National Handicapping Championship: At a Crossroads?
In this week’s season finale of the reality show, Horseplayers, on Esquire Network, viewers went behind the scenes of the 2014 Daily Racing Form/NTRA National Handicapping Championship. The show’s 10 episodes chronicled the year-long journey of several handicappers trying to reach that ultimate goal – a seat at the exclusive tournament in Las Vegas each January.
But the Horseplayers audience only got a glimpse of the prestigious event. There’s much more to the story of the National Handicapping Championship, how it continues to evolve, and where it might be headed.
The NHC was established in 1999 with two goals in mind: To celebrate horseplayers and crown one handicapper the best of the year.
With its anyone-can-qualify format, Las Vegas destination, gleaming Eclipse Award trophy for Handicapper of the Year, and big-time prize money, the NHC soon showed potential as a horseplayers’ equivalent to the U.S. Open, Super Bowl, or Stanley Cup – take your pick.
The 160 players who made that first trek to Vegas in January, 2000 competed for the healthy sum of $200,000. In hindsight, it was a humble start.
The tournament took off exponentially in the ensuing years, with a mini-industry of qualifying tournaments and separate NHC Tour springing up with it. For the 15th NHC tournament last January, 3,200 players competed throughout 2013 to land a seat in the field of 500 or so. The NHC Tour and tournament gave out more than $2 million dollars in prizes and other awards. Still, according to its operator, the National Thoroughbred Racing Association, the NHC is far from reaching its potential.
“We absolutely believe this property is in its infancy,” said the NTRA’s Keith Chamblin. “It could eventually be a $5 million or $10 million tournament.”
But it’s not clear exactly how it’s going to get there, and like any business or franchise that blossoms, the NHC’s rise has not come without growing pains.
From financials to formats to the NHC’s raison d’être, players have ramped up their concerns about how the tournament system works and whether horseplayers are truly being celebrated or perhaps getting the short end of the stick in some cases.
For Horseplayers cast member Christian Hellmers, transparency is one of the biggest concerns. Some players are skeptical of the amount of money coming into the NTRA from Tour memberships and seat sales versus the amount that is paid out in prize money. In 2013, prize money and awards equaled $2,069,984 while revenue was $2,400,273.
“That’s ($330,000) not going to players. Where is that money going?” Hellmers asked. “How do we figure the takeout rate? What is going to happen as the tournament grows?”
Chamblin said of the $330,000 profit, around $140,000 paid for tournament expenses with other money going toward the salaries of those involved in putting it on. Money from that pool also goes into marketing next year’s tournament.
Chamblin pegged the NHC takeout rate at 13.76% for 2013, but some players, including Lenny Moon, who did his own analysis of NHC financials in a series of blog posts, believe the math is shaky depending on how you calculate travel expenses, hotel rooms and other factors.
The challenge, Chamblin said, is being able to give horseplayers a hard number for the following year.
“We don’t know where we’re going to land for overall participation for (qualifying) sites around the country,” he said. “As we get toward the 4th quarter, we start to see how online play is being impacted, whether they are selling out (seats).
“It’s not something where we can say takeout next year is going to be X. What we’ve been comfortable doing is guaranteeing what the minimum will be, so players can know what the baseline is.
“Depending on how you look at the structure of the NTRA, we’ve profited off the NHC slightly. Or you could say it’s cost us hundreds of thousands of dollars.”
In addition to the changing financial structure from year to year, the format of the tournament has also been a work in progress, to the chagrin of some players like Hellmers.
“It’s so arbitrary,” Hellmers said. “It just takes a more intellectual approach… built on math and input from the best players. I feel like that’s not happening.”
So far, the NTRA has employed a year-by-year method, making tweaks to the rules based on player feedback. For example, in response to criticism that prize money was top-heavy, the NHC’s first-place payout was reduced from $1 million to $750,000, the amount won by handicapper Jose Arias in January, and awards were paid out to 50th place for the first time. The 2014 NHC tournament was also extended from two days to three, and organizers added a cut-down to 50 players after the 2nd day, with a final table of 10 competing for the top prize. A consolation tournament on day three also kept players sticking around until the end.
“We’re trying to figure it out. We don’t have it right yet,” said Chamblin, who pointed to favorable responses in a survey of players following this year’s tournament.
Professional handicapper and former Thoroughbred trainer Brent Sumja is among those who like the format changes to the NHC tournament. His issue is with the NHC Tour, the year-long qualifying competition that awards seats to the NHC tournament and has its own prize structure.
Sumja happens to be the guy who won the NHC Tour last year.
“I have zero interest in doing the Tour (again). It’s economic suicide,” said Sumja, who won $75,000 for first place (a tenth of the prize for winning the NHC tournament) plus $17,000 in bonuses. Sumja said he spent $40,000 to $50,000 in travel and other expenses to pocket the $92,000.
The problem, according to Sumja, is that the Tour has tilted in favor of online qualifiers that offer seats to the NHC tournament in Vegas but do not have cash prizes attached. Had he finished second instead of first in the Tour points standings, Sumja would have won $15,000, not $75,000, and therefore, would have lost a substantial amount of money in pursuit of the Tour title.
“You only have so much money to put in these things. You can’t just be firing money into online that doesn’t pay back anything. You’re getting an entry to Vegas, which is great, but… the Tour has became economically ridiculous to pursue.”
To win either the half-year or full-year standings on the NHC Tour, players do need to have at least one score from a live, on-site tournament, which can offer the possibility of large cash awards. But in previous years, the number of required on-site scores was higher.
Online qualifiers have grown substantially for the logical reasons you might expect – they are convenient and less expensive for both the operator and the player than a live, on-site tournament. In 2006, only 40 seats to the NHC tournament were awarded online. Last year, about half of the 500 seats came through Internet qualifiers.
“The value proposition of this event varies from individual to individual,” said Chamblin. “A lot of players like the online tournaments because they save on travel.”
Still, Chamblin said the NTRA wants to preserve the role of on-site qualifiers as much as possible because they benefit the racetracks. However, the number of tracks that can afford to hold such events may be dwindling. It costs $10,000 for an on-site host to buy three seats to the NHC tournament, but getting that expense recouped can be difficult for smaller tracks because they can’t attract enough players who will pay an entry fee and may have to travel to get to the location. By comparison, online hosts pay $7,250 to the NTRA for each seat but may easily get 300 players to participate and fork over entry fees.
McKay Smith, whose business is online qualifying for the NHC tournament, said even with online qualifiers, the margins are thin since hosts pay not only for seats but accommodations in Vegas, and credit card fees, while trying to keep entry fees reasonable.
“Our net is really no more than 7 or 8 percent,” said Smith, who used to operate the NHC tourney with the NTRA and now runs the qualifying website, www.horsetourneys.com.
Smith said he sees the value in a strong on-track component. In addition to online qualifying tournaments, HorseTourneys also awards seats to various on-track qualifiers and hosts its own event at Laurel Park each year with a purse reaching $200,000 or more.
“It still needs to be an equitable mix,” Smith said. “If the tracks don’t do well, we don’t do well either. That’s where the new player gets harvested. It’s really the on-track experience that creates the online player.”
NHC Tour winner Sumja said the on-track component is also important because horseplayers form relationships, something that could be gleaned from watching the cast of Horseplayers interact at racetracks across the country.
“I think the NHC is awesome, but they’ve really dropped the ball on the Tour,” Sumja said. “It’s really taken the fun out of it. The live tournaments are an incredible experience.”
Perhaps the NTRA needs to better incentivize in-person qualifiers, but whatever the mix of live and online might be in the future, Chamblin said the Tour is a crucial part of the NHC’s growth.
“Our success depends on more players,” he said. “Thousands of core players have yet to experiment with tournament play. Some probably aren’t even aware of it. We’re looking for avenues, building incentives to sign up or trying to come up with tournament structures for newcomers.”
Chamblin said increasing the number of players competing for seats at the NHC tournament will help everyone achieve their goals by boosting revenue and therefore, prize money, but it’s fair to say that a larger tour and tournament will also make the task of qualifying (and winning) that much more difficult for horseplayers.
There’s a $2 million bonus on the line for the player who can win both the NHC Tour and the Vegas tournament, but the chances of that happening are, frankly, minuscule when a player is competing with thousands of others on the Tour and against 400 or 500 opponents in the tournament.
Considering the prize money involved, the Vegas tournament is the ultimate goal and carries with it the Handicapper of the Year award. But it is also a one-weekend, “mythical” betting tournament that doesn’t ask horseplayers to manage their own money, a critical aspect of the game. The Handicapper of the Year award and the top prize of $750,000 rest solely on those three days.
Christian Hellmers, who recently won nearly $270,000 at the Horseplayer World Series, another tournament in Las Vegas, believes the NHC, World Series and perhaps the Breeders’ Cup Betting Challenge could be combined to create more of a “series” to determine Handicapper of the Year or perhaps to honor more than one horseplayer for all the hard work.
“I believe horse racing is a quest for truth,” Hellmers said. “I want to be recognized for the blood, sweat and tears I put in. Horseplayers work just as a hard as jockeys, trainers and grooms. And nobody knows it.”
While there are disputes over money, formats, and structure, everyone agrees tournament play could be an excellent way to drive new players to the sport, especially if shows like Horseplayers or other television content incorporating the NHC can grow. Chamblin and Smith agree the message for new players is that contests are fun, they often involve a low, fixed investment, and they can also serve as a first step toward learning the intricacies of pari-mutuel wagering.
For all of the parties involved to reach their goals – horseplayers, tournament organizers, racetracks, and the NTRA, collaboration might be crucial.
“We work in cooperation with the industry,” said Smith about HorseTourneys. “My goal is to help the industry stakeholders improve their programs and get more participation.”
Chamblin concluded: “We’ve got to take the existing tour members and use them as soldiers to communicate how fun tournament play is. It’s kind of a game within the pari-mutuel game. We can’t do that without the help of the players.”