The Hunt for Customer Care or, Customer Care the Adventure Begins

You arrogant ass. You’ve killed us.

     – Andrei Bonovia in The Hunt for Red October to Captain Tupolev.

A Twitter topic that is sure to stimulate discussion is the obliviousness of tracks and ADW’s. I think oblivious is the right description because the alternatives are to conclude they are either incompetent, arrogant or purposely ignoring problems, and I simply don’t want to believe that is the case. I’ll point out a few things that are seriously hurting the game.

Odds Manipulation

On May 21, 2012, one (or more) bettors manipulated the pool in the fifth race at Thistledown Racetrack, pulling off a pretty neat betting coup. The favorite, Eye Look the Part, was a 1-5 favorite in the win pool until 30 seconds before the close of betting, ultimately winding up at 5-1. What the manipulators did was bet $15,000 on every horse, except Eye Look the Part, through Lien Games, a legal ADW in North Dakota. This maneuver drove the other starters down to around 9-2. The manipulators then bet a large amount using Euro Off-Track, a service based on the Isle of Man, and one that does not pool bets with the tracks in the United States, instead running a separate pool that pays track odds.

On a typical Monday Thistledown expects to handle $9,000 in the WPS pools, but in the 5th race the pool was $128,010.

The Thistledown Racing Secretary said, “Our people did everything correctly. The wagers were not illegal. Thistledown verified the money had been transferred into the race pool before approving the payoffs.”

Yes, that is what the bettors wanted to hear. It’s perfectly legal to manipulate a pool. How about showing a little disgust at this reprehensible behavior?

I don’t know all the racing rules in Ohio, but to be fair I expect there is some language that requires tracks to pay off on all legal bets once a result has been declared official. Even so, the high road would have been to simply refund all bets on the race, calling it a non-event for betting purposes. The manipulators would not have made a dime, and I really believe the bettors would have supported the decision. Euro Off-Track apparently cancelled the associated accounts, but that is not the point, especially if the manipulators collected first. The track and ADW  had no incentive to make a refund regardless of the rules, because whatever percentage Lien Games or Thistledown was getting, it was a lot bigger number at $128,000 as opposed to $9,000. The greedy betting brokers were willing to essentially send the message that they have no scruples when it comes to their share of the pie. Arrogant? Powerless? Idiocy? You can decide.

Two years later, on Sunday August 17, 2014 in the fifth race, Missjeanlouise was a 1-2 favorite until about midway through the race when the tote board flashed 3-1. The rest of the horses also dramatically changed odds so that every other starter settled between 3-1 and 5-1. For example, the outless longshot Dusty Lily dropped from 35-1 to 9-2.

It wasn’t quite the pool manipulation from 2012 – the average WPS pool was only $14,000 that day – but the 5th race had a pool of over $45,000. Someone put $4,000 on each of the five starters not named Missjeanlouise through – that’s right – Lien Games in North Dakota.

It certainly looks like a case of fool me once, shame on you, fool me twice it’s because I learned nothing. The Ohio State Racing Commission had two years to fix this problem, including working with Lien Games to try to keep pool manipulation from happening through their hub. They could have adopted a rule that said in the case of obvious pool manipulation, bets may be cancelled, although horses could still be paid their purse money.

North Dakota said all the right things. We’ll work with Ohio, we’ll develop methods to prevent odds manipulation in the future. I’d feel a little better if it wasn’t the second time the manipulators used the same ADW and picked on the same track. It takes a lot of faith to believe THIS time they’ll get it right. It’s a week from 2015. Software is pretty sophisticated. It shouldn’t be tough to find pool manipulators BEFORE a race is official.

This sort of thing hurts racing in inestimable ways. Every group that thinks the game is dirty is handed confirmation, not because an unscrupulous few try to manipulate pools, but because the racing commissions have looked completely impotent against them. If you aren’t smart enough to identify pool manipulators, I’d argue you aren’t smart enough to manage racing.

Track Take and Rebates

I shouldn’t have to talk much about track take, but there are jurisdictions that still insist on gouging betters on some combination bets. It’s not unusual for tracks to snag around 25% for trifectas and superfectas, but Pennsylvania takes it to a new level. At Penn National the take on trifectas is 31% and superfectas 30%. Parx is almost as bad with 30% on both the trifecta and superfecta.

Pennsylvania as much as any state doesn’t care about pool size. The vast majority of their gambling revenues are associated with the casinos, and it isn’t rare to see the pool size LESS THAN the purse. Casinos subsidizing racing is common, and in Pennsylvania the horsemen feel certain the state will never sever the tie between horseracing and casino betting. You know, just like Massachusetts gave the casino franchise in Boston to the Wynn group that never promised a continuation of racing instead of the Foxwoods group that promised to keep Suffolk alive.

The Horseplayers Association (HANA) has tried to create pressure by organizing players boycotts, but it is hard to convince millions of what are essentially independent contractors to all move together in the same direction.

Study after study has shown that decreases in handle are directly related to increases in take. How racing commissions and track management can operate against their own best interest is as mysterious as some DaVinci Code-like novel.

That’s only half the problem. Even with the 25% “normal” take on trifectas, whales betting through rebate operations can be offered as much as 17%. I’ve written about The Killer Whales and the damage they do, but the states are inarguably complicit here.

If I’m betting $5 million a year on trifectas and I’m a 12% loser, I can still make $250,000 profit for a year. The take kills all but the best bettors, and having to compete against big money players getting huge rebates is making the game almost unplayable. Hey racetracks, IT’S PARI-MUTUEL. It’s not like football where the amount bet doesn’t change the payoff. In an NFL game f you bet $5 or $5,000, you get 10 to 11 odds. Horse bettors are forced to figure out a way to win starting out 15-25% in the hole due to the take. Let me pass this message along to track management. IT’S REALLY, REALLY HARD TO CONSISTENTLY MAKE MONEY WITH A BIG TAKE.

Tracks have little incentive to raise the signal cost to the point where whales start pulling out of the pools. Tracks are agnostic about everything other than pool size because the more bet the more they make, even if it means eventually tracks will only be left with whales betting against each other as they push more and more small-time fans out of the game. Tracks WANT the whales, and perhaps they even believe they NEED the whales. Good luck surviving while you try to compete for the small number of plus-sized bettors out there. It is not like casino gaming where the whales have no impact on payouts. You still get 3-2 on your blackjack no matter how much the whales are betting. Casinos can and do cater to both the seniors sitting at the penny slots and the Phil Ivey’s who bet (and apparently win) millions.

It is also doesn’t make sense for tracks to offer a rebate like the ADW’s. Rational economic behavior indicates they should charge no more than they need to cover costs (with a reasonable profit for those tracks that are not non-profit corporations). Rather than offer rebates, if costs went down, they would just drop the take. But still, how can they compete against ADWs that offer money back to their customers? If racing wants to work on a big problem, whales, signal cost and rebates has to be pretty high on the to-do list.

Answer Your Tweets and Emails

This came up because a few people have mentioned to me not getting responses from ADWs and the regular complaints about one of the NYRA public handicappers.

I’ve only had a couple of “problem” people on Twitter, but 99.9% of the people I’ve interacted with are pretty reasonable folks.  When I hear about people who have been blocked by one of NYRA’s public faces and I know those people to be not only rational and informed players but big supporters of NYRA, it represents the epitome of arrogance. How in the world can a circuit treat good customers like irritants? If you are smart enough and sophisticated enough to become a public handicapper for the biggest circuit in the country, you have to be able to handle all sorts of people.

Nobody should have to tolerate abusive people, but like any good performer, you recognize they inevitably and occasionally show up, 99.9% of the audience doesn’t like them any more than you do, and there are clever ways of handling them without being abusive yourself. A thousand people who like and respect you offsets the one that doesn’t. If you are a public figure and you think you need to block someone, be sure it is a person the rest of us would block in your position.

I’ll pass along my best advice. Nobody is too small. And you never know if the person you blocked in a petty snit, or you are too good to answer will one day be important to YOUR success. You’re a public figure. You already know you can’t please everyone, no matter how hard you try. Don’t let the haters bother you so much, and figure out which people appreciate you and make sure they keep appreciating you. It’s good for you, it’s good for NYRA and it’s good for your fans.

Same with the ADWs. If someone has a problem and they ask about it in a respectful way, respond quickly and with an equal amount of respect, whether the person bets $100 a month or $100 a race. There are always options.

Track Improvements

I’ve written about this during the year, but it’s worth reminding tracks.

  • I’ve had high-def on my TV for ten years. Having high-def TVs at the track, or sending an HD signal to people betting at ADWs is not some new fangled innovation. It’s catching up with where you should have been five years ago. And stop being so parochial and only making it available to people who bet through your hub. You’re vending a product and you’ll sell more if you offer a better product at a better price than the next track.
  • There should be enough public seating for everyone who would rather bet the $5 than hand it to the person at the admissions booth. You want to pay extra for a special seat in the clubhouse, great. But just because you don’t shouldn’t mean you have to stand up for four and a half hours.
  • There should be enough betting machines and tellers windows so nobody has to wait more than a minute or two to make a bet, even close to post time. Getting in a line with five minutes to post and not getting your bet in should horrify racetracks. They just lost whatever the take was on your action. If you are track management and you just said, they should get in line earlier, drop me a note and I’ll be happy to chat with you about missing the point.
  • If you aren’t already doing it, on track racing programs with past performances should be subsidized, just like a lot of ADWs do. Trust me, you’ll get it back in the extra action it can generate. Knowledgeable bettors are willing to risk money. People who are guessing won’t be quite as willing to part with the Benjamins. Racing Forms are up to $7.50. It’s simply too much if you aren’t a serious bettor. With parking, admission, Racing Form and Timeform, the nut at SAR is close to $20 a day BEFORE food and drink. If you think that is no problem, once again I’ll go with oblivious.
  • Every track should have wi-fi. Again, this isn’t Buck Rogers stuff, it’s just catching up to where you should have been five years ago. Timeform U.S. openly touts the beauty of being able to open your tablet and have hundreds of pages of past performance available on the screen. DRF touts its Formulator program as being able to put together data analysis on the spot. Why should I not be able to use those tools on a whim at the track?
  • I love going to Saratoga, not just because I grew up there and broke my pari-mutuel maiden there, but because the place is a party with plenty of food and drink options. Every track should have real restaurants, even if they aren’t four star. They should have bars that people would come to even if they weren’t at a track, and they should stay open until the track closes at the end of the simulcast day. Show baseball or football games or whatever sport happens to be on  TV. If someone comes out because they don’t have to miss their team play and they make a bet, the track is ahead. Even if they are only drinking top shelf liquor and not playing the ponies you are ahead. If you have places that would be destinations if they were out there in the real world, perhaps people that normally wouldn’t make their way out to the track would show up.
  • While I’m thinking about it, a restaurant in a strip mall that was charging $9 for a frozen hamburger on an institutional bun with a plastic packet of ketchup and frozen french fries along with a $5 diet soda that goes for $1.29 at 7-11 would go out of business in a month. Actually, they’d never be able to find a bank willing to give them a loan. Admittedly we’re all captive, but does that mean you have to gouge us like workers in a company town? I could stomach (no pun intended) paying $9 for a burger made fresh with quality beef and french fries I watched you slice, and even though it would cost you more, I’ll bet you’d sell a lot more of them. Otherwise I’m stuffing myself before I go to the track and waiting until after I get out to eat again.
  • If you cannot identify your best customers (read that largest bettors) within one week of starting a race meet, you should be replaced as general manager. And once you do you should decide how you are going to treat them better than the average twice-a-year player. If someone tells you it’s not fair, tell them that fairness is treating special anyone who bets ten times the average per person handle.
  • Listen to every suggestion and thank whoever offered it. If it is a silly suggestion have a laugh privately in your office after the races. If not, figure out how to implement it.
  • Finally, race tracks are inherently better than casinos from a betting perspective and everyone knows this. The two reasons why casinos flourish is that (1) the skill level to play most games (slots being the best example) is minimal; and (2) the action is fast. Players get caught up in it. Tracks need to do a lot more promotions related to the betting aspect of the game. Sure, that bobblehead of Fourstardave is great to add to my collection of cheap, useless crap I’ve picked up from Saratoga over the years, but is that the best way to spend your promotional budget? How about this idea. Print the comprehensive Saratoga statistics book and give that away the first weekend. It can’t be that much more expensive than the bobblehead/poster/umbrella/lunch bag you were planning on giving away and it will actually help people to bet, not to mention getting them into the track. If you can’t convince people that they should be parting with their money at the track instead of slots-a-plenty, it’s time to start thinking outside the box. Instead, tracks are selling out to the casino companies as a way to inject dollars into purses. This only works until the market is saturated and as they found out in places like Delaware, it is no guarantee of profit. Racetracks need to start thinking like this:

Remo Williams: “Chiun, you are incredible.”                                                       Chiun: “No, I am better than that.”                                                                           (from the movie, Remo Williams: The Adventure Begins)

Racing Commissions

I used to work for state governors. I can personally attest that they care about every interest in their state and they want to see those interests, and the citizens, prosper. They believe the people have an absolute right to competent government.They make appointments to literally hundreds of boards and commissions. They cannot know every single person that is recommended for appointment by the staff people who vet them, but they can demand that anyone appointed to the racing commission be free of conflicts of interest and have real experience and qualifications. “I like horses” or “I worked on your campaign” are not sufficient to qualify a person to sit on the Commission. I haven’t gone through every person on every commission, but I have gone through commission membership in a few states, and I can tell you that based on the available biographies, a scary percentage are not what I would term qualified to be making rules and adjudicating violations. The other side of that is they often cede enormous power to the Commission staff, or allow the staff to exert enormous influence over the final decision. Some of the problems I cited above are directly the result of part-time, unpaid, marginally qualified political appointees being in charge. That absolutely has to change.

That is enough for this week. If you managed to read this far in the blog, you are either a close relative or someone with world-class perseverance. In any case, thank you. I’ll have my Christmas message out for Thursday morning and I promise it will be a lot more upbeat.