Advice: Embrace 'Whales,' Close Tracks
This year’s International Simulcast Conference opened Sept. 29 with some advice to the horseracing industry: Embrace the “whales” and computer-assisted wagering, and close some tracks to help improve the product at those that remain.
The three-day simulcast conference in St. Petersburg, Fla., draws a mix of simulcast directors, representatives of online wagering entities, pari-mutuel vendors, and track executives—but not many of the latter. If more had been in attendance, they may not have liked what they heard.
Michael Konik, a best-selling author, television commentator, and former member of sports-betting syndicates, discussed how computer-assisted wagering allows users to identify potentially profitable plays and make money.
He said the “smart money” has sought out other means to wager on racing because bookmakers “don’t want to service people that understand the line better than they do.”
Konik acknowledged rebates, which average about 7% in the industry, can spell trouble for the average on-track player who is at a disadvantage, but he doesn’t advocate eliminating rebates. He said the industry needs to experiment with lower percentages to see how far it can go without chasing away the whales.
“You will know when the rebate is set too low,” Konik said. “I don’t know what that right number is for your industry. I don’t believe smart bettors will be the end of the industry. In fact, they can be one of the forces that revitalize the industry.”
Konik said a major drawback of the pari-mutuel system is takeout rates, which average about 20% but run as high as 30% for some exotic wagers in Pennsylvania.
“I don’t think most people can win betting horses at a 20% takeout,” he said. “The vast majority of your customers cannot win long-term betting horse racing.”
Larry Higgins, executive vice president of the Tampa Bay Horsemen’s Benevolent and Protective Association and a VIP customer at Tampa Bay Downs, said there are four major areas that need improvement: information for bettors, integrity, accommodations for players, and a larger pool of bettors. Higgins, who owns Thoroughbreds, spoke from the perspective of a bettor; he said he wagers about $1 million a year at Tampa Bay Downs.
Higgins said he plans to attend the Breeders’ Cup World Championships at Santa Anita Park but will not play the Ultra Pick 6 because he’s not convinced the industry has done enough in the area of wagering security since the Ultra Pick 6 fraud of 2002.
“I’m still worried about the kids from Drexel,” Higgins said. “There are equally sophisticated or more sophisticated people out there who could do the same thing.”
Higgins said past-posting and late odds changes “destroy for many of us our faith in the game.” He warned the industry about the dangers of relying on subsidies from gaming machines, and also questioned why some racetracks don’t take advantage of resources in their community.
“I don’t understand why there aren’t more ties between racetracks and universities,” Higgins said. “Why aren’t we doing anything to attract young kids with money?”
Higgins said subsidies could disappear as state governments continue getting squeezed for money for programs that impact much larger segments of the population. He noted a $70,000 race at Presque Isle Downs & Casino attracted total handle of only $40,000, and suggested tracks start finding ways to generate more business from their core product.
“(Legislators) are going to look at this subsidy and say, ‘Why are we giving this money to these people?’ ” Higgins said.
As for the number of the tracks in the United States, Higgins said it’s time to consolidate. He said he races at small tracks and likes many of them, but having so many in operation isn’t practical as field sizes shrink.
“I’d like to see at least half of them go out of business,” Higgins said. “Every track in America is running, but we don’t have enough horses.
“Please do me the courtesy of going out of business.”
The simulcast conference is hosted by the Thoroughbred Racing Associations and Harness Tracks of America in conjunction with the America Greyhound Track Operators Association.
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