Posts Tagged ‘horseplayers association of north america’
Friday, October 9th, 2009
What’s this? Happy horseplayers? Why the racetracks must be giving money away. EIther that, or someone has paid attention to the needs of these long-suffering, often forgotten supporters of the game. In this case, it’s the latter, and the group paying attention to horseplayers was Equibase, the racing industry’s data base owned in tandem by the Thoroughbred Racing Associations of North America and the Jockey Club.
The Paulick Report has chided Equibase to be more responsive to the needs of the industry and suggested the company focus more on using its data to help build the fan base and worry less about turning a profit for its owners. Shortly after our critique of Equibase, the company announced that it was loosening restrictions on access to historic charts. Most recently, we were pleased to see that Equibase announced a new and improved method of communicating late scratches and changes to horseplayers and fans. We hope these two recent imnprovements in service are signs that Equibase takes its mission seriously.
Jeff Platt, president of the Horseplayers Association of North America, tells the story of how this new program came to be. — Ray Paulick
____________________________________________________________________________________________________________
By Jeff Platt
president Horseplayers Association of North America
Equibase recently announced completion of a new project called Scratches Today. A press release was distributed on Oct. 1 (click here to view). HANA was involved right from the very beginning. Here is the story…
Early Beginnings
In April, 2009 while we were in Lexington, Ky., for the first HANA Day at the Races at Keeneland, we met with Equibase CEO Hank Zeitlin and his management team. We talked about several issues that are critical to racing and we were given a tour of the Equibase facility.
When the subject of scratches and changes came up, everyone in the room admitted the current system in place was lacking. Reporting of scratches and changes had always been a point of player frustration. More so for players following and wagering multiple tracks online than for players following a single track while wagering at the track live.
For the online player, reporting of scratches and changes had always been hit or miss. Each and every week we could point to at least a handful of scratches that were never reported at all. Every once in a while we could point out instances of the wrong horse being reported as scratched. The same could be said when it came to reporting of rider changes. Ditto for races off the turf.
A little bit of background information about me might be in order here. Back in 2004 I created a module for JCapper called Scratch Bot. Scratch Bot’s sole function is to allow the user-player to scour the web for scratches and races off the turf and import new changes as they become available. I’m telling you this as a way of letting you know just how acutely aware I am when it comes to scratches and changes information and just how unreliable that information can sometimes be.
To give you an example, when the Breeders’ Cup was held at Lone Star Park in 2004, Seek Gold officially finished second in race one, and was part of a $2 exacta paying $970.20, while listed in the Autotote/Brisbet system as a scratch!
While chatting with Hank that morning we let him know just how strongly we felt that there needed to be a reliable web-based source for scratches and changes information. While sitting at the table in one of Equibase’s conference rooms, I "white boarded" a design for a web-based system capable of getting the job done on a legal pad and showed it to Hank. I even volunteered to stay on in Lexington for the next several weeks (or the entire summer if necessary) to do software development work on the project for free.
I guess Hank must have seen how passionate we were about the need for the industry to do a better job in this one area. He agreed to a follow-up meeting which was held a few days later. From that beginning the idea of Scratches and Changes in Real Time became a reality.
The Scratches Today Project
The Scratches Today Project enables Equibase to propagate scratches and changes information onto the Equibase site in something pretty close to real time. Click here for a direct URL to the page at Equibase.com:
When you click on the link for an individual track, you will see a page that looks like the following screenshot:
The page html shows the track name, date and time of the last update, and continuously updated changes for each race.
RSS
Players can also subscribe to a free RSS Feed.
RSS stands for Really Simple Syndication which allows anyone to subscribe to a feed of data using a software client of some kind.
What is cool about RSS is that any new information is pushed to you direct. There is no need for you to visit Equibase and constantly refresh the page. Once you subscribe you will just receive an update with new information each time there is a new scratch or change. There are also RSS clients available for mobile phones, so a player wagering on multiple tracks online, at an OTB, or at a track live, can easily receive updates on any or all tracks as well.
You can find the most popular standalone RSS clients here.
A list of popular mobile RSS clients can be found here.
XML
In addition to the web pages for each track and the RSS Feed, a downloadable XML File has been provided for those players who wish to parse the latest scratches and changes. The XML itself looks like this:
The XML contains nodes populated with information for race date, track name, race number, horse name, program number, change description, and a timestamp. In early meetings with Equibase, everyone was in agreement that a central XML feed was the perfect source data format for delivering this information.
How does it work?
In the past, an employee at each track was responsible for letting Equibase know about scratches and changes. At most tracks the employee responsible for scratches and changes wears many hats and is responsible for many different things on race day. Generally that employee could be counted upon to let Equibase know about early scratches and changes. But if that employee happened to be busy later in the day when subsequent scratches and changes were announced, reporting such information to Equibase had always been given low priority.
Enter the Equibase chart caller. Before a chart can be cut, all scratches and changes need to be entered into the system. Hank Zeitlin, the CEO of Equibase came up with a novel idea. Instead of waiting until after the race to enter late breaking scratches and changes – why not be proactive and have chart callers enter scratches and changes data into the system as they are announced by the track announcer over the public address system? If that could reasonably be done – then changes could be propagated from the database into the XML and out onto the Equibase site within a second or two after the chart caller clicks the submit button.
The following info model was adopted:
A designated track employee would still be responsible for entering early scratches and changes. As part of the project Equibase went out into the field and sold the tracks on the idea of giving higher priority to scratches and changes.
Responsibility for entering scratches and changes shifts to the chart caller 45 minutes to an hour before post time for race one.
In late April, 2009 Hank committed a team of Equibase IT people to making Scratches in Real Time a reality. Hank has kept HANA in the loop and asked for our involvement and input right from the beginning. The system that Equibase has created is more extensive than the one I initially “white boarded” on a legal pad in that first meeting. It contains protocols for error checking/error correction that the initial system I was proposing didn’t have.
HANA is honestly thrilled with what Equibase has produced. The new Equibase system meets all of the requirements we wanted to see in every way. It is web based. It records scratches and changes in a central database. And it propagates those changes out onto the web within a second or two of when the submit button is clicked.
For the online player wagering on multiple tracks the Equibase Scratches Today project is a vast improvement over what was available in the past. As well, for those at tracks or simulcast centers, they now can get accurate real time jockey changes, surface changes and scratches "pushed" right on to their mobile phone, eliminating the need to watch TV screens or visit the posted scratches sheets for their updates.
Where do we go from here?
It is our sincere hope that players everywhere will enjoy the benefits of this new system for many years to come. We are also envisioning that tracks, in an effort to cut costs and improve standardization, will move to use the Equibase XML feed as a data source for displaying Scratches and Changes in Real Time right on their own track websites as soon as reasonably possible.
Tags: equibase, hana, hank zeitlin, Horse Racing, horse racing technology, horseplayers association of north america, jeff platt, Paulick Report, Ray Paulick, scratches and changes, Scratches Today
Posted in Industry Organizations, equibase | 18 Comments »
Tuesday, May 19th, 2009
By Ray Paulick
Betting windows at 33 simulcast sites remained open on Saturday’s Los Angeles Handicap at Hollywood Park until after the Grade 3 stakes race had been run because they did not receive a stop betting signal from the Scientific Games tote system that contracts with California racetracks to handle pari-mutuel wagering.
According to Eual Wyatt Jr., the Inglewood, Calif., track’s general manager, all of the money wagered at those sites – properly or improperly—was “thrown out of the pools” and refunded. Wyatt did not know the amount. He said the 33 simulcast sites all went through a single betting hub. (Click here to view the sites affected and the amount wagered at those sites.)
The incident is under investigation by the California Horse Racing Board.
The past-post wagering was first reported by Mike Maloney, a Lexington, Ky.-based professional horseplayer and industry watchdog on betting issues, in an article posted on the Horseplayers Association of North America web site. Maloney, a frequent speaker at industry gatherings on the issue of integrity of totalizator systems, was recently named vice president of HANA.
Terry McWilliams, a West Coast representative for Scientific Games Racing (formerly Autotote), would not comment on Saturday’s betting irregularities, saying, “I am not authorized to speak on behalf of the company. “ McWilliams referred the Paulick Report to a corporate spokesperson who did not immediately return a phone call. Scientific Games Racing president Brooks Pierce also could not be reached for comment.
Here is one explanation of the incident provided to Hollywood Park officials by George Brannen, Western Regional Director of Scientific Games Racing, in an email provided by the California Horse Racing Board to the Paulick Report. “At stop betting of race 9 for Hollywood Park we were not receiving pools from a group of 33 imports,” Brennan wrote. “All of these import processes were running on the Slave system. We had 7 other systems in the room wagering on Hollywood and of those 4 were on the Slave system and did not get the stop betting message from the California tote. The other 3 systems imports that were on the Master system did get the stop betting and shipped pools final on time. Because of this we were pretty sure that a stop betting message was not sent to any of the 33 imports and made the decision to clear and close those 33 sites. We then stopped the Slave system, promoted the Clone to become Slave, restarted all the Golden Gate imports that were also hung on the old Slave so that Golden Gate would not be delayed. A more detailed report will follow.”
“This is my first recollection of this (type of wagering irregularity),” Wyatt said. “The good thing is whatever mechanical error occurred, it was discovered and those bets didn’t count.”
At least that’s what Scientific Games apparently is telling Hollywood Park officials. This isn’t the first irregularity in California regarding the tote company, which in 2008 agreed to a settlement with the California Horse Racing Board over software errors related to “quick pick” wagers. Scientific Games knew of the software flaws for months, yet failed to notify the tracks or CHRB. It wasn’t until a horseplayer discovered the flaws while making “quick pick” superfecta wagers on the 2008 Kentucky Derby that the software problem was made public.
Other Scientific Games tote problems have been reported in other states, including a Philadelphia Park past posting incident last June 28 when wagering sites in Florida did not receive a stop-betting signal from a Scientific Games hub. Maloney reported a past-posting incident on a race originating at Fair Grounds in New Orleans, which also used Scientific Games. The most infamous Scientific Games/Autotote incident, however, involved the 2002 Breeders’ Cup Pick Six scandal when company employees hacked into the system to make Pick Six wagers long after the betting cutoff and took home the entire pool.
Kirk Breed, executive director of the California Horse Racing Board, has ordered an investigation by his agency into the latest Scientific Games mistake. “I have read Scientific Games’ explanation and did not understand what it said,” said Breed. “It is their fault. They basically said it’s a malfunction, and I accept that as their malfunction, so they are taking responsibility. They’re the ones that are going to be charged with responding to whoever lost money or was left out.”
Is Breed satisfied that the past-post wagers on the Los Angeles Handicap were excluded from the pools? “I don’t know. I’m not satisfied with anything at this stage,” he said. “All I have is an explanation from Scientific Games sent to Eual at Hollywood Park and which he sent it to me immediately. He and I talked yesterday. Frankly, I do not understand what they are talking about.
“It’s like the quick-pick," Breed added. “It had been going on for nine months and they didn’t do anything about it and didn’t tell us about it. This is why we are trying to get some real-time monitoring in this state so we can have an independent source looking at our wagering, rather than depending on Scientific Games.”
Copyright © 2009, The Paulick Report
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Tags: breeders, breeders' cup pick six scandal, California Horse Racing Board, CHRB, eual wyatt, hana, Hollywood Park, Horse Racing, horseplayers association of north america, kirk breed, mike maloney, pari-mutuel wagering, past-posting, Paulick Report, Ray Paulick, scientific games
Posted in California, Regulatory Issues, Tote System, Wagering | 26 Comments »
Wednesday, February 25th, 2009
By Ray Paulick
For those racing fans who come to Florida during the winter months and are unhappy with the sterile environment of Calder Race Course or the schizophrenic nature of Gulfstream Park Racing & Casino, I have three words for you: Tampa Bay Downs.
The little racetrack near Tampa that first opened its doors in 1926 is absolute heaven for fans of Thoroughbred racing. If you like good value, sitting outdoors in the Florida sun, or getting a close-up look at the horses, Tampa Bay is the place to go in the Sunshine State. After coming to Florida for the better part of 40 years, I made my first visit to Tampa Bay Downs last weekend, and the only question I had was, “What took so long?”
Though the track offers a card room, a modern simulcast center and other indoor comforts, the main attraction at Tampa Bay Downs is old-fashioned live horse racing. Good-sized fields and competitive takeouts make Tampa an interesting track for horseplayers, too, and the fact that handle for the current winter season is on par with the 2007-08 meeting is a sign that track management, led by GM Peter Berube, is doing something right, especially in the face of a very difficult economy.
I was pleasantly surprised to see a nearly full parking lot and a bustling clubhouse and grandstand when I arrived for the Saturday program, when attendance reached almost 5,000. Free parking and only $3 for clubhouse admission makes Tampa Bay Downs an entertainment bargain for people in the area, and the competitive takeouts (win, place, show 17.5%; daily double 18%; pick 3s, pick 4s, etc, 20%; exactas, 21.5%; trifectas, superfectas, 25.9%) helped the track rank 11th in the recent survey by the Horseplayers Association of North America.
High takeouts at Tampa were a sore spot among some gamblers in recent years. “We’ve been very aggressive the last four years in reducing and tweaking our takeout,” said Berube.
Berube said the economy presents a very real challenge to the track, which he said relies on retired snowbirds and tourists from the north. As a result, on-track attendance is down about 5% and on-track handle has declined 10% this year. Simulcast figures have helped make up for the on-track wagering shortfalls. “The weekends have been fine, but weekday programs have been very soft on-track,” Berube said. “The weekday customers are the ones who are mostly on fixed income.” Those are the folks who have seen their retirement savings hammered by the collapse in the stock market.
Berube said Tampa essentially has the same market as Gulfstream Park on Florida’s East Coast. “Just like them, we’re selling Florida sunshine and good entertainment value.”
The difference between the two winter tracks, especially since Gulfstream Park was rebuilt and is now as much a casino as it is a racetrack, is as clear as night and day: Gulfstream has few outdoor seats and puts a premium on its indoor dining rooms and slot machines, while Tampa has ample, free outdoor seating, both in the grandstand and on the apron, where picnic tables and benches are popular among the diverse fan base.
With a saddling paddock and walking ring at the top of the stretch, fans on the apron or in the grandstand can easily view the horses, when they are brought over from the stable area or while in the walking ring. It’s one of the most intimate and fan friendly racetracks around.
Since Stella Thayer bought the track in 1986, Tampa Bay Downs has embarked on a steady stream of capital improvements. Berube has been at the track for 15 years, and says that “racing will always take top priority here. That’s a tribute to the ownership. She’s a horsewoman,” he said.
Berube said an average of $1 million per year is invested in capital improvements, which include a turf course installed in 1997, an infield video board bought last year, a totally renovated clubhouse, and a modern simulcast room. The track also offers wireless internet access for its patrons.
Video billboards are sprinkled along freeways in the Tampa area, and Berube said they have been a great marketing tool for the track because of the ability to change the message during the day. “We’ll promote pick six carryovers as they occur, and we’ll even change the message from a racing promotion during the day to the card room at night,” he said.
Tampa Bay Downs was always a well-kept secret, at least for me. It’s not anymore.
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Tags: calder, florida racetracks, gulfstream park, Horse Racing, horseplayers association of north america, Paulick Report, peter berube, Ray Paulick, stella thayer, tampa bay downs
Posted in Florida, Race Tracks | 8 Comments »
Saturday, January 3rd, 2009
A recent guest editorial by Fred Pope entitled “Priority 1: Racing’s Business Model,” brought forth a vigorous discussion among Thoroughbred owners, breeders and horseplayers about revenue splits from simulcasting and the levels of takeout in pari-mutuel wagering. Comments continue to be posted on that article two weeks after its original publication (including a lengthy reply from Pope on Jan. 2), as well as on a follow-up piece I wrote on the subject.
The following analysis on the issue was written by a California-based horseplayer who goes by the pen name “Indulto.” He previously wrote a Paulick Report guest commentary on the Breeders’ Cup in October and has contributed to other racing-related blogs and web sites. Indulto’s views, like those of any guest commentary, do not necessarily represent those of the Paulick Report. – Ray Paulick
By Indulto
I heard there was a mugging going on at the Paulick Report recently, but when I got there it looked more like a series of drive-bys.
What is it about Fred Pope that riles up horseplayers? When the Paulick Report offered a second exposure to Pope’s agenda in “ PRIORITY 1: RACING’S BUSINESS MODEL,” it was swamped by responses from horseplayers including multiple comments from several staff members of HANA (Horseplayer’s Association of North America).
In pari-mutuel pool participant parlance, it appeared to be an attack of pirHANAs.
As usual, Mr. Pope’s crafted arguments are logical, persuasive, and targeted at racehorse owners. The reader who is primarily a horseplayer, however, soon realizes that Pope doesn’t acknowledge their existence much less recognize them as having any stake in his new business model for racing despite the fact it involves funding purses with pari-mutuel handle – a breath-taking omission to some. Understandably, a few initial reactions from responding horseplayers were overly negative and/or derisive.
Considering the volume and passion of his opposition, Pope’s willingness to engage was laudable, but his live responses to the onslaught were not as convincing as his canned content. One of my objectives in this belated response is to address the concerns of some of racing’s customers who are not among the horseplaying elite; in theory, practice or internet participation. Perhaps a chronological presentation of the salient portions of Mr. Pope’s defense – with assistance from Ray Paulick — will permit easier reader verification, if desired. The bolding in quoted portions is mine.
Pope’s initial reply disparaged most of the industry’s customer base.
“… I value bettors greatly. We have somewhere in the neighborhood of 100,000 handicappers in America and we are losing some every day. They are not being replaced, so time is of the essence. We have about 3 million people who go to tracks each year and have a generally good feeling about racing, but they don’t know how to handicap, so betting isn’t much fun unless the color they picked wins. ….”
Who are those “100,000 handicappers” he referred to and where does that figure come from? How many of them are whales and/or professionals, i.e., the tiny minority of players whose huge bankrolls give them the clout to force the industry to effectively lower takeout on their wagers through rebates. This perversion of the pari-mutuel system puts the vast majority of non-rebated bettors at a competitive disadvantage, especially in the exotic wager pools. Takeout is obviously too high, but only the wealthy are eligible for relief. Some of the average player resentment against horsemen today is derived from the horsemen’s shutting off signals from tracks they were negotiating with to onshore ADWs, but still allowing them to go to offshore ADWs that service those high-volume players.
Where are the free videos the industry should be generating for internet and on-track viewing to acquaint the novice with the game and the environment before, after, and even while attending the races for the first time?
Mr. Paulick then came to Pope’s defense.
“I didn’t interpret in reading Fred Pope’s article that the horseplayers don’t matter. Of course they matter. But so do the owners who invest a whole lot more than an OTB or a phone betting company, and so do the tracks that have huge investments in bricks and mortar. Horseplayers lose on average 20% of what they bet. Horse owners lose more like 50%. Tracks may be show a minor profit, but not enough to rebuild their infrastructure or invest in the future. Right now, no one seems to be winning.”
Those percentages are misleading, in my opinion. Without implementing a level playing field from an equine medication standpoint, wouldn’t the bulk of any purse increases continue to go to the same owners who currently collect a disproportionate share of purses just as rebated professional bettors cash a disproportionate number of IRS signers?
Apparently emboldened by that support, Pope responded to his detractors in kind.
“ Now, how some of you got the impression that I am against lowering takeout and don’t care about bettors, is hard to understand. But, I have a wife, so here it is: I apologize honey for not considering your feelings and I promise to never do it again. I was trying to get the front door back on and should have thought about the fact you are feeling a chill.”
Okay, Mr. Pope. We are a sensitive bunch. We’re watching an industry devoid of leadership and deficient in integrity self-destruct. You aren’t the only one passionate about saving it and seeing it prosper. Concentrating on the unhinged front door while ignoring the broken back door hardly seems a recipe for success. Like a politician whose message changes with his audience, you provide no indication in any of your speeches and articles that bettors should benefit as well as owners.
In his concluding response there, Pope wrote, ”But, I think most people were not aware the bet takers were getting the lion’s share and now most want to change the IHA to restore live racing. What I would like to hear is from some young folks in marketing about what this change could do for the host tracks and the sport.”
I would guess that as many people were unaware of who gets the “lion’s share” as were unaware that the playing field is tilted against the non-rebated bettor. Horseplayers prefer ADWs to other bet takers when they provide rebates or access to venues the others do not. In my opinion, enabling residents of all states to wager on-line through the bet taker of choice on races at any venue, would by itself justify modifying the IHA. Establishing a centralized industry authority would be icing on the cake. John Pricci once proposed Bill Clinton for Racing Commissioner. Is anyone better prepared to deal with industry politics?
In Paulick’s last response he wrote, “What has gone up is the access to exotic wagers (multiple types of exotics on every race, which wasn’t the case 25 years ago). With that increased access to exotics is an increase in the blended takeout, since players invest more in exotics than in lower takeout WPS wagers. Did racing make a mistake in offering too many exotic wagers, or should the higher risk-reward bets have the same takeout as WPS, which most serious players don’t seem to play?”
Currently the “serious players” dominate the Pick Six wagering pools because the $2 minimum for each combination effectively bars virtually all but big-bankroll bettors from playing it competitively. Defenders of the current minimum insist that a lower minimum would reduce the number of carryovers and thus the huge payoffs the wager sometimes generates. Perhaps a compromise is warranted. New York offers a lower Pick Six takeout on non-carryover days. Lower minimums on weekends and holidays – and only when there is no carryover — would enable more players to compete in the Pick Six Pool. Allowing on-track patrons to purchase a minimum of say 100 combinations at $.50 on those days should spur attendance as well as handle.
Shortly thereafter, Paulick followed up with his own summary in “ POPE’S UPSIDE-DOWN BUSINESS MODEL PROVES HOT TOPIC.”
“Comments from horseplayers focused largely on what they believe is an onerous level of takeout,… Not many of the horseplayers who commented seem to have much sympathy for horse owners who spend at least $2 billion a year on training costs and compete for half that amount in purses.
“Many of those horseplayers want to see takeout reduced, especially on exotic bets such as exactas, trifectas, superfectas or multi-race wagers where the takeout often exceeds 25%. Some of them feel ADW companies should get a large enough share of the takeout so they can be profitable and still offer rebates to their best customers.
“The problem with that, as I see it, is that the stronger position the ADW companies have, the greater a percentage of handle will migrate from on-track business to phone or internet wagering . … As handle moves from on-track to ADWs, there is less retained revenue for the tracks and local horsemen to put on the show. Less revenue means lower budgets for marketing, capital improvements and technology advancement for tracks, and less incentive for horse owners to stay in the game.”
Sympathy on all fronts is obviously in short supply. Maybe I should have changed the title to “Can’t we all get along?” Seriously, owners need to consider reducing costs where practical. Purses aren”t supposed to support extravagance or subsidize bad judgment. Trainer fees, vet bills, stud fees, and sales prices are likely places to start. Why are fees generally greater for high-profile trainers whose "expertise" is funneled through assistants and applied increasingly hands-off across venues and among clients? Are their total earnings to total charges (including vets) ratios always competitive?
Pope added: “You know, it is hard to have it both ways. You want a better racing product, but the money from a better product is now going to the bet takers who give you a discount. … Which way do you want it? Do you really want a better product that will grow the sport, or do you want your discount.”
Actually, we want both. To imply the two are mutually exclusive is also misleading. One problem that players now attribute to owners, as well as tracks, is the degradation in quality of the product. Higher purses aren’t drawing large fields, and graded stakes seldom attract previous winners at the higher levels. There are simply too many races being carded and insufficient cooperative scheduling. The result has been lower demand and thus handle. In fairness, synthetic surfaces may also be a contributing factor in this area.
Pope then rallied back to his original position.
“So, you guys are contending the growth of claiming races to over 70% is a better racing product?
And, the main reason for racing’s decline is the takeout rate?
… I think you will find the people spending $500 million each year on yearlings want to get back more than the claiming ranks provide. They also want to participate in a sport, not just make a bet.
So, I’m going to say horseplayers are overpopulating this discussion.
Thoroughbred racing is the racehorse owners’ game. The track facilities are important partners, but at the end of the day, racehorse owners and breeders will decide the racing product, its distribution, pricing and promotion. From time to time, they need to stand up and fix problems. I think that is exactly what they will do with the IHA.”
The internet wagering/viewing genie is out of the bottle, and it is the only access for fans too remotely located or too physically infirm to attend live racing. Racing should expand that market with the IHA, not abandon it. As one who follows the sport at its highest level and bets for entertainment, I would prefer to compete on a level playing field for all bettors regardless of bankroll size; just as many horsemen would prefer to compete in an environment with uniform medication policies accompanied by more appropriate penalties for violators.
Pope continued, ”The reason we have the problems in the sport is the lack of owner leadership. We need the basic structure of a major league like the other sports. … I apologize for jumping in on those who want to discuss takeout, however, I think that issue belongs in another forum. It would not be a part of the IHA.
… We spend too much time hiding from the truth. The truth is medication, drugs, animal welfare and the details of the right mix of takeout and customer service are not the basic problem. The basic problem is structure, or more specifically, the lack of it.”
One truth Pope can’t hide from is that his plans will have to not only overcome resistance from his fellow horsemen, but also from horseplayers. If nothing else, he must now realize that there are people as determined as he is to put racing back on track, and that they have organized in order to accomplish some of the same objectives. Another truth is that my former colleagues’ reactions had prior momentum. I was still working with the founding HANA team when the Pope agenda got its first airing on the Paulick Report in “POPE TO OWNERS: ‘IT’S YOUR GAME’.” After experiencing a similar reaction to Pope’s remarks in that article, I submitted an opinion piece to the HANA Blog, “Horseplayers to Pope: It’s Our Game Too.” I assume, Mr. Pope either never saw it or felt no response was necessary.
It’s probably no coincidence that, in the absence of my daily dissidence, HANA has progressed well beyond a handful of posters at the www.paceadvantage.com Web site to become a corporate entity with now very public officers, a distinguished advisory board, and an internet sign-up membership that has (to the best of my knowledge) quadrupled since Mr. Pope’s work initially appeared on the Paulick Report. HANA is now led by its president and principal spokesman, Jeff Platt, who is no less logical and persuasive than Mr. Pope in articulating his organization’s concerns and goals. It’s clear to me that these two gentlemen should be talking to one another and developing a new business model that both horsemen and horseplayers can support.
Among the many worthwhile player comments focused on ADWs and takeout, there was one that I am certain deserves wider distribution. Poster BombsAwayBob Grant wrote, “The first track in the country offering strong rebates for bettors making wagers AT THEIR TRACK will be the first one to see their bottom line improve. It will get bettors back to the track, while still allowing full ADW access for their signal.”
Simulcasting and technology helped create the off-track wagering advantage in terms of cost, convenience, and competitiveness. It’s time to reverse that drain by pulling customers back to a future where on-track patrons are viewed and treated as racing’s best customers. Hopefully, Hollywood Park will get the message by next April. What have they got to lose?
Copyright © 2009, The Paulick Report
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Tags: Account Wagering, advance deposit wagering, ADW, betting rebates, fred pope, hana, handicappers, horseplayers, horseplayers association of north america, indulto, jeff platt, pari-mutuel wagering, Paulick Report, racing's business model, Ray Paulick, Simulcasting, simulcasting revenue splits, takeout, thoroughbred owners, www.paceadvantage.com
Posted in Account Wagering, Industry Reform, Regulatory Issues, Simulcasting, Thoroughbred Business, Wagering | 56 Comments »
Tuesday, July 22nd, 2008
(The Paulick Report was contacted by the recently formed Horseplayers Association of North America (HANA) with a response to our recent article on the Thoroughbred Horsemen’s Group and its approach to negotiations with account wagering or advance deposit wagering companies (ADWs). The following commentary does not reflect the views of the Paulick Report but is published in the interest of advancing the discussions on this subject. — Ray Paulick)
It was announced a few weeks ago that Ellis Park in Henderson, Kentucky struck a last hour compromise between Ellis and the KHBPA, allowing for racing to begin in 2008. With it, close to 6% of ADW handle will be going to purses this summer. It appears that Ellis is charging Advance Deposit Wagering (ADS) companies up to 8% signal fees for the right to broadcast Ellis races.
The Thoroughbred Horsemen’s Group’s Bob Reeves said this recently about the deal as reported by Ray Paulick of The Paulick Report: "We are trying to save racing."
We think deals like this will do the exact opposite. And we’ll tell you why.
An ADW normally pays about 5% (which is about what the current free market dictates) for the right to broadcast a signal and sell it to their customers. It is like a web-affiliate bookseller selling a book and keeping a commission. Then the ADW pays expenses, keeps some of the generated handle for themselves to run their businesses, and returns the rest to the player in a few ways:
1) Player Rewards - A video game, maybe a hat, trinkets of some sort, what have you. We all have received these perks.
2) Innovations and Customer-centric Benefits - An improved betting interface, R and D (like Twin Spires TV), free handicapping information (like Ian Meyers’ paddock reports at Premier Turf Club, his deal with Woodsideassociates.com, or partnerships with Thorograph at betfair), free past performances, free video. Things to encourage the player to up their handles.
3) Cash Rewards Through Rebating - Churn baby churn.
This model of giving something back to the player and delivering it in a customer-centric way has resulted in a rise in handles for ADW. Up over 17% last year - our only true blue growth segment.
If ADW’s are charged a higher fee, things like free rewards, hats and shirts; or the interesting innovations we have seen like race replays, and conditional wagering and paddock reports can all be cut. This hurts us in attracting new fans to our Internet platform, as well it alienates our existing customers (ask Vegas how they’d do without comps or adding a concert as an attraction; and ask them now what would happen if they took them away!). All those rewards and incentives are very important, but the most important point however to us as a business: It effectively increases takeouts. If 3% more is charged for a signal, 0.5% might be absorbed by the ADW. Where does the other 2.5% come from? Yes, the customer’s pocket - the customer that already pays for purses to the tune of 21% blended rakes.
When the signal fee is raised 3%, more than likely 2-2.5% will be taken from the cash rewards from certain ADW’s. If you were receiving a rebate of 5% on win wagers at track ‘A’ and they are cut in half you know, we all know what happens, you bet less. With these price sensitive players, where 2.5% can mean a huge difference, it can kill their handle. As Dan, a professional player, said recently to us "Even miniscule reductions of 2 points can make a HUGE impact on a player’s bottom line. The intelligence of the modern player is frankly overlooked by those in positions of decision."
With a conservative elasticity of demand of 4 for rebated high volume players, this takeout increase could result in a 10% drop in handle (many would argue it would be much more). Not to mention any new players (especially the younger demographic we covet) that are attracted to some of the perks like free past performances, or innovations, will find they are not there any longer, and it makes the customer experience deficient in a demanding 21st century business model. Online poker anyone?
It’s like going to McDonald’s and finding out that yes, the price of a Big Mac was raised 30 cents, so you might eat one less a month now; or maybe go to Wendy’s instead, but not only that: Now your more expensive Big Mac is served not complete in a nice wrapper, but in a do it yourself kit. When sales of Big Macs go into the tank, it would not surprise any executive at McDonald’s, they would know they cut their own throat.
Increasing takeouts, poor customer service and an absence of both soft and hard innovation through reinvestment is something we should have learned has helped kill this business by now. Year after year the evidence is overwhelming. In fact, this study written several years ago by a gambling expert and reported to racing, stressed the takeout point and making sure these players are taken care of.
Racing has lived with rising rates of takeout for so long that they have become a way of life. They are the line of least resistance whenever the industry needs money. It is all too easy for the industry to see that if we have a constant $100 in handle, and we raise the takeout by one percent, we’ll make a dollar more. It is much less easy to see that handle is not constant and, over the longer term if not the short, we won’t have that $100 any more.
If we don’t offer a low takeout (via rebate) to customers, we’re going to lose them, or at least a significant portion of their money. Hence the efficacy of rebates: they target reductions in the takeout to the customers who would respond the most to them.. (Analysis of the Data and Fundamental Economics Behind Recent Trends in the Thoroughbred Racing Industry, 2004)
Sometimes I wonder. I really do. Do we actually want racing to lose market share? If we do, we are certainly doing a good job at it.
Everyone needs to work together in the current ADW impasse and the business must know where players stand. If players are not heard from and respected, we will not grow the pie, we will simply end up having less of a pie to split.
This opinion piece was submitted by a HANA member at Pull the Pocket blog spot. We will be discussing the ADW situation and offering solutions over the next few weeks; including a white paper. The paper will show what we think ADW should look like for the 21st century and beyond - it will include, but it is not limited to, open access, fair prices for all players (not just whales), and fairness to the producers - the track and horsepeople. The overall goal is one thing and one thing only - to grow the sport. This is an opinion to kick off the discussion - players matter. We matter. If you would like to join HANA click here. It’s free.
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Tags: Account Wagering, advance deposit wagering, bob reeves, ellis park, hana, horseplayers association of north america, khbpa, Paulick Report, Ray Paulick, takeout, Thoroughbred Horsemen's Group
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