Agenda Set For 3rd Annual Racing & Gaming Conference At Saratoga

Pat Brown, the director of The Racing and Gaming Conference at Saratoga, knows what makes an agenda tick. He has seen his fair share of seemingly endless Power Points, glazed-over eyes and the attendees that surf the Internet in an attempt to multitask. The best way to combat the conference malaise? Just a healthy dose of fun.

“I've spent over 40 years of in and out of government, thinking about and writing about the gaming and horse racing industry,” said Brown, a former advisor to New York's Governor Mario Cuomo and an attorney that lives just south of Albany. “I want everyone to come away from this conference having learned something interesting, but most of all, I want them to have fun.”

As the director of the what will be the third installment of this hybrid conference that will be held at the Hilton in Saratoga Springs, New York from Aug. 14-16, Brown and his planning committee have put forth yet another stellar card. Once again, those in attendance will take in cutting-edge topics under the umbrella of racing and gaming with an ambitious schedule just out this week.

This year's slate runs the gambit when it comes to angles and there is something for everyone that is interested in the intersection between these two worlds. “We've got something for lawyers, thorny issues, where the little guy fits in and how technology shapes and impacts the racetrack and the casino,” said Brown.

After an opening reception at the Adelphi Hotel on Monday, Aug. 14, the conference shifts into high gear Tuesday with experts that will speak on the following topics:

  • New York Casino Expansion to New York City and Surrounding Counties: Is the Finish Line in Sight?
  • Consolidation of Gaming: Status and Implications
  • Tribal Digital Gaming: Has the Moment Finally Arrived?
  • Technology and Gaming: New Challenges, New Solutions
  • The Implications of Exclusion for Racetracks and Casinos
  • Consumer Protections and the Federalization of Gaming

Pat Brown | courtesy of Brown and Weintraub

“We want this conference to not be so New York-centric,” said Brown. “The way you do that is by thinking broadly and topics like tribal gaming, regulatory issues and legal questions like exclusion, are all applicable across state lines.”

Sandwiched within day one is a lunch lineup which includes an address by Stacie Clark Rogers of the Thoroughbred Aftercare Alliance and a keynote delivered by Joe Asher, President of IGT Sports Betting. “Joe's is coming to keep us energized, entertained because I think lunch needs to give everyone a break from the conference,” Brown said.

On day two, the conference concludes with four sessions that deal with aspects of racing and wagering, including:

  • Harness Racing: An Industry in Decline–or in Transformation?
  • Historical Horse Racing Machines: The Tail Wagging the Horse?
  • HISA–Legal Limbo and Regulatory Reluctance
  • Racing's Changing Customer Base, CRWs and the Future of Betting

Each of these hot-button issues draw from an arc of past precedent and are extremely significant to the future of the horse racing industry. “Not everything is about Thoroughbreds,” said Brown, who has also owned shares in racehorses. “We want to expand the vision to harness racing because it has much to teach us about statutory issues concerning aspects like the minimum number of race days.”

Brown knows that a panel concerning HISA is important, but he wanted to find a way to zero in on something specific. How state regulators are handling the current situation seemed appropriate. He also understands that conference attendees will be particularly keen to hear about the impact of Historical Horse Racing Machines and the power behind Computerized Robotic Wagering groups. “I have no doubt that those sessions will generate some interesting questions and debate, especially when everyone is talking about the impact on track handle,” said Brown.

Wrapping up the conference, some 50 attendees who purchase tickets will have the opportunity to take in the Saratoga meet along The Spa Veranda. Pat Brown's idea of fun, indeed.

Click here for more information concerning registration and hotel information for The Racing & Gaming Conference at Saratoga.

 

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TIF Issues Alarming Report on Computer Assisted Wagering in CA

Nine of the 11 largest betting pools have shown declines from all customers except computer-assisted wagering groups over the past four years, while the handle of the largest CAW groups grew dramatically, according to an extensive study of data released Monday by the Thoroughbred Idea Foundation (TIF).

“The Thoroughbred Idea Foundation's analysis of data from Del Mar between 2018 and 2022 showed on an inflation-adjusted basis, per-race (or per-opportunity basis for certain bet types) CAW betting, from what is believed to be 17 accounts, has grown tremendously in the last five years-up 46% in the superfecta pool, 49% in trifectas, 78% in pick fives, 128% in the show pool and a staggering 403% in the pick six pool,” reads the report, concluding, “The trend for all other customers is disturbing.”

This trend is problematic; the report concludes that major problems is that the increases in CAW betting, due to rebates, does not make up for the handle decline from other sources. That has a deleterious effect on purses, whose soul source of funding in California is through wagering.

The report, “Sharks & Minnows–Managing the Growing Imbalance in Racing Wagering Markets,” is available on the TIF website, racingthinktank.com.

CAW bettors receive rebates on the takeout because of the large volumes they bet, but they quote Del Mar president Josh Rubenstein as saying that those rebates will be limited at the Del Mar summer meet–at least in the win pool.

“We get that late odds fluctuation is frustrating to players,” Rubinstein said, referring to the fact that CAW players place their bets based on their perceived value in the odds close to post time, which creates major odds shifts–often after the horses have left the gate.

“Beginning with our upcoming summer meet, [we] will be implementing new protocols for CAW players that are designed to limit participation in the win pools at two minutes to post. Based on what we've monitored and analyzed from other tracks, we believe these protocols will reduce late odds changes.” TIF reported that the largest rebates will be given to bets made with more than three minutes to post, a smaller amount at two minutes, and the smallest rebate at under two minutes. Non-rebated customers pay 15.43%, the report says.

“Limiting CAW guardrails to merely a rebate change in the win pool, while potentially helpful in reducing some late odds changes, amounts to little more than window dressing for mainstream customers,” TIF concludes. “CAW betting in Del Mar's exotic pari-mutuel pools, particularly the trifecta, superfecta, pick three, four, five and six pools has been substantial. Play from Elite (Turf Club, a top CAW) and RGS (Racing and Gaming Services, another) customers exceeded 32% of total handle in each of those bet types last year and was 38% of pick five handle.

“CHRB data does not delineate how much is staked on the early pick five, with its friendly 14% takeout to mainstream bettors, and how much is on the high takeout late pick five, with a 23.68% takeout rate. It is reasonable to expect the percentage of CAW play reflects their enormous pricing advantage over the public on the late pick five. Total handle figures do not tell the most accurate story. In nearly every pool offered by Del Mar, all non-Elite and RGS handle is declining.”

To read the full report, click here.

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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.

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When Do CAWs Help And Hurt California Racing?

Last month, a lengthy Financial Times feature detailed the growing share of overall handle generated through Computer Assisted Wagering (CAW)–both in California and nationwide.

CAW players are a small group of high-volume and largely anonymous gamblers with an outsized impact on the betting markets due in no small part to the sophisticated wagering tools at their disposal. Because of their high stakes play, they're offered inducements in the form of rebates and reduced takeout rates largely not available to the average punter.

CAW proponents argue that these deep-pocketed players provide much needed financial ballast to an industry in flux. Critics say the industry has bent over backwards to accommodate their trade, to the point where their influence on betting pools is akin to a run-away train. It's not an easily told story–attention needs to be paid to the numbers behind the numbers.

Using California Horse Racing Board (CHRB) data, the story illustrated the way total California handle has shrunk appreciably between 2007 and 2021, but the share of that handle from CAWs has increased hand over fist during the same window.

When it comes to by far the most influential of these computer syndicates, the Elite Turf Club–a Curacao-based company owned in part by The Stronach Group and NYRA Bets LLC–their share of overall wagering has increased from about 3% to roughly 30% between 2007 and 2021, according to the FT's analysis of CHRB data.

Just two Elite Turf Club accounts account for the majority of all “Elite Turf Club” wagers bet, the FT calculated. Though here it should also be noted that other important betting entities facilitate CAW play, including some key ADW platforms.

Bill Nader, president and CEO of the Thoroughbred Owners of California (TOC), told the TDN that the Elite Turf Club's percentage share of the overall handle during Santa Anita's recently completed “Classic Meet”–which ran Dec. 26 last year through April 9–was 22.89%.

This number is important for one crucial reason: There is a tipping-point when the percentage share from CAW players on overall handle becomes so large that their participation at these levels becomes unsustainable–that it begins, essentially, to cannibalize the market.

“I think everyone would pretty much agree that around 25% is the cap and anything above that might be taking it too far,” said Nader, who presides over the organization given final say over any betting-related contracts inked in the state.

“Even the CAW player would agree that in striking the right balance through their lens–to avoid the CAW player competing against the CAW player which is not what their model wants–they need liquidity in the pools for distribution of investment,” said Nader.

Scott Daruty, president of Elite Turf Club, agrees there's a balance to strike–but he takes a more circumspect route as to what the tipping point is, highlighting different variables factoring into the equation, like the size and location of a racetrack.

“There are very different answers. I can only speak to the tracks that we operate,” said Daruty, pointing to the 1/ST Racing facilities.

“I would think if CAW is 15% of the pool, you're fine. I think if it's 30% or more of the pool, I personally would start to get worried about that,” Daruty said. “Other tracks who have different circumstances may answer that question differently.”

Does the 22.89% CAW play on total handle from the recent Santa Anita Classic Meet strike the right balance?

“I am not overly troubled at 22% if in fact that is the [right] number,” said Daruty, adding how, at the time of the interview, he was not able to verify the figure.

Earlier this week, the Daily Racing Form reported that Santa Anita will cut purse levels for the upcoming Spring meet. This cut was anticipated months in advance, said Nader, but has been influenced by issues like a slate of lost racing days through inclement weather this winter in Southern California.

Not inconsequentially, the purse account is in an operating deficit–a number currently sitting at $554,417 in the red, but expected to shrink to $430,789 through June 18, said Nader. How much of the state's purse account deficit can be attributed to the impacts from CAW play?

“They're volume players and they make a significant contribution,” Nader responded. “That's where I come back to the need to strike the right balance.”

Santa Anita | Benoit

Modifications Already Instituted in California

That said, efforts have already been made at Santa Anita and Golden Gate Fields to control CAW growth in California—the first concerning the Rainbow Pick 6.

Since Santa Anita's fall meet last year, CAW players have been prohibited from taking out the Rainbow Pick 6 jackpot on a non-mandatory payout day.

“CAW players must bet in a 40-cent unit which means they can't take out the jackpot,” Nader said. By rule, the only way the jackpot would be paid is to a single 20-cent unit.

The second concerns a bête noir of CAWs among ordinary gamblers–swinging last-minute odds changes. In response, CAW players must 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, said Nader.

These modifications, said Daruty, were made at least partly in response to player feedback.

“There were complaints about late-odds shifts and a lot of focus on CAW players as the cause of that, and we wanted to take steps to try to alleviate the problem if not wholly at least partially,” Daruty said.

Have these modifications rectified the problem of late-odds changes? “We've monitored it carefully and we believe it has had a materially beneficial impact on that issue,” Daruty replied, leaving the door ajar for further possible pricing changes in CAW play.

“I don't know there is ever a perfect answer or a final answer,” Daruty said, adding that anything more specific on possible pricing tweaks would be a hypothetical. “It's an issue we will continue to monitor and if necessary make adjustments.”

Nader took a similar stance to Daruty, saying that the CAW surcharge is so prohibitive, “it effectively prices them out of participating in the win pool.”

But these modifications haven't fully addressed the issue of striking the right balance between CAW and non-CAW play, Nader added, once again saying “it's all about how we control access to the pools and how we price it to ensure fairness.”

As to what additional controls on the betting pools could and should be instituted, Nader also largely steered away from specifics, explaining that contract negotiations are ongoing between the tracks and the TOC with the Del Mar summer meet on the horizon.

Del Mar offers an intriguing case study as to the growing impact from CAWs in California.

According to publicly available CHRB data, the total amount Elite Turf Club wagers at Del Mar annually has increased nearly 56% comparing 2018 data–the year prior to the Santa Anita welfare crisis and a global pandemic–and 2022 numbers.

On a handle-per-race basis, the increase is even more stark. Comparing 2018 numbers to 2022, the Elite Turf Club's per-race handle increased 73.1% at Del Mar.

“I'm not trying to avoid the question, but we still need to have the conversations with the track partners,” Nader said, when asked about specifics concerning these ongoing negotiations. “We have the rights to approve, but I need to respect the position of the tracks. We need to come together.”

Nader pointed, however, towards the higher takeout wagers–like the Pick 4, 5 or 6 bets–as an area for possible pricing modifications.

“The CAW players have gravitated towards the multi-leg wagers which are higher takeout wagers. In many cases, higher takeout wagers can lead to higher rebates. There's where I think there's room for discussion,” said Nader.

For win, place and show or Exacta wagers, the takeout is extracted one time for each race. In the multi-leg wagers, however, the takeout is extracted only one time for a sequence of races.

“So, in terms of payments to tracks through commissions and to owners through purses, those dollars are not working nearly as hard as they would be in the single race pools,” said Nader.

Del Mar | Horsephotos

Concern Over Core Customers

The Thoroughbred Idea Foundation (TIF), an industry think-tank, has been banging the drum about the rise of CAWs, and the implications for the industry, for several years.

Just this March, TIF co-founder Craig Bernick warned that the current trajectory of CAW play risks substantial losses to both mainstream betting customers and to racehorse ownership.

In the same vein, Pat Cummings, TIF executive director and a former executive with the Hong Kong Jockey Club, stressed how vigilant California horsemen should be to the impacts from CAW to the long-term sustainability of the state's racing industry.

“No group should be pushing more for reform in this space–and to date, that has not really happened,” Cummings said, pointing to how California's purses are built solely upon handle, unlike other states which bolster their purse revenues through other sources. “Wagering is the lifeblood of the sport, but in America, nowhere more so than California.”

As such, pricing is key. “The growth of CAW play is proof that the cost we charge bettors via takeout matters,” Cummings said.     “If takeout was higher for CAWs, they wouldn't wager or churn as much as they do,” Cummings added. “And while we don't have access to the deals cut to incentivize them, their overall growth is the sign that improving their experience through better pricing has worked.”

Indeed, the lack of public transparency by the industry at large about the impact from CAWs is glaring. Take the CHRB, one of the more transparent commissions when it comes to CAW data.

Until 2021, the CHRB issued detailed annual betting data on individual Elite Turf Club accounts. Last year, the CHRB lumped all Elite Turf Club accounts into one block.

More specifically, the incentives offered these players is another major bugbear of CAWs. According to the FT, the rebates that CAW players receive can be around 10% of whatever they bet.

When asked if these details should be made public, Nader said that any effort at pricing transparency should ideally be done uniformly across the nation. “But I'm not sure there's a willingness to do that,” said Nader, who added that legal obstacles could similarly hinder such endeavors.

When asked the same question, Daruty said that “we believe very strongly that the personal wagering habits of our customers and their personal situations is something that should remain private, so we're not prepared to discuss specific rebates of specific players–that would not be appropriate.”

Individual rebates, Daruty explained, are dependent upon a wide variety of factors.

“Thus far we haven't found a one-size fits all model that we think makes sense for our racetracks, the horsemen who run there, as well as our customers. Until we can come up with such a model, we're going to continue to have a wide variety of rebates available to a wide variety of customers,” Daruty added.

Which leads to a fear among track operators that weakened CAW incentives could drive these price-sensitive players from the game. At the same time, without controls on CAW access to the betting pools, CAW is only going to further sour the average gambler to the game, Nader admitted.

“For the casual bettor, I'm not so sure,” Nader said. “It's the core customers, they're the ones I'm concerned about. I'm talking about the ones at a level just below the CAWs–they're the ones contributing on a day-to-day basis or participating at a higher rate. We want to make sure we're looking after their interests.”

What should that look like? Nader skirted specifics, calling it “a question for the industry at large to look at.” That said, “the key is introducing new people to the sport. Maybe we haven't done a good job at that for the last 10 to 20 years.”

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