Jerry Brown | Horse Racing Free Tips

Fed Up With the CAWs, Brent Sumja is Now an Ex-Horseplayer

It was back in 2004 that Brent Sumja made a career decision. He was among the leading trainers in Northern California, but wasn't following his true passion. That was playing the horses. So he disbanded his stable and set out to be a professional handicapper. It went well. He played the races regularly and also focused on the handicapping tournaments. In 2014, Sumja won five tournaments in a four-month span from May to September to clinch the title of 2013 Daily Racing Form NHC Tour Champion and the first prize of $75,000 that goes with it. For years, he was confident that he had made the right decision.

But the game he was playing in 2013 is nothing like the game being played today. That, he says, is because of the proliferation of the Computer Assisted Wagering (CAW) players. He's found that he can't compete against them, their algorithms, their ability to bet huge amounts at the very last second and their huge rebates.

In a Tweet posted Sunday, Sumja announced that he was walking away. “They (CAW players) have infiltrated every last pool and after 40+ years I am done feeling and being duped by sketchy practices,” he wrote. “Going to concentrate on other sports I am excited about. They ruined horse racing.”

Ironically, the decision came after he made a winning bet on the 20-cent jackpot Pick Six at Del Mar. The winners paid $5.40, $14, $5.20, $56.80, $6.60 and $4.40 and the bet paid $3,216. Sumja is convinced it should have paid more and that the reason it didn't is because the CAW players swooped in and took home most of the pool.

“It's been a culmination of years of just feeling like something is going on that makes me feel that I am not playing on a level field because of the computer players,” he said. “I don't understand technology, so I don't know how they are doing it. But I do know that when you see late odds changes and they are correct way too often in terms of them winning it seems not possible. It gives me a feeling that I am playing in a game that is stacked against me. You know the old adage, when you feel like you are the sucker at the table it's time to get up. I have read what Jerry Brown wrote in the Thoroughbred Daily News and have followed all the numbers Pat Cummings has been coming up with. It's made me realize I have no edge anymore. If I can't beat the computer players why should I play?”

Sumja said he had been wagering about $500,000 a year and worked with two other horseplayers, one betting $2 million a year, the other $1 million. Both partners have also quit wagering on racing. Sumja's wagering dollars are now devoted to sports betting.

“We're all out, but I don't think the tracks care,” he said.

As is the case with many horseplayers, Sumja got tired of watching the horse he wagered on at 4-1 30 seconds before the race break on top and go down to 8-5. Even when those horses won, it left a bad taste in his mouth and he can't understand why the horses whose odds take a late plunge seem to win far more than their fair share. He is not willing to concede that maybe that's because the CAW players' algorithms are so good that they usually come up with the winner.

“I'm not going with the company line that they are just great handicappers. I don't buy it,” he said.

Sumja wants the tracks to close the pools well before the race starts.

“They have to close the pools off significantly ahead of the first horses going into the gate,” he said. “That would take away the feeling that something isn't quite right. You bet on sports and you take a team at +$350, the game ends and you win you get paid +$350. If you take a team getting four points and if they cover the spread you win. What horse racing is doing would be like them telling you with a football bet we'll let you know what the spread is after the game has started. You might have plus three or plus six. We'll let you know during or after the game. Why would you play that? You wouldn't. Shut the pools down three minutes to post. Shut everything down. Let every player see what odds they are really getting.”

Sumja understands why the tracks willingly accept wagers from CAW players. By some estimates they now account for one-third of all the dollars wagered on U.S. racing or about $4 billion annually. The tracks have made a business decision that it's in their best interests to take their bets. Sumja counters, saying that a lot of players are now doing the same, making a business decision that because of the CAW players it is not in their best interests to continue betting on the sport.

“If that's what racetracks want, to cater to CAW players, that's fine,” he said. “But you have a choice not to play nowadays. There are so many other types of wagering available. I've been making my own football line since I was 15. I love betting on sports. And when I make a sports bet that is paying 7-2 I get 7-2 if it wins and not 6-5. It's a refreshing feeling.

“In his article, Jerry Brown wrote about the myth that horse racing won't make it without the money being bet by CAWS. Horse racing made it for 100 years before anyone ever heard of CAW. I understand games change. If racetracks feel this is what they need to do to maintain their business that's what they're going to do. It also comes to a point where you make your own decisions and when you realize you're in a bad spot you've got to stop playing. That's my position. I'm not playing anymore. Neither are my friends.”

Sumja said that after he posted his tweet he heard from dozens of people who said they also have quit betting on racing and that they were happy that he spoke out. The horse racing industry used to get $500,000 a year in handle from Brent Sumja. Now it gets none. How much longer can this keep happening and how many more Brent Sumjas can it afford to lose before real and lasting harm is done to the sport? These are real problems and so far the sport hasn't been able to offer any serious solutions.

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Letter to the Editor: Existential Crisis. No Hyperbole

There have been several stories recently in the TDN about Computer Assisted Wagering (CAW), and many of them have contained accurate and useful information. But what those articles have failed to do is convey what CAW really is and does, why it matters, and most of all, how dire and urgent the situation they have created is. Hence this letter.

1-First, the basics. Betting handle is the lifeblood of our industry. It directly funds purses, creates all the jobs in our business, and indirectly funds the commercial bloodstock industry—no (or less) purse money to run for, and eventually yearlings will have the market value of show horses, and stud fees will follow them down.

2–The parimutuel pools are a market; horseplayers compete against each other, not the house. CAW is not just someone using a computer to handicap. Yes, there is a handicapping element, and if someone creates a good handicapping model, good for them. But the important part is this—CAW “players” are being given a massive advantage over regular horseplayers. They get electronic access and a last split-second look at the pools, which gives their computers the ability to assess the situation in a microsecond, and automatically make hundreds of targeted and incremental bets, totaling tens of thousands of dollars per “player,” right at the bell. No human can do that, or compete with it.

3–Because CAW is responsible for so much handle, and because many of the CAW “players” have banded together to negotiate, they receive gigantic rebates. So in effect, they are playing into a much lower takeout than the general public, and that, combined with the advantage they have been given, enables them to basically vacuum the pools. And since it's a market, if they're siphoning off money, someone else is losing it. More on that in a moment.

4–In our industry, we publish handle figures, not profit and loss. But remember: CAW “players” get gigantic rebates. That means the industry gets to keep much less of every dollar they bet—roughly speaking, it takes $3 of CAW handle to equal $1 bet in the backyard at Saratoga. So if overall handle stays the same, but CAW handle is replacing non-CAW handle, for purses, and for everyone else in the industry, it's like handle going down. And CAW is now responsible for about one-third of national handle.

5–The overall retail blended takeout on racing is normally about 20%. But with the CAW “players” making money as a group, it means the horseplayers who make up the other two-thirds of the pools are in effect paying the entire takeout. So for them, the takeout is up to roughly an onerous 30%. Now, horseplayers are not like the people who buy expensive yearlings. They generally work for a living, and as a group have a finite amount they can lose over the course of a year, or lifetime. So as the takeout has gone dramatically up, one of three things has to happen:

A) Horseplayers bet the same amount, and tap out faster. That reduces churn on handle, and handle overall goes down.

B) Horseplayers reduce what they bet as they lose more, to make their money last longer. Handle goes down.

C) Horseplayers stop betting or switch to legal sports betting, which has a takeout of between 5-10% (and no learning curve, since most of us grew up with these games, and there are no odds changes after you bet). Handle goes WAY down.

In other words, CAW isn't just disguising the drop in non-CAW handle, it is CAUSING it.

I know many serious, lifelong horseplayers who now only play on big days, or who have quit the game entirely.

6–So here it is; figures courtesy of Pat Cummings:

As CAW handle has gone from about eight percent of the pools to about a third over the last 20 years, non-CAW handle has nosedived. To give you an idea of how short a time period we're talking about, Smarty Jones won the Derby in 2004.

ADJUSTED FOR INFLATION, ORDINARY (NON-CAW) HANDLE IS ABOUT ONE-THIRD OF WHAT IT WAS JUST 20 YEARS AGO.

Do I have your attention now?

Almost all of that drop came before the advent of legal sports betting. And remember, the non-CAW handle is the oxygen-rich blood that nourishes everything. CAW is not just taking money out of the pockets of ordinary horseplayers; it's killing horsemen and the industry as a whole.

This is an existential crisis, without exaggeration. Since only handle figures are published, the picture has been obscured to the public, but we are not talking about a long horizon–I think major cracks will start becoming visible within the next year or so, because the downward spiral is accelerating rapidly now that there's sports betting. And as ordinary handle goes down, CAW will as well–the robots adjust their bet size to the size of the pools, so that they aren't killing their own prices. These guys aren't in our game for fun, like horseplayers are, they're here to suck money out of the pools. And when they no longer can, they will leave.

7-So, what can be done? Finally, some good news: because the industry makes so little from a dollar of CAW, eliminating a portion of their handle will not have anywhere near the same effect as eliminating the same amount of ordinary handle.

The first thing that has to happen is that the unfair advantage has to be taken away from the CAW players. Their special access to the pools has to be shut off with three minutes to post, like NYRA did with their win pool. But it can't be just cosmetic. It has to happen in all pools.

The second thing is to reduce their rebates. If you make twice as much from each dollar bet, even if CAW handle is cut in half, it's a wash. And if those two actions erode their edge to the point where they bet much less, good; that's the idea. We need to knock that third of the pools figure down by quite a bit, to salvage what's left of the non-CAW handle, and hopefully create more.

I'm using “salvage” advisedly, because we are hemorrhaging customers, and once they are gone, it is hard to get them back. Since I wrote the first draft of this letter one of those cracks has appeared. Golden Gate is closing, in an attempt to triage California racing. We need to stop the bleeding. And we need to do it right now.

Jerry Brown is the president of Thoro-Graph, Inc.

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Thoro-Graph Sues NYRA Over Disputed $333K in ADW Partnership

A business partnership between performance-figure provider Thoro-Graph, Inc., and the New York Racing Association (NYRA) that had been billed as a “win-win-win” deal for the two parties and advance-deposit wagering (ADW) customers when it first launched in 2017 has gone sour, resulting in a lawsuit filed in New York State Supreme Court.

According to the civil complaint, Thoro-Graph is suing both NYRA and its NYRA Bets ADW platform over the alleged non-payment of at least $333,000 that Thoro-Graph believes is its rightful cut for incentivizing horseplayers to become NYRA Bets customers via a free, membership-based portal called Thoro-Graph Player Services (TGPS).

Thoro-Graph claimed in its complaint that its portal grew NYRA's betting handle by $100 million over a roughly five-year span, “solely through the joint venture resulting in $3 million in revenue” for NYRA.

When the alignment between the two entities was first announced in 2017, the deal was billed as giving Thoro-Graph an ADW partner, while NYRA Bets got a valuable pipeline of new customers.

Horseplayers would benefit too, a TGPS executive explained at the time of the launch, because they would get access to “concierge-level support,” volume-based wagering rebates, on-track visitation amenities and discounts on Thoro-Graph handicapping products.

But according to the lawsuit, “Defendant NYRA failed to perform its part of the bargain [by allegedly not paying] Plaintiff its full 50% share of its Net Revenue,” wrote Karen Murphy, the attorney for Thoro-Graph, in the Dec. 19, 2022, filing.

“That breach has resulted in hundreds of thousands of dollars in losses to date and has impacted the value of Plaintiff's corporation resulting in additional lost profits to Plaintiff,” the complaint stated.

The filing stated that the dispute involves how net revenues are calculated: “Plaintiff is entitled to its full 50% share of defendant NYRA's revenue that is generated from the handle wagered on NYRA races by non-New York residents and paid to defendant NYRA. In failing to do so, defendant NYRA is in material breach of its core financial obligation to pay Plaintiff its full revenue share under the terms of the joint venture.”

The complaint contended that Thoro-Graph attempted “good faith settlement efforts” to square up the purportedly mounting non-payments, including making a written demand for the money on June 13, 2022, and a meeting with NYRA representatives to discuss the issue.

“[NYRA's] response was to intimidate Plaintiff with the threat of termination of the joint venture and not to address the failure to pay Plaintiff its full 50/50 share,” the complaint stated.

NYRA then followed through with a letter Dec. 12 giving a 180-day notice of termination of the partnership. That action, in turn, led to Thoro-Graph's lawsuit one week later seeking “compensatory damages which are no less than $500,000 [and] estimated additional damages for the remainder of the term of the existing Agreement.”

The court has set a Feb. 10 date for the defendants to file a reply. TDN asked a NYRA spokesperson if the racing association or NYRA Bets wished to comment prior to that filing, and also asked how the termination of TGPS might affect horseplayers who use the portal.

“NYRA will honor the terms of confidentiality agreed to by the parties involved and reply to the court by Feb. 10. This contractual dispute does not and will not impact NYRA customers,” Patrick McKenna, NYRA's vice president for communications, wrote in an email.

The “Termination for Convenience” letter that NYRA served Thoro-Graph is scheduled to become effective June 10.

“That notice of termination has now been issued solely because Plaintiff made it clear it would proceed with legal efforts to protect its rights under the Agreements to receive its full share of compensation,” Thoro-Graph's complaint stated.

“Plaintiff performed its obligations under [the contracted terms] by maintaining its website as 'best in class' and offering free and reduced priced Thoro-Graph data which has resulted in NYRA Bets signing up over 1,700 horseplayers. This was accomplished by Plaintiff without any marketing assistance from the NYRA Parties…” the complaint stated.

“In 2017, Plaintiff grew the handle of defendant NYRA Bets by $3.1 million,” Thoro-Graph's court filing stated. “In 2018 Plaintiff's contribution was $10.7 million; in 2019 the contribution went to $15.3 million; in 2020 the contribution was $22.7; in 2021 the contribution reached $24 million; [At the time the Dec. 19 lawsuit was filed] Plaintiff's contribution [was] on track to reach $25 million making the total added handle over $100 million.”

Drilling the alleged non-payment issue down further, the complaint stated that NYRA's deduction of an “import host fee” from the net revenue calculation is a chief bone of contention.

The complaint put it this way: “To be clear, what defendant NYRA is claiming is an “import host fee” is simply money RECEIVED by NYRA Bets solely as a result of “Qualifying Wagers” by non-New York residents on NYRA CONTENT and then passed on to and RECEIVED BY DEFENDANT NYRA AS REVENUE.”

Attorney Murphy, when reached by the TDN, said, “For now, we will let the complaint speak for itself. We will have more to say after NYRA's response.”

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Flightline Given Fastest Ever Thoro-Graph Number

Thoro-Graph, which has been computing speed figures for 35 years, gave Flightline (Tapit) a negative 8 1/2 for his win in the GI TVG Pacific Classic, the fastest number it has ever assigned to a horse. The previous record was a negative 8, the figure Frosted (Tapit) ran when winning the 2016 GI Metropolitan H.

Flightline was given a 126 Beyer figure. That is the second fastest Beyer number ever, trailing only the 128 that team gave to Ghostzapper (Awesome Again) when he won the GIII Philip H. Iselin H. at Monmouth Park in 2004.

Even though he gave Flightline the fastest number he has ever given to a horse, Jerry Brown, who owns Thoro-Graph, said he chose to err on the side of caution and that had he not the figure would have been much faster.

“When I first looked at it I could have given this horse a much better number,” he said. “There were only two dirt routes on the card and neither had big fields. When substantial proportions of those fields don't fire you're left to make figures off a very small number of horses. That makes it difficult. If I had the other horses he beat running anywhere near what they usually run he would have gotten a negative 11 1/2.

“As a figure-maker, you have to sometimes decide which scenario is most likely. You're already going to give a horse the best number of all time, even if I did it the way I did it. You have to decide which is more likley, that several other horses he ran against did not fire or they did fire and Flightline ran a figure that would be like breaking the sound barrier or a human running a three-minute mile. If you give a horse a minus 11 1/2 you're talking about Bob Beamon stuff. (Beamon shattered the record for the long jump in the 1968 Olympics in Mexico City, breaking the old record by nearly two feet). That was my choice, go with a figure that would have been the sort of thing that happens once in a billion or have several horses that ran behind him, ones who are usually pretty consistent, just not run their race. I chose to go the way I did and he still wound up getting the best figure of all time.”

Brown said that if Flightline runs another sensationally fast race in the GI Breeders' Cup Classic he may take another look at the Pacific Classic number.

“If he wins the Breeders' Cup and it looks again like the figure should be a minus 11 1/2, I'll give him a minus 11 1/2,” he said. “That would also make me go back and look at the Pacific Classic again. We do review races.”

While Brown has no problem rating Flightline's Pacific Classic as one of the greatest performances ever in racing, he will be picking against the 4-year-old in the Classic. One of the theories behind the Thoro-Graph numbers is that very fast performances take their toll on a horse.

“If you look historically at the horses that have run almost this fast, a couple of them, Midnight Lute (Real Quiet) and Ghostzapper, held it together,” he said. “But if you look at horses who have run very fast, either relative to what they have done before or relative to the breed, where they have run a figure that is incredible compared to the rest of the horses out there, these horses generally don't hold together. That doesn't always necessarily always manifest itself in the same way, but it usually manifests itself in some way. And you're dealing with a horse here who, apparently, has enough issues that he's only made a few starts. So the question is what happens now? People say there is plenty of time between now and the Breeders' Cup. Yes. But there's also plenty of time for things to go wrong. A lot of training will take place between now and then. A race is not the only place where a horse could get hurt.”

Brown bet against Flightline in the future wager bet for the Classic.

“I spread out a fair amount in the future wager,” he said. “He's odds on and I don't think he's 1-2 to make the race. That's not to say that he's an unsound horse or anything like that. It's just that horses generally don't survive running that fast.”

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