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Computer Assisted Wagering: Anatomy Of A Deal

A deal that Del Mar has made with a titan of Computer Assisted Wagering (CAW) provides a rare glimpse into the tremendous sway that individual players can wield over track and racing officials, the potentially lopsided economic ramifications of such deals, and the tremendous pressures that California executives are under with competing jurisdictions that enjoy purse subsidies not available in the Golden State.

It also turns a spotlight onto a world largely hidden from the public eye-one that industry leaders are generally loathe to discuss publicly, and in which just a few anonymous gamblers can have an outsized impact on the financial fitness or ill-health of the sport.

Last year, Del Mar continued a deal with a player identified as Elite 17 that saw them enjoy a noticeably more favorable rate of play than other high-volume players that wager through the CAW platform, Elite Turf Club, according to detailed wagering reports obtained by the TDN, background conversations with racing officials and figures within the CAW world, along with publicly available data.

At the enormous volumes CAW gamblers play, such deals can give individual players a significant financial edge.

The result was that this one player constituted nearly 47% of Elite Turf Club's total handle on Del Mar last year, according to the reports. Two years prior, Elite 17's play had constituted just over 36% of Elite Turf Club's total handle on Del Mar, according to publicly available California Horse Racing Board (CHRB) data.

At the same time, the amount of money another Elite Turf Club player (Elite 2) wagered on the track dropped off by over $32 million between 2021 and 2023, the reports show-from around $45 million in 2021 to around $13 million last year. In 2021, Elite 2's play came to just over 27% of Elite Turf Club's total handle on Del Mar. Last year, that number had dropped to around 12%.

According to multiple sources familiar with the situation, Elite 2 received a deal similar to Elite 17 in prior years at Del Mar, but not last year.

An individual familiar with the situation-who spoke as a “California racing source” on condition of anonymity-said that, prior to the track's 2023 summer meet, Elite 2 declined such a deal, which would have necessitated paying a “substantial seven-figure up-front payment.”

Del Mar Thoroughbred Club | Horsephotos

When asked if Elite 2 had changed their mind about the deal after the summer meet was underway, the source declined to answer, citing concerns about proprietary business information. “But you can't make an up-front payment after the meet has started,” the source added.

Such arrangements have served as a pre-payment on host fees to be split between the track and the purse account, sources say.

The deals that Del Mar has struck with Elite Turf Club players over the years, while hardly an anomaly among tracks nationally, nonetheless raises questions about the best approach to managing CAW play in a state where purse revenues are generated solely through betting. If purses fuel the sport, getting this equation right is an imperative.

Are deals between tracks and individual CAW players, therefore, a sustainable approach for growing the sport in California? Is CAW play now so vital to the economics of horse racing that every step must be taken to maximize their business? Or should California's tracks be much more focused on incentivizing play from the average punters who generally contribute the biggest slice to purses, rather than pandering to the whales of the betting seas?

While it's difficult to know exactly how such deals might have impacted Del Mar's purse account revenues, the bare numbers illustrate a track facing tough economic headwinds, with serious implications for the horsemen and women in the state.

Purses last fall at Del Mar were reduced by over 10% due to a purse account overpayment reportedly to the tune of $2.1 million. All-source handle at the track's flagship summer meet declined nearly 11% from 2022 to 2023, according to the DRF. Wagering through Elite Turf Club on the track's product has declined from around $167 million in 2021 to around $113 million last year, according to the CHRB.

“As a track with no subsidies from alternative forms of gaming that depends exclusively on handle for purse generation, promoting handle from all segments of the betting market is very important to us. On an annual basis we sit down with the [Thoroughbred Owners of California] TOC to both establish purse levels and to discuss how we best promote wagering on our simulcast signal,” wrote Del Mar Thoroughbred Club president, Josh Rubinstein, in response to a series of questions.

Before the start of each meet in California, the tracks present the TOC with a list of individual host fees charged to each location that receives its simulcast signal. For that track's meet to proceed, the TOC must first sign this document.

“We are proud of our racing product, which has been well-received for the last several years, and confident that our host fees are fair and competitive with other major race tracks. We will continue to work with our partners to balance pricing considerations with the overall demands of the wagering markets,” Rubinstein added.

How takeout is divided from CAW play

BACKGROUND ON RATES AND REBATES
The debate around CAW players typically surrounds the major edge they wield over regular gamblers thanks to their use of sophisticated wagering technologies and the attractive rates and rebates offered to them-inducements not available to the average punter.

When “rates” are mentioned, what is meant are “host fees.” This is a charge wagering outlets pay to track operators for the contractual right to import a simulcast signal. A wagering outlet could be another racetrack, an ADW platform (like FanDuel), or a CAW platform (like Elite Turf Club).

Experts say that CAW host fees for the premium tracks typically vary between 6% and 8%. After breeders' premiums and other minor deductions have been removed, host fees are roughly split 50/50 between the track and the purse account in California.

The entities that pay the lowest host fee, therefore-like CAW players-contribute the lowest per-dollar amount to purses. At the same time, proponents of CAW argue how these inducements are warranted due to the vast amounts these players inject into the betting pools.

The amount CAW players are “rebated” can be broadly calculated with this simple equation:

Rebate = Takeout minus host fee (plus any other associated minor fees). The smaller the host fee and the larger the takeout, then the bigger the rebate.

Let's use the 20% blended takeout rate among the pools. And let's say the host fee (plus other associated fees) that the CAW player pays comes to 7%.

The rebated discount for the CAW players, therefore, could be a maximum 13% on every dollar wagered.

Experts recently told the TDN that the most successful CAW players can consistently win at an average rate of around 92%. At that win rate, a 13% rebate (for example) would see the player enjoy a 5% profit margin.

According to wagering reports reviewed by the TDN, that win rate is an undercount. These reports show how Elite Turf Club players can win at an average rate in excess of 105%, even before their rebate from Elite is factored in. At this rate, the profit margin would be much better than many investment accounts.

It's also important to note how the numerical monikers given to Elite Turf Club players-a company majority owned by The Stronach Group (TSG)-don't relate to just one person.

These players employ a team of potentially dozens of people, including mathematical wizards who create sophisticated computer algorithms capable of analyzing the betting markets for exploitable weaknesses, as well as individuals who place the bets for them.

Insiders consulted for this story describe how these teams of experts can, over time, deduce through the betting markets and through other data sources if rival CAW players receive more favorable rates.

Given the money at stake, the competition can be cutthroat.

ELITE 17'S DEAL
As CAW play has grown exponentially in recent years, track operators have cut deals like that between Del Mar and Elite 17 to attract their business. And the amount these gamblers wager is often so huge, just one player can make up a significant portion of a track's overall handle.

In 2019, when the renowned gambler “Dr. Nick” stopped wagering on Australian racing reportedly due to increased taxes on bookmakers, his exit was projected to trigger a 6% drop in turnover on racing across the board.

Multiple sources for this story said that Elite 17 and Elite 2 were both well-known Australian gamblers.

Scott Daruty | Horsephotos

Scott Daruty, president of both TSG's Monarch Content Management and of the Elite Turf Club, declined to confirm or deny their identities, citing confidentiality agreements.

According to detailed reports obtained by the TDN, Elite 17 wagered more than $650 million on U.S. racing through Elite Turf Club alone last year. In 2021, Elite 17 wagered roughly $60 million on Del Mar's product, according to the CHRB. Last year, Elite 17 wagered some $53 million. Last summer at Del Mar, the amount Elite 17 wagered was roughly 10% of the total handle at Del Mar, using the DRF's all-source handle figures as a baseline.

These numbers don't account for Elite 17's potential play on horse racing through other methods such as fixed-odds providers and exchange options like Betfair in other countries, or on other sports. Some CAW players also have accounts with different CAW platforms like Velocity, owned by Churchill Downs, which enables wagering on tracks whose simulcast signals are managed by Churchill.

At the same time, multiple sources say individual deals are still fairly prevalent among smaller tracks struggling financially, but that they're now unusual among the nation's top-tier tracks.

According to wagering reports reviewed by the TDN, the New York Racing Association (NYRA) offered the same host fee to Elite Turf Club players at Saratoga last year, irrespective of the betting pool. This included Elite 17. The host fee NYRA charged was slightly lower than Del Mar charged the same CAW players (outside of Elite 17), these reports show.

“NYRA cannot responsibly comment or opine on information never provided to our organization,” wrote NYRA spokesperson, Pat McKenna, in response to questions about the wagering reports. The TDN provided to NYRA an overview of the figures in the reports but not the raw data. NYRA's data was independently verified for the TDN. NYRA is a minority owner in Elite Turf Club.

McKenna did, however, stress the steps the organization has taken to manage CAW play, including barring CAW play in the Pick 6, Late Pick 5, and Cross Country Pick 5 pools, and requiring CAW players to place win bets on its races no later than two minutes to post.

California has also taken similar steps to moderate CAW play.

Since Santa Anita's 2022 fall meet, the win pool has been closed to CAW players one-minute to post, or else they must also pay a surcharge of around 3.5% on top of their normal rate if they want to bet to the close of the win-pool. Last year, Del Mar followed suit. Both tracks have also reverted to the traditional Pick 6.

When it comes to Del Mar's deal with Elite 17, the agreement was incumbent upon the player making a substantial payment at the start of the meet, according to multiple sources. Once that up-front payment was made, Elite 17 paid a host fee almost half of that for other Elite Turf Club players, wagering reports show.

But multiple sources familiar with the situation explained how factoring in the up-front payment, Elite 17 paid a host fee on Del Mar's product last year around a percentage point or so lower than the other CAW players.

At the volume CAW gamblers play, just one percentage point difference in host fee can mean a significant edge for one CAW player over all others, along with possible residual effects on all other participants in the betting pools in terms of late odds movement.

Bill Nader | Horsephotos

TOC president and CEO Bill Nader explained that deals involving up-front payments incentivize the player to maximize the amount they wager on the track's product.

“For example, if the player bets over a certain threshold, the player benefits from a high-volume discount. If the player does not reach that wagering threshold, the effective rate would be higher than other CAW players,” wrote Nader.

But could the deal that Del Mar struck with Elite 17 have prompted other CAW players-and Elite 2 in particular-to have curbed their play at the track last year?

The California racing source said that other CAW players were offered similar terms to Elite 17 last year. However, it should be noted that the other CAW players that wager through Elite Turf Club on Del Mar didn't bet to nearly the same volume as Elite 17 last year, and that Elite 2 was the only Elite Turf Club player to wager in the region of Elite 17's handle in 2021.

The California racing source also noted how CAW play is closely aligned with overall handle on a track's product, and that declines in total handle would invariably lead to decreases in CAW play.

“It's hard for us to say with any certainty why player A or B may have reduced his or her volume of play,” the source said. “The best source for that is the player themself.”

The TDN reached out to a representative of the player believed to be Elite 2, who declined to discuss the situation.

Here, it should be noted that at least one Elite Turf Club player increased their play between 2021 and 2023. This was Elite 10, who wagered $4.9 million in 2021 and $6.7 million in 2023 on Del Mar's product.

The TDN does not have access to data showing individual CAW handle on Del Mar's product in 2022. That was the year the California Horse Racing Board (CHRB) stopped making such data publicly available. Even so, California remains more transparent than other jurisdictions about what CAW data it makes publicly available.

Another wrinkle in this story is how Del Mar boasts an attractive wagering product with good field sizes and an impressive safety record. With that in mind, was the deal the right one to strike?

“With the benefit of hindsight, it has been the wrong deal for over 10 years and this is why we need a market correction,” wrote Nader, in response to a series of questions. “We represent the owners and purses are paid to owners, trainers, and jockeys, and there is room for improvement. This is what the TOC hired me to do.”

When asked why the TOC approved the deal last year, Nader wrote how 2023 “was my first full year with the TOC and we needed time to work with our Board members and others, notably the tracks, to voice our reservations and allow for a period of adjustment. This entire exercise has been a work in progress.”

WHY IS THIS IMPORTANT RIGHT NOW?
The issue of shrinking purse revenues amid declining economic benchmarks couldn't be a more pressing issue in California right now, where the industry attempts to piece together a revised racing framework in the wake of Golden Gate's impending closure in June.

At the end of the day, therefore, those arguably most impacted by decisions around managing CAW play are the industry stakeholders attempting to eke out a living from the sport.

When asked for comment on the story, the California Thoroughbred Trainers (CTT) wrote in a prepared statement how, “based on Del Mar's representations and the TOC's confirmation of how the purse account there has been managed, we can only say we're disturbed and confused. In January of 2021, at a CTT Board meeting, we attempted to question TOC leadership at the time about how purse levels were being funded, and were angrily rebuked by those in charge.”

At that point in time, Greg Avioli was TOC president.

“Since purses are the lifeblood of our sport, and are fueled by the public's interest and its confidence in the integrity of pari-mutuel betting, the apparent lack of transparency we're hearing about now has to be remedied immediately,” the CTT added.

Scott Chaney | courtesy of the CHRB

According to CHRB executive director, Scott Chaney, the agency is “keenly aware of the questions, importance and interest surrounding CAWs and plans to place the topic on our meeting agenda in the next month or so.”

Chaney added how “the concepts of purse accounts and structure are also vitally important to racing in California, therefore in order promote understanding and transparency, we are in the process of amending our race meet license application to include additional questions in this area.”

All of which leads to this question: Will Elite 17 be offered the same deal this year?

“No. Negotiations are ongoing across the entire customer sector,” wrote Nader.

“High-volume players will agree that two key deliverables to make their business models more attractive are access and liquidity to commingled pools,” added Nader. “Our racetrack partners should also understand the collective upside and if everyone can take a step back and look at this thing holistically, we can work it out.”

The post Computer Assisted Wagering: Anatomy Of A Deal appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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Technology, Engagement, and the Future the Focus of Annual Round Table Conference

SARATOGA SPRINGS, N.Y. – A panel on computer-assisted wagering (CAW) and its pros and cons, and another on trainers' reactions to the new Horseracing Integrity and Safety Authority (HISA) regulations, took center stage at the 2023 Jockey Club Round Table Conference on Matters Pertaining to Racing held in Saratoga Springs, New York on Thursday.

Patrick Cummings, the moderator of the panel on CAWs, is the Executive Director of the Thoroughbred Idea Foundation, a racing-industry think tank. Cummings took the panel through a brief history of parimutuel wagering and the changes the industry has seen before landing at the crux of the subject matter: CAWs.

“The CAWs are individuals with well-resourced staffs, developing couture models assessing vast amounts of data,” said Cummings. “They deploy finely-honed algorithms to efficiently place bets, often at the last possible second, all while receiving significant rebates for their play.”

The rebates, he said, while sizeable, were only one of the challenges that CAWs present to racing. The other is their ability to bet large amounts of money at the last possible second before the race, which gives them an advantage over regular players.

Pat Cummings | Skip Dickstein

“In pari-mutuel wagering, betting late has always been beneficial,” Cummings said. “But, when all betting was done on-track, betting late came with the risk you might not get your bet down at all.

“That's not a concern now, especially for the CAWs, who've been given the ability to place batch bets, dumping vast amounts in the final cycle of betting. The impact of that is witnessed every day, in nearly every race and across almost every pool.”

That impact, he said, has led us to where we are now: CAWs have grown from 8% of total handle in 2003 to around 33% of handle today. At the same time, when adjusted for inflation, non-CAW wagering is down by nearly two-thirds over the same time period. That's a concern because the money returned to racing in the form of purses is much greater from normal bettors than from those receiving huge rebates. So while handle may be up, “the greatest source of growth has been a handful of high-frequency bettors,” who pay less back into the system.

“How the evolution of CAWs is managed and how we support the existing customers we still have might be key to the future of wagering on racing in today's tech-forward world–one with unfathomable processing power, machine-learning, AI and more,” Cummings said.

Cummings led a Q-and-A session with Joe Longo, the General Manager of Content Managing Solutions for NYRA, which owns an ownership stake in the Elite Turf Club, one of the largest computer syndicate operations; and Dr. Marshall Gramm, a horse owner and professor at Rhodes College.

Gramm said he had written models with partners based on statistical probabilities. He started receiving rebates in 2011, and said that doing so not only allowed him to turn a profit, but to increase his handle enormously, from $49,000 in 2010 to $25 million in 2015. He has gone on to be a major racehorse owner, with 116 horses he now owns alone or in partnerships.

Gramm said that some in the industry have come to believe that rebates are all negative, but that his churn had increased exponentially because of it.

Love it or hate it, though, CAWs are here to stay, said Gramm.

“There's no walking back from it,” he said. “The computers aren't going away. You can't step back in time.”

Neither panelist addressed the issue that Cummings talked about in his introduction and that was covered in Jerry Brown's TDN op/ed, Existential Crisis, that because in parimutuel markets, players are playing against one another, regular people are effectively paying more, and leaving the game.

Longo discussed how NYRA has become the only racing organization to ban CAW bettors in the win pool within two minutes to post in order to negate the late odds fluctuations which have become so frustrating to horseplayers. Longo said that while no other organization had followed that lead, he felt that others eventually would.

HISA Panel Discusses Adjustments to New Rules

Trainers Jena Antonucci and Ron Moquett served as panelists, along with Ben Mosier, Executive Director of the Horseracing Integrity and Welfare Unit (HIWU), and HISA's Lisa Lazarus on a Q-and-A panel moderated by Jim Gagliano, the President and COO of The Jockey Club, on how trainers were adjusting to the new HISA regulations.

Gagliano asked the two trainers how their life had changed under HISA.

Trainer Jena Antonucci | Skip Dickstein

Antonucci said that she was already running her business along the lines that HISA requires in terms of record-keeping, but acknowledged that that part of the business had been a learning curve for other horsemen. Moquett said that, “as a Thoroughbred trainer, there's a new set of rules to follow and we're going to adapt to those rules, but primarily, we keep the priority on the horse.”

Antonucci acknowledged that there were concerns and bumps in the road as the program has gotten underway, but urged people to come forward with those problems so that the solutions could be found. But the benefits, she said, were dramatic.

“I may be a minority in this thought,” she said, “but I find it has been the great equalizer. It isn't a secret that there is availability of different levels of pharmaceuticals on different levels. Really smart chemists, and people looking to gain an edge. So I feel the biggest benefit has been to probably the hardest hit of this industry, which is the middle and the smaller side, where it has allowed a level playing field and where that guy or gal who busts their butt 24/7 can walk into a race and not feel like they're going to watch another horse re-break at the top of the stretch. That their plied trade and their skill set will have an opportunity to shine, where that eight-percent trainer historically, where it looks like I can't train a racehorse? All of a sudden, he's winning more, or she's winning more, and it's not because we've done anything different in our practice. And you know what? What I do, I do darned well, and my horse–whether it's in the Grade I Belmont Stakes or a $12,500 maiden–is going to have the chance to march down that stretch and compete eye-to-eye with the horses next to them, and there's not a pharmaceutical in our way.”

The crowd gave her an ovation after the comment.

“There are a few parts of it that have been very challenging,” said Moquett. “You're dealing with a large group of people who are now just getting introduced to technology. I'm helping people who are sometimes my competitors try to understand and navigate the system.

“I wear a number of hats,” he said. “I train horses. I own horses. I'm a member of the HBPA, and I'm on the HISA Advisory Committee. I'm constantly a sounding board. People come to me and say this is unfair, and I come to [HISA]. It's new. There are going to be problems, and they're going to have to listen to horsemen. It doesn't matter how good [Lisa Lazarus] is at her job, we need the Bill Motts and the Steve Asmussens. My job is to say, `look, I understand what you're trying to do, but we need to do a better job of explaining to people what the differences are between accidental contamination, an overage of an allowed medication and someone trying to gain an edge.' I'm basically representing 4,500 people that have to go through every regulation that HISA believes is okay. So [Lazarus] and I will get together, we'll battle, and we'll come to a solution. I will say we don't always get along that great, but she has been very good about hearing me out.”

Lisa Lazarus said, “One of the things we heard a lot was that if the public hears that a trainer has a medication overage, they think that they're a cheater. That they don't understand the difference between true doping substances, and medications that are allowed, but just not on race day. And so, one of the things that the [AMDC] does is distinguish very clearly between allowed substances and banned substances.” Violations for each were very different, she explained. “We're there to protect the 99% of trainers who are competing cleanly, so that they get a fair race.”

Safety, and The Traceability of Thoroughbreds

Tracing what happens to a Thoroughbred when it leaves racing or breeding has long been a problem for the industry, an issue that Kristin Werner, the Senior Counsel for The Jockey Club, addressed in her report on Thoroughbred Safety.

“I am pleased to announce that the `Transferred as Retired from Racing' process has gone digital,” said Werner. “The permanent removal of a horse's eligibility to race is beneficial to the retiring racehorse, but the process requires thoughtfulness and transparency on the part of the seller and buyer to avoid contractual disputes or other disagreements. To that end, the previous process required a notarized signature and hard-copy form to retire a Thoroughbred from racing. With the assistance of digital signature verification, we are now able to confidently collect the required signatures through the Interactive Registration website, which will make the process easier for everyone involved.”

Kristin Werner | Skip Dickstein

Werner also reported that the ease of traceability is increasing due to the replacement of hard-copy certificates with digital ones starting with the foal crop of 2018. This, she said, “will allow The Jockey Club to follow up with the certificate manager to try to trace a Thoroughbred that has exited the racing or breeding population with an unknown outcome. When this system is in place in 2024, an automated prompt will be triggered when a horse has not been reported dead and has no racing activity, no breeding activity, and no Thoroughbred Incentive Program number for a specified time period. The communication will explain why the prompt was triggered and will ask the manager to indicate the horse's current status.”

For foals born in 2017 and prior that had made a start in the past 10 years, she said, The Jockey Club would be reaching out to the last connections to try to determine their status.

Werner also addressed racing's safety issues.

“In 2022, data analysis from the 14th year of reporting to the Equine Injury Database (EID) showed a decrease in the rate of fatal injury in 2022 to 1.25 fatalities per 1,000 starts,” said Werner. “This is the lowest cumulative fatality rate since the EID was launched in 2009, and is the fourth consecutive year that the rate has decreased. While 99.88% of Thoroughbred races were completed without a fatality last year, clusters like those that occurred in April and May of 2023, unfortunately, cast a shadow over the good news and bring equine fatalities back into the headlines of national media,” she said, referring to the fatalities during the week leading up to the Kentucky Derby.

Werner said that the advent of the EID had allowed them to identify 35% of the risk factors which put horses at increased risk for breakdown during the running of a race. Those factors include a horse's vet list history, the race distance, and the time a horse has spent with a trainer. Long races, and longer time with a horse's trainer make that horse statistically safer.

The Safety Committee is also calling for the dissemination of information regarding the consistency and maintenance of track surfaces. “The Thoroughbred Safety Committee today calls for that information to be frequently measured at periodic distances and made available to the public,” said Werner. “Working with other key industry stakeholders, especially the Horseracing Integrity and Safety Authority and the Racing Surfaces Testing Laboratory, The Jockey Club recommends exploring the best methods for providing the racing surface data to the horsemen and public, including through an app, website, or other electronic feed. As with all of its recommendations, The Jockey Club will help provide resources to ensure this recommendation is met.”

Analytics in Sport

Michael Lopez, the Director of Football Data and Analytics for the National Football League, is a Saratoga resident who used to teach at Skidmore College in town, and a long-time horse racing fan. He talked about how the NFL uses data to drive decision-making, and ways in which he felt horse racing could do the same.

Michael Lopez | Skip Dickstein

And while the sports are completely different, there were several interesting parallels.

Wearable technology has been an interesting new potential safety tool for horses, designed to measure things like their regular stride to detect any changes that might indicate a problem. The NFL is doing the same.

“Recently,” said Lopez, “all NFL players are now wearing RFID chips in their helmets, shoulder pads, and cleats, small enough so that the players don't feel them, but enough so that a signal is emitted each time they step onto the practice or game field. The burden is heavy–this data is messy and the tracking cumbersome–but the idea of a cleat specific to a running back on turf, or a helmet specific to a quarterback who likes to scramble–gives the league plenty to work on. And each practice, each club is required to wear tracking devices that give insight into a player's load, distance traveled, speed, etc., which enables sports scientists to evaluate performance, if players need to tone down, or injury recovery.”

Moreover, the NFL is timing the replay review process to ensure that a coach's challenge in a more prominent game is treated the same way that it would be in a less-prominent one. After the non-disqualification of Forte (Violence) in the July 29 GII Jim Dandy S. prompted much discussion over whether a less well-publicized event would have merited a DQ, the topic struck home. “The horse racing corollary is obvious,” said Lopez. “When, why, and how stewards decide for or against a disqualification, because a possible DQ at Del Mar should have the identical decision-making process to one at Saratoga.”

Engagement With Racing

Lindsay Czarniak | Skip Dickstein

Lindsay Czarniak was just a baby when her father Chet took the job as the first-ever horse racing reporter for USA Today in 1982. Today, she is a sports broadcaster who anchored SportsCenter for six years and who works as a Fox Sports sideline reporter. She is a studio host for NBC's summer and winter Olympics. She is also an influencer with America's Best Racing and a West Point Thoroughbreds partner who was one of the co-owners of Jace's Road (Quality Road) in this year's Kentucky Derby. “My goal was to give folks that pay attention to my content the VIP access,” said Czarniak. “I had so many people pulling for Jace's Road because they knew we were in the big race.”

Her advice for racing? Lean into storytelling and access; just because it feels normal to people within the industry doesn't mean that it is to fans. “There is a family aspect, a necessary aspect, a high-stakes aspect to this sport that your average sports fan would consume.”

She also advised racing to place itself where young people consume content, i.e., streaming platforms, digital and social media, etc., and to communicate the safety steps that have been taken.

Racing and Data

Kyle McDoniel was named the President and COO of Equibase on June 1, 2023, and comes from a sports and data background, having most recently served as vice president of U.S. Strategic Partnerships for SportRadar, a sports technology company.

McDoniel talked about the challenges inherent in GPS tracking of horse racing, and said that Equibase is now producing tracking at 28 tracks across the U.S. and Canada, representing over 75% of North American handle. In addition, he said the company was continuing to invest in graphical representations of past performances, including those that illustrate stride frequency and length averages, among other things.

Janney's Closing Remarks

Stuart S. Janney III | Skip Dickstein

In his closing remarks, Jockey Club Chairman Stuart Janney said that the advent of HISA had done a lot to secure racing's future.

“Four years ago, at this program, a great Australian breeder-owner, John Messara, speaking about the proposed federal legislation, said, `You've got everything to unleash your monster of economic rewards if you were to join the rest of the world in this harmonization in terms of the drug rules.' John was right and we are here today and it's now time to capture that future.”

To do so, said Janney, “I have two suggestions. First, we have to embrace the international aspect of the sport. Racing is global and thankfully, in many parts of the world, the sport is thriving.”

His second suggestion, he said, involved marketing. “We need to get past the concerns that we are constantly in turmoil, rocking from one crisis to the next. Another Round Table speaker from the past, David Fuscus, [who] discussed crisis management, said, `If we come together as an industry, negative perception can be turned. There is hope we can come through these dark days, but to do so, the public needs to understand what we're doing and believe we are on a path to success.'”

Entire Conference Available Online

To watch the entire Round Table conference, click here.

The post Technology, Engagement, and the Future the Focus of Annual Round Table Conference appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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Letter to the Editor: Computer Assisted Wagering

Thoroughbred Daily News has written extensively about Computer Assisted Wagering and the players and clubs that by using such methods have placed a stranglehold on our pari-mutuel system.

Just a week ago in this space, Dan Ross had a wonderful column on the subject and what it has done to handle in California.

It is hard to say no to someone wanting to bet a huge amount on Thoroughbred racing, and it is understandable in giving them rebates to reward their action.

But it is harming the game and small players such as myself.

I witnessed an example April 23 in Kentucky when I bet $200 to win on For the Flag in the fifth race at Keeneland. She was 6-1 when the gates opened, 3-1 as they entered the first turn, and 5/2 as they exited the turn. She won and paid $7.98.

You can sell all the yearlings you want, have 2-year-olds work in great times, etc., etc., etc. Enjoy the big stud fees. Put together syndicates. But when the $2 bettor has had enough, or in this case the $200 bettor, then all you have left are the computer players and the folks who have a Derby party and are interested in racing for an hour a year. Maybe that is all that is needed for the game to continue.

But by doing so you are losing people such as myself. I find myself wagering less and less every year because the sharp change in odds while horses are running infuriates me.

No one loves the sport more than I do. No one enjoys handicapping more than I do. No one finds Keeneland to be as special a place as I do.

Make their last dump of money into the pools happen with a few minutes to the post. Or take them out of the win pools. Or …

Just do something. Because these kicks in the gut are becoming more than people like myself can take. This is supposed to be fun. For me, it is not any more.

The post Letter to the Editor: Computer Assisted Wagering appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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Letter To The Editor: Craig Bernick

No business can change what it does not measure. Racing's public measurement of support, via wagering, hides serious issues.

Recent stories have continued to cite declines in total handle, wondering just what is at play. How that handle has been derived has changed dramatically, but that's not reflected in the overall numbers.

Over the last century, U.S. racetracks have reported total handle on their races and, for most of that time, it was one metric that accurately depicted the health of the business. But in our modern era of simulcasting, rebating and high-frequency betting from professionals, often called computer-assisted or robotic wagering (CAW/CRW), total handle figures actually deceive industry stakeholders more than anything.

Just over $12 billion was bet in 2022, which is roughly the same as in 2000. Adjusted for inflation, total wagering is down nearly 50% in the last 20 years. To compound the issue, research conducted by the Thoroughbred Idea Foundation (TIF) estimates that roughly $4 billion of total handle from 2022, around one-third of betting, was from the CAWs/CRWs. Others think the figure is probably higher.

Racing industry stakeholders should know how much is being wagered, through which channels, how much of those wagers are going towards purses and how that has changed and continues to change. But racetrack operators and executives in the betting space seem to have little interest in publicly discussing how their CAW/CRW business is thriving while their mainstream business appears to be floundering. That lack of transparency wasn't always the case.

Big Changes Over 20 Years

In 2004, an NTRA-commissioned study showed the burgeoning CAW/CRW space represented about 7-8% of total betting. Now, it seems headed towards 40%. This does not have to be the problem it has become. On its own, betting from CAW/CRW groups represents a modern, tech-based, intelligent and efficient form of betting. It should be something we can embrace and improves the overall business.

NASDAQ estimates that high frequency trading now represents half of all stock trading. But trading and investing from mainstream investors has never been cheaper or more accessible. Racing has not evolved similarly.

Racing's costs–through takeout–have grown for mainstream customers while rebates for high-frequency bettors are believed to be higher than ever. The amount the public actually loses, “effective takeout” also seems greater than ever. TIF research, led by Pat Cummings, has uncovered public data which shows mainstream ADW customers are losing far more than the traditional blended takeout rate at tracks in Florida. A figure that should be approximately 20% is often closer to 30%, and it typically gets worse on mandatory payout days.

While racing should be able to embrace a future with more tech-enabled betting, it cannot do so at the expense of mainstream customers. All of the evolution has focused on CAW/CRW bettors, making it easier to bet and at lower price points, while mainstream customers are still paying full-freight on a product that has not evolved for them…and they have fled the sport in droves. Total handle figures hide that shift. The higher the takeout, the more room there is to rebate the sport's biggest players. And they have responded! The segment that has actually grown is the segment with the lowest takeout!

Using inflation-adjusted figures from that NTRA study, published in 2004, CAW/CRW betting has likely tripled in the last 20 years. That means mainstream betting is probably down about two-thirds since then. This is an atrocious trajectory from racing's largest customer base–rank-and-file horseplayers–and has occurred during a period where racing had a veritable monopoly on legal, regulated betting via the Internet.

Now racing's inferior, expensive product for mainstream bettors has to compete with legal sports betting. Good luck.

Great Purses Should Not Buy Our Ignorance

Owners and breeders have enjoyed purse supplements through additional gaming revenue for over two decades now. Combined with poor reporting of actual wagering trends, these supplements have also succeeded in buying our general ignorance of the core product–betting on racing. That's incredibly problematic in the long term.

Horseplayers are some of our sport's greatest advocates, and many of our biggest owners were first introduced to racing as $2 bettors. Not only do we risk losing a generation of future owners if our sport is no longer relevant to mainstream bettors, but we are also squandering the business acumen of leading owners on industry boards by failing to give them an accurate picture of how wagering on the sport has evolved.

More than ever before, racetrack operators are owned, or controlled, by gaming companies. Combined with racing stakeholders' ambivalence towards wagering, gaming corporation ownership often does not seem to rate daily racing as a long-term priority. For many of them, owning and operating racetracks has been a not-so-subtle trojan horse for gaming machines.

Particularly in jurisdictions with heavily-supplemented purses, owners should be advocates for reduced takeout and a healthier evolution of the wagering product for all customers. This will drive future participation. It has gotten easy to ignore how the betting business has evolved when tracks run maiden races for over $100,000, when auction prices climb and the business of buying and selling horses is so lucrative. It defies logic that purses have grown considerably thanks to purse supplements but yet takeout remains high for our mainstream customers.

Industry stakeholders–specifically, owners and breeders–must be more attentive to the alarming trajectory of the wagering business, demanding both more transparent reporting and a product that can grow all customer bases–not just the high frequency bettors at the expense of rank-and-file horseplayers.

I'm all for technology. I'm not against CAW/CRW play. I want all customer segments to grow. I want a bigger pie for everyone. I'm FOR horse racing. We all enjoy bigger purses, but the realities of our core wagering business, which sustains the sport and keeps it in the public consciousness, is really alarming. Most owners and breeders don't see it because it has been, relatively, hidden behind antiquated methods of reporting handle.

I encourage owners, breeders' and horsemen's organizations to demand far greater transparency–both of operators and regulators–as it relates to racing's wagering business. We need to be stewards of our sport and not merely accept elevated purses while ignoring the economic fundamentals that impact our largest base of customers.

Craig Bernick is President and Chief Executive Officer of Glen Hill Farm, a breeding and racing operation based in Ocala, Florida. He founded the Thoroughbred Idea Foundation.

The post Letter To The Editor: Craig Bernick appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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