The Breeders’ Cup Forum: A Betting Bonanza Awaits
Kenneth E. Kirchner currently serves as president and CEO of Falkirk International, which consults with the Breeders' Cup and other racing organizations on domestic and international simulcasting, television, account wagering, product development and government relations.
A former senior vice president of Breeders' Cup, Kirchner also worked as executive director of the Pennsylvania Horse Racing Commission and in the administration of former Pennsylvania Gov. Robert Casey and as special assistant to Congressman Paul Kanjorski.
Breeders' Cup handle, which grew significantly from the mid-1990s until the present, is a critical source of revenue for the organization and its Championships days.
What's new on the betting menu at this year's Breeders' Cup?
This year's betting menu will feature multiple low cost wagers – 10-cent superfectas, 50-cent trifectas, Pick 3s, Pick 4s, Pick 5s, and $1 exactas.
The Championships continue to be the best bet in sports. Last year saw fans collect $71,510 on a 50-cent Pick 5, $46,814 on a 50-cent Pick 4, over $444,000 on Friday's $2 Pick 6, several Pick 3s that paid over $10,000, and 10-cent superfectas that paid thousands of dollars. And that doesn't even get into the trifecta and exacta payouts. The Breeders' Cup continues to deliver the highest payouts for the lowest investment of any two days of racing all year long.
Do “guaranteed” pools work in driving handle? And how do you and Breeders' Cup arrive at the guarantee levels?
Guaranteed pools drive attention to specific bet types. We'll have $7 million in guaranteed pools this year with two $1-million pools on Friday (Pick 6 and Pick 4) and $5 million on Saturday ($2 million Pick 6 and late Pick 4 and a $1 million early Pick 4).
Because the insurance markets for guaranteed pools have disappeared and we have to self-insure each pool, we tend to be a bit more conservative with setting these amounts. We'll look at a three-year average of a specific pool and work back from that figure. For example, the Friday Pick 6 has averaged $1.35 million the past three years and this year's guarantee will be $1 million.
What trends have emerged in the years you've been handling Breeders' Cup simulcast and wagering issues?
It's hard to believe but this is my 17th event and the changes from the early years are mind-boggling. Prior to 1996, there were a dozen or more common pools on the Championships – each state almost had its own pool. The first thing we did in 1996 was force all sites into either a single common pool or one separate pool. This produced bigger pools, which led to more wagering and that allowed us to expand the betting menu.
Remember that exotic wagering was in its infancy back then with the primary emphasis on the win, place, show and exacta pools and they represented almost 70% of all wagers – now they are only 54% of wagers. Total wagering was only $60 million in ‘96, now it's $165 million. There were no Pick 4s, no rolling Pick 3s, no superfectas, no reduced price wagers. The only international site taking the Breeders' Cup was Canada and that was in a separate pool. Now we have over 25 countries participating in the common pool and Breeders' Cup has been in the forefront of moving the world towards global commingling. International wagering accounted for over $20 million of the total handle last year.
How do Breeders' Cup wagers (percentage of WPS, exactas, tri's, multi-race bets for each race) compare with an average race day at a major track?
Breeders' Cup is much more heavily weighted towards the exotic bets. We see only 33% of wagers in the WPS pools, where a regular day might see 36-40% in those pools. But our average WPS pool is still $3 million or so. We have tremendous value offered in every pool but the players have moved their action towards the high-paying exotic bet types. And when you can make $46,000 with a 50-cent Pick 4, why wouldn't you be in that pool?
We were the first event to offer the Pick 4 bet, which is now the most popular wager on almost every race card in the country. Breeders' Cup has helped lead the country in the move to low-priced, high-payout exotic wagering.
Is there an established pattern on what races, other than the Classic obviously, will handle the most money, or is that driven more by star horses, field size, or some other factor?
Field size is critical to overall handle. But it's important to properly place the races in a sequence that balances fan interest, betting, and television. Each race should handle more than the preceding race. Obviously, that's not always possible based on the fields but I have to give great credit to Dora Delgado and the racing office, they consistently deliver outstanding quality and maximum entries.
Having a Zenyatta or Goldikova every year would be sensational and make my job a lot easier in generating record handle figures each year. For example, we continue to reserve the option to change the race order based upon the final entries in each race. This year we will switch several of the races on Championships Saturday based upon what we believe will be the optimum betting menu and fan interest.
You talked about how Breeders' Cup days traditionally provide the most attractive exotic payouts in racing. But do you have some concerns that the growth of vertical, multi-race wagers and longshot winners discourage churn and tap out a lot of players seeking life-changing scores?
Yes and no. The vertical, multi-race wagers are one of the reasons we've seen the growth in handle over the past dozen years and they are some of the best paying bets offered. As you point out though, these bet types do tie up monies in multi-race pools that might otherwise be re-bet race after race. That's one of the reasons that there is no substantial change in the bet menu this year after adding the early Pick 5 in 2011.
What effect do you think a Saturday night East Coast prime-time Breeders' Cup Classic will have on handle? Are East Coast OTBs and racetracks staying open late?
That's one of those variables that we won't be able to answer fully until after the event. We are running the Classic one hour later than the past two years, 8:30 p.m. EDT vs. 7:30 p.m. I've talked with a number of East Coast sites and they will be making special efforts to keep their crowds throughout the entire Saturday program but we recognize that this is unchartered territory.
I suspect that a number of players will watch and wager on most of Saturday's card at their local simulcast facility or OTB and then head home for the Classic. That should help our ratings with NBC. And last year, we saw $40 million in wagering via North American ADW sites, so fully 25% of all betting is now via ADWs. I think players will get their bets in one way or another. And I believe our play in future years is to find a way to get a prime-time home audience tuned in and actively participating in the country's only legal internet wagering option.
How does California stack up with Churchill Downs and other host sites as far as handle and revenue to Breeders' Cup are concerned?
California is a very good site for the Championships from every perspective. Certainly the attendance at Churchill is unsurpassed as a host site, which also leads to higher handle. But the fan experience at Santa Anita – with the weather, San Gabriel mountains, LA amenities – have advantages that no other site can offer. But I do miss not having a Florida site on the rotation.
Tell me a little about the handicapping tournament that will take place again this year.
The Breeders' Cup Betting Challenge continues to be a new and shining light at the Championships. It's now in its fourth year and the BCBC has become the go-to handicapping tournament in the country. We're expecting a record number of players, around 140 for the event. Last year, Patrick McGoey, an attorney from New Orleans, qualified for the BCBC in a $100 online qualifier and turn his bankroll into a $270.000 payday. That's a story that rivals the poker stories you see on TV, turning $100 into $270,000. This year, some 43 of the 140 players will have qualified online and we'll certainly see another fantastic story emerge from the BCBC.
My hope is that Breeders' Cup will devote added resources to this event in the coming years and we can grow this to become a $1-million tournament – and start attracting international participation from punters around the globe. If we can bring the best horses and horsemen from the world over to the Championships, why not the best punters and horseplayers?
Any predictions on total BC handle this year?
I'm hoping that the entire country is so burned out by all the negative political campaigning that they'll be looking for a fun alternative to get away from it all. And then they show up at their local racetrack and bet the entire Koch brothers fortune on the Championships.
Has wagering on the event reached a plateau?
I believe there still is room for substantial growth in wagering. You have a home viewing and internet audience that should be participating. Tens of millions of dollars are being bet every weekend on college and pro football – we just need to draw their action for two days of the best Thoroughbred racing they'll ever see – with payouts that make their 11/10 football odds look sad.
Certainly, we need to find a way to expand into the Asian markets of Japan and China but those are quite a ways off. We need to show the UK bookmakers that a common pool will increase their turnover and guarantee them a bigger gross profit. Overall, we'll continue to seek new bet types, more simulcast markets and creative ways to reach our fans.