Breaking from the Gate

An interesting story came out yesterday on AOL’s new Daily Finance website which dealt with ‘High Speed’ trading in the stock market. The parallels to what is called ‘computer robotic wagering’ in pari-mutuel wagering were easy to see, and some on Wall Street use the same arguments that those in the racing business use to condemn the practice.

“There’s also the concern that high speed trading gives an unfair advantage to high-rollers and major institutional clients who can afford the expensive, high-tech setups needed to participate.”

Much like the current CRW players have on the pari-mutuel side, high speed traders are also concerned about how the industry reacts to their business model and what future rules and regulations they might face moving forward.

“Traders are uncertain about what type of new regulations may come from the U.S. Securities Exchange Commission or Congress. The biggest fear is that regulators could potentially move to ban high frequency trading altogether. Less dramatic, there could be restrictions on trading volumes or new taxes being levied on the industry to rein in profits.”

Many believe in the old addage from Lawrence Garfield in Other People’s Money however. “You can change all the laws you want. You can’t stop the game. I’ll still be here. I adapt.”

“Faced with new regulations, Gray Long, chief information officer for Trading Cross Connects, said that technology and innovation would immediately be implemented to find “work-arounds.” He suggested that as soon as any new regulation is enacted, new algorithms could be created to adapt and find trading strategies that would be able to help firms profit in the new environment.”

The most interesting parallel however is the realization that it’s not just about the numbers and arbitrage. As with any good CRW system in pari-mutuel wagering, high speed trading requires long term strategy.

“But in most cases, a long-term business strategy will win the day, he (Allen Zaydlin, CEO of electronic trading software firm InfoReach) said, because no matter how many thousands you spend creating the infrastructure needed to compete with speed, ultimately, “somebody comes with newer, more modern and optimized equipment, and you have to rethink your strategy.”

Give more people the same tools and the ‘edge’ goes away. As more and more people try to get into the arena, the more important part of the equation will be the ability to optimize the underlying logic making it run. In pari-mutuel wagering, it means that to optimize the ROI, the person using CRW has to become a better predictor of the outcome of the race. They must become a better handicapper.

The big question on the pari-mutuel side has always been “Is it fair?”

My response has always been yes.

Pari-mutuel wagering has always been one person wagering against everyone else in the pool. Anyone who plays with any frequency always tries to have some kind of edge over the rest of the players. You can’t beat the takeout without it. Some people can read past performances better. Some people use ‘The Sheets’. Some people know the trainer. Some get up in the morning and time their own workouts. Some people spend hours watching race replays. And yes, some people use computer software to help them wager. There is even simple software available to anyone, like DRF’s Formulator, and the conditional wagering systems available on a few of the ADW platforms (TwinSpires and Premier Turf Club for example).

There are many tools out there to enhance performance at the window for those that care to put in the time, effort, and capital to use them. Unfortunately, most people don’t want to do it, and therefore believe that it’s not fair to them that there are people out there that do.

I would argue that is unfair.

Zenyatta takes the Classic with as an impressive a move as I’ve seen in a long time.

Rachel just fell over in her stall …

Let’s just hope the voters do the right thing and reward the filly that showed up for the big dance.

I want everyone to know that I am a fan of Larry Winget. For those of you that don’t know who he is, I’d like to call him a motivational speaker, but he’d probably give me a tongue lashing for calling him that, so I’ll instead use his own title to describe him … The Pitbull of Personal Development.

I first ran across Larry one day when I was on the road and happened to be sitting in the Detroit Airport. I was stuck there due to a flight delay and had finished the book I always bring with me when I travel. Bored, I headed to the bookstore in the main concourse, and there in the window was a books with the following title screaming out at me (yes, some books can scream) …

“Shut Up, Stop Whining and Get A Life – A Kick-Butt Approach To A Better Life”.

How can you not pick up a book with that for a title?

All I can say is that if you haven’t read it, run, don’t walk to the nearest bookstore, head to Amazon, or find it at the library. I’m not going to go into all the details, but it’s a page turner, and an eye opener. He really cuts to the chase. He has several other books with equally provocative titles (”It’s Called WORK For A Reason”, “You’re Broke Because You Want To Be”, “People Are Idiots And I Can Prove It!” among others).

But I’m not here to sell you on a book(s).

You can also find Larry on YouTube, and as good as his books are, hearing him deliver his message in person (or on video) is something not to be missed. And that is why I am posting today. Before you go any further, please watch this …

Every racetrack Owner, ADW Owner, OTB Owner, General Manager, Board Member, employee of all of the Alphabet Soup of racing organizations, horseman … well you get the idea … should watch this. It’s simple, and cuts right to the point.

I was very fortunate to have a father that is a great racetrack executive to learn from (and boy have I learned a lot). I remember the first time I attended the RTIP Conference in Tucson very clearly to this day. It was December of 1984, and my father was about four months into his first stint as the GM of Canterbury Downs. He was asked to give a speech at the conference, and during that speech he talked about how Canterbury was going to be a customer focused company. Now for a lot of us that attend the various conferences each year, we are used to hearing grandiose plans and great ideas put forth in speeches … and then next year, the same things get talked about again, because nothing happened.

Except at Canterbury Downs.

When the track opened the following year, it was universally praised for having great customer service, even by the news writers that regularly didn’t have much nice to say (we all know how critics are). And the following year at the RTIP Conference my father gave another speech where he told everyone that Canterbury executed, and succeeded. He brought that message back to Canterbury Park with him in 1994, when the Sampson family (who had just bought the track) asked him to be the GM for the second time. Canterbury Park is still a fan-friendly place to this day, and although I am surely biased, I strongly believe that his influence is a big reason why.

I remember my first day at work after being named the GM of what at the time was OhioTab. I had spent my summer working at Canterbury as I had for the previous five years, and was flying back and forth to Ohio to help work on launching WinTicket.com. Charlie Ruma gave me a chance to run the operation after it launched in August of 2000. It was a big leap for me career-wise, and I have to thank him for taking a chance on me. Eventually, that little company became AmericaTab and got a lot bigger, and when it was not so little any more Churchill Downs bought it and its now TwinSpires.com.

From the start, I made sure that AmericaTab was a customer-focused company because of the lessons I had learned from my father. It manifested itself in many ways. We hired more customer service staff than other ADW’s that were handling five times our volume. If you look back at a lot of common features that are available at all the ADW’s now, you would have found a lot of them at AmericaTab first. Our betting platform was simple, worked on most PC and browser combinations, didn’t require software downloads, and was very easy to use. It was fast, and very reliable. We spent a lot of money trying to stay ahead of the curve on our hardware and bandwidth. We had (I believe) the best streaming video and race replay system, and the best handicapping data. We sent checks to our customers that wanted withdrawals from their accounts daily, and initiated online credit card processing and ACH transactions. I even had to fight a little to get rid of the wagering fee that was being charged when I got there, and we spent a long time agonizing about charging for video or services before just putting in a small wagering minimum instead.

I could go on, but we tried very hard to make sure in everything we did that the customer came first. Were we always successful? Unfortunately no, but I heard and saw enough positive reviews from our customers (and significantly fewer negative reviews) to let me know we were doing a lot of things better than our competition.

I could also tell by how fast our business grew.

The Customer Service staff lead by Laura Simmons was a big part of AmericaTab’s success, and other than from me, they probably never got the credit they deserved. I do know that without them and their tireless efforts AmericaTab would not have become the great company it was.

So now I’ve tooted my own horn, my father’s, and Laura’s. But that’s not why I’m posting today either.

If you talk to the bulk of the knowledgeable customers (the gamblers for those that haven’t figured that out yet), they are pretty universal in what makes them happy. They also are not shy about telling you what makes them unhappy if you take the time to listen.

1) They think takeout is too high.
2) They question the integrity of the pools.
3) They believe drugs are rampant in the sport.
4) They hate being held hostage to tracks, groups of tracks, or the horsemen. They believe they should be able to wager on whatever track/pool they want to … through their preferred outlet for wagering.

Now there are countless other smaller things they would love to see too, but these are the big four for most knowledgeable players. You know the 80-20 rule? Guess where 80% of the handle is coming from? Yep, the customers that care about the big four.

Racing needs to remember who the customer really is, and get to work on these things first.

Oh, and If you didn’t watch the YouTube clip, please go back and watch it now … especially if you have a title at work ….

Many moons ago on one of my websites far, far, away, I used to handicap the major stakes races each weekend. I haven’t done it for a few years, but figured since this year’s Kentucky Derby looks to be a wide open affair maybe it was time to jump back in.

If the track is ‘good’ or ‘fast’ then I will be using these four in most of my tickets:

Papa Clem - He would have been overwhelming top choice in this wide-open event but he has looked less than stellar at Churchill in the morning. He’s proven he can make the move from poly to dirt, and beat what was everyone’s top horse before he withdrew from the Derby in Old Fashioned in the Arkansas Derby (G2). I still like his chances, but less so than I did a week ago.

Chocolate Candy - If Pioneerof the Nile wasn’t in California, this guy might be sitting on a six race winning streak. He’s also improved every race during that time. If you like Pioneerof the Nile, you should be using him here too.

Hold Me Back - Certainly has the breeding to get the distance, and from all reports out of Churchill has looked great during training hours. I love hearing about the horses doing well in the mornings, as it has led me to several winners over the years. I also like that he is a closer, as I am seeing several speedy types in this race. If he get’s a clean trip look out.

Mr. Hot Stuff - I actually played him in Future Pool #3, so I’m not just jumping on the bandwagon. Not sure if he can win, but he will factor in the exotics if he’s settled down since arriving at Churchill Downs.

If there ends up being an ‘off’ track then these two will factor heavily:

Desert Party - Might be the Shiek’s best chance to capture the roses. Won the Sanford (G2) in the mud last year at Saratoga. Beaten as the favorite in the UAE Derby, but was trying to close into a speed favoring track. Might even be OK on a fast track, but I like him a lot more if the track is wet.

Freisan Fire - logic tells me that it’s just too long between races for him. Even longer than Hard Spun, who ended up second. He might hit the board on a dry track, but don’t leave him off your tickets if the track is wet. He ran great in the slop in the Louisiana Derby (G2) and is coming into the race off a nice work at Churchill on 4/27.

What about the favorites?

I Want Revenge - certainly good enough to win, but I’m taking a stand against because I think he will bounce off the two races at Aqueduct, and he didn’t face much there after leaving California so he wouldn’t have to hook Pioneerof The Nile anymore. I think he will be over-bet.

Pioneerof The Nile - has never run on dirt, and has two average (compared to the other contenders) works at Churchill (11/26 on 4/27, and 4/19 on 4/21). Contrast that to his works in California where he had three bullet works in his last four (and was second in the other). He will have to prove me wrong.

Throw outs:

Sorry to the connections, but I can’t play any of these even with someone else’s money.

Advice, Atomic Rain, Dunkirk, Flying Private, Join in the Dance, Mine That Bird, Nowhere to Hide, Summer Bird.

So there you have it. Good luck on Saturday, and ‘let your conscience be your guide’.

I woke up this morning to my normal routine. A little breakfast coupled with ‘Mike and Mike in the Morning’ on ESPN2. As would be expected now that baseball is in full swing, there was quite a bit of discussion going on about the games. I admit that I am not much of a baseball fan despite having a huge collection of baseball cards as a kid, so normally I don’t pay much attention until playoff time. This morning however was different.

The main story of the day was the death of storied Philadelphia Phillies announcer Harry Kalas. Personally, I had never heard of him before yesterday. I certainly never equated him with the Philadelphia Phillies. Interestingly enough, I knew him better than I thought, because in addition to his work with the Phillies, he also was the voice of NFL Films. There have been many famous baseball announcers that I did know (Harry Carey, Vin Scully, Jack and Joe Buck to name a few), and to a certain extent I see similarities to our track announcers in horse racing. There have been many announcers that have spent years primarily at one spot, or on one circuit and have earned the same kind of reverence that Mr. Kalas had in Philadelphia from the local fans. I think that’s great, and should be celebrated.

I could list countless names, and I’m sure I would fail miserably at remembering them all, so I’ll just give you one. Terry Wallace. At Oaklawn he has called nearly 20,000 consecutive races. I’ve known Terry for a long time and consider him to be a friend in the business, and an all-around great ambassador to the sport. I first met him when he also called races at Ak-Sar-Ben, where he took over for another announcing institution in Bill Murphy. This is a remarkable streak which I am certain will go unnoticed outside Hot Springs, should it come to an end.

But, that’s not the reason for this post.

As anyone who follows baseball knows (and even those of us that don’t), baseball is a sport that probably has more statistical information available for fans than any other sport in the world. Every time I watch a sports show you hear of an event taking place in baseball which is followed by its statistical significance. For example, the next no-hitter to be pitched will be number 258 in Major League Baseball history. Oh, and by the way, in case you were interested, number 257 was also the first no hitter in history to be pitched at a neutral field, and numbers 255 and 256 were both thrown by Boston Red Sox pitchers, which was the first time since 1974-1975 that two consecutive no-hitters were thrown by the same team (California Angels if you care). I swear someone is out there keeping track of what each and every player had for breakfast.

So what does that have to do with horse racing?

Our sport is also driven by statistics. Only for some reason horse racing makes it very difficult to find and use statistics … and very expensive.

Baseball statistics are easy to find and work with. For example, let’s take a look at Hank Aaron. One quick Google Search and you can find this:

http://www.baseball-reference.com/players/a/aaronha01.shtml

Now you might be thinking ‘OK, he’s one of the greats, and if I wanted statistics on Secretariat I could find that too’. Well, here’s the same statistics for Ben Hayes, who I happen to know. He played two seasons for Cincinnati before getting hurt.

http://www.baseball-reference.com/players/h/hayesbe01.shtml

Contrast that with the horse racing industry, where having this information is paramount to being successful wagering on the sport.

As with baseball, there is a central authority currently keeping the historical data, Equibase. Thankfully Equibase also distributes the data to other vendors like Bloodstock Research, the DRF and others … for a fee. Those companies also slice and dice the data, add some of their own, and resell it. The data business in horse racing generates a lot of money for the companies that buy it, and those companies that sell it make it difficult to use once you buy it or make easy to use data so expensive that the average gambler can’t afford it.

Yet in baseball, it’s free … and in baseball, the data is accurate.

Despite there now being technology available to track every horse in every race at every track, the industry has not implemented the technology. I think most fans know about Trackus, which is currently deployed at Keeneland, Del Mar and Woodbine. Is the Trackus data part of the official record? No. In fact the tracks that are paying for the Trackus service can’t even get the data from the vendor in some cases!

There are also other systems that can do similar things, for example legendary timekeeper Tag Heuer has a system specifically designed for horse racing. There is no rational explanation as to why horse racing is not providing accurate split times for each horse, as opposed to just the horse that crosses the beam first. A customer should not have to estimate these by calculating them manually. Can you imagine how long it would take to just do one race with a 12 horse field and 10 PP lines for each horse? Now extrapolate that to nine or ten races for a single card and maybe five tracks for a single day. It’s insane to expect a customer to have to do this.

Enjoyment of horse racing is IMO more dependent on statistics than baseball, yet the industry does a poor job of providing data to its fans. At a time where the industry is struggling, this needs to change soon. We need to start giving customers all the tools they can possibly use to make it easier to play. Accurate data in a format that is easily used is but one step.

There seems to be a big push (at least among horseplayers) to eliminate race day medications in horse racing. If they can’t be eliminated, then most people in the industry think there needs to be significant reforms on the medication front, as things appear to be getting a little out of control.

I wrote a pretty long post on my feelings about this subject last year, which is here in case you haven’t read it yet. I hope there were some good ideas in there, and at least some others in the industry agree with the needs to accomplish something in this area.

In particular, I was happy to see the NTRA recently formed its Safety and Integrity Alliance which included amongst its goals:

• uniform medication rules for each racing state
• ban of steroids from racing competition
• out-of-competition testing for blood and gene doping agents and pre-race testing
• uniform penalties for all medication infractions

The NTRA is good at doing research and making recommendations to the industry. Unfortunately they really have no power to actually do anything. While I applaud the effort and support them in what they are trying to do, it will make no difference if there is not widespread adoption of the recommendations that come out of this program. Or worse, if the recommendations don’t really address the problem.

After spending a year since my last post on the subject away from the day-to-day operations of racing, I have come to the conclusion that perhaps I didn’t go far enough in my last blog post on the subject. Maybe an outright ban on race day medications is really what needs to be done.

But how do we get there? Simply flipping the switch would create a huge problem given that nearly all horses in training are currently running on some form of medication in this country. It would be a little rude of me to lay down the gauntlet without some kind of plan. So here it is:

• All horses foaled in 2008 or later are never allowed to run on race day medications, period.
• In 2010, when those horses are two year olds, they will not be allowed to run on race day medications. All horses three years old and upward still can.
• In 2011, when those horses are three years old, they will still not be allowed to run on race day medications. All horses four years old and upward still can. This is going to be the difficult year. Racing secretaries are going to have to write more races for straight three year olds, or unfortunately the three year olds that step up to run against older horses will be at a medication disadvantage. Perhaps some additional weight allowances can help here, or the racing secretaries will have to get creative with conditions.
• In 2012, when those horses are four years old things will get easier on the racing secretaries because now they can write races for three and four year olds without race day medications, and five year olds and up will still be able to race on race day medications. If the racing secretaries still write three and up, or four and up races then the younger horses are still going to be at a disadvantage, but less so than the previous year.
• In 2013 there will now be a category for three, four and five year olds, or just four and five year olds. Again, older horses can still run on race day medications in races not involving the younger horses.
• In 2014 and beyond, a racing secretary can still keep moving the medication bar out, one year at a time, or at some point the track can just decide to stop allowing race day medications altogether.

OK, it’s not a perfect plan … it still takes five years to get through all the steps. For the player however, there will be at least some ‘raceday medication free’ races to play beginning in 2010. It also gives owners and trainers plenty of time to adjust. Those that want to be early adopters can, and those that want to play out the game can do so too. I also think it’s a little more fair than to just draw a line in the sand.

This plan doesn’t eliminate the need to improve the things the NTRA is targeting, nor the things I brought up in my previous post. All of those things are important to try to catch the cheaters and bring the playing field back closer to level than where it currently is.

–Racing needs more stars to promote the sport. Horses need to stay in training longer. How about mandating that no horse gets to breed before it’s a six-year-old, and no two year old racing before August? When the animals are worth more in the breeding shed than they are on the track, something has to be done to slow that down.

–Also, as an incentive to keep horses on the track, allow artificial insemination for all breeds. Quarter horses are doing it now, and it’s OK. There can certainly be rules put in place so as not to over saturate the breeds. Two things come to mind immediately, limiting the total number of conceptions to something that would occur naturally (both in number per year, and for how long), and if an animal is able to breed naturally, they have to do it that way. Insurance costs for the stars (like Curlin) make it nearly impossible to keep them in training when they can’t make enough money to overcome the premiums by running. If they were able to harvest enough sperm to lead to the equivalent long-term income from his breeding naturally, then premiums would go down, and there would be an upside to keeping him in training since more could be charged for his offspring if he keeps winning.

–While I am on the topic of Stars, all Owners, Trainers, Jockeys and drivers should be able to sign endorsement deals with anyone, and be able to promote whatever they want on their clothing. I will allow for some regulations such as the size and location of the ad, and making sure only legal things are advertised. No one gets to claim business conflicts though. Golf has figured out a way to allow its athletes to do this despite corporate sponsors putting on events. We can too. And a personal note to a trainer who shall remain nameless … no taking hats of your rider’s head … he was just as important in getting to the winner’s circle as you were.

–Note to the Breeders’ Cup … please do away with the purple saddle towels. The entire rest of the industry uses standard colors, so you can too. And while we are on the topic of saddle towels, dog tracks and harness tracks should switch to match the thoroughbred colors. Yes, I know you had your color schemes first, but thoroughbred and quarter horse racing is far and away the biggest handle generator, and therefore fewer people are impacted doing it this way. Yes, customers will grumble for a few weeks, maybe for a meet, and then all will be forgotten.

–Programs should go final for all racing no less than 72 hours prior to race day. Enter to run please. The customers will thank you because they have more time to handicap, and you will make more money because handle will go up. Trainers, if you are entering to run, this isn’t an issue.

–Animals should not be allowed to scratch without a valid medical reason, confirmed by the State veterinarian. If allowed to scratch, they should be put on a list until after the next race at the same condition is in the condition book. Again, enter to run, not to see if the field is soft enough to keep your win percentage at 25%. If your animal can only win at that level if the stars align properly then you aren’t running at the right level.

–If an animal is in training at a track, it should be required to race there at least one time a month, barring injury. If there are not any races at the track for the animal, the animal is in the wrong place and should be sent somewhere it can actually participate. If the animal is hurt, turn it out and make room for another animal that is healthy enough to race. Looking at field sizes at most tracks, there are clearly a lot of animals “in training” and not enough runners.

–I don’t know who to put in charge, but something has to be done to better coordinate post times … and stakes races. Maybe fewer races and/or fewer racetracks will solve this problem.

This is one of the most complex issues the industry is currently facing, make no mistake about it. Exclusivity means many things to many people involved in the racing industry, and most of it isn’t good. Having said that, I don’t believe the “Exclusivity” period the racing industry has gone through is all bad. Without it, there would not be nearly as much racing being shown on television now.

Having run an ADW company that was forced (basically) at gunpoint to sign a deal with TVG, and was denied signals from Magna for a year because of it, I know a lot about how exclusivity impacts the racing industry, especially it’s customers.

For any track contemplating signing an exclusive deal with anyone, let me relay this. In BOTH cases that I cited above, when a product was removed from AmericaTab’s offerings through no fault of its own, the SAME THING ALWAYS HAPPENED. The customers got mad at the track that signed the exclusive deal, not the ADW …. very mad in fact. E-mails and phone calls were overwhelmingly along the lines of “tell ‘insert track here’ they can go ’insert colorful language here’ themselves, I’ll just bet something else.” 

Note to racetracks … the customers are more loyal to their betting outlet than they are to your track. Remember that, because once you’ve forced them to move to another track, they may never come back. If you don’t believe me, check out the various racing message boards and it won’t take long to figure out how your customers feel about not being able to bet their favorite track through the ADW of their choice.

So, lets have a frank discussion about exclusivity.

First, there are really two kinds of exclusivity we are talking about. Broadcast exclusivity and Wagering exclusivity. It’s important to remember this, because one does have some necessity, while the other clearly does not.

I can make an argument for broadcast exclusivity. All major sports have it. Want to watch the Super Bowl? In the U.S. you are going to have to do it on the Fox network this year. Fox paid the NFL a large amount of cash for the privilege, and they will sell a lot of commercials to help recoup the money. If the game was on every other network too, the economics just wouldn’t work. OK, maybe it would for the Super Bowl, but we are discussing racing. 

Wagering exclusivity on the other hand has no place in racing because it harms THE CUSTOMER. TVG and TrackNet will tell the world that they need wagering exclusivity because the extra fees they can extort receive from the remaining ADW’s is what allows them to keep their respective TV networks on-air, and that the majority of customers playing through an ADW are watching their networks but betting through someone else.

In my opinion, it is absolutely necessary for the racing industry to keep these two channels operating. We need to have as much racing available on television as possible, so they need to be funded. But who should be doing the funding?

TVG and TrackNet will (rightfully so) make the argument that more money gets wagered on races that are shown on their respective channels than on races that are not. This makes logical sense to me. What also makes logical sense to me is that if wagering increases on those races, then the host track is going to get more in host fees from any and all sources that rely on those broadcasts to service customers. Yet the host track is not being charged for the privilege of being on the network, but in many cases they are also charging the same ADW’s a higher host fee which could be used to support the networks.

If we assume that the networks can’t survive on their own, and the tracks cannot afford to support them even though they are the prime beneficiaries of having their races on TV, then how do we fund putting racing on TV?

Since I have been spending money in this exercise, then let’s keep going with the .25% of handle model and give it to the industry to support broadcasting of racing. So you don’t have to go back to my previous posts, that number comes to about $32,742,500 based on 2006 simulcast handle. This money can be used by the industry to support TVG, HRTV, and to pay for racing events to be shown on ESPN or the major networks.

Now the takeout split looks like this: Host Track-4.8125%; Athletes-4.8125%; Outlet-4.8125%; Customer 4.8125%. That would make the equivalent host fee 9.625%, which is still a healthy increase from what is currently out there for rates.

If you talk to most serious handicappers, and even the “Athletes” group, you are going to hear something to the effect of “drugs are ruining the sport.” I believe this to be true now, but I can tell you my head was firmly buried in the sand until I had a conversation in 1999 with a friend who happens to be a very highly respected and prominent trainer.

I’m not going to tell you who he is, but a conversation we had at Keeneland in the fall of 1999 sticks with me to this day. I had not seen my friend for some time, and had just moved to Lexington. At the time I was consulting on simulcasting issues with the NTRA, and upon hearing that I was working for them he said to me “Bowk … can you get them to do something about the medication issue?” Not realizing that medication had become an “issue” I asked him to explain, and was told in no uncertain terms that he had to make the decision to race most of his best horses outside of his home base because medication abuse was so wide-spread at the time that he couldn’t compete with it, and he refused to join in.

Yes, there is an “issue” and heads can no longer be buried in the sand about it. So what can be done?

Let me start with a disclaimer here. I am not a veterinarian, nor have I ever trained a horse or a dog. I was a hotwalker for one horse, cooling her out after a race. I’d tell you the “whistle till she pees” story but Kris tells it so much better than I do … )

If the industry is going to get serious about the medication problem, then there are several areas that need to be addressed:

1. The List
2. Penalties
3. Thresholds
4. Testing

Let’s start with “The List.” Every major sport with rules about medications its athletes may or may not use has a banned substances list. Our industry needs one that covers EVERY jurisdiction. If it’s banned in Nebraska, it’s banned in California. I don’t know a lot of specifics about all the drugs that can be used in racing, but I do know this. If WADA can come up with a list for human athletes, someone can come up with one for animals. For our human athletes, we can just use the WADA list. This is where reform has to begin. Most of the jurisdictions where I have worked as a racing official have some rules about what medications are allowed on race day. This is the wrong approach. Don’t tell the participants what they can use … tell them what they can’t use.

As I mentioned, I’ve never trained a racing animal, nor am I a veterinarian. I don’t know what needs to be allowed on race day. Logic tells me if other countries can ban everything, the U.S. should be able to as well. I’m not going to make a case for allowing this or that drug here. In fact, in the grand scheme of things I don’t really care what drugs are allowed or are not allowed (within reason of course, I do care for the animal’s well being). I don’t think the customers really care either. Consistency is the key. Customers want to know what is being used, and whatever “it” is, there needs to be transparency. The industry must publish the information for public consumption, including the Veterinarian’s names that are treating each animal.

Personally, I think the penalties handed out for drug offences are a joke. Yes, I said it, they are a JOKE. Having said that, I am not a cold, heartless, bastard. 

I am for fair punishments.

“Fair” to me means EVERYONE associated with the drug positive gets penalized. The Vet that administered the drug, the owner of the animal, the trainer of the animal, and the animal itself. All get suspended the same amount of time. Don’t think that’s fair? Well, maybe I really am a cold, heartless, bastard … but when the judgement comes down, go sue each other … not me, not the Host Track, not the Racing Commissions.

Accountability goes a long way people. As does due process. Both should be championed to clean up this mess. The absolute insurer rule might be a little suspect in this regard, but we have to live with it. One thing that can, and should be done, is having better security on the backside, and better documentation of treatments by the veterinarian.

There is a big difference between performance enhancing drugs and non performance enhancing drugs, and penalties should reflect that. Penalties should be consistent, no matter where the infraction occurred. If violation “A” results in a 30-day suspension in Ohio, then it should be a 30-day suspension in Florida. At some point there also has to be a place for career ending sentences … where someone loses their ability to participate in our sport. Period. No more 50th chances for people that can’t figure out the rules. Oh, and one more thing …. no Eclipse Awards for ANYONE with a drug violation that contributed to the Eclipse.

Before we can intelligently talk about testing, I want to address thresholds. Testing becomes more sophisticated every year, and technology can find more things at lower levels than ever before. There has to be threshold levels established below which a violation is not deemed to have occurred. Also, establish formal withdrawal times for the therapeutic drugs on the list. Make the veterinarian training the animal keep detailed records, and if they can prove the medication was given outside the window, then it’s classified as a minor infraction, or none at all. As an example, if we can assume the facts that were reported are true, Brass Hat didn’t deserve his DQ in Dubai.

Testing needs to be done on every athlete that participates in the sport. Animals, every time they run. Humans, on a regular (and random) basis. Yes, I am saying that I believe that a sample should be taken from EVERY animal every time it races. If for time/money reasons they all can’t actually be tested, the deterrant is still there. Samples should be kept for longer periods of time and periodically tested for new drugs which are discovered later … not necessarily for penalty purposes, but at least to help advance the science.

And, yes, I have a way to pay for all the testing too.

I believe that the industry as a whole should set up ONE lab for testing, and all samples should go through the same testing procedures. Uniform medication rules and uniform testing. Let’s also fund it with 0.25% of simulcast handle. So you don’t have to go back to my previous posts, that number comes to about $32,742,500 based on 2006 simulcast handle.

Back to the revenue split, we are now looking at: Host Track-4.875%; Athletes-4.875%; Outlet-4.875%; Customer 4.875%. Don’t worry, I still have some more money to spend.

*** Since my original post on the subject a story was published in the New York Post which quoted a good friend and Hall Of Fame Trainer, Jack Van Berg on the subject of medication in racing. And just for the record, Jack was not the trainer I mentioned above.

“These horses, they can’t say no,” Van Berg told The Post from his barn at Hollywood Park. “They’re getting steroids from the time they are babies. They don’t have time to grow and mature like they should.

“Just open your eyes and look around. You know how many trainers would still be winning races if they couldn’t use medication? Some of them would starve to death. The veterinary bills are as big as the day money (training bills) for a lot of them. You watch and check how much these veterinarians are making on the backstretch now. They’re becoming wealthy.

“I don’t have that many horses, and people will say that’s sore eggs with him. But I’m telling you facts. Any horseman will tell you. You couldn’t get 10 percent of horses racing (in the U.S.) to pass a drug test in Hong Kong or Japan. We’re a laughing stock. It’s disgusting to think that the foreign countries don’t allow that stuff, but here in the United States, we’re supposed to be leaders, and they give them everything from soup to nuts.

“I think we should be racing with absolutely no medication whatsoever. Zero. Stop it all. If the horse ain’t right, turn him out instead of running (him) until he breaks his leg off.” If you want to read the whole story it’s here.

I believe him. It’s time to act.

If you want to start a heated discussion among regular Customers in the racing industry, all you have to do is tell one of them that the tote system is secure and no money is being bet late.

After they get done yelling about Chris Harn, the two recent examples of past-posting, and all the odds shifting they see on the television feeds, even I start to wonder. And for the record, I’ve been a Teller, a Mutuel Manager, run a large ADW company, consulted with tote companies, and currently sit on the TRA 2020 Committee, the industry group which deals with issues having to do with our tote systems. In short, I know a little bit about how tote systems operate.

Let me go on record now and say that I do not believe in the normal operation of the tote system that there is ANY past-posting going on that is not intentionally enabled by the system. I can hear people falling off their chairs everywhere.

Yes, there is a mechanism built into the system which allows for the possibility of past-posting (or past-cancelling) and it is called the “close cancel delay.” For those of you that don’t know what that means, the close cancel delay is enabled at some racetracks to protect the mutuel teller from someone walking away from a ticket at off time. At most tracks, tellers are responsible for their shortages at the end of the day. It gives the teller a chance to cancel the ticket, so they are not out the money.

The TRA 2020 Committee has been working with tracks and State regulators to eliminate the close cancel delays, but they still exist at some places. The TRA keeps a list online of the close cancel delays at tracks. It was last updated on 11/14/07, and there was still a track listed with a 10 second delay! Before you start throwing stones at the outlet, which I am not naming here, keep in mind the delay might be gone by now. However, another note to the National Council of Legislators from Gaming States … start working on regulations to mandate no close cancel delays if your State still allows them.

In addition to allowing the ability to cancel a ticket, there is one other problem the close cancel delay helps to create … the perception of there being money bet after off time due to the late odds shifts players see when watching TV monitors. A host track is not able to post “final” odds until all outlets are in the pools. This means that if the outlet with the 10 second close cancel delay is also wagering on a track you are playing, final odds could not even begin to be calculated until at least 10 seconds after the race begins.

The TRA 2020 Committee has done a couple of things to help in this area. First, at the urging of the 2020 Committee tote companies now send the win odds to the host track first when updating the pools (exacta, trifecta, pick n pools are sent following the win odds). Second, the tote companies at the host track now “force” a win odds calculation at 10 seconds after off time. By doing these two things, it has been reported back to the 2020 Committee that over 98% of the win pool is reflected at 10 seconds. Not perfect, but a lot better than it was even a year ago.

Unfortunately this only solves part of the problem with the display feed that is being shown on television screens world-wide. The main cause of seeing odds shifts while races are being run has to do with converting the output from the tote system into the graphics that get over-laid on the host track’s video signal. And it’s not just odds … the running numbers mid-race also suffer. When I worked as a placing judge, I was appalled at how long it took for a change I keyed into the infield toteboard display to actually show up on the television. I always thought it made me look bad as a placing judge because the display updated sometimes as long as 10 seconds after I made the change to the running numbers.

There is also one other thing we found out about display feeds. Sometimes the odds that show up with each “chicklet” don’t update during the course of the race until the placing judges actually update the running numbers. So if the 1-2-3-4 ran all the way around the track in that same order, the odds on TV would never be updated, even if the tote had passed along the proper odds! The 2020 Committee has also begun asking the video vendors if anything can be done to help in this area.

It’s a little ironic that with the advent of the graphics packages that performance has gotten worse. I remember my days at Ak-Sar-Ben when the running numbers were overlaid using a display board that was in the TV room that was identical to the infield toteboard. Instant updates! A small camera shot the display board and it was overlaid onto the video picture. Updates were actually in real-time back then. Of course, it looked a little ugly and there were no odds.

Obviously there are issues with the tote system, and they can all be addressed with a little application of technology by the industry. After all, if millions of stock transactions can be handled by Wall Street, then certainly there is a way to fix the tote system.

Enter WTP. I can already hear people asking, “What the heck is WTP?” In short, WTP is a new tote protocol being developed by the tote companies, and some racetracks, which essentially ships the individual bets off to the host track for validation before a ticket is issued. This is different from the current ITSP protocol which batches the wagers together and sends pool totals. WTP does a lot of good things to help fix the tote issues the industry is currently facing:

1. Eliminates the refunding of tickets when a communication link is lost.
2. Lets the host track know exactly where and at what time every wager was placed.
3. Allows for instant updating of odds.
4. Assures that no more wagers are accepted after the pool has been closed.

While all of these are certainly good things, I am going to advocate a different solution, because I don’t think WTP goes far enough. I think we need to have one national bet processing center.

Note, I am NOT saying we need one tote company.

I am saying we need to separate the system that processes the wager from the systems that collect the wagering data. My thought process takes it one step further. I want to see a centralized bet processing center (well, actually two for redundancy purposes) that is a separate entity which is specifically NOT owned or operated by anyone that accepts a wager, or develops equipment that accepts a wager. It must be independently operated, not beholden to anyone that accepts a wager, and above all, it must be a non-profit organization.

To use the stock market example, I have an online brokerage account and an account with a full service broker. I can use either to buy shares of Google, but they both have to enter my purchase into the (centralized) NASDAQ system to make the trade. It sounds a little like WTP, but it goes a few steps further:

1. It’s now easier to secure the bet processing system, since there are fewer locations where bets are processed, and fewer people with access to the system.
2. It’s easier to attach a transaction monitoring to proactively watch for irregularities.
3. An auditing system can be more easily put in place to insure bets are only being accepted from approved outlets.
4. Customers could establish accounts which would allow portability to every outlet, and device attached to the system. 
5. If an upgrade to the system needs to be made, or a new bet gets introduced, everyone gets it at the same time.

I am not looking to put the tote companies out of business. They are all moving towards building centralized datacenters for their own businesses anyway, and most outlets are actually sending bets “off-site” now. The industry needs the tote companies, and if they don’t have to worry about processing the bets, they can focus on producing better customer facing products, and providing better on-site services.

To do this will require a sizable investment by the industry. I have an idea for a way to pay for this, and once again, I am going to invoke the word “fair” here.

I am suggesting that to start, 0.25% off all simulcast handle be used to pay for it.  According to the Jockey Club, in 2006, Off-track pari-mutuel handle on Thoroughbred racing alone was $13,097,000,000. Using just that figure, there would have been $32,742,500 to fund the new bet processing center in 2006. Factor in Standardbred and dog racing handle also, and there is plenty of money available to do this, including paying for all of the telecommunications that needs to be put in place to support it. If it doesn’t cost that much in the long term, then a lower percentage can be applied later. This is supposed to be a non-profit organization after all.

And no, I don’t want to raise takeout. It should come off the top before dividing up the takeout. It’s only fair.

So now we have: Host Track-4.9375%; Athletes-4.9375%; Outlet-4.9375%; Customer 4.9375%.

Going through this exercise can be fun. It actually reminds me a little bit of the movie Dave. For those of you who haven’t seen it, Dave is “hired” by the President’s staff to impersonate the President who has had a massive stroke. There is a lot more to the plot than this, but in the movie, he tries to make sense of the Federal budget. He takes a look at how stupidly some of the money is spent and re-distributes it to a worthwhile cause. We have a few worthwhile causes, so let’s continue.