Racing Don't Need This!

[miff]

PTP:


Millennial Gamblers, Hats, Clubs, \"Action\" ..... or Value?

Jeff Hwang at the Motley Fool (h/t to @derbyologist) analyzed gamblers in his demographic in a lengthy piece anyone interested in the topic (read-horse racing) should give a go.

We often hear young people won\'t bet the races, attend racetracks. They don\'t have the attention span, you see. They also don\'t want to bet slots. They\'re a different breed that wants different things. Vegas, racetracks and others have tried parties, lots of interesting action betting, hats, and concerts. Although some of that might work to get them in the house, they are still not gambling.
The problem is, virtually all of the discussion regarding millennials has centered on abstract explanations seeking abstract solutions, when the biggest problem is likely far more fundamental than that. Few if anybody discussing the millennial problem have discussed it in the context of the declining economics of gambling itself.
What he speaks of is what we\'ve spoken about here often enough - metaporically, the squeezing of the lemon.

Slot house advantage, over the last twenty years, has moved up appreciably: From below 6% in 1996 to almost 8% today. \"In short, the player is losing money faster than ever before\", he writes. Slot handle is down about $60 billion since \'06.

Blackjack tables are disappearing as they combat card counting and raised the juice, paying 6:5 for blackjack.

His view: Young people are so educated and so aware of the deleterious affect of worse and worse payouts over the last 20 years, they are moving away from casino-type gambling. No value, no bet, we\'ll go hang at the pool, or as the author alludes, play Daily Fantasy Sports, or sports bet.

He suggests the following, to try and get these young, educated people to bet:
In our discussion on blackjack and table games earlier this year, we introduced a concept I call the skill-free rate, which essentially is the lowest house advantage of a comparable game requiring no skill. The implication is two-fold:
1. That a game requiring skill should have a lower house advantage under optimal play than a comparable game requiring no skill.
2. The more skill a game requires, the lower the house advantage needs to be to both compensate the player for acquiring the necessary skills, while avoiding over-penalizing lesser-skilled players.
The above is very salient for horse racing. In effect, you need to be able to send home winners, because the demographic which is predicated to play a skill game needs to know they have a chance to win. Rakes should be lower for these games, not higher.

We often hear horse racing is about getting \"young people in the building\" so they \"get the bug\". This is completely, unequivocally wrong. To get the bug, today\'s younger demographic needs a game they perceive can be beaten. If they don\'t find it, in Vegas, or at the track, they will find it somewhere else.

Right now, that\'s exactly what they\'ve been doing, and it\'s perfectly rational gambling behavior

[jbelfior]

Until they find out they can\'t win at Draft Kings or FanDuel either.


Good Luck,
Joe B.

[Boscar Obarra]

We\'ve known all this for decades.

  The player is the last one serviced, (or the first , depending on how you define serviced).

  Bigger purses, better pay for racing execs, everyone gets a break \'cept the horseplayer. A 15% pick  5 doesn\'t cut it.

  Take needs to be at 10% or less, across all pools.

[jma11473]

Boscar Obarra Wrote:
-------------------------------------------------------
> We\'ve known all this for decades.
>
>   The player is the last one serviced, (or the
> first , depending on how you define serviced).
>
>   Bigger purses, better pay for racing execs,
> everyone gets a break \'cept the horseplayer. A 15%
> pick  5 doesn\'t cut it.
>
>   Take needs to be at 10% or less, across all
> pools.

And the rebate players say bye-bye....

[TGJB]

Wrong.

The only figure that matters, whether you get rebates or not, is the net takeout you play into. Whether it\'s a 10% takeout or a 20% takeout with a 10% rebate doesn\'t matter. And if the smaller takeout brings others into the pools or keeps them alive longer, it\'s good for the stronger players, most of whom get rebates.

[miff]

They would have to lower signal cost/host fees along with takeout otherwise there would be no rebate houses.

Can\'t see any math where venues like NYRA could lower exotic takeout rates substantially without tons of red ink.

[Boscar Obarra]

Something Joseph Heller would appreciate, \"we can\'t lower the takeout because the takeout is so high now\"

[gteasy]

Recently it was announced that Spain wants to join the NBA...the world is shrinking, and to view the health of racing, the conversation should include South America, the Caribbean(hello Cuba), Hong Kong, Japan, Southeast Asia, the Down Unders, etc...at least two horses showed up at Santa Anita from CHINA this year...another from Russia.

I worked briefly in St. Kitts...15 years ago I attended the races on Nevis at a wild, beautiful, isolated mile oval hard by the ocean...the winning groom, a Rasta, turned to the stands and announced that his horse was the greatest since Secretariat...wagers were written by hand...a few years later Arthur Sharpe developed a track on St. Kitts, and today he competes with runners from other island nations at Beaumont Park...greyhounds and real estate help support the venture in this tiny country.

Love for the Sport of Kings runs deep world wide, as it does now for basketball...racing\'s future is global, and that is where I would turn for fresh answers and solutions...just one more arena where the USA has become less relevant.

[miff]

DRF

Audit raises concerns over New York OTBs' financial situations

By Matt Hegarty


New York lawmakers should examine the statutory requirements imposed on the state's five offtrack betting corporations with the intent of shoring up their deteriorating financial condition, according to the recommendations of an audit by the New York state comptroller's office examining the OTBs' operations over the past five years.

The audit, released on Friday, called the financial viability of the five corporations "questionable," citing across-the-board declines in handle, operating revenue, and contributions to local governments. It recommended that the state legislature reconsider the formulas contained in state laws requiring payments to the state's racing industry, particularly to in-state harness tracks.

"Given the significant amount of 'upfront' payments the corporations must make to the racing industry and governments in an environment of declining handle, the corporations may have trouble reducing expenses enough to ensure their long-term viability without legislative action," the report said.

New York's OTB corporations have long faced financial problems as more handle migrates away from brick-and-mortar locations to Internet and mobile wagering operations. In 2010, the state's largest OTB corporation, New York City OTB, went bankrupt, and both OTB corporations on Long Island have struggled significantly with their own financial problems.

According to the audit, total handle at the five OTB companies declined 19 percent from 2009 to 2013, and "the downward trend is continuing," the audit said. Total handle on horse racing in the U.S. declined 11.4 percent during the same period. Operating revenue for the five companies declined at an even greater rate, by 24 percent, over the same period, while operating expenses declined only 9 percent.

Distributions to local governments declined 42 percent over the same period, according to the audit, to $10.2 million from $17.6 million. All five OTB corporations are owned by the counties in which they operate, and all net profits are distributed to the localities.

The audit raised specific concerns about payments made to in-state harness tracks under a "hold harmless" clause in a state law passed in 2003 that allowed the OTBs to take nighttime simulcast signals from other tracks. The audit said that officials from one of the corporations, Capital OTB, stated that it paid the Saratoga harness track $2.5 million annually under the law from wagers that generated net revenue of $300,000 for the OTB.

"The costs the corporations have to bear under this law significantly outweigh the benefits received," the audit said.

The audit also points out that the OTBs have been paying far higher rates for some simulcast signals over the past five years. During that time frame, many racetracks have pressed simulcast sites to pay higher rates as leverage in the market has shifted to tracks that have highly attractive simulcast products and to collectives of tracks that have banded together to increase their market power during simulcast negotiations.