Monday, June 24, 2013

Playing the Pick 4

The following article is reprinted with permission from the Horseplayers Edition of Trot Magazine, April 2013:

Pick 4’s in harness racing have become a staple for bettors. Early this century the Meadowlands stepped outside the box and offered a pick 4 on their deep, contentious fields at a reduced 15% takeout, which was much lower (sometimes by half) than many other tracks’. It caught on like wildfire, with some pools reaching over $100,000 on a Saturday night. Not long after, tracks like Balmoral Park began offering reduced takeout on the pick 4, and the bet has snowballed. Now, even high takeout pick 4 tracks are benefitting from that branding.

Playing the pick 4 wisely is a learned skill that every harness horseplayer needs to hone.

For us as players we need to ask ourselves some serious questions while choosing to play or pass a pick 4 bet.

·         What’s the pool size?

·         What’s the minimum bet size?

·         What’s the sequence like and how to we construct a ticket?

First, with pool size we need to decide if it is large enough to take a bigger ticket, or concentrate on a smaller one. If we like two longshots and the parlay value with those two longshots winning with two favorites would be $4,000, we likely want to stay out of a track with a pick 4 pool of, say, $3,000. We’re beating ourselves by playing a poor expectation bet.

Second, minimum bet sizes are very important to be cognizant of. At Woodbine for example, the twenty cent bet has caused longshot pick 4 payoffs to be depressed at times, while some chalk sequences can pay more than they did when the bet minimum was $1.  In a $75,000 pick 4 pool at a $1 minimum, it used to be the holy grail to find three horses that are not favored by the crowd and make a monster score. Now, it makes more sense to pound some chalk and hope for an edge that way.

Last, we need to concentrate on the sequence itself, and constructing a ticket around it. Most amateurs have a craving to cash a pick 4 ticket regardless of the return on investment, so they play a spread ticket which looks something like this: 234-23-234-2345. In each race they will likely use the morning line favorites and second favorites and sprinkle in one or two longshots. These are the pick 4 tickets that cost $72 and tend to pay $96.

It is perfectly natural to play a ticket like this. In behavioral economics, “Prospect Theory” explains the fact that we as humans value wins and losses differently. We derive more pain from losing, than the joy we get from winning. We want to play a ticket that hits, even if it’s a bad bet, because the thought of losing in an hour outweighs the joy from long-term return on investment.

Instead I’d offer out another approach.

In Six Secrets of Successful Bettors, published several years ago, professional Randy Gallo spoke of using separator horses. A separator horse can be defined as a horse which you love, who might be 6-1 or higher. He advises this horse be used as “key” horse, and making the rest of the ticket a pick three.

So, instead of spending $72 on a chalk laden ticket, you’d instead do something like this:


This allows you to key heavily on a horse you like very much, while adding longer shots on your ticket.

If this $80 ticket comes in, it can pay $1,000 or more. This is a far cry from trying to grind out $20 profit on a chalk ticket.

The thinking behind Gallo’s approach is sound. Winning at betting the races is not about picking winners, it is about picking winners that others do not have. When you are using a separator horse, you are feeding off the high hit rate, low payout spread tickets taken by many, and increasing the size of your payouts.

Hitting any pick 4 is a real thrill, but knowing we are hitting pick 4’s that payout at rate over parlay allows you to look at your bankroll at the end of the year and smile, knowing you beat the game. That’s the greatest thrill of all.

Monday, June 17, 2013

A Few Suggestions for the New Racing Commissioner

I saw a note on twitter last week from a long time bettor, fan and horse owner (and a friend I’ve known for many years):

That’s one $4 million per year bettor on harness racing - he probably supplied more than a Meadowlands Pace purse each year to racing from his cut of takeout - going down to zero. He “got tired of the lack of sensitivity to customer needs”.
I think he is a part of a large group of fans and bettors. Harness racing does not do a good enough job to meet the needs of customers, even though in many cases the wants and needs of customers overlap with the wants and needs of participants.

I think that’s readily apparent with the above tweet. If he spent $4M on yearlings and stopped, there’d be some serious chatter. But a bettor leaving? Ho hum, another one lost.
That got me thinking, what are some things I’d like a commissioner to do; policies to put a better face on the sport, for positive branding, for fans, and participants?  We’ve heard about a commissioner for a hundred or more years, and it has never, nor will it ever happen. The grip on power so many factions have is so tight and unwilling to compromise, it’s a non-starter.

Since this is only an opinion column, we’ll suspend belief for a moment. Here are a few policies that would ensure the new commissioner be turfed from his or her position within a half a year; maybe even sooner.

“If You Don’t Feel Like Trying, Pay the Piper”

I’m almost always amazed when I read headlines from other jurisdictions about a racing commission doling out penalties for “lack of effort”.
“The Stewards have suspended jockey John Doe for not riding his horse to win and have given him a $5,000 fine. The jockey has appealed, but will not be allowed to ride until his appeal is dealt with. The public’s trust, and the integrity of the sport of horse racing, is beyond reproach.”

This past week in Australia, Hall of Fame trainer Gai Waterhouse was fined in a very public steward’s trial, for not disclosing a possible neck issue and for lack of keeping perfect vet records, when her 1-5 shot raced poorly in a stakes race. The hundreds of thousands of dollars bet on the horse ensured it was taken seriously. In North American harness racing, when a 1-5 shot sits the wood, we expect our customers to turn the page like nothing happened and keep betting.
These things do not happen much anymore overseas because, well, when you bring a hammer down that sends a message to connections that not trying will cost them a lot of money, a not-so-funny thing happens: They try.

Sitting with a 2-5 shot, going to the back with a 3-5 shot, and not respecting betting dollars is unprofessional and a pox on harness racing’s house. The first thing a new commissioner does is stop it, just like other jurisdictions have.

“These Boots Are Made For Fining”
After we get the sport’s drivers chugging to put forth an effort in races they should, we make sure they don’t put too much effort that is beyond the rules of what’s right.  The second thing I would like to see eliminated is the practice of booting a horse’s hocks.

Despite being against the rules, this tactic has gone on with a wink and a nudge for some time – ignored by both judges and drivers. If you watched last year’s Jug card, for example, you’d wonder if you were watching harness racing or a soccer game, and when you checked the fines and suspensions you saw nothing.
I sometimes imagine Walter Case watching races from home, saying, “hold it, I got kicked out of racing for that. What the hell?”

Some drivers and industry insiders like to say “it’s not hurting the horse, it’s just scaring them.” I’m sorry, but this misses the point entirely. This is not a pre-1930 agrarian society any longer; it’s urban and it’s evolved to the point where the general public does not want to see animals scared into performing for humans.  Circuses cannot scare animals into doing things, because if they do they get fined and shut down. Rodeo, a weekly staple on network television 30 plus years ago with a tremendous fan base and huge revenues, never learned that shocking a horse to get it to perform scared was not copasetic either. It’s not a staple on television anymore.
In Ontario a few years ago some drivers prescribed to this practice, but the Ontario Racing Commission heard complaints and began cracking down. Again, a not-so-surprising thing happened: It stopped. 

We’ll do the same. First offence for booting:  A $1,000 fine, second offence, $2,500, third offence, 15 days and a $10,000 fine.  This age-old practice will be gone from the sport in a week.

“There’s Money Being Bet, Honestly There Is”
There’s a couple of billion – with a “B” – bet on harness racing each year in North America. For an industry that generates that kind of betting volume we sure make a mess of it when protecting the customers and horse owners from in-racing nonsense. I’m not going to slag individual judge’s here because many do a good job, but it’s not their fault either way.

In Hong Kong there’s a judge’s school and infractions are called with something that everyone wants: Consistency.
A new commissioner would immediately take rulings out of an individual’s disparate hands, i.e. the gentleman or lady whose best friends, perhaps, with the people they are judging. We’d do what the National Hockey League does with questionable goals and create a league office with judges watching all the races nightly on several television screens. They make the call, using industry wide rules.

If letting a horse up the inside is a rule that racing thinks is an enforceable offence, it’s called, whether it happens at Scioto or Mohawk. If a slow quarter is a bad thing at Monticello, it is at Yonkers as well.  Our customers will respect this, and so will participants.
Think about what would happen to the financial system if insider trading, or company reporting rules, differed from state to state. The economy would implode. Right now judging and inter-track and interstate rules are a mess in a multi-billion dollar betting industry. The new commissioner will fix it.

“The Greybar Hotel Is Open For Business”
I remember a conversation I had with a friend over ten years ago. He was a super-good bettor and followed the game as much or more than anyone. This fellow is a good guy who teaches his kids right from wrong, does business with honor and integrity – an all-around ethical, decent person.

He was also building a stable with a questionable trainer who was winning at unbelievable rates; a trainer you’d have to be dumber than a bag of hammers to think was on the up and up.
He said, “I find myself making excuses for him, and I never thought I’d do that, but winning is so fun, I can’t help it. Plus, if I wasn’t giving him horse’s, it would be someone else.”

A commissioner, when a trainer is using EPO or another dangerous drug like a pain killer gets caught, needs to ensure they get charged criminally. People who use EPO on horses are committing horse abuse – just ask someone who has to take care of a horse coming down off it. Using an undetectable, illegal pain killer endangers both horse and driver and is not only a fraud issue, it’s a safety issue.
By charging people criminally it sends a strong message and it helps change a culture. It makes my otherwise ethical friend who would never do such a thing in his life, with his family, or with his business, say “no” to such a business plan. It also brings in new investment to our game that have long left after trying to compete against the chemists, and it helps us attack those who are coming after us for slot money.

“Really Folks, We Do Have Stakes Races”
Friday night’s are for high school football, Saturday night’s for college football and Sunday’s for pro football. Some night somewhere, needs to be branded for harness racing.

The next task for the commissioner is to schedule every stakes race in North America with a proper season.  It’d create a night that matters – a night with big pools, good horses, good drivers and good exposure – each week.
Fifty two weeks a year, for one day each week, there would be a home for harness fans. There’d be a race to tune into, to bet, and to talk about. We’d pay TVG to show it, instead of that bizarre 4 claimer quarterhorse race at Los Al. We’d promote it with verve at simulcast centers, track to track, and with ADW companies. This will ensure more eyeballs, more exposure and more handle for the sport.

This is a great sport with interesting horses and some really nice big races. A commissioner has to find a way to stop what we all see each night at the track: Fans watching TV monitors of a claimer at their home track, or a thoroughbred race at Mountaineer, instead of the Dan Patch or Battle of Lake Erie; likely because they have no idea it’s even taking place.  
You could have the greatest product in the world, but if you don’t sell it right it will be an abysmal failure.  A commissioner constructs, packages, markets and sells harness racing’s big events.

“It’s Time For You, Yes You, To Give Up Some Cash & Some Power”
Talk to any horsemen group. They want to market the sport. Tracks believe we need to market the sport, too.

“Bingo spends 25% of revenues on marketing, casino’s 20%. Racing spends only 2%, let’s spend more money!” they say.
Everyone is in agreement, until you ask someone to pay for it.

That’s where another policy comes in, which certainly assures the new boss’s pink slip – a horse racing tax.
A commissioner’s office immediately creates a 1% tax on purse, driver and trainer checks; just like a withholding tax. This 1% is matched by the tracks out of their budget.

At slots tracks, this tax is increased to 0.5% of the purse share and 0.5% of the tracks share of total slots dollars. That is, if your slots deal is written so 10% of slots revenues go to purses and 10% goes to the track for profits, those numbers are now 9.5% each. 
I’m sure everyone can get by on $43,500 Opens, instead of $45,000 Opens. Especially considering those purses, like we saw in Ontario this year, won’t be there forever.

With this money, the things racing needs to succeed will be enacted. New technology, beaming a signal, lobbying Washington for helpful tax treatment, or treatment for our bettors via W2’s, a marketing in a box package for all tracks to encourage on-track patronage, lobbying of state legislatures to add slots, or keep them, creating horse retirement programs that work, takeout and rebate programs and studies, industry-wide customer retention programs. Virtually everything that should be done – and are already being done by our competition - will be done with the proceeds of this tax.
The kicker with this is how the money is spent. The commissioner spends it by using expert knowledge and study in related fields – customer retention, or marketing, or betting, or a hundred others. He or she does not have to get a policy rubber stamped in an industry meeting by every harness commission, horsemen group, track, or association known to man; most of whom don’t even like each other.

Now back to reality........
Woodrow Wilson uttered one of my favorite quotes: “If you want to make enemies, try and change something.”

The above list for an incoming commissioner likely assures that.
However, I feel, and I’m sure many of you agree, that whoever forces change for the better in the sport of harness racing will never succeed if he or she is liked. Appeasing the masses – the alphabets – has been harness racing’s (and racing’s in general) overriding policy and rudder. That rudder has not steered the sport in a direction forward, it has been stuck in neutral; just as one would expect when you try to be all things to all people.  

Unfortunately it’s even worse, because there are no alphabets for perhaps the most important leg of the stool – customers. It should be no surprise that over the years, as the monopoly crumbled, we’ve lost them.
For the sport to move forward and for the sport to be able to respect its customers, there will be winners and losers in the short run. There’s no way around that. Some people will not be happy because change is difficult, and change means that certain people will not have as much say as they used to have.

I think business author Seth Godin put it best about industries requiring deep change to survive; in this case, referring to the newspaper business:
“If by save you mean, "what will keep things just as they are?" then the answer is nothing will. It's over.

If by save you mean, "who will keep the jobs of the pressmen and the delivery guys and the squadrons of accountants and box makers and transshippers and bookstore buyers and assistant editors and coffee boys," then the answer is still nothing will. Not the Kindle, not the iPad, not an act of Congress.

We need to get past this idea of saving, because the status quo is leaving the building, and quickly. Not just in print of course, but in your industry too.”

A new direction is needed for racing – involving compromise, cessation of power and some horrible tasting medicine for some factions - and it can’t, in my opinion, come soon enough. The status-quo that everyone loves to protect is not leaving the building; it left it a dozen years ago.

Reprinted with permission from HRU, please sign up for HRU for free here if interested