Category Archives: Opinions

Opinions and editorials

The Murray Rojas Decision

By now everyone should have read about the case of Pennsylvania Trainer Murray Rojas who was convicted of 14 counts of “misbranding” animal drugs in violation of federal law but found not guilty of seven counts of wire fraud. The outcome was certainly a mixed bag. Prosecutors didn’t get a conviction on the most serious charges, and Rojas still faces punishment for the misbranding convictions.

But this article is not about whether Rojas did it or deserved it or was singled out in some way.  Frankly, given all the testimony, something stunk over at the Rojas barn and she perhaps could have done a lot worse than a conviction for misbranding. Let me be clear – this is not about defending Rojas or anything she did that got her in the mess in the first place.

Rather, I want to talk about two things: a federal overreach in terms of the prosecution of wire fraud, and some shots at the HBPA that were taken by the well known racing writer, Ray Paulick. Let’s start with the wire fraud.

According to the website legaldictionary.com, wire fraud is “the crime of using an interstate wire, television or radio communications, or the Internet, in order to defraud someone.” In the case of Rojas, purse money in the races Rojas’ horses contested was paid by interstate (and it has to be interstate to trigger federal jurisdiction) electronic transfer of funds, and this was enough to trigger the federal charge. But make no mistake – if the feds wanted jurisdiction, they had to come up with a violation of a federal crime, and overages in race horses of veterinary medications haven’t made it into the United States Code. So they had to get creative and decided on wire fraud.

When the first mail fraud act was passed in the late nineteenth century, there was a proliferation of get-rich-quick schemes and shady land deals, usually promoted by city slickers, to separate rural rubes from their money. Fleecing someone was a crime, but the federal government cleverly made fleecing someone through the mail a whole other crime. The obvious extension of the mail fraud law was to make wire fraud equally illegal. This originally covered the telegraph and the telephone but eventually everything where communication is through the hard lines or air (it’s no longer just wire fraud), including the internet. These federal laws are pretty handy when authorities are targeting substantial crimes like racketeering and money laundering, but certainly more of a stretch for something like paying the winner’s share of a purse with a check from an out of state bank, especially when the “fraud” was ostensibly gaining an advantage by illegally dosing medications. I suppose you can argue somebody got defrauded – perhaps the connections of the second place finisher and the people who bet on that horse to win – even if it was only indirectly. Of course, it would seem that by the letter of the federal law, if Rojas had committed the same offense at Parx, she wouldn’t have been charged with wire fraud because the bank used to pay the purses at Parx is in Pennsylvania.

That begs the question, if an act at one track can be considered federal wire fraud, and the exact same act at another track wouldn’t be considered federal wire fraud, were the feds overreaching when they charged Rojas with wire fraud? And it further makes one wonder whether the federal fraud statute was appropriate as the primary law enforcement tool for dealing with therapeutic medication overages at racetracks primarily governed by the state they are in. Like a lot of laws, often the breadth of how the law should apply becomes a function of the creativity of the prosecutor. Even so, do we really believe the Congress of the United States actually anticipated the wire fraud law to apply in cases like Murray Rojas?

After reading an editorial from Ray Paulick in which he speculated on the motivations of the HBPA in this matter, I spoke with Eric Hamelback the CEO of the national HBPA about why the HBPA contributed to Rojas legal defense. Hamelback was very clear that HBPA financial support was not about “enabling,” as  Paulick suggested, the kind of violations of which Rojas was accused. It was because the HBPA was legitimately concerned that if the wire fraud charges stuck based on getting a purse distribution check from an out of state bank, then there was no violation that couldn’t be considered wire fraud, at least at tracks where purse checks were drawn on an out of state account. In a sense, the feds were looking to make new law with regard to violations of drug/medication thresholds. Overage of Ranitidine? Overage of phenylbutazone? Both could be considered wire fraud based on the thinking of the feds with regard to Rojas. Whether or not you like the HBPA position, it seems clear they had a legitimate concern, not “preposterous scaremongering” as Paulick suggested. It takes very little imagination to stretch the decision the feds made on wire fraud to include any violation that results in a purse being fraudulently paid.

Hamelback was direct in saying that the HBPA has always been in favor and supportive of penalizing those within the racing industry who break or abuse racing’s regulatory rules, and while there are some who won’t see any difference between defending Rojas from an overreaching federal government and defending Rojas’ actions to try to gain an edge, the HBPA position was not an attempt to find ways of having trainers like Rojas wiggle out from underneath punishment for the misuse of therapeutic medications.

Even if you believe the states have done a less than sterling job of cleaning up racing, you have to ask yourself if the answer is federal prosecution for wire fraud. There will certainly be an element who agrees with Paulick when he says

“I understand why enablers like Mostoller and Hamelback rejoiced when the jury found Rojas not guilty on seven counts of wire fraud and conspiracy. They are hoping the FBI will turn tail and let horse racing return to policing itself. They must believe the status quo was working just fine before the feds showed up. And maybe it was, for the cheaters and crooks, but not for honest horsemen, and certainly not for the betting public. This is a shameful chapter in the history of the HBPA.”

and they will miss the point just as Paulick did. Even if HBPA was pleased that the decision on wire fraud went their way, to imply there was some sort of sticking-it-to-the-fans rejoicing at HBPA over the decision was ridiculous. The characterization that this was somehow part of an HBPA effort to enable scofflaws to get off the hook is plainly off base. HBPA believed the feds had overreached when they applied the wire fraud statute and it turns out that based on a jury comprised of regular people they were right. The message was not that the FBI should turn tail, but that you charge trainers with the appropriate crime and adjudicate it in the appropriate jurisdiction, and if they are found guilty you give them the appropriate punishment. Paulick made the classic mistake of conflating a stance on a point of law with carte blanche support for the alleged lawbreaker. To use the word shameful is not even close to the HBPA position on Rojas.

Paulick could have done his due diligence and talked with Eric Hamelback (as I did) about the Rojas decision and he would have found out what I did. He also could have stayed to the end of the trial instead of leaving after the prosecution was finished presenting its case, and perhaps that would have given him a complete perspective on why Rojas chose to fight the wire fraud charge. Instead he chose to attribute to HBPA feelings (rejoicing) and motivations (covering for violators) that were off the mark. If the HBPA was satisfied with the verdict, it was because no other trainer will have to worry about a federal felony for any overage of a legal therapeutic medication.

If Paulick and others believe the states have proven themselves incapable of standing up to the horsemen, there are plenty of steps they can take before settling on creative federal prosecution. For one thing they could get people on racing commissions who know what they are doing, spend a lot more time on proactive enforcement of the rules, and don’t have close personal relationships with the people they are supposed to regulate. But you can be assured the Murray Rojas situation could never have proliferated if the stewards and the racing commission had been more vigilant. Pennsylvania is as much to blame for the involvement of the feds as the problem trainers are.

If the feds are the answer, then change the laws to put them in charge, but until then, how about we try to make the current system work the way it is supposed to.

 

Saving Santa Anita

Things are getting serious in Southern California.

Frank Stronach has sent Tim Ritvo to Santa Anita to save that track from potential demise.  For those who aren’t familiar with Ritvo, he has been the The Stronach Group’s Chief Operating Officer of the Racing Division since June 2012. He’s seen as uniquely qualified because he has been a jockey, trainer, and a racetrack executive, someone who can act as a bridge between the blue collar people who make the track go – the trainers, stable workers, and jockeys – and the corporate guys, people who Ritvo referred to as “guys with MBAs and lawyers who don’t know the first thing about racing.”

I don’t know about you, but it sounds to me like he zeroed in on the first really big problem — guys running the track who might understand the business end of things, but don’t really understand horseracing. From the anecdotal evidence, Santa Anita seems to have found more than its share of track administrators, including the stewards, who can’t seem to help but regularly incur the ire of various stakeholder groups. While Ritvo is kind to the existing management personnel in public, he must have heard the regular criticisms of them, and I’d say it’s time for him to have some frank discussions in private.

But Ritvo expresses the real motivation to get everybody on the same page –  the fact that Stronach owns a half billion dollar property that doesn’t return even 4-5%. Reading between the lines, at some point either Santa Anita becomes economically viable as a racetrack property, or Stronach either sells it (and if someone buys it, I don’t know why anyone would think they could do a better job of running a horseracing facility) or redevelops it. And while Ritvo doesn’t come right out and say it, horseracing in California is in as precarious  a position as it has ever been in. If all the players didn’t see the urgency before, unless Ritvo succeeds in a big way, they may be looking at a new place of employment/recreation in the near future.

To his credit Ritvo expressed an understanding of the importance of the bettors to the success of racing. Ritvo understands that without the bettors, there is no racing, but I’m not sure he understands exactly who his customers are and what they really want. Ritvo suggested that bettors want two main things: lots of options and field size. He went so far as to say field size was more important than   the quality of the racing. That’s an interesting perspective, but one I can understand. A 12-horse state-bred maiden field should be ripe for some major prices.

I’ve expressed my opinion on both those issues. For me, the issue in racing is not that there are too few betting options available to bettors. In fact, there are far too many bets on each event at most tracks. The second race at the NYRA tracks has win, place, show, exacta, quinella, trifecta, superfecta, daily double, pick-3,  and pick-4. It’s also the second leg of the pick-5. That’s 10 different pools in which to place your money. A bettor with some capitalization might get into a few of them, but how well can your $200 a day guy cover combinations in the more complicated verticals and for how many races? And that doesn’t even count the pick-6 that will be coming up two or three races later. Of course the more bettors get into the complicated verticals, the less they will be in the higher churn pools, the less they will win, and the less they will spend their gambling dollar at the track, and I would think that should be a big deal to a track looking to maximize revenues.

I get it. You line up 10 random people at the track and you’ll get 10 different favorite bets, and so the people running the racetrack believe they are obligated to offer as many of those bets as they can on a respective race. Based on horseracing board discussions, there are arguments to be made on both sides, and I’d certainly be willing to defer to any definitive study on whether the Cheesecake Factory sized betting menu is superior to a smorgasbord focused heavier on the higher churn bets. But I still think you can have the complicated verticals, just fewer of them.

The other issue is the size of the minimum bets. It’s blasphemy to say so, but I don’t favor 10 cent minimums on superfectas or 50 cent minimums on trifectas or the pick-3/4/5. There is no self interest. I simply believe the higher minimums will push people into the higher churn pools where they have a better chance of success and a better chance of staying in the game. I’ve heard the argument on the flip side – if they didn’t have the low minimums the modestly capitalized bettors wouldn’t be able to get into those pools, but raising the minimums is a bit like castor oil used to be for kids – it’s for their own good.

I’m reminded of the Andrew Beyer book, My $50,000 Year at the Races. That’s how much Beyer made essentially betting win and exacta, and that kind of potential would exist 40 years later if those pools were sized as if it was 1977. The horseplayer who is as much gambler as investor is going to struggle having to grind through a month with an expectation to make as much as he dreams he could with one sweet pick-5 win.

I will concede two things. One track deciding to readjust the betting menu while others stay with the really low minimums will likely not work. For something like higher minimums and fewer pools per race to work it really has to be an industry wide effort. Two, I fully understand tracks aren’t going to change as long as they figure they can direct a significant part of the bettor’s bankroll to the higher take bets. Of course in California, they raised the take on exactas to the point where you are probably just as well betting the complex verticals. If Ritvo has any sense about how take affects handle, he’ll quickly petition to drop the exacta take to no more than 18%.

Field size is a trickier issue. It’s clear that too many five or six horse fields is a huge turn-off to bettors. But do we really want more 14 horse fields, especially if six of those horses are outless? Think about the Kentucky Derby. For the last three years I’ve been able to eliminate 8-10 horses, and I’ve only had one of my eliminations finish in the top three. Too many horses may be as bad as too few, especially if we’re talking about lower price maiden races with a lot of inexperienced runners. If you have a 14 horse race and you can toss seven runners, what advantage do you have? Then weigh that against the disadvantages.

I think the ideal number of starters is between 10 and 12. This provides plenty of combinations, doesn’t put too much pressure on the universe of horses in a respective price range to race often, and it limits the potential your horse will lose as a result of bad racing luck or post position.

Ritvo mentioned the potential for Santa Anita to go to a three day a week schedule. I believe what he is really saying is that we need contraction in the sport. Although Ritvo has said that the issue is not a horse shortage but an owner shortage, his solutions to the problem are at the moment somewhat up in the air. The only thing he’s really offered is that more people should become owners because it is a great game, but as the old saying goes, the way to make a small fortune in racing is to start with a large fortune. Until it becomes more affordable (your horse would have to earn $4-5,000 a month to keep your head above water at Santa Anita), or there are significant tax advantages, it’s not going to be easy to attract new owners.

I’ve opined that racing is a three-legged stool consisting of the owners, the trainers and the bettors. Take any leg away, or make any leg longer or shorter than the others, the stool collapses.

We all appreciate Ritvo calling out the bettors as being the base of the racing pyramid, but the reality is that for years they have been at the bottom of the Santa Anita hierarchy, with the owners and trainers ahead of them. When Ritvo was asked about changes, he said, “I’m going to be the guy that goes to the TOC (owners), the trainers’ association, the breeders.” Did you notice any group missing, as usual?

If Ritvo is serious, the bettors will have the same seat at the table as the owners and the horsemen. To this point the bettors have not been well organized. There is no real equivalent of the HBPA or the Thoroughbred Owners of California for horseplayers, although perhaps HANA comes closest. The problem with horseplayers is that they’ve never had to adopt a groupthink sort of philosophy.  It will be very tricky for Ritvo to figure out how to embrace the bettors as he goes through the process of revitalizing the track, and he does so at the risk of causing the trainers and owners to become agitated if pleasing the bettors means the owners and trainers get any less money.

Ritvo has made his opinion on the importance of the bettors and the importance of a reasonable take very public. At this point, if he breaks faith with the bettors and doesn’t metaphorically put his money where his mouth is, he may wind up losing the whole thing.

One last point. For a while now, improvements to the barn area at SA have been the subject of discussion. Ritvo said, “It takes a huge amount of investment to maintain it and to upgrade it, and there is [no return on investment]. It’s a long term play.”

In another case of reading between the lines, what Ritvo is saying is, don’t expect us to invest in the backside until we know we’re going to be around for many more years. But, the most important thing is that nobody better give the slightest consideration to having the bettors pay for this. If anything, money to redo the stable area should come out of purses, which if Ritvo makes the right moves should be able to stay at least at current levels  In other words, since Santa Anita gets a percentage of handle to fund purses, if Ritvo can increase handle, he can have his stable redevelopment fund out of the increased revenue, while trainers and owners won’t have to accept lower purses.

Ritvo is certainly talking the talk. Let’s see given all the barriers he’ll have to break through whether or not he’ll be able to walk the walk.

The Continuing Saga of Turf Paradise

Well, Turf Paradise didn’t take to Twitter to complain about the story in the Arizona Republic. They turned to America’s daily paper, USA today.

The bottom line from Turf Paradise’s perspective: Tribal casinos and Arizona’s unfair gambling policies are to blame for any problems Arizona racing has.

To be fair, Turf Paradise has a point. There are 23 casinos in the state of Arizona, and four significant casinos within 28 miles of the racetrack, including Fort McDowell, Talking Stick (Casino Arizona), Wild Horse Pass and the one Turf Paradise has pointed to as a major impediment, The Desert Diamond  Casino, owned by the Tohono O’odham Nation, 11 miles from the track.

Let’s go through some of the history of that casino. In 2002, state voters approved a compact between Arizona and Indian tribes limiting the number of casinos and gaming devices in the state. The agreement essentially gave Native American tribes exclusive rights to the Arizona gambling industry. Among the more  significant requirements:

  • A maximum of 18,158 slot machines in the State, including transfer agreements. Currently, there are about 15,390 slot machines.
  • A maximum of 1,301 slot machines in any one casino. Slot machine wager limit of $29 for most tribes.
  • A maximum of 3,318 blackjack and poker tables in the State.
  • A combined maximum of 119 blackjack and poker tables in any one casino and bet limits for poker and blackjack.
  • A maximum of 43 casinos in the State. That includes a combined maximum of 29 casinos for gaming tribes that had casinos at the time the Compact took effect in 2003. It also includes a combined maximum of 14 casinos for non-gaming tribes that didn’t have casinos in 2003. If a tribe leases its slot machine rights to another tribe, which many have done, then the number of casinos the first tribe can operate is reduced.

In 2009, Tohono O’odham announced its plans to build a casino and resort on unincorporated county land they bought at 95th and Northern Avenues, a parcel surrounded by the City of Glendale . This caused some consternation in the City of Glendale, especially since the tribe didn’t have a reservation anywhere near Glendale.

Of course, there was some fine print in federal law. When the federal government built the Painted Rock Dam on the Gila River to protect non-Indian farmers, the dam caused flooding in the Tohono O’odham’s Gila River community, rendering 9,880 acres of unusable. A federal law in 1986 allowed the tribe to purchase replacement land in unincorporated areas and apply to have it designated as a reservation.

The Tohono O’odham tribe decided 135 of those acres should be at 95th and Northern Avenues. Who could have figured the federal law to make reservations whole would result in an enclave within a city becoming a Native American reservation?

By July 2010, the  Department of the Interior agreed to designate the land the Tohono O’odham purchased as reservation territory, based on the 1986 law.  This is where the story gets good.

In November of 2010 the Gila River Indian Community sued the Department of the Interior, saying the department did not consider whether the land was eligible for gaming. Glendale joined the suit, arguing the land should not be taken into trust because it was surrounded by the city. Glendale also tried to quash the casino by lobbying the state to pass legislation that would allow Glendale to annex the Tohono O’odham Nation’s land, making it ineligible for reservation status. In February 2011 Governor Jan Brewer signed the legislation. The Tohono naturally sued.

Two weeks later Arizona, the Gila River and the Salt River Pima-Maricopa Indian communities sued the Tohono O’odham, alleging the tribe’s plans violated the 2002 Arizona Gaming Compact passed by the citizens of the state. They argued the compact implicitly capped the number of metro-Phoenix casinos. Reading the specific elements of the compact, that argument seemed to be a stretch, but it turns out the feds had bitten off more than Arizona wanted to chew. Not unexpectedly, both tribes joining in the lawsuit owned casinos in the Valley.

By July 2011 a federal judge issued rulings in favor of the Tohono O’odham on both lawsuits, the Department of Interior and annexation cases. The state and the tribes that had filed the suit appealed to the U.S. 9th Circuit Court of Appeals. Yes, that 9th Circuit Court of Appeals.

But the state and the tribes had another card to play. In 2012 they got Rep. Trent Franks  to sponsor a bill to keep the Tohono O’odham from opening a casino on its West Valley land but the bill died in the Senate. Meanwhile, in May 2013 the 9th Circuit asked the Department of Interior to reissue its ruling on the Tohono O’odham’s reservation status, with deeper explanation.

In November 2013 Representative Franks once again got the U.S. House to pass legislation aimed at blocking the tribe’s Glendale casino. This measure banned tribes that take land into their reservations after April 2013 from opening gambling sites, putting a sunset date of 2027 in the bill. That bill also failed to clear the Senate.

Meanwhile, the 9th Circuit agreed to postpone the compact case until the U.S. Supreme Court had ruled on a Michigan lawsuit. Michigan had sued the Bay Mills Indian Community for refusing to close a casino the tribe built without asking Interior or the National Indian Gaming Commission. The tribe, however, raised sovereign immunity. If the Supreme Court would have done away with sovereign immunity altogether, that would have impacted the lawsuit between Arizona and the Tohono O’odham, but in May 2014 the Supreme Court upheld tribal sovereign immunity, protecting the tribes from getting sued in most cases. The opponents to the casino suffered another loss in July when the U.S. Department of Interior reaffirmed its decision to make the tribal land at 95th and Northern Avenues part of the Tohono O’odham Reservation, meaning the tribe could build whatever it wanted on the land.

The City of Glendale decided to make a turn, and in a divided vote the Glendale City Council agreed to support the Tohono O’odham casino five years after expressing strong opposition to the project. At the same time the U.S. Senate finally decided to insert themselves into the fight when the Arizona senators, John McCain and Jeff Flake, introduced a bill prohibiting new casinos in the metropolitan Phoenix area. The bills didn’t make it out of the session, but with the start of the next session in January 2015 McCain, Flake, Franks and also Paul Gosar reintroduced legislation to ban casinos in metro Phoenix. Really.

The federal maneuvering didn’t deter the Tohono O’odham. They broke ground on the casino in August 2014, inspiring new Governor Doug Ducey, Attorney General Mark Brnovich and Department of Gaming Director Daniel Bergin to let all the parties know a few months later that Arizona would not allow the casino to open because – this is a good one – they alleged the Tohono O’odham Nation committed fraud in negotiating the 2002 gaming compact. There has to be at least a little irony in the state claiming they were hoodwinked by the Indians. The tribe responded by filing a lawsuit asking for an injunction that would allow the casino to open later that year.

In something of a surprise ruling, the U.S. District Court of Arizona denied the tribe’s request for an injunction, ruling that the Tohono O’odham Nation failed to prove it would suffer irreparable harm or financial losses from the state’s attempts to block the casino. Apparently the judge was unfamiliar with the casino business, often known as a license to print money. Hard to imagine their lawyer wasn’t able to sell the idea that millions of dollars were on the table for the tribe.

I know. It’s hard to follow the lawsuits without a program.

By November 2015, the 9th Circuit affirmed the decision that the state law that would have allowed Glendale to annex the tribal property was unconstitutional on the basis that when it comes to tribal issues, federal law trumps state law.

The U.S. House failed to provide quick passage to the legislation sponsored by Franks and Gosar disallowing any new casinos in the Phoenix area, and on December 20, 2015 the Desert Diamond Casino opened with 1,089 slot machines, although without the ability to operate table games.

Negotiations between the state and the Tohono O’odham Nation continued until finally, a week ago the parties reached agreement on what officials described as a massive $300 million expansion project featuring slots, table games, as well as alcohol sale. Interestingly, the other Native tribes running casinos in the state said they wanted more gaming in their facilities. In exchange, they would let Desert Diamond become fully operational. Arizona not only didn’t get what it wanted – no new casino in the Phoenix area – it wound up having to expand gaming on other reservations.

So the long and tedious story of the Glendale casino finally came to an end, the only end anyone could have really expected. I have seen no evidence that Turf Paradise and Jerry Simms were part of the efforts to block the casino, but clearly it will have negative effects on the track.

While Turf Paradise peddles the economic impact of the track ($91 million dollars a year), that only represents .03% of Arizona’s GNP, and frankly will pale in comparison to the economic impact of the casino and the multiple thousands of jobs it will generate. Even given the limited amount tribal casinos contribute to state revenues, they contribute more than Turf Paradise.

Arizona, like many other states that were helpless to stop the proliferation of tribal casinos, has essentially lost any future opportunity to help Turf Paradise out of it’s downward spiral. For the principals of Turf Paradise who wish for reform, the tribal casinos have essentially tightened their hold on casino style gambling. Even if Turf Paradise is spot on in its analysis that the tribal casinos are pushing them off a precipice, they have not done the right things to help themselves to compete for their slice of the gambling dollar. Many horseplayers have ditched betting Turf Paradise because of the excessive take they impose. At the very least, the 20.75% win, place and show takeout makes it incredibly difficult for Turf Paradise to retain new fans long enough to convert them into horseplayers, and like many tracks, they don’t get that raising the take has the inverse effect on revenue.

Turf Paradise played the loyalty card – they’ve been here supporting Arizona for 61 years, aren’t they owed something? One stinking racino in  state that already has 23 casinos and room for 20 more? Turf Paradise tried to get voter approval of slots with Prop 201 and got shot down. Perhaps if voters knew what the future would hold for Turf Paradise they would have made a different decision, but I’m afraid at this point that the proverbial horses have left the barn.

It’s hard to imagine Turf Paradise getting any kind of slots or VLTs now that the state has basically given the tribes carte blanche over any gambling that isn’t horseracing. What the court cases proved is that states are at a severe disadvantage against the the federal laws that govern Indian Gaming. It also proved that gambling in Arizona belongs to the tribes. On May 17, 2017 the sound Turf Paradise heard was a nail slamming into the coffin where horseracing was reposing.

One thing Vince Francia, general manager of Turf Paradise, got right in his response to the Arizona Republic. It could be horse racing’s last straw.

Tumultuous Turf Paradise

Who says the print media is dead? An investigative report by the Arizona Republic, claims Jeremy and Ronald Simms, brothers feuding about the control of Turf Paradise Racetrack in Arizona, could be jeopardizing the future of the state’s horse racing industry by reducing track business and race purses. (The report is here http://www.azcentral.com/story/news/local/arizona-investigations/2017/05/14/turf-paradise-feud-jerry-simms-ronald-simms-horse-racing-thoroughbreds/97308762/)

That’s a good one. Track owners killing racing. Who’d have thought?

I’ve been to Arizona many, many times, and I have family there. I’ve always had some difficulty trying to describe the politics in Arizona. They had a bad run of elected Governors  when Evan Mecham and Fife Symington were indicted, and one of the more underwhelming Governors in their history in Jan Brewer, who ascended to the governorship after Janet Napolitano bolted for the Obama Administration.

I have a funny aside about Governor Jane Dee Hull, the Secretary of State who moved into the Governor’s office after Fife Symington resigned. I was at a state dinner when, unknown to some of us, Governor Hull was called away after the speeches because part of Northern Arizona was on fire. Once the diners were finished, a band took the stage and the bar was open. Someone propped a smiling, life-sized cardboard cutout of the Governor on the side of the stage, looking at the band admiringly. A few songs and a few drinks into the festivities and one of the people with us says, “She hasn’t moved the whole time she’s been on the stage.” He wouldn’t believe it was a cardboard cutout until he got up close to the stage and saw it for himself. Anyway…

In a lot of ways Arizona is still a “good old boy” state (or good old gal if you count Rose Mofford, Jane Dee Hull, and Jan Brewer) and the Racing Commission fits that bill. The racing commissioners are probably more typical than not of the composition of racing commissions.  If you read their posted bios, you have to wonder how many long time race-goers are just as qualified to be a racing commissioner.  You have an estate planning/corporate lawyer who is a “fan” of thoroughbred racing. There is a financial advisor who has owned horses. A greyhound guy (which is not a bad thing if you are a state with greyhound racing). And another fan who owned horses. No medication experts. No veterinarians. But some good friends of Jerry Simms.

According to the Republic, “two commissioners — Tom Lawless and Jay McClintock — acknowledge close personal ties with Jerry. They socialize at Turf Paradise and one another’s homes. They hang out regularly at an off-track betting bar on Camelback Road, near their homes. A third commissioner, Chairman Rory Goreé, employed one of Jerry’s attorneys for personal legal matters.”

This is not so uncommon either. It’s not unusual for the qualifications of the racing commissioners to be thin, and the relationship between the racing commission and the track management to be, well, let’s just say very friendly.

And would people be shocked that Jerry Simms contributed $15-$20K a year to political campaigns, more in big election years?

You can’t make this stuff up. Again according to the Republic,

“Ron Simms points to his sibling’s past role in a California political-corruption sting, and to financial dealings with a former mob-tied casino operator. Ron alleges Jerry misappropriated millions of dollars from Turf Paradise while using Arizona courts, politicians and prosecutors in a “secret backdoor scheme” to cheat him.”

For his part, Jerry Simms managed to get his brother declared an undesirable with regard to track ownership by the racing commission over the findings of an administrative law judge who found Ron to be a decent man and a victim of a smear campaign by “the Jerry Group.”

Inspiring family, eh?

All I can say, is if we’re depending on a couple of racing fans and a greyhound guy to sort all this out, we may be placing unrealistic expectations on them.  But clearly something is wrong. By every statistic the Republic was able to provide, Arizona racing is in big trouble.

As might be expected, Jerry Simms and Vince Fancia, General Manager of Turf Paradise, offered the same explanations we hear from most track officials. Blame goes to an industry-wide slump that has closed many tracks, Indian casinos have siphoned away gambling dollars, and a shortage of thoroughbred horses has forced tracks nationwide to run fewer races.

But Turf Paradise also insists it is thriving with special promotions such as wiener dog races and a Kentucky Derby Party.  General Manager Francia added, “There is no impact between the Simms brothers’ litigation and the vitality of the Arizona horse-race industry and the future of Turf Paradise.”

I believe that is code for, of course a feud over the way the track is managed and by whom will have an effect on racing. It certainly stretches credulity to insist that sort of distraction is irrelevant.

I’m going to go out on a limb and suggest the weiner dog races are not the answer racing has been searching for.

Turf Paradise is not alone, either as a track in trouble because of the state of racing or as a place where the regulated and the regulators have unnaturally close relationships. We cannot expect the kinds of conditions at Turf Paradise – and plenty of other tracks for that matter – to always lead to decisions that are in the best interests of the horseplayers. In Arizona, there is at least the appearance that what Jerry Simms wants, Jerry Simms gets, and anyone who gets in his way, even his brother, may suffer as a result.

The money Arizona is spending on legal fees will ultimately result in the state wondering if it is worth it just to have horse racing in Arizona. According to the Republic, in just three years, the state has paid $739,248 to private lawyers representing the Department of Gaming in connection with the Simms controversy, according to agency records, with some of that money coming  from racing purses. It won’t take long at those rates for the State to get fed up with the situation, and it is hard to say how they will react when they do.

Arizona, and plenty of other states, need to come to a frank realization that as you turn over the racing commissions to people whose only chance to succeed involves overcoming a long and steep learning curve, especially when racing is in the midst of a crisis as bad as it has ever seen, is a surefire way to ensure the conditions that led to the crisis do not improve. We need racing commissions that are not so intertwined with track ownership that that they are unable to make decisions in the best interest of the other stakeholder groups – racegoers, owners, trainers – instead of reliably putting track ownership ahead of them. We need racing commissions that adequately represent the gamut of stakeholders. We need racing commissioners who come to the job with knowledge in the areas in which they are asked to make decisions.  We need racing commissions that can think outside of the box when that sort of thinking is necessary.

The situation at Turf Paradise may provide us with some comedic relief, but the issues are deadly serious. And if horseplayers and horsemen continue to put up with it, then they deserve nothing more than what they’ve been getting.

10 Ways to Fix Horseracing

One of the great ironies of racing is that the people in charge seem to be the only ones who don’t have the answer to “how to fix horseracing,” at least according to social media. Ask any serious racing fan and you’ll get a “slew” of suggestions on improving the sport. So here goes with my best shot at revitalizing horseracing, in no particular order.

1.Simplify the betting menu and you can drop the take and keep revenues constant or increasing. The question for the racing authorities is simple: how much will adding bets increase handle? If a player brings $200 to the track, will increasing the potential number of pools increase handle or revenue or is he just going to spend his $200 either way? The well known formula for gambling revenue is

Gaming Revenue = Volume x House Advantage

In the case of horse racing volume equals handle and house advantage equals the take. In very simple terms either you have to increase volume or increase the house advantage while keeping volume the same to increase revenue. But, as has been shown in numerous studies, raising the take has the effect of lowering the volume. So the less enlightened jurisdictions raise the take again and lose even more volume.

The ideal for horseplayers is to raise the volume while reducing the house advantage. This gives the good horseplayer a better advantage, while maintaining revenue for the house, a win-win. The problem is it is much harder to do when you have a Cheesecake Factory sized betting menu. Even if a track drops the take on a win bet, they may not realize a net gain in revenue unless people pull out of the other pools, usually pools with a higher take

My hypothesis? Reduce the number of betting pools and if the track does it right, (1) they’ll increase the volume in the remaining pools enough to increase total volume AND (2) increase the churn because people will be experiencing more collections. Increase the volume and you can drop the take and still keep revenue constant. In my opinion the two things have to be done coincidentally.

The fact is that the so-called jackpot bets, like the Pick-6 create little churn. Horseracing is not the lottery, and they are never going to be able to compete with the lottery. How do you compete against walking into a 7-11, saying quick pick and handing a clerk $2 for a chance to win a few hundred million?

If our $200 a day bettor decides to get into the Pick-6, he won’t be able to cover very many of the combinations (assuming there are 8 horses in each race, that’s 262,144 combinations) and he won’t be in a pool where the track picks up the churn. The track will get their percentage of the $200, the guy loses, and starts wondering what he’s doing at the track. Without some sort of addiction, nobody is going to play a game where they are mainly donating their money.

Here is my suggestion for a betting menu:

  • Win betting every race;
  • Exactas on every race, and no quinellas;
  • Combine the place and show pools into a single pool, but pay to the first three spots. This may also cut back on negative pools;
  • The take on win, place/show, and exactas would not exceed 14%;
  • Trifectas only on races with at least eight starters and superfectas only on races with at least nine starters, and the minimum bet is $1. No 50 cent or 10 cent bets. Lowering the minimums not only dilutes the prices, but it encourages people with no business betting into those pools to switch from the pools where they have a better chance of winning;
  • A maximum of five Daily Doubles, three Pick-3’s, one Pick-4, one Pick-5 and one Pick-6 a day, with a minimum bet of $1 on everything but the Pick-6 where the minimum would be at least $2, if not $3. At the very least, you’ll keep the undercapitalized out of the Pick-5 and Pick-6 pools. I used to know a lot of serious Pick-4 players who gave up the bet when it went to a fifty cent minimum. Yes, tracks can get more small bettors into the pool, but if it comes at the expense of the bigger players, the tracks are basically shooting themselves in the foot. The arithmetic is simple. 10,000 bets at 50 cents is less revenue than 6,000 bets at $1. Same for the superfecta. 100,000 bets at 10 cents is less than 11,000 bets at $1. Small tracks, at the least, figured out years ago that dropping the minimums doesn’t increase the volume. And when you hit a big superfecta it can be one of those life-changing collections.
  • Stagger the bets so there are not more than two horizontal exotics on a respective race. So Race 1 might be Daily Double/Pick-5, Race 2 — Pick-3, Race 3 — Daily Double/Pick-4, Race 4 — Pick 3/Pick-6, and so on.  This focuses the exotic money;
  • No take percentage on the combination/exotic bets should exceed 22.5%, and even that sounds like it should be lower.

And that’s it. Enough exotics to keep the professional player happy, but a focus on the bets the lower capitalized players can win. Increase churn, increase volume, lower percentage, and at least revenue neutral.

2.Cut operating costs. This entails at least two things. One, getting rid of, or at least redesigning, cavernous plants that were built when 15,000 people would attend the races on the weekend. It makes no sense to maintain a huge facility that is all but empty except for two days during the season. Two, automating to the maximum extent possible. There is no reason I should have to wait in a line at the track to bet – ever. If I have a tablet, I should be able to connect to the track ADW and bet, and funding/unfunding my account is as simple as walking to a window. There should be plenty of self-service machines for those without a tablet, and they don’t have to be the big clunky sort. It’s 2017 for goodness sake. I’ve been to restaurants where you barely have to interact with the wait staff once you sit down and there is no waiting to order. Someone brings you water, there is a tablet at the table, you order, you slide your credit card, your meal shows up a few minutes later, and the staff does the obligatory checking on you. You can’t tell me you couldn’t do the same thing at the track. Yeah, there are a few old guys and a few neophytes that the track might have to coddle, but if we’re talking about new customers in the millennial age group, they will love the technology.

3.Make the track a destination for more than racing. Realistically, how do you justify a facility that is used by the public only part of the year for five or six hours a day? You’ve got to have additional revenue streams, and I don’t mean a casino or upping the prices for parking, admission and programs. In fact, general parking should be free, the grandstand admission should be $5 and you should get a $3 betting only voucher in return.

I was at the South Pointe Hotel and Casino recently. It’s on Las Vegas Boulevard,  but about seven miles from the wall-to-wall casino part of the strip, so it has to be relatively self-contained. It had 11 restaurants, a big multiplex movie theater, a large bowling alley, a bingo parlor, meeting rooms, a show room – you could stay there for three days and never get outside, which thinking about it is probably the point. Tracks should have a great sports bar, a nightclub, some good shopping – and I don’t mean just the gift shop – for those who might bring someone who isn’t quite as interested in the horses, good restaurants where you would be happy to stay after the races and eat dinner, recreational opportunities for the kids that are out of any area where people are betting – you get the idea. Design a destination that will generate traffic from morning until late at night. And if people show up for lunch or dinner and only bet a few bucks, that’s still more than the track would get if they never showed up in the first place.

In the right location, a conference center would be a good revenue source. The shops and restaurants should have separate outside entrances, and if you spend any money at one, your track admission is free. The track makes money on a lease, people have a reason to go to the track other than horseracing, and you can accommodate people who wouldn’t go to the track unless they could induce family/friends to come along. The track also becomes a year-round destination if it is designed right.

One last thing. We’re all used to paying a premium at a sporting event, but how about making the prices just a smidge above the normal street price.

4.Standardize the medication list and thresholds nationally. If you believe the anecdotal evidence, a lot of people believe chemical substances are rampant in racing. Whether or not that is your opinion, it makes no sense to have 37 different permissible medication lists and thresholds. Get every jurisdiction together, have them agree on the list and the thresholds, and trainers will not be able to complain about not being aware of differing thresholds between jurisdictions. Same threshold in Arizona as in Florida, same in Nebraska as in California. Between the HBPA, ARCI, and the NTRA, there are plenty of opportunities to convene and facilitate the meetings. There is no reason to usurp the authority of the states to enforce the thresholds, if that is at all a concern, but if there is interest standardizing enforcement, that  can also be put on the table.

We have been enforcing medication/drug standards the same way for decades. To expect a different result is absurd. There are two obvious issues. One is that most of the thresholds are less related to performance enhancement than you might think. The nature of most thresholds is to identify a level which a horse should be below after dosing a certain period before the race. In other words, it is the residual after metabolization. The threshold doesn’t necessarily mean a level above which there is performance enhancement. There are certain medications that have no performance enhancing effect beyond their therapeutic value. While it is fine to set the threshold for those medications and call a positive, it makes more sense to treat those violations as a traffic ticket rather than a felony, and the punishment would not involve retroactive disqualification from the finish position and purse. Like traffic tickets, an accumulation of violations within a specified period of time upgrades the punishment. There is no essential difference between the level of violation for a single positive for omeprazole (Prilosec) and clenbuterol (a bronchodilator) in most racing commission rules, yet abuse of the later can be performance enhancing. Would it really be bad for racing to treat therapeutics that have no real performance enhancing impact differently than therapeutics that have the potential for performance enhancement, and to even treat those differently than illegal substances?

Second, the vast majority of enforcement money is spent on catching violations after the fact. The key for racing would be to prevent a horse likely to test positive from ever entering the starting gate. And no, out of competition testing is hardly the answer for legal substances because testing a horse 48 hours out from a race and finding the presence of a legal therapeutic isn’t of much value, and that is what almost all the tests will show. The very few cases of finding something illegal a few days before a race – and that would be pretty much only anabolics or Class 1 substances – could get the harshest penalties, but that may not be sufficient justification for a costly OOC testing program.

The answer is two fold. There needs to be an automated record keeping system that shows exactly which medicines a horse has been given by amount and time. Those records should be available to the track medical director, who would have the power to flag anything suspect. The medical director could order testing if there is time, or recommend to the stewards that the horse be declared. If the trainer is shown to have followed all dosing and withdrawal requirements any subsequent positive moves into the traffic ticket category. If the trainer and vet have altered the records, they both lose their license for some period that makes an impact and the owner is ruled off the track for a similar period. Any honest owner would tell his trainer that real “cheating” will not be tolerated.

Vigilance and investigation before the fact can go a long way to avoiding post-race positives.

Punish any violation that show a real intent to gain a chemical advantage harshly, but don’t make as big a deal over violations that aren’t performance enhancing, or where trainers made every effort to comply.

5.Consistency in evaluating inquiries or objections. This would only apply in cases where there is potential for disqualification. In my opinion, it would be fine for the stewards to call an inquiry or for the jockey to object, but much like major league baseball, there should be a central location that makes the decision to disqualify or not. If MLB can handle 15 games a night, racing could handle simultaneous tracks running. This is as close as we can come to consistency across the country and should quiet most of the critics. Nobody can successfully make the argument that there is a substantial difference between adjudicating a foul in Maryland vs Florida or Illinois. The only thing we know is that the stewards in each jurisdiction can take the same foul and make three different decisions. You want credibility in racing – it starts with consistency and having a reliable system for making the right call.

And for the most part, the stewards still have most of their responsibilities for enforcing the other racing rules. No doubt they will be irritated with the change, but it’s best for the fans and best for racing.

6.Information should be free. That includes basic past performances and whatever other data the tracks want to provide. If you don’t think simulcast racing forms that sell for $7 or $8 on track don’t keep people out of the game, you don’t understand simple economics. I used to joke that between parking, clubhouse admission, racing form, and a Pepsi, I was down $20 at Saratoga before I made a bet. The “nut” is too high, and tracks need to recognize they’ll get a lot more people betting money at the track if they subsidize information. And it can only apply to people who are attending the races in person so that the tracks aren’t subsidizing other venues.

Ever see the supermarket ads where some food item is on sale for half price? We know the supermarket isn’t making money on the product – it’s what they call a loss leader – but the purpose is to get you into the store so you buy things where they are making money.

Sell the premium products – the serious players will still probably use them –  but make it so that if someone shows up at the track (or my attached sports bar) they can get enough free (or really cheap) information to make an informed selection.

7.Increase customer service. Let me ask a question. Do most of you believe your track or ADW treats you as you should be treated based on your action? While many states do not allow for rebates, they certainly allow comps. I actually witnessed an official at Saratoga seek out a valued player and ask him how many of that day’s giveaways he would need. A small thing, but something that made him feel special. Too many tracks make customers feel like the track is doing them a favor by allowing them to bet the races.

Customer service for new players should be easily obtainable as well. Free betting and handicapping seminars should occur throughout the day. There should be somebody available to help people with betting machines. There should be a customer service representative available throughout the racing day. And they shouldn’t have an attitude.

While I’m thinking about it, POST TIME MEANS POST TIME AND TRACKS SHOULD COORDINATE POST TIMES WITH OTHER TRACKS. And if we make the automation changes, there is no reason to have 35 minutes between posts. 20 minutes should work just fine.

The racetrack has enough crusty characters. The people who work there shouldn’t be among them.

8.Start catering to millennials. According to the Motley Fool,

  • Millennials find games like the current slot product uninteresting;
  • Millennial gamblers want to be engaged and empowered, and to exert some control over outcomes;
  • Millennials prefer night clubs to sitting at a gambling table;
  • Millennials are more interested in online gaming, poker and daily fantasy sports (DFS);
  • Millennials want skill-based games;
  • Millennials want experiences;
  • Millennials want to be social;
  • Millennials demand fairness.

The question is, why would they not be a lot more interested in horseracing? It can’t be that picking a fantasy team is orders of magnitude easier than coming up with a winner. You want daily action? No problem. Skill-based. Check that box. Exerting control? You make all the decisions.

So what could horseracing do to compete for millennials?

Most of the suggestions I’ve already made fall into that category, like dropping the take or giving away information for free or having it be an entertainment venue.  Millennials still go to Vegas, but for nightclubs and entertainment. Horseracing could learn something about adapting. Do you have to pay for fantasy sports statistics? Of course not. I’m not sure how to get the take low enough to compete with things like fantasy sports, but the race tracks can have the advantages of being social and providing experiences, something you can’t get if your only option is on line.

Somebody has to figure out what creates “fairness,” because the current regime has done little to convince even ardent supporters that it is a clean sport.

9.Racing, like casinos and fantasy sports, has to disengage from the state. They have to become a for profit business that pays taxes based on profits and not a percentage off the top. That would help them they drop the take enough to make a difference.

The state can continue to regulate racing, as they do other gambling ventures, but you have to allow the business to function as a business. They would negotiate with the jockeys and the horsemen, just like other sports do.

What other business pays tribute off the top before accounting for all the operating expenses? Sounds like the old protection racket, doesn’t it.

10.There has to be contraction in terms of the number of racetracks. All things considered, most jurisdictions would be happy to be OTB’s or ADW’s. There are two reasons why that would be a problem. First, there are enough national ADW’s that most of the betting revenue might never stay within the state. Second, horsemen have strong influence, and they will work hard to fund a breeding industry in the state. Without sufficient revenues from handle (and purses), the breeding industry doesn’t survive. Horsemen have also been very effective in convincing legislatures that the breeding industry contributes a significant amount to the state economy.

I understand that, and believe it is a legitimate concern on the part of horsemen. But it has been the case for years that the pool of horses is shrinking. Small fields are too often the rule. On a nine race day, we should have at least 80 horses or so. Last Sunday at AQU there were 62 entries for the nine races. That’s slightly less than seven horses per race. Under my proposal for a revised betting menu, three races would have been trifecta eligible, and only one race superfecta eligible. That is totally unacceptable.

One obvious way to increase field size is to reduce the number of tracks available for racing. This may also have a tangential positive effect. It could be easier to put healthier horses on the track and allow horses with health issues more time to recover.

Contraction doesn’t simply mean watching the smaller, class C tracks close. That is not the problem. They are either the last stop for the marginal racehorses, or playgrounds for the state breeders. No, contraction means eliminating some of the mid-level venues too.

The ultimate outcome should be two-fold: increasing the handle at the remaining tracks – by a lot I might add – and increasing field size.

Have you ever read The Tragedy of the Commons, a famous essay written by Garrett Hardin in 1968? Say you have a common grazing area for cattle and you have one cow and another grazer has one cow. You realize the grazing area has unused capacity, so you bring in a few more cows. Your competitor sees the same thing and he also adds cows. This goes on until there are so many cows they use up the entire grazing area and instead of having long term grazing land, the grazers will have to move to a different area.

Same thing in racing. Each jurisdiction only functions in its own best interest with little regard for the commons, in this case the industry as a whole. No state has a real incentive to give up racing as long as they are making money and the horsemen are happy. In fact, in some states, in order to run a simulcast operation there have to be a certain minimum number of racing days.

But in order for some states to make money they do things that deteriorate the game, like raising the take. It can be a vicious circle.

How do we create contraction?

  • Revenue sharing. The tracks that keep running have to help keep the tracks that shut down revenue whole so that they can fund breeding programs. If it works out, volume increases at the active tracks and there should be sufficient revenues to share.
  • For those states that have an active track there is no problem running races for state-breds. For the states that don’t have an active track, they can run an abbreviated meet for “state-breds only”  and some of the major stakes in an adjacent state. For example, when Colonial Downs closed, the Virginia Derby became the Commonwealth Derby and was run at Laurel.
  • The formula for getting the simulcast signal to states that gave up racing should be at a favorable rate.
  • States that lose tracks should pass rules that set up an in-state ADW and that require all bets originating in that state to go through that ADW or be placed at OTBs.
  • FOR ILLUSTRATIVE PURPOSES ONLY, here is a hypothetical list of tracks that would remain active. This would not include harness or quarterhorse tracks. Albuquerque, Arlington, Belmont, Canterbury, Churchill Downs, Del Mar, Emerald Downs, Fair Grounds, Golden Gate, Gulfstream, Keeneland, Kentucky Downs, Laurel, Louisiana Downs, Monmouth, Oaklawn, Sam Houston, Santa Anita, Saratoga, Sunland, Tampa Bay Downs, Thistledown, Turf Paradise.  You’ll notice a number of the tracks with attached casinos were left off the list, probably to the joy of the casino owners. 23 tracks nationwide.

There you have it. My proposal to save racing. Not the only ideas and maybe not even the best ideas, but a place to start debate.

Is Arrogate the Best Ever

The other day I heard a historian lamenting that as the years pass, witnesses to history’s most significant events also pass. We’re left with the stories passed down, or the books that are written, but they are a poor second to the oral accounts of those who lived through events. Our great-grandparents lived through The War to End All Wars, our grandparents lived through the Great Depression, our parents – those whom Tom Brokaw called the Greatest Generation – changed the world during the second world war, and in the lifetimes of the baby boomers, we were witness to Civil Rights and the Vietnam War. Having been there we have a perspective that only comes from being an eyewitness to history.

When Arrogate won the Dubai World Cup the superlatives flew and many horseplayers were quick to anoint the performance, if not the horse itself, as the greatest of all time. No less an expert than Arrogate’s trainer, Bob Baffert, proclaimed Arrogate the “greatest horse since Secretariat.” Well, perhaps his bias as Arrogate’s caretaker had something to do with that opinion, but there is little doubt the horse we saw yesterday was a rare talent indeed.

Arrogate had a troubled start, pinched between two rivals right out of the gate and dead-last in the run to the first turn. Mike Smith, his rider, never panicked, instead steering Arrogate to the outside, biding his time down the backstretch, and making his move coming out of the far turn. He won in powerful fashion in a time of 2:02.23.

After the race, Baffert, clearly emotionally caught up in the moment, said, “When he missed the break, I gave him no chance at all. I was so mad at myself thinking I shouldn’t have brought him – that’s the greatest horse I’ve ever seen run, it’s unbelievable, I can’t believe he won. That is a great horse.”

Sure, Arrogate was up against it after the break, and no horse of ordinary talent may have won as convincingly as he did, but I’ve seen on more than one occasion high quality speed horses miss the break and instead of rushing to the lead (what I call the death move), were allowed to settle and ran by the field in the end with the same reaction from the trainer.

Horses that prefer to run from the front fall into a few categories. There are rank speed horses, need to lead types, but also horses like Arrogate that have push button speed that they can use at any time. They don’t need the lead, but they instinctively prefer to lead the herd. They are, what I have defined previously, class horses. The definition of class I have offered is the ability of a horse to hold its speed over longer distances. A lot of horses can run a :21.4 quarter, or a :44 half, but fewer horses can do that and finish in 1:08.2, or complete a mile in 1:34. What Secretariat did in the Kentucky Derby – running each successive quarter faster than the last – is as rare as a 56 game hitting streak in baseball. When Seattle Slew ran impossibly fast fractions – :45.1, 1:09.2, 1:35.2, 2:01.4 – and finished in 2:27.2, only to lose by a nose to Exceller, his performance was stamped as one of the greatest of the century. And don’t forget he demolished Triple Crown winner Affirmed in the process. Forego’s defeat of Kentucky Derby winner Honest Pleasure in the 1976 Marlboro Cup was equally one for the ages. The list could go on.

Class horses can simply do things that merely good horses could never accomplish.

As history points out over and over, those things to which you are witness seem larger than similar events from the past. Those who pronounced Arrogate the superior of Man o’ War were at least caught up in the moment, but let’s be realistic – nobody alive today can tell you they saw both horses and could pronounce the better of the two. And if you want to compare running times, you’d have to account for the different track composition and the lack of a sophisticated timing system. I’ll tell you this. The people I knew that had seen Man o’War and Citation would never concede any horses since were superior. It’s the nature of the horse being of your generation.

I never saw Man o’War or Citation or Native Dancer, and I have only hazy memories of Kelso, Dr. Fager, and Buckpasser, but I have  vivid memories of Secretariat, Forego, Seattle Slew, Affirmed, and Alydar, and  I can remember having the same thrill from some of their races that fans got from Arrogate’s performance.

Was Arrogate’s performance in the Dubai World Cup the greatest of all time? Is he a better horse than the two standards by which all other thoroughbreds are measured – Man o’War and Secretariat? Unfortunately nobody can know for sure, but we can say this for certain. We saw a great horse give a great performance, and who knows. If Arrogate keeps up what we saw in his last four races, maybe our children or grandchildren will talk about comparing some future thoroughbred of the moment to Secretariat, Man o’War…and Arrogate.

Kent Desormeaux and the Photo Finish

Back when I first started going to the track, photo finish pictures were often posted in a shadow box for all to examine. After one close race, a four horse finish, I went over to check the photo. They had actually posted two photos, both exactly the same but one with the line in front of the winner’s nose and one with the line showing the show finisher.

A man standing next to me starting complaining that they had used the same photo to determine the win and the show. It took me a second to realize he assumed someone had snapped a picture at the moment the first horse hit the finish line, with his complaint being the third place horse hadn’t yet hit the finish line. Of course, the fact was that the nose of the third place horse was also on the finish line. It seems a bit counterintutive, but once you get a proper explanation, it makes total sense.

I asked a few other people if they understood how the photo finish system worked, and more than a few of them understood it like the guy at the photo box. Somebody was snapping pictures at the right moment.

That was 40 years ago, long before everyone had a pocket phone with a digital camera. When people saw a picture they assumed someone had snapped it with a camera.

From: Wikipedia:

Photo-finish cameras were developed during the 1940s and 1950s as a way of reducing cheating in horse racing. Typically photo-finish cameras use strip photography, in which a camera is aimed at the finish line from an elevated position in a tower. It captures only the sequence of events on that line in the vertical dimension. Every part of each racer’s body is shown as it appeared the moment it crossed the line; anything stationary is represented as a horizontal streak. The horizontal position represents time, and time markings along the bottom of the photo can be used to find the exact crossing time of any racer. The high angle allows judges to see the position of every horse in relation to the others.

In other words, when you see the photo finish “picture” the entire horse, including the nose is on the finish line. What the fellow at the shadow box saw was  a portion of the film strip in which the first four horses had crossed the wire, with each respective horse’s nose on the wire.

Technology is improving. Some tracks are going to digital systems – Arlington Park comes to mind –  but regardless of which system they use, there is agreement that the photo finish camera is accurate. Curtis Linnell, executive vice president of wagering analysis and operations for the Thoroughbred Racing Protective Bureau said,

“That is something controlled, and controlled very closely, expertly; by vendors and regulatory associations. (The TRPB) has not seen one instance—not one instance—in which there has been evidence a fraudulent photo finish has been perpetrated.”

A few days ago jockey Kent Desormeaux let the racing world know what he thought of the photo finish system.

“I don’t believe in the validity of the photo finish system, not at all as a matter of fact. I know I’ve been deprived of wins—or the other way around—but I’m pretty certain that we, and you as the Thoroughbred Racing Protective Bureau, need to find a better way to make sure that photo finish was accurate.”

He went on to say,

“I believe they can make the wire where they want. When we’re going 40 miles per hour, you can change the finish by a centimeter and show that the horse’s nose is on the line or isn’t on the line. I’ve seen some races this year, on Breeders’ Cup day, that I don’t think was the true winner. I want horse racing officials to make me believe that the photo finish was real. I don’t believe them. I’ve been in 30,000 races, I get to the wire and raise my stick then get embarrassed and pulled in and told, ‘Well, you didn’t win.’ Been there, done that.”

It was news because Desormeaux is still a well known jockey, but this incident sounds like a good reason for racing to have a Roger Goodell-like commissioner, a guy who can suspend you for using flat footballs.

What was Desormeaux thinking? Does he even understand how the photo finish system works? Racing has enough credibility issues without throwing doubt on something that has been seen as pretty close to foolproof, not just by horse racing, but by a number of other sports.

It was especially egregious for Desormeaux to suggest that even the Breeder’s Cup is not immune from finish line shenanigans. Seriously? Desormeaux wants us to believe that incompetent technology reaches as far as racing’s biggest day?

Desormeaux’s statements were at the least irresponsible, and it is a shame he’s not subject to any sanction for popping off without any proof except his speculation that there were races he was sure he won before the photo finish revealed otherwise. Having someone of Desormeaux’s stature suggest that even the technology being used to ensure horseplayers are getting a fair shake can be manipulated is one more reason racing is seen by even it’s regular players in a negative light.

I don’t know what Desormeaux was hoping to accomplish, but I know what he did accomplish. He threw his sport, the sport that has allowed him to make a very good living, under the bus. He might as well have said, the people who run racing are cheats, that they don’t care about giving horseplayers an even break.

One more distraction. One more reason horse racing is losing players. One more reason to shake your head and wonder how much longer we’ll have to put up wth this absurdity.

Rainbow Pick-6 at Gulfstream Park

Most horseplayers remember the Breeder’s Cup Pick-6 scandal from 2002 in which a programmer at Autotote, Chris Harn, along with two friends, figured out the flaw in Autotote’s system to be the sole winner of a $2.57 million Pick-6.

Once I saw the structure of the ticket – 1 X 1 X 1 X 1 X ALL X ALL – I immediately thought something was fishy. I talked to a number of other horseplayers and there was unanimity. No way this was a bet any experienced horseplayer would make.

I happened to be friends with a high ranking executive at Autotote and I talked with him on the Sunday after the BC. At that time he gave me the company line and guaranteed me that the system was 100% foolproof and secure. I told him to start looking because someone had pulled a fast one.

Now I don’t know how much I had to do with pushing the investigation that ultimately revealed the scheme, but it pointed to an important lesson. Most horseplayers might not understand exactly how the software works, but they can spot a canard eight furlongs away.

On Thursday December 8 Gulfstream’s 20 cent Rainbow 6 was hit for $71,145.66. The Rainbow 6 is only paid out when there is a  single unique ticket sold with all six winners. On days when there is no unique ticket, 70% of that day’s pool goes back to those bettors holding tickets with the most winners while 30% is carried over. The structure of the ticket that hit the bet was five singles to an all in the last leg

8/1/8/1/1/all

and was bought through TVG for $2.40. Was it deja vu all over again?

The horseplayer reaction was a little different this time. Some players noted there are syndicates that buy a large number of small tickets, and perhaps this was one of those. Other players noted that at least two of the horses in the first five legs were suspicious as singles – Bionsway went off at 11-1 and Latent Princess was almost 10-1. Only one of the horses, Policy Portfolio, was a short priced favorite.  The other two singles were 5-1and 3-1. The big separator came in the last race when 42-1 Maria and Beto won.

Given that we had seen a similar situation in the not too distant past, it was fully on TVG or Gulfstream Park to immediately investigate and report to the public. If the play was generated by computer and was part of hundreds of separate tickets, this should show up pretty quickly. Since the ticket was purchased at TVG there should be a history of how many tickets were played, as well as whether this player regularly played such tickets.

Based on anecdotal evidence, and given the changes made by Autotote after the 2002 scandal, the weight of horseplayer opinion is that there is no scandal. But still, given the unusual construction of the bet, the betting public needs an explanation. Even if TVG or investigators up the line were sure there were no shenanigans, the chatter on the ticket went on for a week afterward, far too long in my opinion. When something smells, even slightly, it is the responsibility of racing to immediately address the issue. 

Racing cannot afford to let instances where there is a wisp of smoke spiral into out of control speculation. The integrity of the sport is under attack from a variety of fronts, and the last thing racing needs is a message that says, fool us once, shame on you, fool us twice – well who cares. Many horseplayers believe they are treated with disdain by the industry, mainly because there is never serious pushback from bettors when there is a scandal. A little grumbling, and the hard core go right back to playing.

I hope there is nothing to the Gulfstream Park Rainbow 6 payout, but the longer we don’t get a definitive answer, with clear evidence, the worse it is for racing.

It’s Always the Drugs

The issue of medications and drugs in racing is not going away, and the solutions to this contentious issue are along a continuum from the existing system is fine to we need federal legislation.

Last November I did an article about H.R. 3084, the Thoroughbred Horseracing Integrity Act of 2015. You can read it here. In that piece I pointed out that not only was the Act seriously flawed, but it really may not be about the administration of drug testing at all but about the great boogeyman of horseracing, Lasix. I urge you to take a look at it. The piece is factual and clearly points out why, in the end, the balance sheet tips away from the horseplayer.

Recently two letters to the editor of the Thoroughbred Daily News (TDN) reiterated support for H.R. 3084. Matt Iuliano, executive vice president and executive director of the Jockey Club (a supporter of the bill) took W. Duncan Patterson of the Delaware Racing Commission and the Association of Racing Commissioners International (ARCI) to task for opposing the legislation. (See Iuliano’s letter here). As is common with these things, Iuliano’s first salvo was to accuse Patterson of being part of a campaign of misinformation against the bill.

According to Iuliano, those against the federal legislation say,

It is a campaign notable for the extent to which it mischaracterizes the provisions of H.R. 3084 and for the vehemence of the rhetoric it employs in condemning both the mischaracterized legislation and those who support it.

And it is all premised on the bedrock assumption that everything is totally fine in the realm of Thoroughbred medication regulation.

And then he provides a quote from Patterson that has nothing to do with everything being alright, but instead worries about whether the U.S. ADA medications list would have to be incorporated into the ARCI list.

Mr. Patterson states: “The medications that are approved by USADA are some medications which we do not allow in racing at any threshold level. By the same token, there are other medications we allow that they don’t allow. So our whole medication schedule would have to be revamped under this.”

The major question should be, would the medication schedule have to be revamped and the answer is maybe. Patterson’s statement may sound hyperbolic, but his point is that the new Thoroughbred Horseracing Anti-Doping Agency (THADA) would have the authority to set standards, and none of us knows exactly how the schedule would be revamped, although I think we can all agree that drugs specifically for human and not equine consumption are not in danger of being on the list.

Unfortunately Iuliano takes the first part of Patterson’s statement and turns that into the misinformation campaign. It is, in the glossary of magician terms, misdirection. It is as if Iuliano is saying, watch me discredit someone by accusing them of taking an absurd position while I ignore the basic issue.

Patterson also mentions the cost of testing.

“Currently USADA does 8,400 tests a year. Nationwide, we do 300,000 tests. Travis Tygart, the head of USADA, is obviously very knowledgeable, but when asked what plan he had to ramp up his testing by almost 40 times, he had no plan. When asked about the costs of their tests we were told about $1,000 a test. Currently, we spend, nationally, $30 million on testing. Simple math will tell you we will go from $30 million to $300 million. Who in the hell is going to pay for that?”

Iuliano then blasts Patterson for more misinformation, noting that no U.S. racing lab tests 300,000 samples. Of course, that is not what Patterson said, and all you have to do is read the sentence. Iuliano goes on to say it is all the labs taken together that test 300,000 samples, which is what Patterson said, unless he believes the word “we” in Patterson’s statement means something other than the the agglomeration of racing jurisdictions. Again, Patterson asks the right questions if you’re paying attention. How does THADA ramp up to 300,000 tests when U.S. ADA (the ostensible model) doesn’t have experience doing more than 8,400? How much more is it going to cost than what we are currently laying out? It simply means, we have a whole new ball game with a ton of details to figure out.

As they say on the informercials, wait, there’s more. THADA would be implementing a new out-of-competition testing program. No doubt that would add to the testing numbers (and cost), once we know exactly what that means. Are we talking about random testing of horses not entered for a race? The reason the U.S. ADA does that is to try to stop the use of anabolics and blood doping, and while some use of anabolics does go on (horses suffering from failure to thrive are often given stanozolol) it is most often therapeutic. If a horse has any level of an anabolic steroid in its system post race, it is a positive, so trainers might have to wait 45-90 days if they treated a horse with a drug like stanozolol.

Iuliano then gives us an important fact as stated in the bill. THADA could contract with the existing laboratories (assuming they got certified) to do the testing. What Iuliano doesn’t say is that the bill doesn’t give THADA disciplinary authority – that still stays with the state.So there is a distinct possibility we’ll have the same system we have, except one more oversight agency.  But, the good news is that there will be no problem paying for all of THADA’s work in setting up the system we already have, with the exception they get to make the standards. THADA just charges the states. Plus, Iuliano cites a report from McKinsey & Company that the incremental cost for having the THADA would only be $19.95 – no that’s my April Fools Joke. It would be $60 per start. I don’t have the math handy, but that has to be a pretty big number. What Iuliano doesn’t mention is who would be paying for the new charge. Anyone what to hazard a guess? Your clue is that it begins with horse and ends with players. If you read the bill, it says in plain english, Nothing in this Act requires the United States Government to provide funding for or to guarantee debts of the authority. The funds necessary for the establishment and administration of the Thoroughbred horsearacing anti-doping program shall be paid entirely by the Thoroughbred horse racing industry…

Ultimately, that means the bettors, whether it is through the take or the money spent on live attendance.

Finally, Iuliano takes Patterson to task for contradicting a statement ARCI made in 2011, which stated Lasix is the thing that doesn’t pass the public credibility test, by suggesting Lasix is a necessary drug for racehorses. Yes, the leadership in 2011 said that, although it was not the position of all the racing commissioners, but it is the current ARCI policy that we need to focus on.

He asks,Where in the bill is there an immediate prohibition of race-day Lasix?

The answer is in fact nowhere, but unless Iuliano wants to suggest we are all blind and feeble-minded, the groups in favor of H.R. 3084 are the same groups that oppose race day Lasix, and a strategy where you only have to convince one group – THADA – to ban the medication might just work out better than the current need to convince 39 jurisdictions. ARCI won’t take on the banning of raceday Lasix, so it is a pretty foxy strategy to put all the decision making authority in a place where they may get a sympathetic ear, especially when you looks

Iuliano closes by saying that while ARCI supports the National Uniform Medication Program, local influences and the wide differences in rule making processes among the states reaffirm the need for change. What Iuliano doesn’t say is that some of the “local influences” are highly respected equine pharmacologists like Dr. Steven Barker in Louisiana, who believe some of the standards were not set using valid scientific testing methods. The problem isn’t the local influences  but the potential failures of the existing standard setters, and that is a problem that can be solved without adding another layer of bureaucracy if they simply choose to do their job correctly.

The second letter was from Russell S. Cohen, a veterinarian who also manages Tri-Bone Stable. You can read it here.

Cohen starts out by agreeing with Iuliano that the assumption that everything is totally fine within the realm of thoroughbred medication regulation is totally false. Other than the fact Iuliano implied that Patterson was saying that when there was no indication he was, most of us would agree thoroughbred medication regulation is not fine, although perhaps for different reasons.

Interestingly, while Cohen seems to lament the use of Lasix on his horses, he is compelled to use it because he doesn’t want to be at a competitive disadvantage. Pretty much the same argument I used in college to explain why I needed to be stoned to enjoy the Laser Floyd show at the planetarium.

He also tells a story about one of his horses.

One of our horses recently had a medical issue before a race that required a steroid anti-inflammatory that, due to testing, could not be administered. I consulted with two other vets in the state that has medication rules I am not clear on. The only option that was legal was 10cc of Bute (2000mg) or 10cc Banamine(500mg). I chose Banamine and called both vets but they were at another track. A third vet was called, and walked into the barn with a 35cc syringe filled with 15 cc (750mg) of Banamine. I told this vet who I was, who the horse is, the race he was in and the post time. I questioned him a second time, and then asked the vet again, can you administer 750 mg? I was told that there would be no problem.

Still, I asked the vet to spill in the shed row 6cc, and administer the rest. I revisited this with the other two vets, racing officials and those responsible for the drug testing. I was told by the head of drug testing program that the horse, if administered 750 mg. of Banamine, “would be in serious jeopardy of testing positive,” which contradicted what the vet had told me.

Notice that Cohen used the word “required” to justify using a steroidal anti-inflammatory. Not that it was a treatment option, but that it was required. He also doesn’t mention (but perhaps expects the reader to know) that Banamine and Bute are non-steroidal anti-inflammatories.

He uses the word “legal” to describe application of either of the common NSAIDS. The fact is that both drugs are on the list of approved medications, and the dosage is a recommended dosage (along with a  recommended 32 hour pre-race withdrawal time) to avoid a post-race testing positive and not the legal limit of either medication.

He doesn’t actually mention when the incident with the other vet occurred other than recently, but if he had read my story on Bill Brashears and Banamine (read it here) which was written a year ago he wouldn’t have had a problem with a vet who, if the story is accurate, didn’t actually know what he was doing. Of course, that also doesn’t speak well of Cohen, who as a vet who has been in racing for “over 30 years” shouldn’t have been getting bamboozled by one of his colleagues.

Cohen suggests a three strike rule, like baseball, and at some level this might not be a bad idea. But there actually needs to be an intent to cheat, meaning a trainer knowingly tried to gain an advantage, not like in the case of Brashears where he had a picogram positive even though he was trying to comply with the rule. Plus, you can’t give the racing commissions unfettered authority to wait to tell a trainer about a violation and then treat three violations for the same medication as separate incidents. Otherwise, it would be too easy for the racing commission to just target a trainer for extinction.

Cohen provides two more recommendations, neither of which is an enormous game changer, but would be worth discussing, especially if vets like the one that was trying to get Cohen in hot water are the rule rather than the exception.

Regardless of your position on Lasix, there is a way to resolve this issue without resorting to federal legislation, which from at least one perspective appears to be an attempt by the Coalition for Horseracing Integrity to end run the individual state racing commissions that haven’t so far proven interested in given the anti-Lasix crowd its way.

Let’s focus on two things. Developing a forum where all the stakeholders representing all the various positions agree to work for future regulation of Lasix, and spending a lot more time and effort ensuring the standards in the National Uniform Medication Program  are set using good, scientific testing studies. But let’s not spend any more time on a piece of poorly crafted and thoroughly unnecessary legislation.

Gary Contessa

So Gary Contessa is doing seven days for having one of his horses test positive for 2.3 nanograms/mL of cocaine. For those not flashing on the measurement, that is 2.3 billionths of a gram of coke. To give you some perspective on a billion:

  • A billion seconds ago it was 1984.
  • A billion minutes ago the Roman Empire was at its greatest extent.
  • A billion hours ago our ancestors were living in the Stone Age.
  • And my favorite, if you sat down to count from one to one billion, you would be counting for 95 years.

If it sounds like not much cocaine to have in a 1,400 pound racehorse, that’s right. Of course, given the current standards and the absolute insurer’s rule, the amount of cocaine measured is irrelevant. It is a zero tolerance substance in Florida and Contessa is presumptively guilty for its presence since he was the trainer of record at the time.

You can argue that however harsh the system may seem, trainers know the rules going in and it is their responsibility to make sure they aren’t broken, whether by them or their employees, and for the most part you would be right. Unfortunately, trainers are not able to control for everything that could result in an environmental positive. Everyone from the person who transports the horse, to the state vet, to the person who checks the horse’s identifying tattoo, to the owners in the paddock could potentially contaminate the horse. Should the trainer be held responsible for them as well? A system that cannot discern between guilt by commission and guilt by proxy is broken. I suggest nothing more than putting yourself in Contessa’s position. If you knew yourself to be innocent, do you simply accept the punishment as the cost of doing business?

I went through the pertinent issues in the case of Kellyn Gorder and methamphetamine, and I’m not going to do the same thing here. Instead I’ll focus on three issues that continually come up in these instances.

First is the amount of time it took to resolve the case. The positive was for Jeremy’s Song, a horse that finished second in a maiden race on March 8, 2014. It took close to two years to close the case and that is simply too long. The system is clearly broken if it takes that long to adjudicate a case, especially when the excess time was not related to digging for the truth.

Second, the issue of environmental contamination has to be resolved once and for all. The test used to determine a cocaine positive is for a metabolite of cocaine called benzoylecgonine. In the real world (say professional sports), a human urine test that shows less than 300 nanograms/mL for that metabolite (or 150 nanograms on a retest) is not considered a positive, although that number is an arbitrary result of discussion by scientists. That’s an eye-opener.  A level orders of magitude higher than what was found in Contessa’s horse doesn’t get you busted by football or baseball, or even in some racing jurisdictions. 2.3 nanograms is only indicative of cocaine exposure at some point in the recent past and certainly does not represent a level at which it could influence performance.

The stewards and the racing commission are in over their heads when it comes to something like environmental contamination. Other than the medical directors, who are often not expert in pharmacology, stewards and commissions are forced to look outside for expertise on environmental contamination, and even when they receive the testimony they cannot bring themselves to excuse the trainer. The fear is that the first trainer who gets excused for a Class 1 violation sets a precedent for all future cases. It is racing’s version of Pandora’s box.

In the case of Contessa, the commission resolved nothing. A $500 fine and seven days for a Class 1 substance was essentially a concession that Contessa was not likely guilty of purposely drugging his horse. They emphasized this fact by not changing the result or redistributing the purse. Why would a trainer feed a horse something like cocaine not less than four or five days BEFORE a race, when it could do no good at all for the horse’s performance on race day? It isn’t like an anabolic steroid, where the muscle built is still there weeks after the steroid has been withdrawn. It makes no more sense than taking two ibuprofen on Wednesday to deal with a headache on Saturday. Why would a commission issue such a light punishment for a Class 1 substance if they truly believed Contessa knowingly drugged the horse?

Finally, I’ve argued in favor of doing in depth investigation. Does the commission understand the mechanism by which cocaine can be transferred from human to horse and did they rule this out? Were all the stable personnel tested? Did all the people who had contact with the horse get tested? Racing commissions are among the few places in America where due process only means a trainer gets a hearing before the inevitable hanging, and nothing has to be proven beyond any reasonable doubt. At the very least, a fact-finding mission gives some credibility to the assignment of punishment.

At the end Contessa still has his record stained with a Class 1 violation. The fact that he accepted the punishment was surely indicative that the commission was never interested in letting Contessa off the hook completely. His only real option was to negotiate for the mildest punishment possible.

There is a great cry by many horseplayers to rid the sport of the drug cheats. As laudable a goal as that may be, how do you accomplish it without metaphorically throwing out the baby with the bathwater? Contessa’s case is nothing similar to Kirk Ziadie, but in the minds of those looking to denigrate racing, they both may be equally symptomatic of the problem. If Contessa was not guilty beyond the language of the absolute insurers rule, then racing did itself no favors by insisting he must be punished. Despite consistent statistics to the contrary, racing is still marked with the stain that a great number of trainers are cheaters and that illegal drug use is rampant.

I’ve pointed out a need to do proactive testing and enforcement because obviously once the race is run, all the damage is done. The goal should not be to wait and catch violations after the fact, but to prevent them from ever happening. Don’t the tracks get it that horseplayers are screwed every time a result is posted official and one of the horses in the money tests positive? Don’t they realize the only win for all of us is a clean result? An ounce of prevention, is worth….you know the rest.

Perhaps if Contessa stays clean, in time people will forget the positive for cocaine. Perhaps owners will see it as the environmental contamination Contessa argues for. But as I’ve learned from the trainers I have previously written about, there are owners that will simply not be associated with a trainer with a Class 1 conviction. There is every reason for Contessa to be concerned about the rest of his career, about whether he will miss out on a potential champion because of the stain of the cocaine positive.

Who actually won here? Not the horseplayers, not Contessa, and not horse racing. It’s one more unsatisfying moment in a history of unsatisfying moments.