More boutique racing is required, and less 6-8 month meets. Case in point: The longer the Gulfstream meet became the less special it became. Can anyone deny that a short Saratoga or Keeneland meet is more exciting and relevant? Keep the brick and mortar to a minimum, have more self betting terminals, and increase the atmosphere to rival the casinos. On-line betting is great, but it cannot replace the feel of actually being at the track.
February 8th, 2010 at 10:49 am
Dear John (so to speak): you are uninformed.
Thanks for bringing u the horse I supposedly bought for $150,000 and sold for $400,000. That horse was named Star of Cozzene and I sued Daily Racing Form and the late writer Bill Murray for writing it as you stated. I settled for a nice sum on that one!
Anybody that knows me or our operation knows that we have sold the sport and not the money-making capabilities of our racing partnership from day one.
As for Clover Racing Stables, visit my website for the answer to your question.
Some of the biggest saps in the game have owned horses in partnership with us, including guys that have won plenty of Grade 1 races in their own right.
Drop me a line at valorific@aol.com, I will call you and we can have a nice little chat to bring you up to speed.
February 8th, 2010 at 10:55 am
I agree with Barry that the industry is going to shrink and I believe it is inevitable. This won’t just come from the desire to have less racing but also from the reality that it is just not possible for the breeders of the horses with lesser pedigrees to sell at a profit. There is no demand for these horses due the the hight costs of training and I don’t see that coming down much even if Barry’s feed and medication plan is implemented. I totally agree that medication needs to be controlled and his idea for a central pharmacy makes a lot of sense. If any Vet is found to have medication that is not allowed on track then action should be taken. We need to clean up the game to create trust amongst the betters. Less racing and higher quality brings out the betters. Just look at the meets at Saratoga, Keeneland and Del Mar.
To Hanging On: I live and race in South America. The industry is healthy and growing here. The ratio between training costs and purses is one of the best in the world. Here we pay the trainer, blacksmith and vet for no more than $1,000 per month. We pay less for stud fees to top stallion who shuttle to these markets so an owner can buy a top class yearling for much less money and the breeder makes a profit. The horses are tough and durable and are winning all over the world. The medication situation is much better and the punishment for infractions is severe. I just heard this morning, while at the track in Buenos Aires, that a top trainer was suspended for one year for a small trace of caffein. They also suspend the horse. Consequently the abuse is considerably less in this region. One place where I have to take exception to what you say is regarding the day rate being exploited in the U.S. I trained there for sixteen years and I can tell you that I never made a penny on the day rate charged to owners. As a matter of fact I usually lost some money on that and had to make up the difference from purse percentages and commissions from sales. Regarding watching your horses run in South America; you can see them run live on the internet. The best racing is in Argentina, Brazil and Chile. Uruguay and Peru are improving rapidly and the next level would be Panama, Puerto Rico, Mexico and Venezuela.
February 8th, 2010 at 11:24 am
Good thought Barry.
Horse ownership was never designed to be an “investment”. If you want to invest, buy a mutual fund not a horse. I lost money in 11 of 12 years as an owner, and couldn’t care less quite frankly. My win pictures cost a few thousand dollars each - that is what they cost for me to have the luxury of owning the brown steeds in them. I think they were worth every penny.
GREAT point on vet bills and markups for adequan/gastroguard et al. If every slot track sunk some cash setting up a central buying/selling/bulk area for the ridiculous items for our horses it would save us all a pile of cash.
If we put owners/horseman organizations and tracks in charge of supply driven enterprises to cut costs and sink money where the return is near or greater than the cost, and let gambling people run takeout (making sure neither side is getting in each others business constantly asking for more from each other) we have a fighting chance.
PTP
February 8th, 2010 at 11:40 am
At a smaller racetrack, graded stakes can attract the best horses on the grounds. Katelyn Wholesaler
February 8th, 2010 at 11:40 am
Barry,
You are absolutely correct with all your points except for reducing the take-out. Hong Kong for example has one of the highest take-outs (20%) but still thrives both as a Thoroughbred Sport and gambling business. Last year they only had 735 races and bet $10Billlion – more than Lotteries in Hong Kong. Similar situation exists in Australia and Japan. Great infrastructure, great races, biggest purses, largest pools to bet into and lots of fun for the fans. We as an industry must address 4 key issues if we want to fix our sport and grow it:
1) Unified structure to govern our industry,
2) Fix the flawed revenue model,
3) Address the integrity issues (Medication, safety, tote and wagering and auctions); and
4) Promote the hell out of this sport.
All of the above can be done if we all work together for the good of the sport and our business.
Satish Sanan
February 8th, 2010 at 11:51 am
Satish, you are out of touch with reality. First off, you are comparing different cultures, secondly Hong Kong handles have gone up since introducing rebates. In Japan, horse racing is the only legal form of gambling I believe. And Australia caps takeout at 16% and also has exchange betting.
I think owners have too much say in how the business is run and that is why horse racing is dying.
They just don’t get bettors.
As PTP states, leave the gambling business to those who understand gambling.
Horse racing is the only industry that gives suppliers (the owners and breeders) a say in what they charge to consumers. Race track owners want as much profit as they can get. Owner groups just need to work on what percentage of the profits they get, not how the profits are derived.
February 8th, 2010 at 12:06 pm
John… thanks for that info on the South American racing. Where can I learn more? My point on the day rate was not weather the the trainers were exploiting it necessarily but the fact that there has to be a cheaper way to do it. Because it you are paying a $70 a day trainer you are looking at $4k a month on average and only a top class allowance runner is going to pay for that, and that’s if you get the horse for free. Forget about lower class claiming horses or what you pay for the horse. Everyone paying $150K plus for these sales horses, and there are a lot of them, the horse absolutely has to be a stakes winner to think about making a profit. I do disagree with everyone who is saying that owners don’t deserve to make a profit or shouldn’t have a goal of making a profit. That’s a bad business model right there. It certainly is a business for everyone else in the industry so why shouldn’t it be a business for the owners, who along with the gamblers are making this all happen? To have legalized gambling and the only internet legalized gambling sport to have these kind of problems is just sad. Kentucky is in trouble because the only way to come close to making it as an owner now is to breed and race in one of the slots fueled states. if you can break your maiden for $70k + bonuses in Canada as opposed to $17k in Florida, that makes up for a lot of the bad or bad luck horses in your stable. So you either have to go there or go the other way and get the training costs more in line with purses somehow. Bad marketing and greed and stupidity (selling cheap signals) by the tracks is what forces the owners to embrace the slots. It’s all we have! Think about how the PGA tour’s even lowliest tour stops have a purse of $8 million and the Kentucky Derby is only $2 million! or the Preakness $1 million! No wonder people retire their stars to the breeding shed when a $10 million dollar horse is often running for 60% of a $200,000 purse like Zenyatta.
February 8th, 2010 at 12:35 pm
Good article Mr. Irwin. Very good article.
February 8th, 2010 at 12:42 pm
Owning and breeding racehorses would be more attractive if purses are higher. There are two ways to boost purses: 1) increase handle 2) beg state governments for subsidies. The government giveth, but the government can taketh away. The safe option is #1, but handle continues to go the wrong way. Why?
Playing the horses is a lousy proposition. I haven’t been betting as much recently, but I went to the track Wednesday. I lost (I readily admit I’m not the sharpest handicapper), and I won’t be hurrying back. Takeout rates are high, and the lack of fixed odds makes it impossible to know what sort of price I am going to receive. Consumers see playing the races as a bad product, and they are voting with their dollars (or lack thereof). If we don’t innovate in North America, the sport will continue its descent into relevance.
Now, if I felt like I had the chance to make money playing the races without receiving rebates or spending seven days a week handicapping, making trip notes, and following track biases, I assure you I’d wager more often…
February 8th, 2010 at 12:51 pm
The numbers that you state are exactly why I agree with Barry that the industry will shrink. Breeders can’t afford to raise and sell mid-level and below horses and anyone who could possibly be in the market for those horses can’t afford to race them in the US. I also agree with Barry that the incentive for owners has to be the pride of ownership and the thrill of racing and winning. Of course there exists the possibility of making money if you come up with a good horse but the chances are that you won’t make a profit. I race horses for my own account but do it in South America where the numbers give you a better chance of doing well. I do that because I love the racing but I realize that, even here, the chances are that we won’t make a profit. I have been in this business for forty years and make my living as an agent trying to find my clients the best horses possible. I also breed in South America where your chances of making money are very good. Those are the two areas where I feel confident that I can make a living and I get great pleasure when one of my purchases, or one that I have bred, goes on to great success. On the other hand, racing is more of a casino. You can win big, of course, but you can also lose. You have to enjoy it to be involved in this part of the industry. I have never seen anyone frowning in the winner’s circle no matter what class of race they won or how much they paid for the horse.
Regarding South America, I would be glad to give you more information if you care to contact me. I have an ad on the “Blog” section of the Paulick Report where you can find contact information.
February 8th, 2010 at 1:07 pm
I’m not sure that takeout is such an issue in alienating bettors, after all they, quite obviously, prefer to bet on slot machines than on horses - probably because they don’t need to think at all. Even the most delusional of one arm bandit victims cannot claim [as some listers have done recently] that gambling is a serious business proposition. I doubt very much that the efforts of those who claim to be making a living from it matter much in the total money bet overall. The steadiest per capita spend on the lottery here is in Sunderland. Guess where the highest per capita welfare dependency is.
The social security budget financing racing through slot machines may be no more bizarre than the stout citizens of Sunderland financing the National Gallery through lottery fund grants, but surely there must be some better way.
Training fees in “our world” would be a lot lower if the grooms were getting South African wages.
If we want to take the moral high ground we need to stop chasing our % of welfare cheques and also perhaps think about the workforce.
Just thinking aloud
February 8th, 2010 at 1:15 pm
Satish and Maury E.
Takeout in Japan is around 25% on all bets, and the JRA has not lowered takeout since new forms of gambling competition have arrived (soccer betting being the most popular). The JRA has expanded the wagering menu, promoted more online and telephone wagering to the point where ontrack wagering represents 5% of the total, improved already first-class facilities and marketed the hell out of the sport. Yet wagering has fallen substantially in the last 10 years largely because of the new competition.
Still, with only weekend and holiday racing at JRA tracks (not counting the locally run races), handle and purses dwarf our numbers. http://japanracing.jp/en/japan/pdf/horseracing_20.pdf
Is the JRA model of a strong central authority possible for our racing industry? It’s doubtful it will ever fall under the umbrella of a government agency the way the JRA does, but tracks and horsemen in the leading U.S. circuits can commit to a national organization with coordinated scheduling, national rules with increased emphasis on integrity, and good, solid marketing.
Of course, stakeholders have to agree to give up some of their independence or control, something that’s been a deal breaker in previous efforts like the TRA’s “commissioner’s office” and the failing NTRA.
February 8th, 2010 at 1:20 pm
Great piece by Barry. Thank you. However something very important was left out: the HORSES.
Horses are beautiful and easy to like and most people do. Little girls grow up reading stories about horses.
Horses should be the biggest marketing asset to racing. Horses have the power to attract fans to the races (Funnycide, Smarty Jones, Zenyatta, Rachel Alexandra). That can only be achieved by vastly improving the welfare and safety of race horses and make racing safe to watch and a respected sport and entertainment in our increasingly “urban” society.
Racing must become clean, transparent, much safer by choosing quality over quantity racing, supported by serious injury prevention and proper equine welfare safety net on and off track. What would be good for horses would be great for jockeys, the reputation and business of racing. #18: A good product advertise itself.
February 8th, 2010 at 1:54 pm
Maury,
As you know I am an owner, breeder and a significant horse player. We need to fix our flawed revenue model first, put more money back into the purses, provide rebate through industry owned platforms and promote the game with extra money that becomes available as a result of it. It is possible and can be done.
Satish
February 8th, 2010 at 1:57 pm
Thanks for the correction Ray. There are no casinos in Japan which means that horse racing is one of the only quick fix gambles going. Not shocking that wagering is falling with such a high takeout regardless of their marketing and having a near monopoly on quick fix gambles.
They do have the lottery there as well, and it has become a lot more liberalized in the last 10 years according to some more quick research.
I’m wondering why Japan keeps takeout rates so high. Betting is pretty tiny over there. 1 Yen equals a penny USD.
February 8th, 2010 at 2:07 pm
Satish, your revenue model is being used in Canada with HPI, and most big Canadian bettors bet somewhere else, no matter how much they love horse racing. Their handle was up 6% last year (not domestically though) for numerous reasons. Their signal was always available, they dropped takeout on tri’s a little bit, they finally made it into US DRFs, and they upped rebates to their bigger bettors. But overall, they have failed to grow the game despite being televised often, and having a near monopoly on Canadians wishing to make parimutuel wagers. The reason is their takeout is too high, and they kill off the desire of most of their customers to get into the sport as a regular.
As for your proposed model:
You fail to see that by cutting out the amount that can be rebated to bettors, will shrink the pie even more.
You also fail to see that your product is gambling and your customers are gamblers. It isn’t NASCAR no matter how much you want it to be NASCAR. In fact if NASCAR had a field of shorter races on one card, it wouldn’t attract very much betting no matter how large its audience is.
You need visible winners. Visible owners that win on small investments…..PROMOTE THAT.
Most importantly, you need visible gamblers that win. Without adjusting the takeout levels lower, that is impossible.
I do agree that horse racing needs to fix other problems, like drugs and betting integrity, but the takeout is what is killing horse racing right now.
February 8th, 2010 at 2:09 pm
I’m naming my next horse “Casino Economy” LOL
February 8th, 2010 at 2:15 pm
Hey Joe (#32),
Re: “A good product advertise itself”. Not really. How many good books, albums, films, movies get lost because they have no money to promote. Or do so in the wrong places.
With all due respect, I feel it’s bigger than the horse actually. It’s hard for people to care about the welfare of the horse when they barely recognize this as a sport and know nothing about it. I’m not saying don’t continue to clean things up. But let’s start marketing something for pete’s sake.
The industry makes no effort to bring in new fans. We’re so far behind in being a relevant brand it’s frightening - especially with all the intelligent and powerful people tied to the game.
And this is not the NTRA’s fault. That’s a tired excuse. Each track has to do their part. We must market a racetrack as a destination. And the jocks, trainers and horses as our players. I don’t say this to hurt people’s feelings but people don’t even know who Zenyatta or Rachel Alexandra are.
The 800 lb gorilla sitting squarely on the finish line is that - outside of Kentucky - people pay zero attention to the sport. End of discussion.
The most important conversation people in the industry need to start is this: how do we get the sport back in the 2010 pop culture universe? A SEABISCUIT and SECRETARIAT every decade and a cancelled reality show don’t cut it.
February 8th, 2010 at 2:33 pm
Maury, I’m not sure what you mean about “betting is tiny” in Japan. In 2008, they had 288 racing days, and each day generated an average daily handle of $95 million. There are no casinos, but there are Pachinko parlors everywhere, with quick fix gambling machines that have the same hypnotic effect on gamblers as slot machines.
February 8th, 2010 at 2:40 pm
Promoting the horses is double-edged. People like horses, and the Seabiscuits, Kelsos, Secretariats, John Henrys, Cigars, Funny Cides, Smarty Joneses, and Rachel Alexandras have all experienced some level of mainstream popularity. However, people don’t like seeing horses breakdown, and I’m sure they don’t want to know about what happens to the $2,500 claimers at Beulah Park when their racing days are over. At least when you promote the gambling end, the new customers it brings in care less about the skeletons in our closet.
February 8th, 2010 at 2:56 pm
Maury , as I’ve said before gamblers aren’t philanthropists. They are getting a very cheap ride not just from racing but from every sport when you look at how much these things cost to produce.
I’m not sure how the figures work over there but I’m sure they aren’t dissimilar to a snapshot view I did in a similar discussion here - this was when we were funded by a betting tax, the method of calculation is now different.
Citizen A bets £2,000 per week and pays 10% “tax on”, that’s £200, rather than have any tax stopped from winnings: he’s an optimist so he pays £200 p.w. If he’s a pessimist he prefers to pay tax only on his returns, so then, on average and over time, he pays about £170 per week [ either way after about 6 weeks the average Joe needs to replenish his £2,000, however the £1,800 doesn’t go to racing it goes to the bookmaker. Of course the vast majority of regular bettors do bet far less than this, simply because they cannot get hold of it in the first place, and their input to racing individually will be a fraction of this.
Citizen B buys a yearling for a modest £25,000 and pays, say, £40 - £50 p.d to train it plus running expenses - perhaps getting on for £20,000 p.a.
After one year which of them has contributed the most to racing? Which one would we miss the most? Answers on a postcard, please.
February 8th, 2010 at 3:05 pm
OK Ray, I just figured it out. Japan does around 20 billion US in handle a year, and have around 40% the population the US has. I wasn’t aware of Pachinko machines. Are they everywhere? It still seems that they don’t have the competition that horse racing has in North America.
That being said, there is still a strong cultural difference between the US and Japan, and of course if you look at sports betting in the US which is supposedly is high as 300 billion a year according to some estimates.
The state also has a huge incentive in Japan to promote horse racing because the horsemen get a much smaller percentage there according to my readings.
February 8th, 2010 at 3:11 pm
Bill O’Gorman, let me offer a different take on what you said:
Both horseplayers and owners/breeders are needed to make the racing game work. Without bettors, the owners and breeders would, in the words of Steve Crist, be competing for ribbons. Without owners and breeders, there would be no races to bet on.
HOWEVER, bettors have much lower exit barriers. What I mean is that, if a bettor ceases to believe horse racing offers value, he can simply walk away from the sport. He can gamble on something else (greyhounds, poker, sports, slots, lotteries), or do something with his time and money that isn’t gambling related.
An owner or breeder has a lot more capital tied up in horse racing. They spend money on horses NOW in the hope of winning prizemoney or selling at a profit LATER. If racing disappeared tomorrow, their investments would be worthless. They have a lot more to lose.
If the owners and breeders are unhappy and stop racing horses, the bettors will simply need a new hobby (professional horseplayers are a rare exception). If the bettors are unhappy and stop wagering, owners and breeders will have worthless equine investments. Therefore, I’d say it’s pretty important to keep the bettors happy. And they aren’t happy right now, and we’re all feeling the pinch as a result.
February 8th, 2010 at 3:14 pm
Satish,
“We need to fix our flawed revenue model first, put more money back into the purses, provide rebate through industry owned platforms and promote the game with extra money that becomes available as a result of it.”
This is fine, but I worry you group those in the same sentence.
“Put more money back into purses” is a noble goal, but not at the expense of the retailers and horseplayers. According to the study done in Louisville, if you DOUBLE purses, handle will go up 6%.
I much prefer controlling costs and looking for ways to make owning a racehorse cheaper, rather than taking more money from an already taxed and fingers in the pie takeout rate, for a 6% bump in handle, (if you double purses (which you wont).)
PTP
February 8th, 2010 at 3:23 pm
Bill, cheap ride? LOL. Who care how much it costs to produce? Gamblers care about whether they have a fair chance of winning or even a chance of winning for the most part.
Since purses are totally dependent on what the public loses, it is the horseplayer that contributes more. Without the horseplayer you will be running for bird seed.
As for owning a horse, that is a decision you have to make, and if it isn’t economical, or isn’t worth the entertainment it gives you, don’t own horses. Also, if the game is not economical, it shouldn’t exist.
Bettors will bet on anything. And they tend to flock where they have a chance to make money. And that only happens with low takeouts.
As for owners contributing. It depends on the region. If they are at a track where the average horse makes $13,000 but the average to keep a horse is $20,000, they contribute $7,000 a year per horse…..but it is the horseplayer contributing the $13,000, plus another $13,000 to the track (depending on the horsemen agreement of course).
February 8th, 2010 at 3:31 pm
Hong Kong races twice a week; one weeknight and a Saturday afternoon. The weekend cards have handles of US $100mil +. They are strict on medication. Sha Tin racetrack is a modern is facility. The US needs to raise the quality and reduce the quantity of its product.
Meanwhile back home I can get a clean modern facility at the Yonkers slots parlor but if I go to Belmont I get the exact same conditions my grandfather had 50 years ago. As a bonus, the plumbing breaks on Belmont Stakes day. At least I am comforted by the fact my takeout dollars are funding corruption at the highest levels of State and Local government.
February 8th, 2010 at 4:09 pm
Maury #44
I don’t understand what you don’t understand.
The amount of money put into racehorses, football teams, Formula One, Nascar or whatever you like by owners is far more than what is put in by bettors. That’s a fact. Other sports do get substantial gate money and or TV money in order to recoup most or at least an appreciable %, racing doesn’t.
When slot machines take such a %of gambling $ it’s hard to make the case that gamblers -as a whole - are intelligent. I couldn’t agree more that facilities on racecourses should be better, but simple economics dictate that underused [and probably underpriced - how much to get in 50 years ago?] facilities don’t warrant investment - that’s why we don’t have rural bus services any more.
Why do you think the Yonkers betting parlour is so well presented? Because at the moment pays them to woo their victims. As soon as internet betting gets going and everyone bets from home you’ll see what the Yonkers place becomes like.
I know betting is an integral part of the racing, but it’s not the be all and end all. Or it shouldn’t be.
February 8th, 2010 at 4:23 pm
Bill O G,
Cavonnier’s point is most salient, imo. The barrier to entry, or lack of barrier to leave for bettors is exactly the main point.
David Wilmot, Woodbine’s (former) head, as quoted in an Aussie newspaper speaking to a bettor who was playing at a pirate place a few years ago…….
He said to the bettor “if you keep doing this you will be not betting on horses, you will be betting on frogs. What would you do then?”
The bettor responded: “Find the fastest frog”
Bettors do not need horse racing to survive, horse racing needs bettors to survive.
PTP
February 8th, 2010 at 4:25 pm
You really don’t get it Bill. No, the money put into horses collectively is not nearly as much as money put into the industry by lost bets.
No, horse racing is not NASCAR, or the NFL, so comparing horse racing to either is ridiculous.
Horse racing exists because of bettors losing money.
NASCAR exists because people are willing to pay for the entertainment. They are willing to watch and advertisers are attracted because people are drawn to its entertainment value.
The NFL is a little more complicated, the same occurs as does with NASCAR but even though they don’t make direct revenues from gambling, they make a lot of money because people gamble on the games. People watch, and advertisers are attracted to it, because the point of advertising is that it will get the viewers to buy their products.
Horse racing does not attract very much advertising money. Nor do they attract people willing to pay very much to watch it if anything. Horse racing is dependent on people being attracted to its gambling component. Take that away, and it will disappear. Keep the cost of gambling high, and racing will do what it is doing today…dying a slow death.
Sure, if horse racing changes to one track a day, they could get away with a 25% takeout. But how many people would be employed in the industry if that happens.
BTW, the gamblers who were stolen away by slots were not the intelligent ones. We have been left to fight it out with each other at a collectively higher takeout (when you take into account there is a super and tri at 25%+ takeout almost every race).
February 8th, 2010 at 5:18 pm
1) Less racing, higher quality.
2)Lower takeout on the exotics to below 20%
3)Create an industry owned betting exchange with a rake of no more than 10%.
Handle will explode and for the first time in a long time your betting base will grow.
February 8th, 2010 at 5:53 pm
You forgot one item>
http://www.clockerbob.com/chapter8.html
Horse racing has a return of around 50% after a patron is roughed up for parking, admission, racing program, clockers, chartman, writers, handicappers, NTRA, stewards, individual tracks’ hand-picked testing labs, racing mafia shake, federal take, the state’s cut and mis-information. More of the days net winnings leaves through the informationally privileged owner-trainer-jockey parking lot (e.g.Valhol’s Arkansas Derby, Cielo Canosa maiden win 8/13 at Del Mar) than the general parking lots in horse racing. In comparison, 100% of the days net winnings leaves through the slot patron’s free parking lots
February 8th, 2010 at 6:01 pm
Last time I tried to open a betting account the pull down went below screen so I could not put in my birthdate or the state I live in. Also do not have credit so Experian never heard of me even though I have been living at and owning the same property for over 18 years. They should make opening an account easy instead of difficult. The state lottery has ridiculous odds and it is the only thing available. I do not waste my money on it anymore and only bought a few tickets back when. My deceased uncle used to wager as much as $200. on one race. He taught me to read a racing form before drugs were allowed. He got the Blood Horse and the Racing Manual. Every year we bought pipe tobacco and tried to win a Thoroughbred till they stopped offering the contest. We both won a set of famous horse pictures the same year when they had a filly and the winning name was Dinner Topic. It was not just gambling that he liked. He liked horses too. We lived in NJ and later on he could have gone to the casino instead of the track but he chose the track. Most people who bet on horses like horses and watching horses break down on a frequent basis turns peoples stomach. If NASCAR drivers had fatal wrecks as often as horse racing they would probably lose fans too. Some people call betting on horses “contributing.” People would like to “contribute” to supporting the horses and their welfare and not the greedy,crooked,sleazy humans who do not care about them. There are people contributing to help horses in rescues where they cannot win a dime.
February 8th, 2010 at 6:47 pm
One of the biggest problems is that horse bettors are somehow ‘intertwined’ with horse owners and those same bettors are ‘obligated’ to supplement the cost of owning, training and caring for horses. Horse trainers, jockeys, vets and other people who help care for these horses are making big bucks and all of their big bucks comes from the betting handle in one way or another. The top trainers, top vets and top jockeys make hundreds of thousands of dollars and most of them are millionaires off the game of horse racing. Very few bettors are millionaires solely from horse race wagering. When a jockey, trainer or vet loses or doesn’t do his job well, he still gets paid. If a horse bettor doesnt do his job well, not only does he not get paid, he LOSES capital.
Horse racing is much more pleasing to look at than ant racing, but at some point, the price is just too high. If ant racing replaced horse racing, i seriously doubt that ant trainers would be driving around in mercedes benz cars and living in million dollar houses with pretty blonde wives because that money would be passed onto the bettors, not the participants.
Sports betting has a rake of around 5% because the participants are not taking a cut of the action. The NFL does not take 1 penny from Las Vegas when you make a bet on the Super Bowl. Las Vegas takes a small (compared to racing) cut of the action just for the process of booking the bet, but they aren’t taking anything close to 20%. What horse race betting does is force the bettors to support the industry. If you make a football bet in las vegas, part of your money isn’t going to pay the players salaries, in horse racing, part of your bet is going to pay the salaries of the participants.
February 8th, 2010 at 7:13 pm
The references in this debate to Japan by Satish Sanan and Ray Paulick are both accurate and appropriate but in a perverse way actually support Barry Irwin’s thesis.
While betting turnover in Japan has decreased by 25% over the last decade, it is still nevertheless enormous and is greater than that of the USA, UK and Ireland combined.
The average JRA purse in 2008 was a staggering US$356,000 (inclusive of all incentives and bonuses). The average yearling price in Japan last year was US$70,639, modest considering the scale of prize money. While Japan is the only country where racing can actually return a profit (the average runner in the JRA in 2008 earned US$114,000), Japanese owners are turning their backs on the sport because the just don’t find it fun. The numbers of JRA owners has been falling steadily over the last decade and currently there are only about 1,000 active owners from a Japanese population of 127,000,000.
The JRA have done a fantastic job over the years but the owner has been somewhat forgotten. Incredibly, owners are denied access to the paddock for all races other than Grade 1 races, effectively denying owners the opportunity to enjoy their horses with their wives, families, girlfriends etc.
Other common complaints are despite a capacity of 180,000 at Tokyo racetrack, owners are limited to three seats (even if they have a runner in the Derby). Furthermore, at the annual eclipse ceremony, there are five awards for jockeys and four for trainers but not even one for owners!
Compared to the USA however the ills of Japanese racing are indeed trivial and I am confident that the JRA will soon make changes to ensure Japanese owners can be proud in public of their horses. Japan would then be a racing Utopia.
February 8th, 2010 at 8:37 pm
People lose money when they surround themselves with idiots. Then they want to blame the business. You can make money but you have to be a seller. No one wants to sell the good ones. It’s hard to part with a good horse for fear of never having another good one.
February 8th, 2010 at 8:41 pm
If you want to see how to treat the customer right, spend an afternoon at the Mohegan Sun Race Book. Free admission, comfortable seating, you can bet from your seat, free drinks and everyone gets at least a 1% rebate. There are 4 big screens and plenty of tv’s to show all of the action. And yes, you can play slots if you want to, at a 8% takeout. Do not forget the multiple dining options for before/after the races. Mohegan treats the racing customer as good as the slot or table game player. I am treated better at Mohegan than at any NYRA track.
February 8th, 2010 at 9:05 pm
Most of the points make sense. However, in your 12% takeout plan, where does the money for the tote company, the video company and the ADW come from?
Someone must get paid a commission to take has to take the bets away from the track (i.e. Las Vegas and online ADWs).
Someone must get paid to disseminate the video signal.
The tote companies must get paid to handle the wagers.
February 8th, 2010 at 10:56 pm
Most of the opinions given here seem to want racing to thrive but only in a way that helps them personally.
Mr. Irwin and others who are very wealthy talk about promoting the sport and caring little about purse money. Why? Well, they can own horses regardless of the financial return. They can enjoy the thrill and excitement, and money is no object. It sounds very noble to say reduce the purses, but would that be their view if if meant being forced out of ownership? Perhaps? But right now, if you’re not wealthy, reducing purses would be the end of horse ownership for you.
The gamblers talk about reducing takeout and getting free admission and other perks. Why? Because that’s what affects the amount of money in their pocket. But what about the entertainment value? Moviegoers would probably love being able to go to the movies for free, but would that really be fair to the people would put on the movie?
I don’t know if horse racing can be rebuilt so that all groups feel that they are getting a fair shake. But, in my opinion, only when all groups are getting a fair shake will horse racing thrive; not just if some groups get a better deal.
By the way, I do agree with Mr. Irwin that the states and gaming companies care little about racing (and to a lesser degree the racetrack owners).
February 8th, 2010 at 11:12 pm
Reducing take out would be a dream come true but will never happen because the fat cats wont ever ” give back” a pie that is already sliced beyond thin.
February 8th, 2010 at 11:13 pm
I vote with Fourcats. Whenever I read Mr. Irwin wanting to shrink racing I look around and try to figure who he’s trying to shrink. I think it’s me.
February 9th, 2010 at 12:42 am
I have a grand idea. I am a recent college graduate, lifelong horse racing fan, and current participate in Thoroughbred racing. My idea is to throw out all the big wigs in racing who are so out of touch with reality and let us take over and right the ship. Racing obviously needs new, young life in the sport. You all have been running it for years and have subsequently screwed up just about everything. The NTRA has no power. The Breeder’s Cup has been so screwed up, Mr. Gaines is rolling in the grave. You all have allowed slot machines to take over our sport. You all have let owners like the Ahmed Zayats and Michael Gills (who you “know-it-alls gave an Eclipse Award to) make a mockery of our great sport. You all have allowed the medication issue to balloon to a point where integrity is nowhere to be found on the backstretch. You all have bred horses for the sales ring and not the racetrack, subsequently fading out some of the soundest bloodlines we have seen in America over the last 100 years.
So my idea is this. How about the Satish Saanans, the Barry Irwins, and everyone else who is out of touch with reality just step aside and let the young bloods take reins. This sport will not grow unless you get the 20 and 30-somethings involved, interested, and active.
February 9th, 2010 at 12:55 am
Here is an example of just how horse racing and the people who run it have no clue what they are doing.
How many people watch the Kentucky Derby on television ever year. Now tell me how many of those people know that you could bet the race in the comfort of your own home. If they do know, they probably do bet through an ADW. But if they don’t know, they for sure aren’t going to see any promotion for it during the Derby telecast or leading up to the race.
The biggest race in the world and most casual fans sit there and are unaware that you could hit a Superfecta for half a million dollars in the comfort of your own home.
But hey, reduce the Derby to a purse of $50,000 and watch everyone jump on board. Please
February 9th, 2010 at 1:42 am
Maury #48
What on earth has the amount of money bet got to do with it?
The only relevant figure in this discussion is the amount returned to racing through purses, which is indisputably only a fraction of the total cost.
At least you do appear to accept that people are interested enough to attend Nascar etc., but I’m not sure that they and the NFL would agree with you that their success is driven by betting.
As I have said many times once racing sold itself to OTB interests it was all downhill. These things invariably follow the same route of rapid expansion, followed by running to stand still, followed by ever more desperate attempts to even survive particularly as a very predatory gambling industry continues to find newer “products”..
No-one on either side of this argument is able to speak objectively if, on the one side they don’t sometimes make the effort to go to the track and, on the other side, if they expect the poorest members of society to subsidise their enjoyment through slots.
That’s not to say that decent racing and reasonably responsible betting can’t be mutually beneficial.
February 9th, 2010 at 2:57 am
@ Steve D (post 12)
I commend you and your partners’ efforts with your rehab project. Its a shame that it could not culminate in a victorious return to the races for your horse.
I would just like to say that, as an owner, I have learned to be vigilant and not be afraid to ask questions of my trainer, veterinarian, jockey,
February 9th, 2010 at 3:57 am
Everything in Mr. Irwin article is the only way racing will survive. I really believe all the race tracks I go to today EXCEPT KEENELAND want horse players to stay home and bet on the computer. They get rid of their employees and make more money for stockholders.
The last 6 years at Churchill Downs has been brutal on me for just going in and betting on the races. They got the music up so loud there is no way to study the form and go wager. It’s like go home and bet on computer like ALL my friends have. I am the last one I know from the fifties that goes every day and I have to wear ear plugs and they gave my derby box to some freak that plays slots. I have no respect for management , none.
Buddy
February 9th, 2010 at 4:37 am
Buddy #65
There you are - you and a few remaining stalwarts are victims of the rural bus / village post office syndrome. Once attendances fell below the tipping point [ which a child of two could have forseen would be the result of OTB] the writing was on the wall. A greasy spoon can struggle on with passing trade but a restaurant needs regular customers.
I still think that your opinion as a racegoer should be given more credence than those in the beting parlours.
Spend A Buck # It doesn’t matter how old or young they are - lack of objectivity is the problem. [ As Fourcats #57 says in his/her sensible post.]
Anyone with a dog in the fight won’t make objective decisions, also I’m not sure that being young is any more of a virtue than being a gambler! An old trainer told me in the late 60s that “youth is wasted on the young”.
February 9th, 2010 at 6:10 am
Four Cats, reducing takeout will increase purses, it will grow the game. I would have no business calling for reduced takeouts if I thought that purses would decrease by even one cent. The takeout is above the optimum takeout as cited in numerous studies.
The optimum takeout which is maximum 14% and probably lower is the takeout percentage that will yield the best return, not for the bettor, but the track owners and the horsemen.
Bill, the OTBs didn’t kill attendance. Competition did. And betting not only pays for all purses but it pays for the racetrack directly. Horsemen don’t contribute one red cent to pay for operations outside of maybe a buck a day at some tracks for stall rental. The track operates on the money its customers lose playing horses. The purses are completely made up of lost money by customers (as well as admission prices and concession profits) and in some cases money lost by customers playing slots.
It is beyond arrogant to suggest that horsemen are more important than bettors or contribute more than bettors. Laughable too.
As stated, without bettors, there would be no racing. And there is but a handful of people who would even pay $5 to get into a track just to watch.
February 9th, 2010 at 8:09 am
It is interesting to see “dancing around the fire” here but never knowing the real heat of contention. Good discussion on everything but the root problem! Discussing what happens in other countries but never addressing the differences except for gaming and gambling. Quality (or lack of it) is eroding ownership; the attendance fan base; the wagering fan base and the perception by the american family; faster than any other component in the game. Horse sales are up in most every other country in the world right now but the U.S. Who in the hell wants to attend a seedy, low quality program that proves nothing more than a girls volley ball game at a sunday school pick nic! Women, who own more than 51% of horses in this country, attend racing less than 20%. What’s in it for them. Crowds at the Ky Derby or the Queen’s Plate are so different from average crowds at most other racing venues be they prove something! We are now governed by people who worship incessant gimmicks that prove and provide no educational or recreational value to other than a few dedicated students of hieroglyphics. Sure they are important! But they are not, nor do they provide the attraction and ultimate glue of non-claiming performances. Those in England, Europe and Asia, who have held true to the origination of the game know that and continue to grow.
February 9th, 2010 at 8:23 am
Bob, you can blame racing’s dying on quality, but that is something that is simply not true. As stated earlier here by PTP, studies have found that doubling purse size has an affect of only adding 6% on handle. Horses per race matters though.
People were betting horses and going to the track in the 50,’s, 60’s and 70’s, and quality had little or nothing to do with it.
Most people that matter (the ones who bet), play because there is a winner every race whether that winner is Rachel Alexandra or Abolish It.
Even with Rachel and Zenyatta around last year, racing still dropped 10% in handle.
You want purses to increase and quality to increase, you need to make the game more competitive against other forms of gambling…plain and simple.
I bet a lot, and I couldn’t name 3 horses on either the NY or California circuit. Names don’t matter to me. I look at the numbers and bet accordingly whether a race has a million dollar purse or a $5,000 purse.
February 9th, 2010 at 9:01 am
Irwin has a convenient memory. How was Team Valor marketed in its early years? Lot’s of ballyhoo about winning stakes and big pots. Then, only when the pushback started from some “partners” that weren’t winning stakes and big pots, did the partnership recruiting messages start to change. The game’s participants would be reduced by 80 percent if the only reason for getting into it was the “thrill”. But, maybe that would be good because it would reduce the game to the level of status that it deserves.
February 9th, 2010 at 9:28 am
good point Maury from your perspective. I would guess that you play from home and not on track and haven’t looked at the attendance figures when prominent or no price horses race. You and handle are important but you don’t have to sell gambling but you do have to have quality in most everything that you do, or at least that’s what Japan, England, Ireland, France, Dubai do. They do not have claiming races. Women are attracted to the social aspect of the game. We have lost that except for one or two days a year. Oaklawn Park, for instance tries very hard to maintain some elements of class and they are successful with only a surrounding population of 35,000 people. Good Luck !
February 9th, 2010 at 9:59 am
Bob, the attendance figures don’t matter, because you can’t put quality out every day, and the people that go to the big events in North America aren’t bettors and never will become bettors.
Japan does have lots of B racing and B race tracks btw. I”m not sure how much handle is created from them though.
Woodbine has a great purse structure but hardly any attendance.
On a Wednesday night, or Thursday afternoon, their total handle is comparable to Beulah in the winter.
Attendance figures don’t matter anymore, with the exception of newbies brought to the track by new owners or partnerships. That is a growth component.
Those who attend the Queen’s Plate or Kentucky Derby matter not to growth of the game.
Again, if you are talking about having one main card a day, sure you will get a huge handle, and probably good attendance no matter what the takeout rate is, but the bottom line for the industry won’t be very good, and there would be very few owners and horses bred, etc.
We don’t really need less racing, we need more bettors.
February 9th, 2010 at 10:31 am
some good points Maury and you may be on to something that proves my point. England bets two and half times more than we do with an eighth of the programs; an eighth of the horse herd; a fiftieth of the foals bred; no casinos at tracks BUT the secret is:
NO CLAIMING RACES ! Yes we need more bettors and they are created by casual fans.
February 9th, 2010 at 10:51 am
Bob Hope#72
I’m not sure about some of these figures.
It’s far less than 1/8 of the programmes [about 5,000 flat races], but perhaps nearer 1/10 of the foals.
I wouldn’t say that the programme book is perfect either by any means, we do have too many very short priced favourites which should be addressed.
Most turnover is off track, but we do have far more of a casual fan base if you loosely define someone who has ever been to the races as a fan. Of course we do have something like 30 flat and 30 jumping tracks in a country the size of one big state!
After the last week or two on the Paulick report I’m starting to feel quite misty eyed about our racing.
February 9th, 2010 at 11:05 am
Bill and Bob, the reported numbers can be seen here:
http://www.jockeyclub.com/factbook.asp?section=17
I’m curious, in the case of Britain, what does total handle consist of, and what is the average takeout?
Do they include bookies and exchange betting?
February 9th, 2010 at 11:25 am
Bill,
I am beyond misty eyed! if you are interested you can get the actual figs from the Jockey Club Fact book online. It is interesting to see how much more efficient some other racing countries are and where their priorities are regarding to “why we race”. When the class goes out of any sport, or product actually, it fails to maintain an interest beyond the participants. Harness racing, dogs, jai lai and boxing are struggling to be recognized at all. Without the uniformity of “quality” nothing can succeed!
February 9th, 2010 at 1:08 pm
“Without the uniformity of “quality” nothing can succeed!”
Right on Bob Hope, at least no mediocre product with antiquated priorities and sinking moral values can succeed for very long.
February 9th, 2010 at 2:40 pm
I’m not sure what “total handle” consists of; hopefully this chart is comparing like with like. On the face of it America seems to bet only 1/4 million per race, Britain 1 1/2 million per race and Japan $2million per race generating 8cents prize money per $1 bet in America, whereas Britain only generates 1 cent and Japan 3 cents. That seems a massive difference to me but if anything like true confirms Maury’s point that the take out is too big.
The British figures contain jump racing too.
Someone said that it was easier to be an owner in S. America, this shows why - apart from Argentina there are much more races per horse.
February 9th, 2010 at 2:48 pm
Bob Hope - As much as I love racing in France, let me clear up a few things: There are, indeed, claiming races in France (and in England, although fewer of them), and on any given day the only people you find at the track are trainers, owners and a stray cat or two. The big race days are marketed well and well-attended (by women, too! imagine that!), but the daily racing doesn’t attract a crowd. Our betting handle continues to rise steadily, though, because of online betting, off-track PMU bars and television betting. While our racing program doesn’t depend on claimers, there are usually one or two on every eight-race card. We also claim horses AFTER the race, not before.
February 9th, 2010 at 2:50 pm
Oh, and you can put in your own bid to defend your horse in a claimer, so you are not necessarily condemned to lose it, although there is always that risk.
February 9th, 2010 at 3:16 pm
It sounds to me as if Mr. Irwin is calling for level playing fields for horsemen and for horseplayers. If, as some have suggested, it represents a new way of thinking on his part, it is no less welcome. The status quo is unacceptable. If an influential horseman can be seen as a friend of the bettor, perhaps others will follow and, together, owners and bettors can work out HOW to implement WHAT Mr. Irwin has proposed.
Mr. Sanan, however, does not appear to be a friend of the average bettor despite his own participation at the windows. He has been described as a large bettor, which make me wonder whether he himself is a recipient of the rebates for high-volume bettors he has publicly endorsed. Since he is a breeder and owner of quality stock, he appears well-positioned to enjoy and profit from the game from a variety of perspectives, and thus a beneficiary of the status quo with little motivation to change it.
Several contributors still seem to think it possible to fill the stands at other than boutique venues or special events. That day is over. On-line wagering and viewing has to be promoted as entertainment using actual winners, and with spectacles like Triple Crown bids and championship matchups televised on network TV; including scheduling and promotion to maximize the audience.
Mr. Irwin’s most significant point is that racing should be considered a sport primarily intended as entertainment for both owners and customers. There will always be horsemen and horseplayers sufficiently resourceful and insightful to pursue the game as a livelihood, but why should they be subsidized and/or protected as well? This is what’s keeping new players and owners from entering the game. It’s no longer a fair gambling proposition from either a competitive or an integrity standpoint. Competition between ADWs on the basis of cash rewards or rebates works against the concept of racing as a sport with a level playing field. Restoring equally lower direct takeout for everyone is the only way to accomplish that.
I hope Mr. Irwin will continue to speak out and that other like-minded industry leaders will join him.
February 9th, 2010 at 4:00 pm
thank you G. Rarick, you help make my point very well.
February 9th, 2010 at 5:17 pm
Barry
You got em all heated up!!! Good for you. And I see some people dropped by that don’t post on a daily basis. Always good to hear John Fulton’s take on any subject. I respect Satish and the way he has tried to do something for the Horse Business but I don’t understand his take on…well the take out. It has been said that online poker, the takeout is about 8%. I don’t know this, just what I am told. To be competitive with these games we just have to get the take out lowered
One Big Farm Owner once wanted to have the takeout raised Nationally by 1/2 of 1 % and the money given to something earmarked for horses. I screamed bloody murder…their reply well it’s only 1/2 of 1 % and I said yes but it’s THEIR money not yours!
One of the oft repeated phrases here is the RICH tracks..well which ones? Here in Lexington we have a basketball arena and a football stadium that taxpayers paid for. In Louisville they have the same things. Yet not 1 cent of taxpayers money was used to build Keeneland or Churchill Downs. These Race Tracks draw just as many people on a yearly basis as those stadiums! We bring in tourist money just like they do but get little credit for doing it .Any Race Track anywhere needs some cash to maintain the facilities so to assume that tracks are getting rich from the take out or from slots is very misleading.
#77 I can’t dispute the figures you posted but Racing for the most part is subsidized in Ireland and England is it not? They seem to realize some things there that they don’t here in the USA…These Farms are Green, they slow development and they bring tourist dollars in!
February 9th, 2010 at 8:53 pm
John Greathouse:
I have been getting them heated up for years–about 35 of them to be exact. And a few of the things I’ve written served to bring a different perspective to parts of the game.
But I think this one hit a chord not so much for what I have written, but because of the current climate.
Those that follow our game sense that we are at a critical juncture. They see the blocks beginning to tumble and they don’t want their spot to disappear.
From my perspective, there is a parallel between what is going on in racing and what is happening in politics. There just doesn’t seem to be any spirit obythe stakeholders to want to work together.
Instead of working together toward a solution, we have each element clinging on to what turf they have.
Do not kid yourselves into thinking that there is not a natural adversarial relationship between horsemen and racetracks. It has been going on for years. Racetrack by and large do not respect horsemen or owners. For anything to get done, these two parties need to get together.
If the NTRA accomplished nothing else in its existence, if they could get horsemen and the tracks to work toward a common goal, that would really be something important.
Breeders (and I own all or part of more than 30 mares myself) need to look to pull themselves up by their own bootstraps and not count on the wagering dollar or the government to make ends meet.
John is right: in that racing can no longer nickel and dime the gamblers out of their money by tacking on the odd percentages here and there. One little half of a percent is not going to hurt anybody, by 5 or 6 of them will.
I have to admit that the one thing that has come out of this exchange is a realization that I am not identified as being a member of The Establishment! I am sure they all must be shocked to learn this, as have I.
February 9th, 2010 at 11:50 pm
Speaking of ‘tacking on’ little percents, what about all the money that gets sucked out of bettors pockets on breakage. Horses who are supposed to pay 4.39 to win, pay 4.20 and why? Because they want to ’round off’ so that betting lines won’t be clogged up with bettors collecting pennies. Funny, because NOW, we have 10 Cent superfectas that often pay off in pennies. A ten cent super can pay 81.39 and it DOES pay 81.39. why not let win bets pay 4.39 instead of 4.20? We are in a new computer age, many people have online or telephone accounts, those people want their extra pennies. Racing for years has been robbing the bettor of their breakage.
February 10th, 2010 at 1:18 am
John Greathouse #82 Racing is subsidised in the same sense as in America, by a % of money bet. The only other significant things are that in Britain there is a fairly easy amnesty from the Value Addded tax [ 17.5%] on horse purchase and training fees [which is not universal in Europe and without which many horses may well have been trained elsewhere] and the fact that stallion income is tax free in Ireland - hence, to some extent, the strength of Coolmore.
Maury After looking at those figures I feel you may have more of a case than I had thought.
Perhaps I should clarify my own position. I do accept that betting is an integral part of the whole picture. What has upset me here is the way things have changed in my lifetime largely as a result of OTB. Racing has slipped from the premier sport to a much lower position and the standard of horse [by which I mean the level of achievement necessary to register some success has fallen markedly in response to the alterations to the programme which were driven by OTB requirements - ironically they now say that poor horses are a turn off from a betting point of view, but unfortunately there doesn’t seem to be any will to address the issue. Owners and trainers here are quite happy with the status quo but would like more money. Something you are familiar with!!
My repeated statements that “running racing for bettors is wrong” are simply based on the above, and, as you will remember I have also said, there is no reason why better run racing shouldn’t be more attractive to bet on than very poor racing with all that implies for medication welfare and so on. That was my point throughout the Gill furore - no-one seemed to register that it was a perfectly predictable result of $5000 horses running for $20000 - they just wanted THEIR $5000 horse running for $20000 rather than Gill’s.
February 10th, 2010 at 11:16 am
Racing is a gambling business game. Races are primarily run to attract bettors. The racing managers have had their head in the sand for a long time, and if racing is to survive as we want it the managers must embrace reality.
The State is the real C.E.O….They provide Security and Regulation
The Racetrack and Horseman are the Producers, they provide the show…Yes, they have diferences,but the common bond is putting on the show. The race card is put on to attract customers. The producers have failed because the producers have put on the show primarily for themselves,not the customers.
The Customers in racing is what the people who put on the show are trying to attract. Unfortunately,some from the Producer category think of customers as a necessary evil and refer to them as degenerate gamblers and think that it is” their” game and customers should only exist to bring them money to promote the producers interest and shut up and go home. They believe this on the basis that the customer has been entertained and that is the extent of their obligation.
Nothing could be more wrong. Racing is not primarily an entertainment venue. Racing is a participatory sport,the customers are competing against each other.
This fact should be a marketing focus.
Remember this: Racing needs customers to survive…Customers do not need racing to survive, there are many other options.
The fan base has been damaged and is shrinking. We must grow the fan base to be successful. Crutches such as slots or other substitutes will not work. We need to offer all participants a chance to make money. Customers have no chance under todays conditions.
A sure fire method of growing the fan base is to send home more winners by lowering the take out, solve the medication issues and clean up the integrity questions and put the show on for the customers, like every other business known to be successful. Every other business does not market their product to please themselves, they market to attract the customers.
This formula is not complicated anywhere except in horse racing. Ask yourself WHY?
The people love horse racing. Leadership is on the wrong track. Give the people a chance to prove it.
Who or what will stand up for the long term survival and success of OUR game?
rwwupl
February 10th, 2010 at 12:15 pm
I guess the Jockey Club, Breeder’s Cup, and all of “The Establishment” groups will have to wait a few more years to consider Mr. Irwin for inclusion.
February 10th, 2010 at 2:28 pm
rwwupl,
As always, I find your passion and logic persuasive, but I’d like further clarification of your remark, “Racing is not primarily an entertainment venue. Racing is a participatory sport, the customers are competing against each other.”
The way I see it, racing has several facets of attraction. For most wagering customers, it is ideally a GAME of chance whose outcome is based on the results of a non-human athletic contest with relatively low predictability. Some play it for entertainment – an intellectual challenge, if you will — and some play it for income purposes. Some of the latter even make a livelihood of it. They treat their activity as a business and want to be treated as businessmen. In some instances, they have been allowed to negotiate “wholesale” prices on the cost of their wagers due to the disproportionate volume of their wagers (such bettors represent only 1% of all bettors, but contribute 15% to handle nationwide).
Players who receive substantial rebates on their wagers (win or lose) can show a profit even if the pari-mutuel payoffs on their wagers do not. Such an edge is proving insurmountable to the vast majority of players who do not receive rebates, and get no relief whatsoever from the exorbitant takeout that has more than doubled since the days of Seabiscuit. Hardly a sporting competition!
Some consider rebating a subsidy for players willing to bet on a racing product of steadily decreasing quality. The result, however, has been not just a lack of growth, but continued erosion of the recreational bettor base on which the industry depends for survival. If racing is no longer primarily an entertainment venue, then where will all the new “serious” and “professional” handicappers going to come from to keep the “game” alive?
Lower effective takeout is already available to rebated players and it hasn’t stemmed racing’s decline. Now takeout has to be reduced for all players, equally. Cooperation among tracks, government, horsemen, and players is needed to reduce takeout everywhere to a more reasonable level, initially, with a schedule for further reductions at specified levels of increased handle.
One thing is certain. Very few people are currently being entertained by a “rigged” game of chance and a low quality racing product. I agree with you whole-heartedly that racing needs to market the competition between customers. The best way to do that is to promote winners that other players can identify with, but I doubt that people betting a million dollars a year will help much.
February 10th, 2010 at 3:16 pm
Indulto,
The Managers decided a few years ago that describing horse racing as “Entertainment” would answer a lot of questions that they found too difficult to answer. I could go on and on about this , but let me quote Richard Duchossois, then Chairman of Arlington and now the large shareholder of Churchill Downs,in a 1994 interview with the Daily Racing Form:
“We are a participatory sport, not a spectator sport, our bettors are competing with each other. This fact should be a marketing focus”
———————————————————————————————————–
….” Entertainment” does not describe our sport, no other sport allows the customers to participate in the action via the pari-mutuels… and that should be our focus. Describing our sport as entertainment allows all questions to be answered “you have been entertained,if not, find another venue”….and too many have done just that!
I will not go further to quote John Hay Whitney and others warning us about what would happen if “Sportsman” lost control of racing…Sportsman have lost control.
rwwupl
February 10th, 2010 at 8:07 pm
rw,
Yes we are a participatory, competitive activity — somewhere between golf and chess or poker, I would venture — with exercise factors like leaping to conclusions and jumping off bridges. It’s the cumulative processes of handicapping, determining value, observing the unfolding drama of the event, and experiencing the impact of the results on our finances that entertains most of us; not the aesthetics of the surroundings, and seldom the beauty of the beasts we burden for our betting pleasure (and hopefully profit).
There is much more to entertaining us than simply staging the event, and that’s where industry management is failing. But Mr. Irwin’s original thrust that horse owners should not (and generally do not) expect to be profitable also applies to horseplayers. Even when takeout is lowered, the vast majority of players will still not be profitable, but most will stay in the game longer and churn more handle while losing roughly the same total amount they are comfortable with.
But there is no comfort in having virtually no chance of success despite increasing one’s knowledge of the game. And those players (and bet takers) who encourage their brethren to increase the size of their wagers to qualify for rebates are the sirens of bankroll destruction and killers of enthusiasm. The special talent, knowledge, insight, work ethic, temperament, and intestinal fortitude of the tiny group of top winning players are not readily duplicated. If the vast majority of players are not involved for recreational purposes and not winning, why are they there? That’s what more players are finally beginning to ask themselves with each passing day.
Unfortunately, the rebated players and their wannabe supporters who hope to become a part of that charmed circle are as much of an impediment to changing the status quo as other industry power brokers who continue to benefit from it.
I.
February 10th, 2010 at 9:12 pm
Dulto, i want you to explain to me how rebates ‘prove insurmountable’ to bettors who do NOT receive them? When you make a wager on a race without a rebate, what is the difference if the money wagered is rebated money or non rebated money? If you’re betting into a pool of 100k, whats the difference if that 100k is coming from a rebate shop or every penny of it is coming from on track non rebated customers? There must be something i’m not seeing. I don’t doubt your points, but they seem to be over my head at the moment.
February 11th, 2010 at 1:29 am
Indulto #88
I hadn’t realised that this rebate system was in place. If I understand you correctly then the rebated players are receiving a benefit at the expense of Joe Soap.
If that is the case then we have had yet another example of the loudest complainer being part of the problem - if the professional players are getting a better deal at the expense of the man in the street then it’s a bit rich for them to complain about takeout.
We have what I think is a similar situation here when there is a major rollover on the equivalent of Pick Six - the “professionals” place enormous combinations staking perhaps many tens of thousandswhich often pay off. If the purpose of these things is to give the aforementioned Joe Soap a chance to win a fortune with a view to attracting new customers then they are destroying the theory.
I’ll say it again - Never Take Advice From Someone With A Vested Interest. As Mandy Rice-Davies said [of Lord Astor who denied their association in the trial following the "Profumo Affair" scandal] “He would say that, wouldn’t he”.
February 11th, 2010 at 10:13 am
Bill, I think the professional player has the same vested interest as horse owners. They all want the game to grow, and that means more money will be bet and lost collectively.
A big rebate player calling for a takeout reduction only benefits if more players play and/or existing players play more.
True, those who get rebates and win money long term because of it, increase the takeout for everyone else betting today, however, they are the carrot stick that many bettors and those who get maybe smaller rebates, try to become.
In other words, without them, handle would be in a much worse situation than it is today, and I think the bottom line to tracks and horsemen would be worse off.
The ideal situation would be a 12% takeout across the board for all. The game would explode. There would be visible winners who beat the game without a rebate (not many, but enough to get the attention of many young gamblers especially).
Realistically though, I don’t see that happening anytime soon. Tracks with slots money don’t seem to care if anyone bets, and some have takeouts as high as 30%, and those without slots are struggling too much to take the risk (even though studies indicate it isn’t a risk to reduce track takeouts).
In England, the best comparison would be those who play on Betfair versus those who play on a tote system. Those who play on Betfair have an edge because of the low commissions paid.
In the USA, about one third of the jurisdictions don’t allow players to receive rebates, or at least rebates that are substantial.
February 11th, 2010 at 11:06 am
Maury Don’t get me started on Betfair!! When anyone - as opposed to a licensed bookmaker - can bet on a horse to lose ,What Do You Think Is Going To Happen? {especially when the win prize is about $3,000 and the jockeys’ share less than 10% of that}
Unfortunately the official story dreamed up by Betfair et al, enthusiastically promoted by a trade press deeply involved with the betting industry, and swallowed hook line and sinker by an administration which is either very naive or completely half-witted is that “the advent of betting exchanges has assisted in cleaning up the sport by means of providing a paper trail to wrongdoing”.
You couldn’t make it up. A court in America even demonstrated that terrorists were using the exchanges for money laundering - a potential I had described to everyone from the beginning - but it never made the Racing Post!
February 11th, 2010 at 3:11 pm
Mr. O’Gorman,
Your Profumo scandal reference dates you, but it brought back fond memories of the Inquirer’s provocative photo-spreads of Ms. Rice-Davies’ cohort, Ms. Keeler. I hadn’t heard the “Joe Soap” label before, having adopted one of my fellow activist’s term, “Joe Horseplayer,” to refer to the average recreational bettor.
I’m not surprised you weren’t aware of the practice of rebating. As an aging on-track player, myself, I constantly encounter fellow players who not only don’t bet on-line, but don’t pursue racing-related blogs and message boards (or else are just beginning to). Many such bettors have no idea that a horseplayers’ organization has been formed that is seeking reforms like lower takeout, uniform medication policies, and increased pari-mutuel pool integrity.
Unfortunately factions exist even among pro-active horseplayers with regard to the takeout issue. While almost everyone agrees that optimally we want to get back to the 10-12% direct takeout rate level for all bettors at all tracks, some believe it is too difficult to deal with the myriad of racing jurisdictions that almost never cooperate with one another. Consequently, some activists continue to encourage both “serious” and recreational bettors to seek rebates through on-shore ADWs whose discounts on takeout are not as substantial as those available to very high volume bettors at off-shore ADWs.
Because some states restrict access by their residents to on-shore ADWs that do offer rebates — and some tracks refuse to deal with such ADWs — I would guess that at least 75% of all players still get no rebate and more than 20% get rebates that still leave them at a competitive disadvantage with respect to the remaining 1-2%. Those who continue to promote rebates view this as progress, but I see it as making it even harder for Joe Horseplayer to win money while the pockets of bet-taking middlemen are being lined at the expense of tracks, horsemen, and pari-mutuel payoffs.
I share your reservations about exchange betting, but I think they would be too popular with price-conscious bettors to ignore. The only question is whether tracks want to give up that revenue to another middleman like TVG-Betfair the way NYRA gave up revenue to NY State OTBs. Hopefully the institution of uniform medication policies and expanded industry-wide injury/breakdown tracking and analysis will precede the implementation of exchange betting in the U.S.
February 11th, 2010 at 3:40 pm
on exchange betting
would one worry about race fixing entering into this mix? with enough in play and enough time to be had it sure complicates things
February 12th, 2010 at 1:20 pm
Ah, This is exactly what I was looking for! Clears up
many contradictions I’ve seen
February 13th, 2010 at 3:06 am
Churchill Downs Inc. is an arrogant organization which cares not a twit about horseplayers. They are in the unique position of having the only race left which the average person knows is a HORSE race. Beyond the Kentucky Derby at their satellite racinos they could care less about horseracing and anyone who has been to Fairgrounds & its OTBs must know this. The main culprit here is Richard Duchissois who–after shutting Arlington Park down–was quoted by Marty Magee of DRF that he cared (see top line). At that time he was not connected to CDI. His influence has been very noticeable.
February 13th, 2010 at 1:12 pm
I made a stupid mistake when I looked at the comparison chart of countrys’ racing. For some reason I assumed that the$1,165.11 of American purses had come from the $13,647.93 betting turnover. Of course that is not he case as a big chunk of the purse money will be coming from the slots. Obviously then bettors are not as I wrongly said contributing 8cents for every $1 bet, although Maury may well be right that the takeout is too high it’s going somewhere else other than into purses.
What threw me a bit was the fact that the British figure of $157,690,000 looked about right because I know we did get £90 million from OTB. But owners here also put in a lot through entry fees [which we have for all races], so I suppose that amount they contributed must be roughly the same as the cost of racing’s infrastructure and bureacracy over the year.