Press Release: 9 of 10 Members Support Boycott Action of CDI

[DeanT]

9 of 10 Horseplayers Association of North America Members Polled Show Support for a Boycott of Churchill Downs Inc. Tracks & Assorted Properties

FOR IMMEDIATE RELEASE

(Charlottesville, VA, April 29, 2014): A poll of Horseplayer Association of North America (HANA) members revealed that 90.2% of respondents will be withholding either some or all of their dollars from Churchill Downs Inc. racetracks – Churchill Downs, Arlington, Fair Grounds and Calder Race Course - wagering platform Twinspires.com and past performance provider Brisnet.com.

This poll result is in response to Churchill Downs Inc. increasing their takeout rates by over 9% on the win, place a show pools and almost 16% on exotic pools at their Louisville, KY racetrack. The takeout increase was put in place April 26th and will continue for the rest of the meet.

The poll also showed that only 8.5% of respondents believe that this is only a one-track phenomenon. 42.8% believe Churchill Downs Inc. will raise prices at their other tracks, and an additional 48.7% believe that other non-Churchill Downs Inc. tracks will follow with rate hikes.

“The Board of Directors was struck by the anger this past week on social media and our email from rank and file horseplayers, so we commissioned a survey of members.” said HANA President Jeff Platt. “The survey confirmed that current HANA membership had a similar discontent and they’ve urged us to move forward.”

Although HANA will be working on partnerships with various groups, an advertising program, and a social media push to increase support for a boycott of all Churchill Downs Inc. properties, the Association of over 2,500 horseplayers believes the success or failure of the effort will lie with customers.

“Large gaming corporations like Churchill Downs Inc. are extremely well funded, but we do not underestimate the power of an educated customer. We ask customers to share this action with their friends and fellow horseplayers,” said Platt.

A list of Advance Deposit Wagering companies and figure/past performance makers is being compiled, so customers who wish to switch from Churchill Downs Inc. properties can complete their due diligence. HANA, as is its custom, will not be endorsing or recommending any of these products or services.

The Horseplayers Association of North America will keep both members and non-members informed on its blog, twitter feed, Facebook page and via email as warranted. Customers are also encouraged to visit www.playersboycott.org (http://www.playersboycott.org) for more information.

Further results from the member poll and the above mentioned list will be released next week on the Horseplayers Association blog.

__________________________________________________ ________________________________

“What support are you willing to show a boycott, as a HANA member”:

I will stop all play and purchases at Churchill Downs Inc. tracks and properties – 39.94%

I will stop some play and purchases at Churchill Downs Inc. tracks and properties – 50.31%

I will continue to play all Churchill Downs Inc. racetracks and properties like I always have – 9.75%

The Horseplayers Association of North America is a grassroots group of horseplayers who are not affiliated with any industry organization. HANA hopes, through proactive change on several key issues (including but not limited to), open signal access, lower effective takeouts, affordable data and customer appreciation, the industry’s handle losses can be reversed. HANA is made up of over 2,500 horseplayer from all across North America, with an approximate handle of $100 millon per annum.

Twitter: hplayersassnna Blog: http://blog.horseplayersassociation.org/

Web: horseplayersassociation.org Further Information: info@hanaweb.org

[wiffleball whizz]

Until people see 12 horses on the grass at Arlington....

Don't let the people here fool u.....people here make up small amount of people betting these tracks...

The downstairs at racetracks are full of degenerates who don't care about takeout and view Churchill in high regards....

Go walk in fords otb in nj next Friday and see if people are boycotting CD? Place will be full of people sending it in with 2 fists

[DeanT]

http://www.bloodhorse.com/horse-racing/articles/84695/hana-poll-players-to-reduce-churchill-action

[PhantomOnTour]

Until people see 12 horses on the grass at Arlington....

Don't let the people here fool u.....people here make up small amount of people betting these tracks...

The downstairs at racetracks are full of degenerates who don't care about takeout and view Churchill in high regards....

Go walk in fords otb in nj next Friday and see if people are boycotting CD? Place will be full of people sending it in with 2 fists
All you have to do is look at the selection threads for today on this site.
Boycott, my ass.

[dannyhill]

If racing is gonna change a boycott from some owners and trainers would help tremendously. If the number of horses on the grounds drops, the number of races run drops. It can snowball from there. Fewer races with fewer runners will cause huge drops in wagering.

[DeanT]

Poll results - The track you think treat you the best and the worst

http://blog.horseplayersassociation.org/2014/04/hana-poll-result-tracks-you-said.html

[wiffleball whizz]

All you have to do is look at the selection threads for today on this site.
Boycott, my ass.

Hahahahaha.....

And the CD is basically the only game in town today.....this boycott has zero shot of gaining traction.....

And if the super high 5 and pick6 miss on Saturday Churchill will be must see tv come wedsday with the huge carryovers.....

[DeanT]

Hahahahaha.....

And the CD is basically the only game in town today


They are, and even with ARC not racing today, handle looks like its down well over 15% from last year.

Yesterday was off close to $600,000, which put them down for the meet.

No one is taking that to the bank, nor are they saying its a trend or who or what is going on or responsible - that would be silly - however, something seems to be building regarding Churchill Downs Inc's place in horse racing.

[DeanT]

More results of your survey from last weekend here:

http://blog.horseplayersassociation.org/2014/05/follow-leader.html?spref=tw

[DeanT]

Handle was down 46% today compared to same day last year.

There was a carryover in the last race last year. If you take out the last race they were down 33% today.

The guys at playersboycott.org will be doing the handle numbers and we'll share them from time to time.

[DeanT]

Down another 29% today. One more race last year though, but perhaps offset by poor weather and off turf last year.

TVG having some issues in Jersey too. Regardless, it looks blah out there in the CD pools.

[DeanT]

Handle update for CDI

http://blog.horseplayersassociation.org/2014/05/playersboycottorg-churchill-handle.html?utm_source=twitterfeed&utm_medium=twitter

[Jeff P]

Churchill numbers through the first 19 days of their meet:
http://www.playersboycott.org/handleupdate05262014.html


-jp

.

[Jeff P]

Handle Update - Churchill Spring Meet 2013 vs. 2014:
http://www.playersboycott.org/handleupdate06082014.html



-jp

.

[jdhanover]

Wow!

[whodoyoulike]

Handle Update - Churchill Spring Meet 2013 vs. 2014:
http://www.playersboycott.org/handleupdate06082014.html



-jp

.

Thank you for these updates. I realize it may not be appropriate for you to comment. It's sufficient and appreciated by me that you just provide the data.

But, for the mathematically challenged reader I was wondering about the impact to the CDI shareholder and/or horse owners. I see approx. $40 million decrease so far in handle from 2013. If their takeout was previously averaging 18% - 20% (I believe after increase it's about 20% - 22%), that's $8 million which could have flowed through to CDI and horse owners (approx. $4 million a piece). I would've expected management changes, angry investors and more vocal owner complaints. So far, I haven't seen any of this. Why?? Companies spend a lot of money for good PR. What did they accomplish?

Maybe my numbers are incorrect since I'm one of the mathematically challenged.

[EMD4ME]

Handle Update - Churchill Spring Meet 2013 vs. 2014:
http://www.playersboycott.org/handleupdate06082014.html



-jp

.

Good, FOK EM. Hate Churchill Downs Inc. with a passion.

[whodoyoulike]

Thank you for these updates. I realize it may not be appropriate for you to comment. It's sufficient and appreciated by me that you just provide the data.

But, for the mathematically challenged reader I was wondering about the impact to the CDI shareholder and/or horse owners. I see approx. $40 million decrease so far in handle from 2013. If their takeout was previously averaging 18% - 20% (I believe after increase it's about 20% - 22%), that's $8 million which could have flowed through to CDI and horse owners (approx. $4 million a piece). I would've expected management changes, angry investors and more vocal owner complaints. So far, I haven't seen any of this. Why?? Companies spend a lot of money for good PR. What did they accomplish?

Maybe my numbers are incorrect since I'm one of the mathematically challenged.


I started thinking about why the shareholders and owners haven't been more vocal. Again, these are rough numbers:


.....................................2013......... .................2014..............Difference
handle.....................$363,506,700.........$3 25,584,335.....$<37,922,365>
approx. takeout %...................0.19.....................0.21
approx. takeout..........$69,066,273...........$68,372,710 ..........$<693,563>

Difference of $<37,922,365> x 0.21 = $<7,963,697>.

50/50 split between CDI and owners $<693,563> x 0.50 = $<346,781>.

I don't think CDI or the owners have been materially damaged by the increase. Also, consider the number of races decreased from 273 vs. 257 probably reduced CDI's costs.

The handle needs to decrease significantly to get the attention of the shareholders and owners.

[Jeff P]

As a business owner, I have to say it is way more complicated than multiplying this year's higher takeout rates times this year's handle and comparing the result to last year's lower takeout rates times last year's handle.

Sure, as a business owner you have to look at that metric.

But you also have to look at how that metric is trending - and consider where that trend line is taking you.

What are your numbers going to look like by the end of the current meet?

What are your numbers going to look like by the end of the fall meet?

There is also opportunity cost involved.

Opening day, before players really got the message out there through mass email and social media, they were up 6.5%.

For the month of May DRF reported a small uptick in handle industry wide this year vs. last year. Other major tracks are having good meets. Even Monmouth (now that the elite meet at Gulfstream is essentially over with) is seeing a rebound in handle. Likewise for Santa Anita compared to Hollywood last year.

It might not be a fair comparison because NYRA added the Met Mile to the Belmont card and there was a Triple Crown on the line - but Belmont reported record numbers this past Saturday - up something like 68% vs. Belmont day last year.

All of that said, CDI's brain trust really ought to be asking themselves the following questions:

Where would we be if we hadn't raised takeout?

Would not raising takeout have let us avoid the onslaught of negative publicity we created for ourselves?

If we had done nothing different this year vs. last year other than unveil the new big screen and let Larry Collmus call our races - would our horsemen have better supported us at the entry box?

If so, would bettors have supported our product too like they have for Belmont, Santa Anita, Pimlico, and others?

If we hadn't raised takeout is there any chance we might even be up for the meet at this point vs. last year?

Beyond that, even if we still can tell reporters and analysts who follow our stock we are ok net takeout-wise - at least for the next 4-5 race days...

Where are we going to be net takeout-wise by the end of the meet?

Where are we going to be net takeout-wise at the end of the fall meet?

Was raising takeout really worth trashing the Churchill brand in the eyes of horseplayers?

Color me all kinds of stupid, but I really do think somebody in the board room ought to be asking the other board members these kinds of questions.


-jp

.

[Stillriledup]

I havent bet one CD race, havent even looked at their PPs, havent watched one race or saw one result and don't plan on it. They're persona non grata, i'm pretending that they don't even exist. I also havent bet one dollar at Arlington and Calder, those are tracks that i normally dink around with. CD is actually a track i've bet seriously the last few years, and my handle is gone from them.

[EMD4ME]

I havent bet one CD race, havent even looked at their PPs, havent watched one race or saw one result and don't plan on it. They're persona non grata, i'm pretending that they don't even exist. I also havent bet one dollar at Arlington and Calder, those are tracks that i normally dink around with. CD is actually a track i've bet seriously the last few years, and my handle is gone from them.

Good! KEEP IT UP.

[Stillriledup]

Good! KEEP IT UP.

I don't miss them, i've found other ways to fill that void, plenty of other tracks out there that are interested in my business. :ThmbUp:

[whodoyoulike]

I agree with everything you've written in the above post. I just hope the CDI board members ask those same questions and get satisfactory answers.

[alydar]

Trying to calculate how much this lower handle a truly effected Churchill's revenue is a very complex calculation for anybody outside of their organization. Handle may be down, but from where? How much have higher signal fees offset the loss? Only Churchill knows for sure.

I would agree that all of the negative publicity can't be a positive. But Churchill is a public company that is more of a gaming company than a track business. I suspect that the actual impact to net income at Curchill is less than many might think, and that is the bottom line for them.

For me, I am done with them. The way they handle the Derby is just too distasteful for me. I love the tradition and history of the event. Excessive greed and commercialism offend me. I doubt they really care about my opinion.

[whodoyoulike]

I'm kind of surprised another track e.g., GP, Bel, Pim or WO doesn't (or hasn't) consider(ed) offering G1 racing at 9f for 3yo F and 10f for 3yo M on the last Friday and Saturday in April. After all people are willing to spend over a 1/4 billion dollars in one week to watch the cream of the 3yo crop. This handle increase should do wonders to any track's bottom line.

It would still be considered a Triple Crown effort IMO even if the spacing was changed. I recall I read that the race spacing had changed over the years but I may be wrong.

I think the slogan "Last Saturday in April" could catch on.

[Jeff P]

June 22, 2014 Churchill handle update at Playersboycott.org:
http://www.playersboycott.org/handleupdate06222014.html

Click the link to see lots of red numbers.


-jp

.

[1st time lasix]

Appreciate seeing these handle numbers....I have not played Churchill following their large takeout hike and neither have three or four other guys in my group. Apparently we are not alone.....patronizing other venues and lower take pools.

[whodoyoulike]

... But you also have to look at how that metric is trending - and consider where that trend line is taking you.

What are your numbers going to look like by the end of the current meet?

... All of that said, CDI's brain trust really ought to be asking themselves the following questions:

Where would we be if we hadn't raised takeout?

Would not raising takeout have let us avoid the onslaught of negative publicity we created for ourselves?

If we had done nothing different this year vs. last year other than unveil the new big screen and let Larry Collmus call our races - would our horsemen have better supported us at the entry box?

If so, would bettors have supported our product too like they have for Belmont, Santa Anita, Pimlico, and others?

If we hadn't raised takeout is there any chance we might even be up for the meet at this point vs. last year?

Beyond that, even if we still can tell reporters and analysts who follow our stock we are ok net takeout-wise - at least for the next 4-5 race days...

Where are we going to be net takeout-wise by the end of the meet?

Where are we going to be net takeout-wise at the end of the fall meet?

Was raising takeout really worth trashing the Churchill brand in the eyes of horseplayers?

Color me all kinds of stupid, but I really do think somebody in the board room ought to be asking the other board members these kinds of questions.


-jp

.

This response is looking better and better. After only two additional weeks, the decline in handle decreased an additional 1.3% from <10.4%> to <11.7%>. I'm waiting to hear some outrage from horse owners and see some management changes for making poor decisions and comments. Remember the $2.00 bettor comment, who does that guy think bet $9 million on CC in the Belmont?.

[highnote]

June 22, 2014 Churchill handle update at Playersboycott.org:
http://www.playersboycott.org/handleupdate06222014.html

Click the link to see lots of red numbers.


-jp

.


Nice job!

[alydar]

Great information.

Interesting that total handle is down 11.69%, and total field size is down 12.91%. (2758 vs 2402)

I wonder how much of the decline is from the boycott versus the smaller field size.

Not a good story for Churchill any way you look at it.

[Jeff P]

I wonder how much of the decline is from the boycott versus the smaller field size. That's a valid question.

I think an accurate answer can be found in the industry's many paid for ecomomic studies such as those authored by Thalheimer, Ali, Cummings, and others.

Here's a link to one such study titled "AN ECONOMIC ANALYSIS OF A PARIMUTUEL RACETRACK-RACEBOOK" authored by Thalheimer and Ali for the Equine Industry Program, School Of Economics And Public Affairs, College Of Business And Public Administration, University Of Louisville:
http://www.horseplayersassociation.org/economic20analysis.pdf

Quote from pages 8-9:
Examining the own-elasticities, it can be seen that of the four variables, wagering on a subject racetrack's races is most elastic with respect to its takeout rate, least elastic with respect to its average purse and comparably elastic with respect to number of races and average field size. The median takeout rate elastici~ was found to be -2.30 indicating that wagering is strongly responsive to takeout rate changes. This is consistent with prior findings in the literature (Gruen, 1976; Morgan and Vasche, 1979, 1980, 1982; Suits, 1979; Thalheimer and Ali, 1992, 1995a, 1995b; Ali and Thalheimer, 1997).

The takeout rate of -2.30 indicates that revenue will increase with a drop in takeout rate up to the optimum level where takeout rate elasticity is -1.00. If host fee cost is deducted from the takeout rate the optimum level will occur at an elasticity greater than -1.00. It can be shown that for elasticities of the order of magnitude found in this study, the present level of takeout rate is such that it can be lowered without changing the host track fee, to increase net revenue to the racetrack-racebook (after host fee deduction). ..However, the racetrack-racebook will get a proportionally lower increase in net revenue than the host racetrack. For example, at a takeout rate level of 20% and a host fee of 3%, the net revenue maximizing elasticity is computed to be -1.18 which is still less than the typical elasticity of -2.3 found in this study. Of course, if the host track fee is lowered in proportion to the change in takeout rate, revenue for all parties (host track, racetrack-racebook, horsemen) will in crease in the same proportion.

Median own-elasticities with respect to number of races and average field size were found to be 0.64 and 0.58, respectively. There is no prior study to gauge the magnitudes of these elasticities but it seems wagering is moderately responsive to changes in number of races or field size. Finally, median average purse elasticity was found to be 0.06 which is considerably smaller than elasticity with respect to takeout rate, number of races or field size. This average purse elasticity is quite small and it suggests, for example that wagering would increase by only 6% if purse were doubled. This is a surprising finding considering the importance that is attached to the purse variable in all major policy decisions to increase the wagering in this industry.


What does this mean in layman's terms?

The authors of the study found that on regular race days the drivers of racing handle are: takeout, number of races, field size, and purse.

The authors of the study determined how important each of the drivers of racing handle were and ranked them as follows:

2.30 TAKEOUT
0.64 NUMBER OF RACES
0.58 FIELD SIZE
0.06 PURSE

The authors of the study also examined the effect of special event days on racing handle.

Quote from page 4:
Special stakes races, such as the Kentucky Derby, were found to be highly significant determinants of wagering for every racetrack group.

Quote from page 4:
The maximum effect was found to be as large as 1,853% which was the case for wagering on Kentucky simulcast races (from Churchill Downs) when the Kentucky Derby was offered.

My takeaway, after reading this and other studies - and after spending considerable time examining real world handle numbers both before and after takeout increases, signal/host fee increases, etc. is that the authors of this and other studies are pretty much dead nuts on about the drivers of racing handle.

Special event days such as Kentucky Derby Day, Belmont Day, Preakness Day, Breeders Cup Days, and to a lesser extent Kentucky Oaks Day rank at the top of the list.

For the other 360 days of the year your changes in handle are driven like so:

Add up the elasticity values identified by Thalheimer and Ali:

2.30 TAKEOUT
0.64 NUMBER OF RACES
0.58 FIELD SIZE
0.06 PURSE
--------------------
3.58 TOTAL


From that you can get to:

64.25% TAKEOUT (=2.30/3.58)
17.88% NUMBER OF RACES (=0.64/3.58)
16.20% FIELD SIZE (=0.58/3.58)
02.15% PURSE (=0.06/3.58)


Based on the industry's own paid for economic studies I think the most accurate possible answer to the "How much of this is being caused by field size?" question is:

About 16 percent.



-jp

.

[alydar]

Interesting information,

Thanks

[Jeff P]

Following up a little further...

When I posted 16 percent as an estimate the impact field size was having on Churchill's handle results, I was not saying Churchill handle is off by 16 percent because of the change in field size.

What I was trying to say is that applying Thalheimer and Ali's elasticity values for changes in field size from 2013 to 2014 might predict that, on regular race dates, about 16 percent of Churchill's handle decline can be attributed to field size.

Let's try a more in depth calculation.

The following table shows the drivers of handle, the changes in values for the drivers of handle from 2013 to 2014, and the elasticity values:
-----------------------------------------------
CHURCHILL SPRING MEET 2014 - REGULAR RACE DATES
-----------------------------------------------
YEAR YEAR PCT ELASTI~
FACTOR 2013 2014 CHANGE VALUE
-----------------------------------------------
TAKEOUT WPS 16.00 17.50 9.38% -2.30
-----------------------------------------------
TAKEOUT EXOTIC 19.00 22.00 15.79% -2.30
-----------------------------------------------
NUMBER OF RACES 330.00 308.00 -6.67% 0.64
-----------------------------------------------
AVG FIELD SIZE 7.63 7.01 -8.13% 0.58
-----------------------------------------------


I think the calculation using the actual changes in field size can be made as follows:

Predicted Change in Handle = (Percentage change in Field Size) x (Elasticity)

Or

Predicted Change in Handle = (-8.13%) x (0.58)

Or

Predicted Change in Handle = -4.71%

Or

Churchill handle is down 4.71% because of smaller field size.

Looking closer, if Churchill handle is down 27% on regular race days, the impact of field size on the drop in handle would be closer to 17.4% (and not the 16% value that I posted above) and I think it can be calculated as follows:

(-.0471)/(0.27) = -0.1744



-jp

.