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View Full Version : An open letter to all participants in the signal wars


Jeff P
11-02-2008, 09:49 AM
An open letter to all participants in the signal wars:

Racing is at a crossroads. Thoroughbred handle is down nearly everywhere. That in itself should be your wake up call. Track management, horsemen's groups, and ADWs - ALL of you should be working together - doing everything within your power to grow handle by bringing new fans to the game.

Instead you have done just the opposite.

This is exactly the kind of mess the industry doesn't need at a time when the last thing the industry needs is any kind of mess at all.

Everyone involved in this mess - EVERY board member of the TOC, THG, TVG, YouBet, TwinSpires, and everyone on every board at EVERY track in North America: ALL OF YOU should be hanging your heads in shame over this.

YOU HAVE FORGOTTEN THE IMPORTANCE OF YOUR BIGGEST ASSET: THE CUSTOMER.

It doesn't matter who is right and who is wrong. No matter which side of this you are on, if you are an active participant in this fight, every hour that you allow this to continue is having a profound effect on the game itself. Simply put: Your actions are driving customers away from the game and giving potential new fans every reason to look elsewhere for places to spend their gambling and entertainment dollars. What a travesty! How can you do this at a time when the game itself can least afford the loss of even one single customer?

Can you not see that you are doing the game irreparable harm?

I implore you to put aside your differences. End this now - before you do the game more damage than you already have.

Sincerely,


Jeff Platt

President, H.A.N.A.

http://www.HorsePlayersAssociation.org


.

cj
11-02-2008, 10:26 AM
Perfectly stated Jeff. I hope at least a few people that matter read this and the light bulb goes on.

lamboguy
11-02-2008, 10:40 AM
thank you for the post jeff, you put in words better than i could ever dream of doing.

i feel the whole thing crumbling at the seems. i have stopped buying young horses, i get calls from farms begging me to buy their horses. i am not interested any more.

this guy drew cuto must be smoking a bad brand of dope. let him keep this up until the spring time and you won't see this game for quite some time.

pktruckdriver
11-02-2008, 10:50 AM
Hey Jeff


It is a nice plea to all involved, and I hope they take notice, really I do, as not having the tracks I want to play, being available to me, I have found other tracks to play and may not go back, the payouts are the same, and less people in the pools, though that may change as they may be the only tracks we can play thru the ADW's out there.


When we, the horseplayer, ask who is the greedy one here, we seem to get the answer that the ADW's want to share only .07% ,(yes only 7% out of 100%), with the horse owners, if true, no wonder they are holding out, I a , horseplayer, can not blame them, to me that is pure greed, now if these numbers are wrong, then I apologize greatly, but I do believe these numbers are legitimate, kinda sad too. Greed is always at the bottom of great negotiations like these, but hopefully common sense will pre-vail here, and realizing that no one can operate without the other, not in this day and age, as ADW are the future here, but not if there are not any horse's to race, or racetrack's to race at, so sharing appropriately should be a "No Brainer".

I guess we will see, will Greed continue or level heads prevail?


Patrick

boomman
11-02-2008, 10:55 AM
Jeff: In a previous thread, I called on your organization to respond to this crisis and do anything in your power to bring the parties to the table, while at the same time exposing the dissenters, and identifying those "out in the open" such as Drew Couto of the TOC and the leadership of THG who are doing everything in their power to keep this from happening. In fact, when I publicly commended the Texas Horsemen for coming to the table with the ADWS, I had a poster say that THG was responsible for that when we know they have NO interest in doing anything but hijacking signals. As someone who is actively involved in racetrack management, I strongly support your organization's quest to bring everyone together and pledge to you and your organization to do anything in my power to help you accomplish this..........I also appreciate your quick response in writing to this crisis that indeed threatens the very lifeblood of our industry that many of us have dedicated our lives to and love so much.............

Boomer

cj
11-02-2008, 11:22 AM
Patrick,

There is a lot more to the argument, and you are way off base in your assumptions.

A few things worth noting:

1. Most ADWs are poorly run, so they would indeed lose money if they give up too much. If they were better run, maybe the horsemen could get more.

2. The horsemen were not very smart when they agreed to the model that is in place today. Now, they are trying to fix it, but they are doing it at a time when the amount of dollars available is shrinking.

turfnsport
11-02-2008, 11:27 AM
Well said Jeff.

I've been saying pretty much the same thing for two weeks, just with a bit too much profanity.

Tom
11-02-2008, 12:55 PM
Great letter, Jeff. :ThmbUp:
I sure hope the horsemen find someone who can read it to them. :bang:

pktruckdriver
11-02-2008, 01:44 PM
Hey CJ



Patrick,

There is a lot more to the argument, and you are way off base in your assumptions.

Okay Cj I admit I may be off base, but where am I off base, please elaborate a little more on what you stated above , thank you.

Quoted from the Sports Network, concerning the Ellis Park situation...

The following is the approved agreement for the 2008 live meet:
Match the demands of the KHBPA and contribute to the Ellis Park purse fund an amount equal to six percent of ADW handle or 1/3 of takeout from wagers placed through the ADW companies on Ellis Park races, whichever is greater.

So here I see 6% as a reference point, but then again I also see 1/3 off all wagers, so what is it, 1/3 of all wagers or 6%, two totally different things , with huge finacial differences, so what is the Horseplayer suppose to believe?

Let me correct myself here please, the 1/3rd is only 1/3rd of "The Track Take-out" only , not 1/3rd of all wagers made thru ADW's, big difference here, and worth tons of money, so in reality in seems to support the 5,6or7% theory here, too me too little.


From our standpoint, the economic package that the Virginia HBPA has with TVG and Youbet closely approximates the proposals that THG has made to TrackNet,” continued Petramalo, who declined to reveal terms of the agreements.
It is believed Youbet.com would have also been excluded from the signal unless it agreed to pay a host fee of at least 5%. Without confirming that figure, Petramalo said an agreement was reached with Youbet.com in the last day or so.

Then I read this and see 5% as what the ADW will pay so what am I to believe here, 5% , 6%, or 7% which I believe is what the ADW's wish to give is just logically low in my opinion, please explain to me why it is not, and no I do not own any horses, but maintaining them is not cheap, from breeding to racing, and everything in between is very expensive, we all can agree with that , no?

If it is 1/3 then I see no reason why this thing is dragging on, but I really believe it is not 1/3 at stake here, but much , much lower, and that I can not see ADW keeping that much, really I do not, if this true am I wrong here? To me 5-7% is way too low , period.

Patrick

DeanT
11-02-2008, 02:00 PM
Hey Patrick,

I assume you are a truck driver? The people who produce products you haul are paying you a fee to deliver it to customers, correct? it cost you time, and gas and all the rest, so you take a cut. If the producer wanted to cut your fee in half would you be able to offer the services you offer?

Best way I can describe this is with a gold producer. It costs a pile of money to mine an ounce of gold - miners, mills, crushers and millions in capital expenditures. They ship an ounce of gold to a jewelry manufacturer for $900 an ounce. The jewelry guy then changes the product into a gold chain and sells that ounce of gold for a pile more money and advertises and all the rest to grow his business and grow the demand for gold.

The track is the gold producer and the store is the ADW. The track puts millions onto making the raw product and the ADW uses its millions of capital expenditure to sell the product, give rebates, offer free video, free past performances and all the rest.

Now those THG people want to double the cost (or more) on what they charge ADW's to sell the product. Just like you would make changes in your truck business when you get a huge "tax" like that, so would an ADW. There is less money for them to put into the player, and their product. If that happens, handle will go down.

That is why everyone tells THG: If you want to own your signal, then build an ADW yourself, or buy one, or offer something to the resellers in a partnership. They want double the revenue for doing absolutely nothing. If that sounds crazy, imo, it is because it is. I would like something for nothing too, wouldnt you?

pktruckdriver
11-02-2008, 02:36 PM
DeanT

Thank you for your reply.


But there is still no numbers involved here, what is the charge for the use of the feeds that the horsemen are holding back, please tell me.


It seems that you said this:

The horsemen at one time agreed to 5-7% at first to see how things worked out when ADW's first came out, then when they saw them make millions, they wanted to negotiate a better deal, or do they want to get greedy and want something for nothing, you say something for nothing, Okay I guess I understand that to a degree, but, then Maybe the horsemen need to start their own ADW and provide us the horseplayer with the product we want, the customer who is spending those millions, to keep them all in business.


But still 5-7% seem pretty low to me, always will, Okay.


Patrick

DeanT
11-02-2008, 02:47 PM
The get around 6% now, split with tracks and they want to double that so the tracks and horseman get around 14.5% or so. Something like that. Keep in mind this is not a 14% fee like Amazon would pay a bookseller - it is not 14% out of 100. This is 14% of the 21.8% of takeout, or two thirds of all revenue.

The whole fight is because ADW's spent a pile of dough to take advantage of a pricing system that was fairly fixed. Now the fee for the signal to them wants to be doubled.

If I had a lemonade business and was buying lemons for $5 a bushel and they wanted to charge me $10 tomorrow, and they are the only people who grow lemons I am screwed, and more than likely pissed. If I owned an ADW I would go tell THG to go jump in the lake too, quite frankly.

cj
11-02-2008, 03:06 PM
Dean,

I do agree with you for the most part. The horsemen are being greedy. However, and I think this is important, why is it that places like PTC can pay a higher rate and still give a rebate, while others complain they can't afford the higher rate and lose money?

There is definitely some ground for negotiation. The big ADWs like Youbet, TVG, and TwinSpires need to cut some fat away. The scary part is that they are run so poorly that even if they do, there is nothing left for rewards for the player.

I would never claim to have all the answers to this mess, and it is a big mess. There is plenty of blame to go around to all sides...tracks, horsemen, and the big ADWs. That isn't really important. The important thing is to get a plan in place that helps all sides, including BETTORS!

DeanT
11-02-2008, 03:18 PM
There is definitely some ground for negotiation. The big ADWs like Youbet, TVG, and TwinSpires need to cut some fat away. The scary part is that they are run so poorly that even if they do, there is nothing left for rewards for the player.


Good point CJ. Hmmm, cut player rewards or a salary? That's a tough one!

We are here for the player, so we need to be heard. I dont care how they split the money, as long as the horseplayer gets a slice. This handle grew 17% last year, but they are killing it this year with this craziness.

If THG comes out with a revenue plan saying the horseplayer gets a hunk of their and the tracks share so rebates, handicapping contests and all the rest can be offered to ALL players I think we'd all climb aboard. But they (i.e. THG) has not shown us even an inch of respect. They want every penny for themselves and themselves only, imo. And when you suck horseplayer cash from the pools through the only growth avenue out there, you will kill this business (again IMO)

DeanT
11-02-2008, 03:29 PM
PS: I think we should also be positive, so on that front I think we can all say that ADW's have been decent to us over the past year or so. We get rebates thru PTC, Twinspires TV has been an awesome innovation. Full replays for every track in Twinspires. Handicapping contests galore! Access has been awesome from the ADW's; the crazy signal stoppages are the annoying things about this whole mess. We were getting there in the business to help the player in many ways before all the THG stuff started.

JustRalph
11-02-2008, 05:25 PM
Jeff

good stuff........ :ThmbUp: .... Press release?

Indulto
11-02-2008, 09:13 PM
... The track puts millions onto making the raw product and the ADW uses its millions of capital expenditure to sell the product, give rebates, offer free video, free past performances and all the rest.

Now those THG people want to double the cost (or more) on what they charge ADW's to sell the product. Just like you would make changes in your ... business when you get a huge "tax" like that, so would an ADW. There is less money for them to put into the player, and their product. If that happens, handle will go down.

That is why everyone tells THG: If you want to own your signal, then build an ADW yourself, or buy one, or offer something to the resellers in a partnership. They want double the revenue for doing absolutely nothing. If that sounds crazy, imo, it is because it is. I would like something for nothing too, wouldnt you?The get around 6% now, split with tracks and they want to double that so the tracks and horseman get around 14.5% or so. Something like that. Keep in mind this is not a 14% fee like Amazon would pay a bookseller - it is not 14% out of 100. This is 14% of the 21.8% of takeout, or two thirds of all revenue.

The whole fight is because ADW's spent a pile of dough to take advantage of a pricing system that was fairly fixed. Now the fee for the signal to them wants to be doubled.

If I had a lemonade business and was buying lemons for $5 a bushel and they wanted to charge me $10 tomorrow, and they are the only people who grow lemons I am screwed, and more than likely pissed. If I owned an ADW I would go tell THG to go jump in the lake too, quite frankly.Dean,
Once again you've clarified the issues so that even I can understand it. I hope that if JP's letter is re-issued as a press release, it would include a similar example and ask them to explain why it isn't just that simple.

JP,
Any particular reason you didn't include XpressBet and TrackNet in the letter?

Perhaps THG/TOC could explain how purse increases without alternative gaming support would be distributed? Would a better product with fuller fields be guaranteed somehow? Wouid they be willing to start rebating all players once meet-to-date handle reached a certain point?

And just who are the intended beneficiaries of these higher purses? Will it be the same group of high-percentage, high-expense stables simply making more money on horses going off at low odds while marginal stables continue to be forced out of the game?

While lower purses are in effect during these signal wars, are the high-end owners running THG/TOC subsidizing those at the low-end?

rrbauer
11-03-2008, 11:10 AM
There is definitely some ground for negotiation. The big ADWs like Youbet, TVG, and TwinSpires need to cut some fat away. The scary part is that they are run so poorly that even if they do, there is nothing left for rewards for the player.



TS/Bris laid off 8 people last month.

cj
11-03-2008, 12:04 PM
TS/Bris laid off 8 people last month.

I am sure now there hand is being forced since they are losing popular signals.

I definitely do not want to sound like I'm pro horsemen, because nothing is further from the truth. My point was a place like PTC is able to run an operation paying presumably higher rates while still giving the best rewards. Why is that?

Players and horsemen should be concerned that ADWs are running efficiently for all. This game is hurting and can't afford to be wasting the little bit of money it has.

DeanT
11-03-2008, 02:07 PM
Trying to Win explains the issue pretty well here.

http://www.paceadvantage.com/forum/showpost.php?p=599785&postcount=17

After this latest settlement at RETAMA PARK, I was re-examining the 'MY RATES' section at PTC recently. Now I know everyone's PTC rebate rates are not the same. Myself being a smaller bettor, means I will get lower rebates than some of the high rollers at PTC. That's the way it should be. I understand that.

My main point in this post, is that I've noticed a trend. It involves the rebates paid by PTC after they've finished negotiations with some greedy, militant horsemen groups. The good news is...in several cases this year, PTC has managed to settle some of the signal fee disputes with these horsemen groups, where some ADWS have not. Kudos to PTC for that. The bad news...after these disputes were settled and PTC obviously paid higher signal rates than in the past, meant just one thing...lower rebates to customers.

I don't blame PTC for this situation. They wanted to get some settlements, so they could offer more tracks for their customers. The signal fees paid by PTC are going up in several cases, thus cutting into their profit margin...so they are forced to lower the rebates in some cases to their customers.

It is the main point why I think we should be against these deals. Currently takeouts are around 21.8%, and with places like PTC and others for all players (heaven help us they cant get every track and be offered in places like CA, AR) this brings the effective T/O rate down to maybe 16%. But now, with the higher prices to horseman, takeout reductions of maybe 2% will be the norm. By letting THG charge higher prices we have our takeout rate raised by a few percentage points.

This is what we have been speaking about during this fight, and have so for some time. From a HANAblog piece from this summer. This is happening right before our eyes. And it will and has hurt handles, imo. When you raise handles, we all know handle goes down, and we sure as heck ain't "saving racing" (IMO).

It was announced a few weeks ago that Ellis Park in Henderson, Kentucky struck a last hour compromise between Ellis and the KHBPA, allowing for racing to begin in 2008. With it, close to 6% of ADW handle will be going to purses this summer. It appears that Ellis is charging ADW’s up to 8% signal fees for the right to broadcast Ellis races.

The Thoroughbred Horseman Group’s Bob Reeves said this recently (http://www.paulickreport.com/blog/bold-negotiations/) about the deal as reported by Ray Paulick of The Paulick Report: "We are trying to save racing."

We think deals like this will do the exact opposite. And we’ll tell you why.

An ADW normally pays about 5% (which is about what the current free market dictates) for the right to broadcast a signal and sell it to their customers. It is like a web-affiliate bookseller selling a book and keeping a commission. Then the ADW pays expenses, keeps some of the generated handle for themselves to run their businesses, and returns the rest to the player in a few ways:

1) Player Rewards – A video game, maybe a hat, trinkets of some sort, what have you. We all have received these perks.

2) Innovations and Customer-centric Benefits – An improved betting interface, R and D (like Twin Spires TV), free handicapping information (like Ian Meyers’ paddock reports at Premier Turf Club, his deal with Woodsideassociates.com, or partnerships with Thorograph at betfair), free past performances, free video. Things to encourage the player to up their handles.

3) Cash Rewards Through Rebating – Churn baby churn.

This model of giving something back to the player and delivering it in a customer-centric way has resulted in a rise in handles for ADW. Up over 17% last year – our only true blue growth segment.

If ADW’s are charged a higher fee, things like free rewards, hats and shirts; or the interesting innovations we have seen like race replays, and conditional wagering and paddock reports can all be cut. This hurts us in attracting new fans to our Internet platform, as well it alienates our existing customers (ask Vegas how they'd do without comps or adding a concert as an attraction; and ask them now what would happen if they took them away!). All those rewards and incentives are very important, but the most important point however to us as a business: It effectively increases takeouts. If 3% more is charged for a signal, 0.5% might be absorbed by the ADW. Where does the other 2.5% come from? Yes, the customers pocket - the customer that already pays for purses to the tune of 21% blended rakes.

When the signal fee is raised 3%, more than likely 2-2.5% will be taken from the cash rewards from certain ADW’s. If you were receiving a rebate of 5% on win wagers at track ‘A’ and they are cut in half you know, we all know what happens, you bet less. With these price sensitive players, where 2.5% can mean a huge difference, it can kill their handle.

pktruckdriver
11-03-2008, 02:20 PM
Okay one more question, put into simple terms I hope, and then maybe we can understand, I hope.


As we know there are many track that an ADW will carry, right?

They know where the money comes from and for what track it goes to, right?


So lets say a great day a Calder has brought into this 1 ADW a million dollars to the overall days pool at the track, otherwords 1 million dollars was bet thru the ADW for Calder racetrack only, here is the big 64 thousand dollar question???


What amount of money goes to the Horsemen, the Track and the ADW is it as follows:

Is it brokedown to the track takeout's for each bet as follows:

Takeout Information
Win, place, and show: 18%
Daily Double and Exacta: 20%
Pick 3 and Pick 4: 24%
Trifecta and Superfecta: 27%

So that the track gets 27% of all tri and super bets made thru this ADW and then they get 18% of all wps bets too, and so and so, is this how it works.

So the Adw would get 73% of all bets made for tri's and super's, and etc...

Now out this breakdown, what exactly do the horsemen get out of this?

Do they share part of the track takeout only, or what?

That seem like alot to the ADW, now does it not, to me it does?



Or is the Million dollars broke down differently than that, can someone explain to me how it is brokedown, please.

And this would be for each track a little bit differently , correct. As each track has a different agreement, correct?


Thank you for your patience
Patrick

applebee
11-03-2008, 02:40 PM
Okay one more question, put into simple terms I hope, and then maybe we can understand, I hope.


As we know there are many track that an ADW will carry, right?

They know where the money comes from and for what track it goes to, right?


So lets say a great day a Calder has brought into this 1 ADW a million dollars to the overall days pool at the track, otherwords 1 million dollars was bet thru the ADW for Calder racetrack only, here is the big 64 thousand dollar question???


What amount of money goes to the Horsemen, the Track and the ADW is it as follows:

Is it brokedown to the track takeout's for each bet as follows:

Takeout Information
Win, place, and show: 18%
Daily Double and Exacta: 20%
Pick 3 and Pick 4: 24%
Trifecta and Superfecta: 27%

So that the track gets 27% of all tri and super bets made thru this ADW and then they get 18% of all wps bets too, and so and so, is this how it works.

So the Adw would get 73% of all bets made for tri's and super's, and etc...

Now out this breakdown, what exactly do the horsemen get out of this?

Do they share part of the track takeout only, or what?

That seem like alot to the ADW, now does it not, to me it does?



Or is the Million dollars broke down differently than that, can someone explain to me how it is brokedown, please.

And this would be for each track a little bit differently , correct. As each track has a different agreement, correct?


Thank you for your patience
Patrick

They share the only thing that can be shared The takeout.

DeanT
11-03-2008, 03:42 PM
Patrick,

Ill try.

Of $100 in takeout with bets made at a track, the track and horsemen generally split revenues. Those are revenues from people that come out to watch the racing.

For people at home we need a conduit to get to them and that is an ADW like PTC. PTC pays for the right to sell a signal to their customers. Maybe 6%, or about 30% commission. With the rest of the money they run their business.

So if $100 is takeout, PTC and customers get about $70 and the track and horsemen get $30.

Now, people seem to think that is out of whack, but in real terms it is not, imo.

Resellers of a product that is produced get much less than 30% of the revenues (or 15% that go to purses).

Music: about 9% of the wholesale price of a CD goes to the songwriter.

Books: An author might end up making around 10% for a book.

So tracks and horsepeople actually make about 300% more as it stands than those folks.

This is not a bad deal, imo. Resellers like Amazon.com or Itunes have created a new medium with proprietary software, have investors and seed capital, have gathered customers, have advertised - they do many things to grow their customer base. if songwriters and authors want more than 8% or whatever, there is an easy solution: Make your own ITunes or Amazon.com. Unfortunately it is not that easy. Resellers add value to your product and help you sell more than you can alone. that is why they can demand a good percentage of anything produced. They can do it better than you can. That is also why this type of wagering is the only growth segments out there today - resellers work their butts off to get business. That is why we have player rewards, handicapping contests and see ads on every page of Horseplayer Mag. Tracks and horsepeople are not out there slugging for new customers for the most part, your resellers are.

Imriledup
11-03-2008, 04:00 PM
Sports bettors risk 110 to win 100. That means, the 'takeout' is approximately 10%. Some places you can shop around and find better than a 10% rate. I remember one year the takeout on the Super Bowl was 5% with a million dollar limit.

I understand that sports wagers have no overhead, but i don't think the players really care about paying their money to keep this game running. The NFL and other sports leagues are not gambling dependent. If horsemen were able to put on enough of a show as to where they wouldn't need the gambling dollars to survive, that would be one thing. But, their product isn't good enough to sustain a fan base that would pay to see their product if there was no gambling.

The horsemen seem like they want to get paid as if they are a sport that would survive without betting dollars.

pktruckdriver
11-03-2008, 04:10 PM
DeanT


You do not own or have interest in an ADW do you?


Of course not, but you are getting more into the real numbers that I have been putting up here, 6% to the tracks and horsemen to be split between them.


ADW , gets 94% , to me MHO is way out of line.

Songwriters do not breed other songwriters, train them, house them, transport them, and pay trainers and vet's and entry fees , etc....


True I do not own horses either, but not all horse owners are the filthy rich we think they are, or are they?


Now someone just told me , did we ever go to the local bookie and ask that he donate to the local track that he made his money from. no, not me.



Also in the 94% of money going to ADW's I would think very very little, 3-7% go to customers, except for places like PTC who give generous rebates, as if IAN wanted he could enlighten us actual numbers, but then it is a private company and that info does not have to be public knowledge , I guess.


Well DeanT

Thank you for helping me understand this, and I still conclude that horsemen should get a little more than songwriters and authors, they have bigger expenditures than most, now the track are different as some are doing things to improve their facilties and other are not, that is a single case basis, when it comes to tracks, and their share, may be less than what they get now, ooops I did not say that did I, my track will never forgive me..

Patrick

startngate
11-03-2008, 04:17 PM
I definitely do not want to sound like I'm pro horsemen, because nothing is further from the truth. My point was a place like PTC is able to run an operation paying presumably higher rates while still giving the best rewards. Why is that?Well, for one thing, PTC isn't providing free streaming video, free replays, free PP's (that I know of), or running a lot of handicapping contests. They also have limited (if any) live operators for wagering, no IVR system, and no mobile betting platform. Also, since I can only guess that they have far fewer customers than TS, they probably have much lower overhead as far as customer service agents, etc.

These are all services I get with my TwinSpires account, and I believe the YouBet's, TVG's and XpressBet's of the world offer them too. But, I don't get a rebate which is OK with me. I like the value adds.

TVG and XpressBet/TwinSpires also are putting up TV networks.

So, it is possible to run lean and give rebates, or offer a lot of features and not do it. There are always going to be trade-offs, and different business models. This is precisely why a one-size-fits-all model the horsemen are demanding does not work in the current marketplace.

Or is the Million dollars broke down differently than that, can someone explain to me how it is brokedown, please.Dean beat me to this ... and also makes many good points in his post. Since I was in the midlle of typing, here is my response ...

For the ease of doing the math, 'blended' (average) takeout runs around 20%, so lets use this figure.

$1,000,000 = total wagered
$200,000 = takeout
$800,000 = returned to winning bettors

The horsemen, track and ADW currently split the $200,000. How it is divided depends on the host fee the track charges the ADW. From what I am reading, ADW's are paying between 5% and 9% of total wagering now for most signals. Again, just to make this math easy, let's use 5%. The split looks like this:

$200,000 = 20% total takeout
$50,000 = 5% host fee to the track, which is split with horsemen (2.5% each).
$150,000 = 15% gross amount ADW keeps

Sounds like a lot, but we're not done subtracting. That $150,000 could be reduced by (depending on contractual issues):

$70,000 = 7% source market fee (if the customer is in a source market area)
$35,000 = 3.5% TVG fee (if an exclusive TVG track); OR
$20,000 = 2.0% TrackNet fee (if an exclusive TrackNet track)

So for many wagers, what the ADW keeps is already actually less than what the track gets at a 5% host fee. If it's a TVG track, the ADW is now down to $45,000 (4.5%).

Now the horsemen are currently asking to receive 1/3 of the takeout (6.67% in this example). Since the tracks and horsemen split what is received from the ADW equally, this makes the host fee 13.34%, instead of the 5% the ADW is currently paying.

So ... now we have:

$200,000 = total takeout
$133,400 = 13.34% host fee to the track, which is split with horsemen (6.67% each).
$66,600 = 6.66% gross amount ADW keeps

If we are just talking about an ADW's survival, then 6.66% is probably in the ballpark, as long as the source market fees and TVG/TrackNet fees go away. Of course, rebating is going to be out of the question, and many of the added features Dean and I mentioned above are going to have to be cut.

And who does this hurt .... drumroll please ... we customers. of course. :bang:

DeanT
11-03-2008, 04:17 PM
DeanT


Of course not, but you are getting more into the real numbers that I have been putting up here, 6% to the tracks and horsemen to be split between them.


ADW , gets 94% , to me MHO is way out of line.



It is 6% of the 21% takeout, not 6% of 100%. They get around a 29% commission from ADW bets (6 divided by 21).

DeanT
11-03-2008, 04:20 PM
Startngate explained things a million times better than I could. Nice post.

pktruckdriver
11-03-2008, 04:36 PM
Startngate
Thank you very, you too DeanT

I still find those number, slighted, not the breakdown you did, no not those.


But if you think that I can believe that the customer wins 800,000.00 out of every million bet, you got to be kidding, if so, we would all know winners, and I know very few, if any winners, How many do you know of, think about it?

Seriously i see no truth in those numbers going back to the customer, not a chance, just a possiblity of maybe 25-35% if that and even then I would have a hard time believing that too.


We are loser's by nature in this game, so few winners, and to have 80% winner is ridiculous, come on.....

Patrick

startngate
11-03-2008, 05:52 PM
Startngate
Thank you very, you too DeanT

I still find those number, slighted, not the breakdown you did, no not those.


But if you think that I can believe that the customer wins 800,000.00 out of every million bet, you got to be kidding, if so, we would all know winners, and I know very few, if any winners, How many do you know of, think about it?

Seriously i see no truth in those numbers going back to the customer, not a chance, just a possiblity of maybe 25-35% if that and even then I would have a hard time believing that too.


We are loser's by nature in this game, so few winners, and to have 80% winner is ridiculous, come on.....

Patrick
Then you truly do not understand our system of pari-mutuel wagering my friend. The 'house' keeps 20% of every dollar wagered, and gives 80% back to the winners. And many here would argue that the winning bettors getting that $800,000 is actually too low an amount ... meaning takeout should be lower than it actually is.

Put simply, if you give me $1.00 and Dean gives me $1.00 for a bet then I have collected $2.00 (total wagers). If I keep $0.40 (takeout), and give Dean $1.60 (he was the winner) and you nothing (because you lost), then that is pari-mutuel wagering.

I know you profess to just be 'a new student of the game' in your profile, but until you understand this basic concept of how pari-mutuel wagering works, I would honestly (and very respectfully) suggest that you stop betting.

I don't say this to be mean-spirited, as I (and everyone else here) were new once too. However, this is too important a concept to not understand. I don't play craps because I don't really understand the bets, but I do love blackjack ... and horseracing ... :)

pktruckdriver
11-03-2008, 06:24 PM
Startngate


No offense taken here at all, I am thick skinned truck driver, give out, I can take it, but understanding pari-mutue iws a big part yes, but if you expect me to believe the following , maybe i think it just hit me, okay


Okay

John bets 100 win # 4

Pat bets 100 win # 5

Scott bets 100 exacta 4 5 box


it comes in 7 win 2 place 3 show

No one wins , we are not giving money back to the loser's are we


Who keeps the lost money, the house, no?

I see how the pools flucturate and why a 73 exacta pays 700.00 and a 45 exacta pays 24.00, and how do we know that actual amount put into the pools stays in the pools and the money is divided correctly, not stealing, but, fees for this and that, bringing down the 80% or so down by 20% or more, is that possible with ADW's.

But honestly I guess I get it now, Pari-mutuel, pools flucturating and we do get most of the money, where was my mind at , thank you setting me straight, sorry for prolonging this wonderful thread, to all those involved to get this mess strsghtened out, but I do see the Horsemen needing just a little bit more if possible, even if most see them as spoiled filthy rich , not all are, adn the expenses they have are great and getting greater, I am not making that up am I, any horse owner got an extra horse for me, or an old horse trailer so I could haul horses around for a living, just send me a pm, just kidding.


Jeff P

Awesome letter to all involved, I hope it get to them and it has the results meant here. As we the players are getting restless, and starting to look elsewhere.

Patrick

startngate
11-03-2008, 06:51 PM
John bets 100 win # 4

Pat bets 100 win # 5

Scott bets 100 exacta 4 5 box


it comes in 7 win 2 place 3 show

No one wins , we are not giving money back to the loser's are we


Who keeps the lost money, the house, no?

No.

In the case of your win bets, both are losers, and the money (after takeout) goes to the people that bet the #7. In most States, if no one bet on the #7, the the win pool would be distributed to those holding tickets on the #2, and if no one bet on the #2, then the win pool gets distributed to the #3. If no one bet on any of the first three finishers, then the entire win pool is refunded.

In the case of the exacta bet, if there are no winning combinations, then the payoff is will be the winning horse (#7) over ALL. If no one has that combination then its ALL over the second place horse (#2). If no one has either of those combinations, then the entire exacta pool is refunded.

Every type of bet has similar payout rules, but I am unaware of any place, or any bet, that lets the track keep the losing bets. That would be bookmaking, which is highly frowned upon (except in Vegas) by the DOJ.

and how do we know that actual amount put into the pools stays in the pools and the money is divided correctly, not stealing, but, fees for this and that, bringing down the 80% or so down by 20% or more, is that possible with ADW's.The local regulatory body (Racing Commission) normally handles verifications of the pool calculations. If someone were cheating, they would lose their license to operate. The takeout is what it is, it's not reduced by any other 'fees for this and that."

InsideThePylons-MW
11-03-2008, 07:00 PM
Gotta give you credit startngate....you've got a great demeanor :ThmbUp: :ThmbUp: :ThmbUp:

trigger
11-03-2008, 07:13 PM
Well, for one thing, PTC isn't providing free streaming video, free replays, free PP's (that I know of), or running a lot of handicapping contests. They also have limited (if any) live operators for wagering, no IVR system, and no mobile betting platform. Also, since I can only guess that they have far fewer customers than TS, they probably have much lower overhead as far as customer service agents, etc.

These are all services I get with my TwinSpires account, and I believe the YouBet's, TVG's and XpressBet's of the world offer them too. But, I don't get a rebate which is OK with me. I like the value adds.

TVG and XpressBet/TwinSpires also are putting up TV networks.

So, it is possible to run lean and give rebates, or offer a lot of features and not do it. There are always going to be trade-offs, and different business models. This is precisely why a one-size-fits-all model the horsemen are demanding does not work in the current marketplace.

Dean beat me to this ... and also makes many good points in his post. Since I was in the midlle of typing, here is my response ...

For the ease of doing the math, 'blended' (average) takeout runs around 20%, so lets use this figure.

$1,000,000 = total wagered
$200,000 = takeout
$800,000 = returned to winning bettors

The horsemen, track and ADW currently split the $200,000. How it is divided depends on the host fee the track charges the ADW. From what I am reading, ADW's are paying between 5% and 9% of total wagering now for most signals. Again, just to make this math easy, let's use 5%. The split looks like this:

$200,000 = 20% total takeout
$50,000 = 5% host fee to the track, which is split with horsemen (2.5% each).
$150,000 = 15% gross amount ADW keeps

Sounds like a lot, but we're not done subtracting. That $150,000 could be reduced by (depending on contractual issues):

$70,000 = 7% source market fee (if the customer is in a source market area)
$35,000 = 3.5% TVG fee (if an exclusive TVG track); OR
$20,000 = 2.0% TrackNet fee (if an exclusive TrackNet track)

So for many wagers, what the ADW keeps is already actually less than what the track gets at a 5% host fee. If it's a TVG track, the ADW is now down to $45,000 (4.5%).

Now the horsemen are currently asking to receive 1/3 of the takeout (6.67% in this example). Since the tracks and horsemen split what is received from the ADW equally, this makes the host fee 13.34%, instead of the 5% the ADW is currently paying.

So ... now we have:

$200,000 = total takeout
$133,400 = 13.34% host fee to the track, which is split with horsemen (6.67% each).
$66,600 = 6.66% gross amount ADW keeps

If we are just talking about an ADW's survival, then 6.66% is probably in the ballpark, as long as the source market fees and TVG/TrackNet fees go away. Of course, rebating is going to be out of the question, and many of the added features Dean and I mentioned above are going to have to be cut.

And who does this hurt .... drumroll please ... we customers. of course. :bang:

I don't get it ....In your example, how can source market fees be almost half of the total ADW commissions ($70,000/$150,000=46%) when it is my understanding that source market fees are imposed only on wagers placed by ADW players who live within a short distance(25-50miles?) from the track being bet on?
Am I missing something?

startngate
11-03-2008, 07:39 PM
I don't get it ....In your example, how can source market fees be almost half of the total ADW commissions ($70,000/$150,000=46%) when it is my understanding that source market fees are imposed only on wagers placed by ADW players who live within a short distance(25-50miles?) from the track being bet on?
Am I missing something?
That's why I started "So for many wagers, ..."

ADW's don't pay source market fees on all of their wagers, and therefore they are going to make more money on wagers outside the source market areas. I suspect that's probably the only place they are really profiting.

However, in some States (like California, Virginia, Washington) the entire State is considered a source market area, so it's not just a short distance. In other States, how many people do you think are wagering from outside source market areas? My guess is that most of the customers live near enough to a track to be in a source market area, but I could be wrong.

If you take a win bet on a California track from a customer in a source market area, the ADW probably loses money taking the bet. Takeout is 15.43% (I think). Host fees are 8%, Source Market Fees 7%, and then tack on the TVG or TrackNet fee and that makes the bet a money loser. And that's before any other expenses.

I can see why the ADW's are saying the math doesn't work for the THG deal. How much room to move there is would require a lot more information, but at any increase in rate it's not going to do anything but hurt the customer.

pktruckdriver
11-03-2008, 07:48 PM
Startngate


As insidethepylon say you got great demeanor and for explaining this to me I have to agree, but I am now more in the know, than before, thank you.


DeanT thank you too.

Jeff P
thank you for a thread I kinda took over, and for that I am truly sorry, but I do now know what I did not before this thread was written, for that I thank you.



Patrick

DeanT
11-03-2008, 11:36 PM
I don't play craps because I don't really understand the bets

:)

As an aside, I know nothing about craps and so forth. I was fortunate enough to go to Montreal for a wagering conference. I spoke on a panel about probabilities, rebates, some gambling economics and things like that. I know a bit about that stuff, so that was no problem.

Then after a trip to a harness track we go to Casino Montreal. I am like a fish out of water. We go play craps. I have no idea how to play, all I know is that I will probably lose. A few people try and explain it to me. They might as well be speaking Swahili. I took out $100, got some chips and bet "dont pass" all night, until I lost.

I'm a horse bettor, and that was pretty damn apparent that trip :)

miesque
11-04-2008, 12:11 AM
:)

As an aside, I know nothing about craps and so forth. I was fortunate enough to go to Montreal for a wagering conference. I spoke on a panel about probabilities, rebates, some gambling economics and things like that. I know a bit about that stuff, so that was no problem.

Then after a trip to a harness track we go to Casino Montreal. I am like a fish out of water. We go play craps. I have no idea how to play, all I know is that I will probably lose. A few people try and explain it to me. They might as well be speaking Swahili. I took out $100, got some chips and bet "dont pass" all night, until I lost.

I'm a horse bettor, and that was pretty damn apparent that trip :)

Excellent job with the thorough explanations, Dean.

Since I am in Vegas planning mode today I have to comment that while I much prefer playing the ponies, craps is by far my favorite of the table games. I only play every now and then because I think its most fun when you are with at least two other friends/associates and as such I never play when it when I am on one of my solo trips to Vegas. However, it the type of game with the right company and moderate luck you be absorbed until quite late in the evening (or more correctly early morning).

DeanT
11-04-2008, 01:45 AM
Last time I was in Vegas I saw people screaming at the table several times. Unfortunately I was in my 11th hour of playing horses, so I did not go over to check :)

It does look like fun. Maybe we can all get together and play at a HANA function. Dr Z and Jeff can figure out probabilities and you, me, John and Chickenhead can drink and throw dice :)

rrbauer
11-04-2008, 12:38 PM
Check this out. It was written by a PA member.

http://www.trackthieves.com/SourceThis.html

BillW
11-04-2008, 02:39 PM
Check this out. It was written by a PA member.

http://www.trackthieves.com/SourceThis.html

Dammit hit wrong button - Rich's post was restored to the original - sri Rich


Now for my post ....

What ever happened to Richard Young (the author)? His PA profile shows his last PA activity as being on 03/06/2008!

RichieP
11-04-2008, 03:55 PM
Check this out. It was written by a PA member.

http://www.trackthieves.com/SourceThis.html

Thanks Rich.
This is all becoming one big headache and when it stops being fun well there is the sign to walk away.

I really looked forward to the CD and HOL meets. Then I see that I can't bet either one living here in NY. On top of that GG which I was doing ok at all of a sudden disappears from my wager menu and is gone.

So I can't bet
CD
CRC
RP
HOL
RET
GG

ALL tracks I really like cap and wager my few pennies on.

Hey ADW's can you say:
http://www.youtube.com/watch?v=BLCQU8iKalA

:ThmbDown::ThmbDown::ThmbDown::ThmbDown::ThmbDown: :ThmbDown::ThmbDown::ThmbDown::ThmbDown:

rrbauer
11-04-2008, 05:28 PM
Dammit hit wrong button - Rich's post was restored to the original - sri Rich


Now for my post ....

What ever happened to Richard Young (the author)? His PA profile shows his last PA activity as being on 03/06/2008!

I dunno...he was incredibly disgusted with what was happening on the ADW scene which was his primary access to the game. Probably fodder for one of DeanT's "left the game" stories.

comet52
11-05-2008, 04:54 AM
Sports bettors risk 110 to win 100. That means, the 'takeout' is approximately 10%. Some places you can shop around and find better than a 10% rate. I remember one year the takeout on the Super Bowl was 5% with a million dollar limit.

Takeout on a 110 lay is 4.54% if action is perfectly balanced.

I understand that sports wagers have no overhead

At a minimum an online-only shop requires servers, office space, software, a linesmaker(s), management, bookkeepers, an ad and promo budget, some semblance of customer service, and a large capitalization to stay in the game.

A full service shop also requires a phone bank and the staff to man it full time.

If by overhead you mean you don't have to fund and run the NFL, yeah that's true. The t.v. networks and 100 million fans watching the beer adverts do that for you.
Tastes great, less filling.

The NFL and other sports leagues are not gambling dependent.

Without gambling interest for the NFL would take a hit and they are well aware of this fact, though they will always publically deny it.

The horsemen seem like they want to get paid as if they are a sport that would survive without betting dollars.

A low-vig sports shop holds 3.38% at -107 and 2.44% at -105. The largest, most successful online sportsbook in the world, Pinnacle, runs a -105 model (though they run -110 on the phone-in side due to higher costs as observed above).

If a full service sports book can operate profitably at 4.54%, why can't an ADW? Because then they couldn't rebate you and me?! Hell an ADW would be cheaper and way less stressful to run than a sportsbook. No making lines, sweating out games, dealing with players taking shots at you left and right, trying to collect from deadbeats or agents, plus you're legal and legit, no offshore 3rd world hassles. Please.

HANA is a nice idea, from guys whom it appears to me, aren't prepared to give up anything. Correct me if I'm wrong. You want more pie, so does everyone. But you have no leverage. You have nothing to put in the pot. You're not offering to bring in more customers in exchange for lower vig, etc. You're nailing an edict to the industry's door ala Martin Luther. You're telling the industry it's business with assumptions about what constitutes their bottom line. Unless you can organize a boycott of racing that puts a meaningful dent in that bottom line I doubt they will bother listening to you.

I know gamblers and they will boycott gambling when junkies start boycotting heroin.

I'd love lower vig. Maybe there's a business model that demonstrates it would work out. I'd love it if the industry would stop strangling itself and work things out. I'd love it if horseracing weren't a dying sport. But this isn't the 1950's. Times have changed and that's the way it is. You're asking a bunch of people who are slowly dying to throw you a chunk of their last meal.

I don't disagree that they are basically idiots when it comes to their own future business. But then, that's what rich people who inherited the wealth usually are, and that's who makes up the old line horseracing establishment in this country. They will go down to the bottom of the sea never abandoning the ship of their own sense of entitlement. Live and learn.

Feel free to flame the hell out of me :) :eek:

Indulto
11-05-2008, 05:45 AM
... HANA is a nice idea, from guys whom it appears to me, aren't prepared to give up anything. Correct me if I'm wrong. You want more pie, so does everyone. But you have no leverage. You have nothing to put in the pot. You're not offering to bring in more customers in exchange for lower vig, etc. You're nailing an edict to the industry's door ala Martin Luther. You're telling the industry it's business with assumptions about what constitutes their bottom line. Unless you can organize a boycott of racing that puts a meaningful dent in that bottom line I doubt they will bother listening to you.

I know gamblers and they will boycott gambling when junkies start boycotting heroin.

I'd love lower vig. Maybe there's a business model that demonstrates it would work out. I'd love it if the industry would stop strangling itself and work things out. I'd love it if horseracing weren't a dying sport. But this isn't the 1950's. Times have changed and that's the way it is. You're asking a bunch of people who are slowly dying to throw you a chunk of their last meal.

I don't disagree that they are basically idiots when it comes to their own future business. But then, that's what rich people who inherited the wealth usually are, and that's who makes up the old line horseracing establishment in this country. They will go down to the bottom of the sea never abandoning the ship of their own sense of entitlement. Live and learn. ...Well said, C52.

Eventually that edict did have an effect as more and more believers got involved. Whether HANA is as an effective messenger as Martin Luther remains to be seen.

You and Slewis raise good points, though. Maybe no rational argument will ever work with these folks. Other than sheer exasperation like Hjack described, what could make enough people willing to close their wallets at the same time? Is there any single issue that could actually generate such exasperation within a sufficient number of players?

startngate
11-05-2008, 08:19 AM
For those who haven't seen it yet, Jeremy Plonk wrote a good column on the subject:

http://sports.espn.go.com/sports/horse/columns/story?columnist=plonk_jeremy&id=3682295

BillW
11-05-2008, 08:32 AM
For those who haven't seen it yet, Jeremy Plonk wrote a good column on the subject:

http://sports.espn.go.com/sports/horse/columns/story?columnist=plonk_jeremy&id=3682295

Well said Jeremy!

boomman
11-05-2008, 09:46 AM
Not that I had any doubt that he would, (as I KNoW he totally gets whats going on), but Jeremy Plonk hit this nail right on the head! I am hopeful that this will be the beginning of other members of the racing media examining this issue and reporting it as accurately as Jeremy did, while at the same time bringing "out in the open" what is ACTUALLY going on behind the scenes, and the incredible greed that is involved in these negotiations. It is also important to note that not one track has agreed to this model despite the pushing from the THG for well over a year, so it is time for the horsemen to fire the THG and sit down with the tracks and find some sort of middle ground that doesn't significantly screw anyone, including the bettors who subsequently pay the tab in the form of lower cash rewards as a result of higher signal fees.............

Boomer

cj
11-05-2008, 09:48 AM
I love this line:

horsemen's representatives act as though the bettor is a complete degenerate who simply will do cartwheels in order to satisfy a $2 jones.

Maybe this one is better:

And, of course, the horsemen have now come calling for more of the pie. Much more. Simple math tells you that going from 20 percent to 33 percent is not asking for 13 percent; it's asking for 65 percent more than you used to be getting. Try going into a contract negotiation with your boss and asking for a 65-percent raise on your current take-home pay.

miesque
11-05-2008, 10:33 AM
I thought Plonk's article was right on target with a lot of great quotes. In addition to those previously mentioned I also especially liked:



And that's when the two sides aren't bickering. Now, you might as well write your bets on a paper airplane and try to fly them to the racetrack.

Racing organizations had better realize this: I'm not a crack addict. I don't need to play the sixth from Anytrack USA this afternoon. In fact, I can go weeks on end with plenty of other fancy-free hobbies and habits. And I'm not alone.

barn32
11-05-2008, 10:50 AM
Takeout on a 110 lay is 4.54% if action is perfectly balanced.

If a full service sports book can operate profitably at 4.54%, why can't an ADW? Just to be clear, a bookies advantage when the customer lays 11 to win 10 is 5%. The bettors disadvantage is 4.54%.

DeanT
11-05-2008, 11:23 AM
On virtually everything written on this topic in the press there are three people in this fight - horseman, tracks and ADW's. Take a look at some of them, and you'll see what I mean.

Jeremy is the first person that stands up for the silent and disenfranchised fourth - the bettor.

Well done.

pktruckdriver
11-05-2008, 11:45 AM
Okay Now you confused me again, this is what I thought it was at first....



Do the horsemen deserve more? Perhaps. But it's nowhere near an equal, one-third pull, in my estimation -- and I don't care how unpopular that makes me the next time I walk through a stable area. Certainly live racing is what all wagering is derived from, and you have to pay your players. But this is a prize-money sport, not a salary sport. In NASCAR, teams and drivers receive about 25 percent of the revenue in race purses, while 65 percent goes to the host tracks and 10 percent to the industry's home office. If a wildly popular and successful business model like NASCAR gives 25 percent to its winning teams, which have to slice their pie in many more pieces than an owner, trainer, jockey and groom, asking for as much as 33 percent in horse racing seems a bit much.


This says they want 1/3rd, yes 33% of the revenue, this not what we dicussed earlier in this thread, where it was broken down thru the takeout, and split between the track and horsemen. Why am I so confused here?


Lets just settle up and miove on for God's sake.


Give the horsemen a little bit more, horsemen take a little less, make it work and lets move on, we the bettor are getting restless, and you should take notice, as we are getting other options here and we could leave you high and dry.


Still confused, again.

Patrick

33% or part of takeout, what is it

DeanT
11-05-2008, 11:49 AM
It is the same numbers we are using here. He speaks exactly what we've been talking about.

startngate
11-05-2008, 12:07 PM
Patrick ... revenue = takeout.

Charlie D
11-05-2008, 12:21 PM
Good article


Restrictions do not make for a good business model, and those in power are failing to see this

Charlie D
11-05-2008, 12:44 PM
Thanks Rich.
This is all becoming one big headache and when it stops being fun well there is the sign to walk away.

I really looked forward to the CD and HOL meets. Then I see that I can't bet either one living here in NY. On top of that GG which I was doing ok at all of a sudden disappears from my wager menu and is gone.

So I can't bet
CD
CRC
RP
HOL
RET
GG

ALL tracks I really like cap and wager my few pennies on.



This is what HANA, THG, ADW's etc should be fighting against



Get bettor betting, the business then maybe makes money, a business that makes money, can then maybe offer better value products , which then makes the business more attractive to others

comet52
11-05-2008, 02:45 PM
Just to be clear, a bookies advantage when the customer lays 11 to win 10 is 5%. The bettors disadvantage is 4.54%.

Theoretical hold is 1 of every 22 dollars bet. 1/22=4.54%.
For purposes of a discussion about income, hold is what matters. But I've never heard the 5% claim, can you explain how it's calculated?

comet52
11-05-2008, 02:51 PM
Well said, C52.

Eventually that edict did have an effect as more and more believers got involved. Whether HANA is as an effective messenger as Martin Luther remains to be seen.

You and Slewis raise good points, though. Maybe no rational argument will ever work with these folks. Other than sheer exasperation like Hjack described, what could make enough people willing to close their wallets at the same time? Is there any single issue that could actually generate such exasperation within a sufficient number of players?

The only thing that will work is a sense of self-preservation, which I don't think they have, hence my ship analogy.

But if they discover one, it's likely to be too little too late. I haven't seen the industry take a coordinated, positive step of any kind since I started following it a few years ago. It's a set of wrangling, ignorant fiefdoms who can't even manage a simple cost/benefit analysis of the adw situation that would lead them to a win/win compromise.

They are hopeless from a business standpoint -- lost in some dream of what was that precludes getting some foothold in what is, and no amount of blowing a gasket at them :bang: about that fact will change it.

RonTiller
11-05-2008, 03:02 PM
Patrick,

I'll give it a whirl. There is a bit of ambiguity when discussing this issue.

Suppose I bet $100 at the track. The track takes out whatever the takeout rate is for that bet (the takeout). Assume its 18%. So they set aside $18 of that $100 bet as revenue. The remaining $82 goes back into the pool to be distributed to the winning bettors.

Now, what happens to that $18 of revenue? Who gets a piece of this $18 pie?

a % goes to the state as taxes
b % goes to fund purses
c % goes to the track for operational costs
d % goes to workman's comp
etc. etc.

The percentages and the number of pieces will vary, but they're all getting a piece of this $18 revenue your $100 bet generated

Now suppose I bet the same $100 through Youbet, an ADW. The takeout is the same, 18%, so there's still only $18 left to distribute to all interested parties. But now, there's a new player vying for a piece: the ADW. How much do THEY get? That is determined by whatever contracts the track has signed with individual ADWs.

In the beginning (mid 1990s), when simulcasting was in its infancy, the tracks virtually gave away the house, essentially giving places like Las Vegas race books the lions share of this $18- it was like found money to the tracks, so big deal. Not anymore. ADW wagering subsequently turned into the primary source of betting revenue, with on track wagering taking a nosedive.

To make matters more complicated, many tracks own their own ADWs, so they essentially sell their own signal to their own ADW. Some ADWs are able to give rebates because they get a big enough percentage of that $18 pie (or are lean and mean enough) that they can pay operating costs, make a profit and have enough left over to return money to their players as rebates. PTC is an example. RGS is another (whales only).

Another complication: horsemen must approve the ADW deals, so if they don't like the terms, they vote it down, Well, in track after track, they don't like the terms, so they veto the ADW deal (but notably, rebate shops catering to whales have not been targeted as taking too big a piece of the pie).

When people refer to ADWs or horsemen getting 33%, they mean 33% of this $18 in distributable revenue, not 33% of the $100 you bet. But sometimes people refer to ADW getting 6%, horsemen getting 6% and tracks getting 6%. Here they mean the same thing, but they speak in terms of takeout percentages, not percentage of takeout. You just have to internally adjust to these two ways of talking.

Here's a good document that shows the takeout pie pieces for California (there are lots of them):

http://www.calracing.com/pdf/Takeout-WhoGetsWhat.pdf

Ron Tiller
HDW

DeanT
11-05-2008, 04:16 PM
HANAblog says he Plonked one out of the Park.

http://blog.horseplayersassociation.org/2008/11/jeremy-plonks-one-out-of-park.html

BillW
11-05-2008, 04:21 PM
HANA Prez discusses ADW mess with Bloodhorse ...

http://news.bloodhorse.com/article/47921.htm

DeanT
11-05-2008, 04:35 PM
On signals:

"Left in the wake of the battles are ADW customers, who while sometimes sympathetic to one side or the other, are often left without favored tracks upon which to bet.

“They are very frustrated, and discouraged; some are outraged, that the signals aren’t going out,” said Jeff Platt, a Southern California computer programmer who is president of the new bettors’ advocacy group, Horseplayers Association of North America. “The level of frustration is an eye-opener to us. And a lot of players are telling me they are going to play something else.”

On who some places get the signal and others do not:


"Frustrations aside, what’s also confusing to many players is this: Why are signals going out to some ADWs, but not others? The so-called “Big Four” – TVG, TwinSpires.com, XpressBet.com, and Youbet.com – are regular non-consent targets of horsemen, but so are certain other smaller venues, such as AmWest Entertainment, BetAmerica, Betpad, Premier Turf Club, and the Racing Channel.

On the “have” side are a group that includes New York City Off-Track Betting Corp., Philadelphia Park PhoneBet, Penn National’s EbetUSA, Connecticut OTB, certain entities offered via the Las Vegas Dissemination Co., and several high-volume offshore entities such as Elite Turf Club and Racing and Gaming Services."

But some wonder why offshore entities such as Elite Turf Club and RGS aren't THG targets. Earlier in the year, Reeves simply said offshores are something the THG still needed to figure out what to do with. But now he says Elite and RGS deserve preferential treatment because of their volume."

On treating all players the same like HANA wants:

Platt, who has penned (http://www.jcapper.com/messageboard/TopicReader.asp?topic=258&forum=Off%20Topic) a critical open letter to the horseracing industry on behalf of HANA, believes availability should be made to all bettors, regardless of the level. And he said players in the HANA organization and elsewhere could really care less how it happens, as long as it happens quickly.

“You don’t walk into a casino and have someone tell you the craps tables are closed, or the blackjack dealers are on strike,” Platt said. “Racing is making it difficult on its players. Players are leaving the game. They are spending their money elsewhere. And many of them are not coming back.”

HANA, which was launched this summer, has just fewer than 300 members that combined wager about $25 million a year, Platt said. “We don’t have enough members yet to stage a public demonstration (such as a wagering boycott), but the day may come when there will be several thousand members. And then we will be able to coordinate some sort of an effort.”

ezrabrooks
11-06-2008, 08:49 AM
Takeout on a 110 lay is 4.54% if action is perfectly balanced.



At a minimum an online-only shop requires servers, office space, software, a linesmaker(s), management, bookkeepers, an ad and promo budget, some semblance of customer service, and a large capitalization to stay in the game.

A full service shop also requires a phone bank and the staff to man it full time.

If by overhead you mean you don't have to fund and run the NFL, yeah that's true. The t.v. networks and 100 million fans watching the beer adverts do that for you.
Tastes great, less filling.



Without gambling interest for the NFL would take a hit and they are well aware of this fact, though they will always publically deny it.



A low-vig sports shop holds 3.38% at -107 and 2.44% at -105. The largest, most successful online sportsbook in the world, Pinnacle, runs a -105 model (though they run -110 on the phone-in side due to higher costs as observed above).

If a full service sports book can operate profitably at 4.54%, why can't an ADW? Because then they couldn't rebate you and me?! Hell an ADW would be cheaper and way less stressful to run than a sportsbook. No making lines, sweating out games, dealing with players taking shots at you left and right, trying to collect from deadbeats or agents, plus you're legal and legit, no offshore 3rd world hassles. Please.

HANA is a nice idea, from guys whom it appears to me, aren't prepared to give up anything. Correct me if I'm wrong. You want more pie, so does everyone. But you have no leverage. You have nothing to put in the pot. You're not offering to bring in more customers in exchange for lower vig, etc. You're nailing an edict to the industry's door ala Martin Luther. You're telling the industry it's business with assumptions about what constitutes their bottom line. Unless you can organize a boycott of racing that puts a meaningful dent in that bottom line I doubt they will bother listening to you.

I know gamblers and they will boycott gambling when junkies start boycotting heroin.

I'd love lower vig. Maybe there's a business model that demonstrates it would work out. I'd love it if the industry would stop strangling itself and work things out. I'd love it if horseracing weren't a dying sport. But this isn't the 1950's. Times have changed and that's the way it is. You're asking a bunch of people who are slowly dying to throw you a chunk of their last meal.

I don't disagree that they are basically idiots when it comes to their own future business. But then, that's what rich people who inherited the wealth usually are, and that's who makes up the old line horseracing establishment in this country. They will go down to the bottom of the sea never abandoning the ship of their own sense of entitlement. Live and learn.

Feel free to flame the hell out of me :) :eek:

Comet, good post. A dose of the real world is hard to swallow..but, I think you nailed it.

Ez

DeanT
11-06-2008, 02:54 PM
The only thing that will work is a sense of self-preservation, which I don't think they have, hence my ship analogy.

But if they discover one, it's likely to be too little too late. I haven't seen the industry take a coordinated, positive step of any kind since I started following it a few years ago. It's a set of wrangling, ignorant fiefdoms who can't even manage a simple cost/benefit analysis of the adw situation that would lead them to a win/win compromise.

They are hopeless from a business standpoint -- lost in some dream of what was that precludes getting some foothold in what is, and no amount of blowing a gasket at them :bang: about that fact will change it.

There is a little bit of movement from player anger and loss of handles, and also empirical data. Five years ago rebates were looked at as the devil "it is our money and we are not giving back anything". This was also a business who said "we will never pay people to play a la a casino comps model".

In 2002 if you bet $50,000 a year, good luck on getting anything less than 21.8% takeouts. Now? If you shop around at some legal onshore outlets you can get about a 3 or 4 point break. If you up your bet, even more.

However, the gist of your post is pretty unarguable. It is an industry that clings to an average cost pricing model and seems to hold that dear to their existence, eventhough it will probably end up destroying it.

Imriledup
11-07-2008, 03:29 AM
There is a little bit of movement from player anger and loss of handles, and also empirical data. Five years ago rebates were looked at as the devil "it is our money and we are not giving back anything". This was also a business who said "we will never pay people to play a la a casino comps model".

In 2002 if you bet $50,000 a year, good luck on getting anything less than 21.8% takeouts. Now? If you shop around at some legal onshore outlets you can get about a 3 or 4 point break. If you up your bet, even more.

However, the gist of your post is pretty unarguable. It is an industry that clings to an average cost pricing model and seems to hold that dear to their existence, eventhough it will probably end up destroying it.

Part of the problem is that state governments have their hands in every piece of pie and the racetracks often have their hands tied in red tape. This pricing model is going to be hard to change because the racetrack has to convince the state to lower their 'take'. Why would the state, who knows absolutely nothing about gambling and percentages, agree to it?

boomman
11-07-2008, 10:00 AM
Comet certainly has "told it like it is", but being the eternal optimist, I always hold out hope that people who truly do love the game of horse racing (such as the members of HANA) can step up and have an effect on this impasse before it's too late. I also strongly feel that holding our wagering dollars back from tracks and organizations that don't offer unrestricted signals will undoubtedly have some effect on stalled negotiations, especially if handle continues to drop at those tracks at a high rate. I realize they have ignored it so far, but I don't see that continuing long term, as I have completely stopped wagering on the restricted signal tracks and encourage others to do the same. During the winter months while I'm at home wagering via the computer, I will concentrate on putting my wagering dollars into the pools of tracks that offer open signal access via a great site that lowers takeout for ALL players and takes GREAT care of its customers, and we all know that to be PTC. I commend Jeff Platt of HANA for getting this info out in the racing media per two very good sources: Jeremy Plonk and Ryan Conley..........:ThmbUp: :ThmbUp: :ThmbUp:

Boomer