Joe Longo | Horse Racing Free Tips

Between The Hedges: Where Do Purses Come From?

The following is the sixth edition of a bi-weekly series entitled Between The Hedges, a column penned by Joe Longo, NYRA General Manager of Content Services. The series will revolve around the business of betting focusing on trending wagering topics and statistics. Send your questions for Between The Hedges to betweenthehedges@nyrainc.com.

The New York Racing Association, Inc. (NYRA) recently released its stakes schedule for the Belmont Spring/Summer meet featuring 59 stakes races worth $16.95 million in purse money.

Pari-mutuel wagering funds the majority of the NYRA purse account. In addition to pari-mutuel wagering, the remainder of the NYRA purse account is funded through VLT revenues generated by casinos located in downstate New York, most notably at Resorts World Casino at Aqueduct.

Both avenues were negatively impacted by COVID-19, but did you know that racetracks and their horsemen earn more from a wager placed on track or via NYRA Bets?

For example, if a customer is at Aqueduct and bets on a race from Aqueduct, approximately six percent of that wager goes to the purse account. If that on-track/NYRA Bets customer decides to wager on non-NYRA content, approximately five percent goes to the purse account.

With racing being conducted without spectators and off-track betting facilities closed during the pandemic, the high margin on-track wagering channel was significantly hampered.

By contrast, the shift from traditional bricks and mortar wagering to an online wagering platform or account deposit wagering (ADW) format has been expedited by the pandemic. Most horseplayers have multiple ADW accounts, so let's revisit the above example and demonstrate what happens when a customer wagers using an ADW that is not named NYRA Bets.

When this customer places a wager on Aqueduct, instead of the horsemen getting six percent to their purse account, they now get half of the host fee charged for the NYRA content. If that ADW is contractually obligated to pay 8 percent for the NYRA content, that means half or 4 percent goes to the purse account.

There is an additional tax or source market fee that an out of state ADW provider must pay for doing business in New York, but the amount that actually goes to NYRA's purses is about 0.5 percent. The same wager on the same content but different channel results in our horsemen earning 25 percent less in purse money.

If that same customer now wagers on content from a non-NYRA track, our horsemen earn the 0.5 percent from the source market fee instead of the 5 percent that would be made on track or via NYRA Bets. That is a reduction of 90 percent to the purse account.

The NYRA content is the best in the country so we can command a higher host fee than most. But what happens when you are a smaller track with less of a demand for their product?

Recent articles have brought to light that several smaller tracks, who realized a windfall in handle during the pandemic when other tracks were shut down, saw only marginal increases to their bottom line along with their purse accounts.

One such track has gone on record saying they were only getting a host fee of 3 percent. Splitting that with horsemen, 1.5 percent goes to their purse account. To maintain a daily purse level of $100,000 assuming all of it is funded through handle, they would have to average about $7 million in handle per day. How many small tracks do you know of that average $7 million per day?

As a steward of the industry, NYRA's mission is to ensure racing prospers in the state of New York and across our industry as a whole. So, support your local track.

Available in 30 states, NYRA Bets is a legal, US-based, regulated, and licensed provider of horse race wagering. Every wager on the NYRA Bets platform is an investment in New York racing and will ensure that we can continue to put on the best show in the country.

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Between The Hedges: Diving In To Minus Pools

A minus pool in horse racing is the direct result of an established minimum payout threshold and a corresponding significant amount of money wagered in a pool on a heavy favorite.

Assuming the favorite runs as expected, the end result is a shortfall between what is left of the net pool to be distributed to the winning tickets and the guaranteed minimum.

The majority of the time minus pools occur in the show pools. But there are occasions where show pools are removed and the place pool is affected. The importance of minus pools is that they negatively impact the bottom line of the racetrack or account deposit wagering platform [ADW] that facilitates the wager. Simulcast contracts hold the guest locations responsible for covering any minus pool that is created by them wagering on the host track content.

In the 1943 Belmont Stakes, a win minus pool of $15,912, the equivalent of approximately $240,000 adjusted for inflation, took place when Count Fleet completed his sweep of the Triple Crown.

The 1969 running of the Belmont Stakes produced the first minus show pool in the history of the race when Arts and Letters won and created a minus show pool of $5,782.98 and ten years later another minus pool occurred in the Belmont Stakes when Spectacular Bid finished third at odds of $.30-1 to win, resulting in an on-track minus show pool of $19,500.81.

In recent years, field-size decline, coupled with net pool pricing, have contributed to an increase in minus pools. The availability of pool information and the ability to wager anywhere via ADW also plays a role.

The 2020 edition of the Personal Ensign at Saratoga Race Course, a nine-furlong test for older fillies and mares, provided a good example of how a minus pool is created. For the purpose of this example, the below illustration uses the gross pool and does not contemplate different takeout rates or currency conversion variances related to international guest locations.

A field of five, following the scratch of Bossy Bride [No. 5], went into the gate, including multiple Grade 1-winner Midnight Bisou. Prior to the race, the show pool was removed in anticipation of a large minus pool. A total of $419,154 was bet into the place pool. This was the corresponding percentage of the total:

No. 1 Abounding Joy – $13,055 (3%)
No. 2 Motion Emotion – $21,223 (5%)
No. 3 Midnight Bisou – $301,995 (72%)
No. 4 Vexatious – $25,758 (6%)
No. 6 Point of Honor – $57,122 (14%)

The official order was 4-3-6-2-1, as Vexatious held off Midnight Bisou by a neck for a 9-1 upset win. It was a further 6 1/4-lengths back to Point of Honor in third.

The total amount of the place pool wagered on the top two finishers was $327,753 or 78 percent.

To calculate the place payouts, the first step is to subtract the total amount wagered on the winning tickets from the total pool, then remove the takeout from the difference. The total pool was $419,154 less the total on the top-two finishers of $327,753, with the new figure $91,401. After removing the 16 percent takeout, the difference was $76,777.

Under net pool pricing with two place payouts, the next step is to divide the $76,777 in two, leaving each of the top-two finishers with $38,389. In addition to the split of the $38,389, the amount wagered on the top-two finishers should be added to this amount, less the takeout. This leaves the amount on Vexatious to be distributed to the winning tickets at $60,025 and $292,064 on Midnight Bisou. Dividing these amounts by number of winning tickets, the raw $1 pay out was $2.33 to Vexatious and $0.97 for Midnight Bisou, or $4.60 and $1.93, respectively, when adjusted for the $2 payout after breakage.

The minimum payout for a wager in the state of New York is $2.10 on a $2 wager. For every $2 that was wagered on Midnight Bisou to place, a minus pool of 17 cents was created. Factoring in where the bet was placed, host fees, and potentially source market fees, it is reasonable to assume that some of the bet takers actually lost money on every place wager on Midnight Bisou.

The impact of the minimum payout threshold is even more pronounced in the state of West Virginia – the only one of its type – where the minimum is $2.20 for a $2 wager. In an effort to avoid losing money on these pools, ADWs will remove the show pool from their wagering menu on specific races.

The racetrack's situation is slightly different in that they must first adhere to guidance or statutes from their regulators. The racetracks must then balance the risk versus reward of the minus pools they are responsible for and the potential host fees on the pool in question.

In New York, NYRA can remove the show pool from stakes races but we must offer the show pool for any overnight race that start five or more separate entries. As the industry evolves, so too will NYRA's approach to managing minus pools in the best interest of all our stakeholders.

Send your questions for Between The Hedges to betweenthehedges@nyrainc.com.

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Between The Hedges: Determining Post Times

Determining post time – the time at which a race is scheduled to start and entrants must be at their starting positions – is a complex calculation with a number of variables for New York Racing Association, Inc. (NYRA) tracks.

There is a general notion that tracks blindly create post times and do so without coordinating with other tracks. But most tracks do work together.
Consider the extensive race dates offered across North America. In 2019, approximately 36,000 races were contested across 4,300 race days, with the summer months being the busiest.

Adding to the post time conundrum is the amount of daylight at different times of the calendar and the fact that NYRA runs year long. Sunset in New York is generally the earliest in December – at roughly 4:28 p.m. – and peaks at about 8:30 p.m. in June and July. Hence, necessitating different post times for NYRA tracks depending on the time of the year. NYRA attempts to conclude each race day within 30 minutes of sunset in the winter, both because of dusk settling earlier and to accommodate races offered by West Coast tracks.

There is a prime signal based on which track handles the most at each point during the year. NYRA almost always hits the board in terms of the top-three handling tracks, and during the Belmont meets and especially at Saratoga, NYRA sets the market and send out our post times in advance. Most tracks will react to NYRA's times, and the company works closely with Keeneland in the spring and the fall to provide race-day updates and ensure separation.

Another wrinkle to creating post times is ensuring coordination with the broadcasting schedule, which produces more than 800 hours of programming year round. Post times have to work within television windows and track partners for the duration of the programming. Dependent upon the time of year, NYRA works with Oaklawn Park, Tampa Bay Downs, Woodbine Racetrack, Monmouth Park, Churchill Downs, Fair Grounds Race Course, Santa Anita Park, Gulfstream Park, and others.

Time required between races is another consideration. At Aqueduct, NYRA can comfortably run 28 minutes between races. Once racing moves to Belmont and Saratoga, additional time between races is required, given the layout of the facility and proximity of the jockeys room, as well as to accommodate post-race interviews with winning connections. The post times must work in concert with our wagering menu to give a little extra time for Pick Ns and also on marquee days with a large on-track crowd.

Once post times are created, they are circulated to an internal group consisting of representatives from NYRA's racing office, mutuels, and television departments for approval before being circulated to our simulcast partners.

NYRA's mutuels team compares our post times to several other tracks once an overnight is produced and identifies any adjustments that will need to be put out on race day morning. Our internal efforts are complemented by the external review of Equibase. A number of tracks communicate any changes to an Equibase scheduling team that then suggest changes to the others in order to avoid any overlap.

So, does it work?

Yes, for the most part. A review of 2019 off times (pre-pandemic) compared to any races within 5 minutes of NYRA races on either side of the off time yielded the following:

Aqueduct's meets (winter, spring, and fall) had 69 of its races (8%) run within 5 minutes of others. A total of 229 races from other tracks fell within this window.

Belmont meets (spring/summer, fall) had 99 of its races (13%) run within 5 minutes of others. A total of 409 races from other tracks fell within this window.

Saratoga had 68 of its races (17%) run within 5 minutes of others. A total of 253 races from other tracks fell within this window.

The results support that the increased racing during the warmer months makes it more difficult for tracks to avoid each other given the volume of races.

While it is not an apples-to-apples comparison, in that NYRA did not run every day of the year, there were just 891 races out of 36,000 in 2019 that were run within five minutes of any NYRA races. That is only two percent.

The takeaway? Trust the process. A lot of work goes into NYRA's post times and the entire industry benefits when scheduled properly.

Send your questions for Between The Hedges to betweenthehedges@nyrainc.com.

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Between The Hedges: Handicapping Challenges Go Virtual

The following is the third edition of a bi-weekly series entitled Between The Hedges. The series will revolve around the business of betting focusing on trending wagering topics and statistics. Each installment will include a column penned by Joe Longo, NYRA General Manager of Content Services, examining certain areas of interest within the landscape of the thoroughbred racing industry. Send your questions for Between The Hedges to betweenthehedges@nyrainc.com.

The New York Racing Association, Inc. (NYRA) has worked with our customer base to modernize our handicapping challenge format to feature online play at a variety of price points throughout the year.

In the past, most NYRA handicapping challenges were centered around marquee events like the Wood Memorial or the Belmont Stakes. In most cases, these events were also held on track which made it more of a localized event.

In 2019, NYRA launched its current online challenge format and participation significantly increased. In order to enter and play online, contestants must be registered NYRA Bets account holders. To learn more, visit www.NYRA.com/challenge.

The online challenges were modified based on feedback from our customer base, with requests including a varied price point of entry; more prize money distribution; and many customers expressed interest in seats for the National Handicapping Championship (NHC) or Breeders' Cup Betting Challenge (BCBC) in lieu of cash or a combination of both.

The NHC seats are highly sought after. Last year, Thomas Goldsmith captured the 21st edition of the NTRA National Horseplayers Championship at Bally's Las Vegas, and took home an $800,000 top prize as well as an Eclipse Award as Horseplayer of the Year. The most recent NHC offered prize money and awards totaling more than $2.9 million.

The 2020 contest results were encouraging. A total of 25 contests were held with 2,500 players wagering $1.3 million while competing for a prize pool of approximately $700,000. A total of 23 seats were provided to players – 11 for the 2021 NHC; three for the 2021 Belmont Stakes Challenge; two for the 2020 BCBC; and the remaining six seats for other NYRA challenges throughout the year.

While the challenge series format and prize distribution continue to evolve, the live money format remains. The players keep their winnings played through their bank roll plus any prize money.

One thing that needs to be stressed is that 100 percent of the prize pool is returned to the customers. NYRA does not charge entry fees or service fees.

So, If NYRA does not charge fees for the contest, why are we doing them and how is it that we benefit?

Challenge play involves a different type of strategy and with it a different type of player, which adds diversity to our platform and appeals to different customers. The races in the challenge series contests are all from our tracks, so it helps promote our content and NYRA earns revenue from the takeout from the bets placed. The numbers have also shown that when playing in contests the customers are wagering other tracks through NYRA Bets as well.

Handicapping challenges play an important role for NYRA across the larger wagering landscape. In 2020, we started hosting challenges weekly and in 2021 we will be offering contests for about 11 months of the year. Consistency, as with other types of wagering opportunities such as the weekly Cross Country Pick 5, is important. We want our customers to know that for just about every week of the year, we are offering a contest.

In addition, with the increased amount of broadcast hours for live racing on America's Day at the Races, the national telecast produced by NYRA in partnership with FOX Sports, we can further leverage our reach and influence to drive people to our contests and wagering platform. The leaderboard for all of these contests are posted throughout the day on America's Day at the Races.

Send your questions for Between The Hedges to betweenthehedges@nyrainc.com.

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