Goodbye Meadowlands! Gural? Luchento? NJSEA? Who is the moron?

[InsideThePylons-MW]

Meadowlands just raised their host fee 40% for the 2011 season.

Whoever approved the raise is a moron.

If Gural did, he's a moron.....if he didn't he's a moron because he will be taking over a track in which somebody ran it's biggest bettors off before he took charge.

How can a track that is losing customers, has a horrendous product and is in trouble think that raising it's prices on it's best customers is a good business decision? Oh wait.....I understand.....they are trying to out-moron the morons in CA.

I bet the Meadowlands with both hands the last couple months during their fall meet to support NJ racing even though their product was crap and I knew that I probably wouldn't do any good. Now as a return gift, they kick you in the balls and raise their prices by 40% on the people that supported them.

Fvck them!

I have to go take a long shower.....I feel dirty from being violated.

[woodtoo]

That's robbery,someone call the cops.

[The Bit]

Is a link available for this? I'm assuming you are talking about take out?

[wilderness]

Is a link available for this? I'm assuming you are talking about take out?

NO.
He's referring to the simulcast signal fee paid by those tracks that import the Meadowlands signal.

I'm really not sure how that effects wagering, with the exception that tracks with borderline profits on their local wagers that are exported to the Meadowlands, may drop the simulcast.

I've NEVER seen an industry chart published of what all the North American tracks are charging for the signal. I'm sure it would be an interesting thing to compare.

[lamboguy]

i have to agree with him. these guys running racing anywhere are BRAIN DEAD.

they all have managed to blow up a great business by being stupid. i see so more and more of this stuff, it makes my head spin.

[wilderness]

Perhaps somebody might be realistic and provide what the old and new hosting fees are for the Meadowlands.

5k a night per track?
10k
20k?

How much is WEG charging?

How much is Northfield Charging?

What's that average complete day hosting fees for a track that simulcasts 20-tracks?

Add the later up and then add the exported local dollars to imported signals and you'll see why so many smaller tracks are failing. And, why horsemen are abandoning the smaller markets.
Why every track is seeking subsidy in one form or another.

Bottom line is that there are simply too many hands in the pie!

As previously offered, hosting fees CANNOT be added on to a wagered dollar.

[The Bit]

How does this effect the wagering public? Other than the possibility of the signal being dropped from certain outlets.

I never even considered this being what itp was talking about.

[Robert Goren]

I am assuming that it will effect the size of rebates that ADWs will be able to give.

[wilderness]

I am assuming that it will effect the size of rebates that ADWs will be able to give.

Does your reference to "ADW's" imply non-NJ ADW's?

Than personally, I'm all for it.

Why should the tracks incur all the expenses, while not having the capability to offer rebates and allow a non-NJ entity with less or no-overhead to take away their customers?

It's my understanding that one of laws submitted by NJ legislators was to allow ADW accounts within NJ, by non-NJ residents (which does not exist currently).

The next step should be, for the resident state of non-NJ ADW account holder to impose a higher take-out on dollars wagered with NJ (or any other state/province that account is not a resident of) ADW's WHEN a LOCAL PRODUCT offers live racing.
Simultaneously, when a resident wagers on a local product the take-out should be reduced.

We've all enjoyed the benefits of simulcasting/OTB (IMO there's no difference), whilst our local products deteriorate. Yet nobody is imposing national actions to revive these smaller local tracks that have been in dire need far longer (and deeper) than the Meadowlands.
The time has come for all us to "pay the fiddler".

"Comp" the resident for wagering on their local product.
"Penalize" the resident for wagering on a non-local product.

[Charles54]

I am assuming that it will effect the size of rebates that ADWs will be able to give.

Exactly. This seems like an excellent business strategy that should help both "regular" bettors and the industry as a whole.

Allowing "preferred" customers to obtain rebates is extremely bad for everyone else. For racing has compete with on-line poker and sports betting in the "skill" wagering arena; it has to do everything possible to get rid of the whales and the bots. They are destroying the underlying game.

[InsideThePylons-MW]

When host fees go up (especially 40%).....

It eliminates any chance of future takeout reductions.

It reduces or eliminates any rebates, incentives, free stuff, etc. that ADW's offer to their customers.

It squeezes the lemon dry for smaller simulcasting venues that are showing their product...example....Meadowlands tells small track that they want 2x for every $ wagered on their product but only want to pay 1x for every $ wagered on the small track (or don't even take their signal at all)....basically it gouges the smaller tracks.

[wilderness]

When host fees go up (especially 40%).....

It eliminates any chance of future takeout reductions.

It reduces or eliminates any rebates, incentives, free stuff, etc. that ADW's offer to their customers.

It squeezes the lemon dry for smaller simulcasting venues that are showing their product...example....Meadowlands tells small track that they want 2x for every $ wagered on their product but only want to pay 1x for every $ wagered on the small track (or don't even take their signal at all)....basically it gouges the smaller tracks.

Still say that unless your able to provide the numbers I previously mentioned (http://www.paceadvantage.com/forum/showpost.php?p=1028250&postcount=6) that you offer no solid evidence that a 40% increase for the Meadowlands host fee is not within comparison of what other tracks are charging.

In effect, unless you provide the numbers, your just "crying wolf"!

[The Bit]

Why does it eliminate future take out reductions?

And what is the actual increase? Is it 10% to 50%? Or is it 10% to 14%? Big difference.

[DeanT]

Still say that unless your able to provide the numbers I previously mentioned (http://www.paceadvantage.com/forum/showpost.php?p=1028250&postcount=6) that you offer no solid evidence that a 40% increase for the Meadowlands host fee is not within comparison of what other tracks are charging.

In effect, unless you provide the numbers, your just "crying wolf"!

You are asking him to compare the M to other "harness tracks" like it is some sort of panacea?

All tracks are in the toilet. Following other tracks host fees who are in the toilet only makes the toilet more crowded.

[JustRalph]

This thread is a great example of why we need HANA

[wilderness]

You are asking him to compare the M to other "harness tracks" like it is some sort of panacea?

All tracks are in the toilet. Following other tracks host fees who are in the toilet only makes the toilet more crowded.

Unless your aware of the size and market competitiveness of the "toilet"?

How would you be aware of when the next flush is apparent.

BTW, I tried a google on various terms and was unable to locate any published list of host fees.

[wilderness]

This thread is a great example of why we need HANA

Ralph,
If HANA is "for" condemnation and bantering, before all the facts are presented?

Than I disagree.

[Zman179]

I think this is all a big deal about nothing.

[wilderness]

I think this is all a big deal about nothing.

My point exactly.

[Robert Goren]

Unless your aware of the size and market competitiveness of the "toilet"?

How would you be aware of when the next flush is apparent.

BTW, I tried a google on various terms and was unable to locate any published list of host fees.You won't find them anywhere. I spent several days trying get that information and got nowhere. It is racing's most closely guarded secret. If you want to know, you are going to have do some hacking. That said anyone who thinks it not effect the bottom line of at least some betters is flat out wrong. If some one is getting more money, some one else is going to get less. In horse racing, the increased cost is always passed on to the better.

[wilderness]

The problem with the hosting signal's is the "hubs" are contracted by individual tracks.
A "hub" offers a grouped set of signals.

Anybody know the names of the "hubs"?

TrackPower is one.
Stronach has one.
There's another in Florida (name escapes me) that is/was owned by Tyner and Hartman of Hazel Park.
Believe WEG has their own hub (via their longtime conflict with Stronach).

When I visited Mount Pleasant Meadows (MI) in 2001 or 2002, they did not carry the simulcast tracks that the other Mich tracks were offering, rather their "hub" was via Sam Houston in Texas.

Next question is, do the "hub"s get a cut of the wagered dollars?

Located some insignificant references:

TRA
http://www.tra-online.com/manual/AccountingandFinance.pdf

Simulcast Fees
There are two primary methods of charging a Host fee for a simulcast—a set percentage Guest's total handle or a less prevalent contractual split of net revenue with the Guest.

Percentage of Handle Method
The accounting function is greatly simplified if the Host fee is a pre-determined percentage of the handle. This percentage can be calculated to be the equivalent of a split of net revenue, but without the reporting complications.

It still is necessary for the Host to receive from a Guest acting as a hub the breakdown of the Satellite handles, even if the Guest and its satellites are paying the same rates and the Guest has agreed to handle all settlements.

Split of Net Revenue Method
A split of net revenue requires agreement and understanding on what constitutes the net amount. For instance, the agreement may specify a 50-50 split between the Host and Guest sites after state and local tax commissions in the Guest location are deducted. It can be difficult for a Host to identify those tax rates. In some states, the tax commissions can differ from track to track, wager to wager, from one wagering outlet to another, or be determined by a sliding scale for the day— or even the entire meeting.
--------------

NY-OTB:
http://www.drf.com/news/nyra-open-aqueduct-simulcasting-dark-days

Though New York racing interests received most of the revenue from wagering by New York City OTB customers, the company was also one of the largest sources of handle for out-of-state simulcast signals, expanding the impact of the closing beyond New York to the racing industry at large. The impact, however, is mitigated somewhat by the fact that New York City OTB paid the smallest simulcast fee of any offtrack betting outlet in the country because of the sheer size of its volume.

For example, Turf Paradise in Phoenix, Ariz., was one of the first tracks to try to capitalize on New York City OTB’s volume when the track shifted its live racing schedule almost a decade ago to include live racing on Monday and Tuesday, days which, at the time, were traditionally dark days on the national racing calendar. Though many tracks have followed suit with the shift to exploit the same advantage, New York City OTB remained a large handle source for Turf Paradise, a revenue source that has now dried up.

Vince Francia, the general manager of Turf Paradise, said on Friday that New York City OTB bettors had wagered $3.7 million on Turf’s signal since the track opened on Oct. 1, or about $77,000 a day. Because of New York City OTB’s bargaining power, Turf Paradise only kept 2 percent of that money as the simulcast fee, Francia said, for total revenue of $1,540 a day, an amount that was split with horsemen.
-----------------

Here's a reference to 2010 and Hawthorne, however the numbers and attempting to make sense of the "simulcast fees" is too overwhelming:

Hawthorne P&L 2010 inlcudes Simo fees:
http://www.itharacing.com/Uploads/resources/1290179661.pdf

[DeanT]

Here is an article on signal fees which explains a little bit about them.

http://blog.horseplayersassociation.org/2010/09/understanding-signal-fees.html

[The Bit]

The above explains it pretty well. Though, I am missing the apparent correalation between take out and signal fee. Why does a higher signal fee affect the ability or willingness to lower take out?

[wilderness]

Many thanks Dean.

Let me ask this, after reading the article referenced?

Is it the contention of yourself and others that utilize ADW's that rebates (which the tracks of the associated wagering hubs) cannot offer are the fundamental issue here?

Are these ADW's returning the appropriate dividends to the local track which is required to absorb the expenses track operation, purses and many other disbursements, while the ADW's have none of these expenses?

Or in effect, are these ADW's offshore?

[DeanT]

The above explains it pretty well. Though, I am missing the apparent correalation between take out and signal fee. Why does a higher signal fee affect the ability or willingness to lower take out?

If the signal fees are upped to say 14%, then the ADWs make a wee bit and the host track makes a ton. Ignoring the loss of advertising, player rewards etc and just focusing on that: Let's say you wanted to offer a 12% pick 3 bet to juice handles. With a signal fee that high it wont be taken anywhere. As signal fees grow, (because a lot of this is written into horsemen contracts) the player gets squeezed, takeout remains high etc.

Many thanks Dean.

Let me ask this, after reading the article referenced?

Is it the contention of yourself and others that utilize ADW's that rebates (which the tracks of the associated wagering hubs) cannot offer are the fundamental issue here?

Are these ADW's returning the appropriate dividends to the local track which is required to absorb the expenses track operation, purses and many other disbursements, while the ADW's have none of these expenses?

Or in effect, are these ADW's offshore?

These are regular ADW's.

The fundamental issue is handles and maximizing them, where enough goes to purses and enough goes to resellers.

Take a non-track example. A lemon farmer sells you lemons and you hire a sales staff, make commercials, take out ads in supermarket fliers for lemons, build a website to sell lemons on the web, offer your customers discounts to make them buy more, go to lemon trade shows and all the rest.

He charges you 10 cents for a lemon. You sell the lemon for 20 cents. After all your costs to grow your lemon sales are included, you make 1 cent a lemon. You are hapy with that, because you are selling a lot of lemons.

Now the lemon maker ups his lemon fee by five cents.

What happens?

You are now unprofitable, so you have to cut: You cut advertising, you cut bulk buying deals, you cut your call center and you shut down your website.

In the end you sell less lemons and everyone makes less money.

[wilderness]

These are regular ADW's.

The fundamental issue is handles and maximizing them, where enough goes to purses and enough goes to resellers.

Take a non-track example. A lemon farmer sells you lemons and you hire a sales staff, make commercials, take out ads in supermarket fliers for lemons, build a website to sell lemons on the web, offer your customers discounts to make them buy more, go to lemon trade shows and all the rest.

He charges you 10 cents for a lemon. You sell the lemon for 20 cents. After all your costs to grow your lemon sales are included, you make 1 cent a lemon. You are hapy with that, because you are selling a lot of lemons.

Now the lemon maker ups his lemon fee by five cents.

What happens?

You are now unprofitable, so you have to cut: You cut advertising, you cut bulk buying deals, you cut your call center and you shut down your website.

In the end you sell less lemons and everyone makes less money.

many thanks Dean, however your example is flawed.

Your example is based upon expanding markets and increasing volumes.

Horse racing as a whole (regardless of breed) and the wagering of same is dying market.
Cutting up that pie into little pieces so that more franchisee's may have their share of the so-called profits is NOT got to promote the longevity of the industry.
Nor is dicing the profit pie up, going to allow racetracks to stay in business.

ADW's, simulcasting/OTB's have been a detriment to horse racing and the survival of horse racing will not be dependent upon the success of the aforementioned three, at least and unless a change is implemented to eliminate the present system of distribution of profits.

If the profits are not visible, than how may governing bodies determine their fair share of the revenue!

"Comp" the resident for wagering on their local product.
"Penalize" the resident for wagering on a non-local product.

[DeanT]

many thanks Dean, however your example is flawed.

Your example is based upon expanding markets and increasing volumes.

Horse racing as a whole (regardless of breed) and the wagering of same is dying market.
Cutting up that pie into little pieces so that more franchisee's may have their share of the so-called profits is NOT got to promote the longevity of the industry.
Nor is dicing the profit pie up, going to allow racetracks to stay in business.

ADW's, simulcasting/OTB's have been a detriment to horse racing and the survival of horse racing will not be dependent upon the success of the aforementioned three, at least and unless a change is implemented to eliminate the present system of distribution of profits.

If the profits are not visible, than how may governing bodies determine their fair share of the revenue!

"Comp" the resident for wagering on their local product.
"Penalize" the resident for wagering on a non-local product.

With respect, that is 1980 thinking.

Customers dictate if your track wins or loses. They speak with their wallets.

We live in a weird time. Somehow taking more of a shrinking pie is considered a business model.

The bottom line is this: ADWs are growing, just like the web has. They spend a larger % of their revenues in promotion and player rewards and they work to keep their customers, and grow new markets as it is in their best interest to. They are the singe biggest reason handles have not fallen to dog racing territory..... and racing does everything in its power to kill them. Make sense? No. But nothing much does in a business where half their revenues from handle have been destroyed in only ten years.

[The Bit]

With respect, that is 1980 thinking.
The bottom line is this: ADWs are growing, just like the web has. They spend a larger % of their revenues in promotion and player rewards and they work to keep their customers, and grow new markets as it is in their best interest to. They are the singe biggest reason handles have not fallen to dog racing territory..... and racing does everything in its power to kill them. Make sense?

Now this makes a ton of sense and explains it pretty clearly.

Learn something new everyday. Being from NJ my ADW options are one, NJAW, which offers nothing outside of a wagering platform and free video replays. I guess if I had other wagering options I'd pay more attention to this issue.

[wilderness]

With respect, that is 1980 thinking.
Customers dictate if your track wins or loses. They speak with their wallets.


Well they are certainly speaking with their wallets in North America.
Pick most any racetrack on a normal night and you may literally shoot a cannon through the deserted grandstands.


We live in a weird time. Somehow taking more of a shrinking pie is considered a business model.

Hogwash (with all respect). Your talking about closing the doors of an industry your hoping to rejuvenate and your unable to see the forest through the trees.

The bottom line is this: ADWs are growing, just like the web has. They spend a larger % of their revenues in promotion and player rewards and they work to keep their customers, and grow new markets as it is in their best interest to. They are the singe biggest reason handles have not fallen to dog racing territory..... and racing does everything in its power to kill them. Make sense? No. But nothing much does in a business where half their revenues from handle have been destroyed in only ten years.

Hogwash (again, with all respect).
Moving the money around (rapidly declining wagered amounts) will not increase the dollars.

Once again, the revenues have declined because too many franchisees have their hand in the pie and operations which provide the product are not able to muster the necessary profits to keep the doors open.


ADW's, simulcasting/OTB's have been a detriment to horse racing and the survival of horse racing will not be dependent upon the success of the aforementioned three, at least and unless a change is implemented to eliminate the present system of distribution of profits.


The numbers for the above were published in the USTA's Trotting and Pacing Guides each year from 1947 through 2003 or 2004.
The declining numbers and the misrepresentation of reporting those numbers only assure the failure of horse racing.
I'm sure there are similar numbers published for T-Bred racing, however that breed is not my forte.

[DeanT]

ADW's, simulcasting/OTB's have been a detriment to horse racing and the survival of horse racing will not be dependent upon the success of the aforementioned three, at least and unless a change is implemented to eliminate the present system of distribution of profits.

I can throw a quote at ya, if you want:

Cell phones have been a detriment to the telephone pole market and the survival of poles will not be dependent upon the success of the aforementioned cell phones, at least until there is a change implemented to eliminate cell phones

What racing fails to understand, and it should be plastered on every executive's desk in the entire industry: We are not a monopoly anymore.

The world has changed. Eliminating new markets, or trying to control them, or trying to average cost price in a marginal cost price game assures its destruction. Some telephone makers moved on to cell phones and have a share of that market. Some magazines have moved on and done well digitally. Some companies that made typewriters have moved on to computers.

Telephone pole makers realized the world had changed and switched to building cell towers. Racing still wants to sell telephone poles to a market that is telling them they don't want to buy them.

Until horse racing quits speaking like it is 1949 and stops wishing they could be a monopoly again, this game is finished. If that is hogwash, so be it.

[wilderness]

I can throw a quote at ya, if you want:

What racing fails to understand, and it should be plastered on every executive's desk in the entire industry: We are not a monopoly anymore.

The world has changed. Eliminating new markets, or trying to control them, or trying to average cost price in a marginal cost price game assures its destruction. Some telephone makers moved on to cell phones and have a share of that market. Some magazines have moved on and done well digitally. Some companies that made typewriters have moved on to computers.

Until horse racing quits speaking like it is 1949 and wishes they could be a monopoly again, this game is finished. If that is hogwash, so be it.

So in summary, and please accept my most sincere apologies for implying something that you did not state.

Your suggesting that all of horse racing simply close their doors (i. e., supply and demand), and let new marketers with a better understanding of today's technology establish new markets?

[wilderness]

You won't find them anywhere. I spent several days trying get that information and got nowhere. It is racing's most closely guarded secret. If you want to know, you are going to have do some hacking.

Robert,
Your apparently correct.

I've searched google.
Posted requests for "simulcast host fees" on three additional harness racing web-forums, one web-T-Bred forum, two harness racing email lists, sent email inquires to an approximate dozen harness track officials, and all of this has NOT resulted in a solitary reply.

[DeanT]

Your suggesting that all of horse racing simply close their doors (i. e., supply and demand), and let new marketers with a better understanding of today's technology establish new markets?

1. Be aware the world has changed and change with it

2. Realize we can not average cost price

3. Listen to their betting customers

It is advice that any business would get who has had a disruptive technology forced upon it via the changing world.

[wilderness]

3. Listen to their betting customers

People wagering into pools that do not provide for the longevity of the same product they are wagering upon, are NOT customers.

[DeanT]

People wagering into pools that do not provide for the longevity of the same product they are wagering upon, are NOT customers.

Ya that makes sense.

I wager $1M and I give Northfield park 5%. If they raise it to 10% to make their track better I wager $0. That is a lot better for our sport.

You got me!

[InsideThePylons-MW]

Ya that makes sense.

I wager $1M and I give Northfield park 5%. If they raise it to 10% to make their track better I wager $0. That is a lot better for our sport.

You got me!

Myself, racetrack executives, industry leaders, owners, trainers, Ed Derosa, etc. all know a little secret which you obviously don't know.......

You will wager $1M no matter if we charge you 5% or 10% because you are a sick degenerate moronic gambler.

You might say you won't bet, but we know you will.

[wilderness]

People wagering into pools that do not provide for the longevity of the same product they are wagering upon, are NOT customers.

Ya that makes sense.
I wager $1M and I give Northfield park 5%. If they raise it to 10% to make their track better I wager $0. That is a lot better for our sport.

You got me!

Irregardless of what you wager, if the wagered dollars are not wagered within the confines of the industry and within parameters that are intended to leave that industry in-tact, than your dollars are not beneficial to the longevity of same industry.

[InsideThePylons-MW]

Irregardless of what you wager, if the wagered dollars are not wagered within the confines of the industry and within parameters that are intended to leave that industry in-tact, than your dollars are not beneficial to the longevity of same industry.

Agree 100%

I would rather go out of business than to stay in business and accept $50K from him when I think he should pay $100K for the privilege of betting on my product.

[DeanT]

It goes back to post seven - every racetrack exec should have "we are not a monopoly anymore" on their mouse pads.

Way back when I took a course in Logic, PHL 245 I think it was. I think this would pass that prof as a truism:

The only businesses that can set price are monopolies, otherwise customers set prices.

Horse racing once was a monopoly and could set price, but now they are not.

Therefore, in horse racing, customers set prices.




You are saying in each of your posts that somehow taking money from a customer at a market price is killing horse racing. Since monopolies can only set prices, and we are not one, your logic is flawed from your first post this thread. It's not part of the solution, it is part of the problem.

[wilderness]

You are saying in each of your posts that somehow taking money from a customer at a market price is killing horse racing. Since monopolies can only set prices, and we are not one, your logic is flawed from your first post this thread. It's not part of the solution, it is part of the problem.

Quite the contrary!

What's flawed is your perception on business operates.

Under your analogy, business would accept a lesser price for their product than is required to maintain their profit and loss, and keep their doors open (irregardless of the losses) entirely for your amusement.

[wilderness]

Agree 100%

I would rather go out of business than to stay in business and accept $50K from him when I think he should pay $100K for the privilege of betting on my product.

Once again, if that money is wagered at an ADW that either doesn't go into the general pool, or goes into the general pool at a lesser rate than to cover the P&L overhead of the track, than yes.
The wagered amount contributes to the decline of the industry and requires the few customers left to absorb the difference.

[DeanT]

that either doesn't go into the general pool

No one is talking about that.

[wilderness]

No one is talking about that.

Golly Gee!

My sincere apologies for my misunderstanding.

I thought this entire thread was about ADW's and the effect of increasing the simulcast host fees as to same.

[DeanT]

Golly Gee!

My sincere apologies for my misunderstanding.

I thought this entire thread was about ADW's and the effect of increasing the simulcast host fees as to same.

It is. An ADW with a host fee is a legal ADW where all money goes into the pools. Host fees have nothing to do with offshore places that book bets.

[Stillriledup]

Exactly. This seems like an excellent business strategy that should help both "regular" bettors and the industry as a whole.

Allowing "preferred" customers to obtain rebates is extremely bad for everyone else. For racing has compete with on-line poker and sports betting in the "skill" wagering arena; it has to do everything possible to get rid of the whales and the bots. They are destroying the underlying game.

This "preferred" list you speak of, how do you get on one, do you have to be of a certain color or religion?

[Robert Goren]

Exactly. This seems like an excellent business strategy that should help both "regular" bettors and the industry as a whole.

Allowing "preferred" customers to obtain rebates is extremely bad for everyone else. For racing has compete with on-line poker and sports betting in the "skill" wagering arena; it has to do everything possible to get rid of the whales and the bots. They are destroying the underlying game.For the record, there are plenty of whales in online poker who get a rebate based on the amount of money they bet.

[baconswitchfarm]

Thought I would throw in my two cents. I bet harness full time and will tell you my thoughts. My rebate will go down with the increased fee at the Big m. If they price themselves into a spot where i can't make money on their product I will simply not bet it. It will be up to big m to decide if they want 5% of the 500k i bet on them last year or 8% of the 0 I might bet this year. If they price themselves out of my market that is their decision. This is my business and that is how I must treat it. I am not responsible for the long term solvency of M1 . I don't bear their burdens as they are not concerned about my bottom line .

[Rutgers]

For what it's worth, I’ll throw in my 2 cents as well. (trust me it ain’t worth 2 cents)




Take a non-track example. A lemon farmer sells you lemons and you hire a sales staff, make commercials, take out ads in supermarket fliers for lemons, build a website to sell lemons on the web, offer your customers discounts to make them buy more, go to lemon trade shows and all the rest.

He charges you 10 cents for a lemon. You sell the lemon for 20 cents. After all your costs to grow your lemon sales are included, you make 1 cent a lemon. You are hapy with that, because you are selling a lot of lemons.

Now the lemon maker ups his lemon fee by five cents.

What happens?

You are now unprofitable, so you have to cut: You cut advertising, you cut bulk buying deals, you cut your call center and you shut down your website.

In the end you sell less lemons and everyone makes less money.

Let’s look at it from the farmer’s point of view.

He has costs as well… land, fertilizer, labor, machinery etc…in fact he has more expenses then you do and a larger capital investment. Plus the farmer also sells lemons directly as well, so he has advertising, sales and web costs as well.

When his costs go up, he has to ask for more money for each lemon. In your example, instead of the you becoming more efficient or making all your customers pay the same price, you think the farmer should bear the cost of the increase. The only way he can do that is by cutting expenses, which leads to a lower quality of lemons. That may be OK for a short while, but eventually the quality of lemons gets so bad, people stop buying them from you and him and you are both out of business.

Plus keep in mind, as an independent lemon seller you are always free to stop selling lemons. The farmer probably would not sell as many lemons, but he would make more per lemon if your customers when to him directly instead of you.

But enough about fruits.

A racetrack has a few options to increase their revenue from handle. Option A is to increase the takeout. Option B is to get a larger percentage of the money bet on the races and since most of a track handle is bet off-track that means increasing their signal fees.

Option A adversely affects (or is it effects?) the majority of horse players by increasing the cost of the bets. It could actually benefit some larger players, because if the track increases the takeout but does not rise the fee by the same amount and the ADW increases their largest bettors rebate by the same percentage (or any amount more then the other players) those large players now have an increased advantage of the rest the players. We also know from experience that increasing the takeout decreases handle.

Option B adversely affects only a small percentage of the players. To the majority of the players the cost does not go up. Maybe some of the larger bettors at an ADW will get a decrease in their rebate, but they will probably still get a rebate and a bigger rebate then most other players. Therefore, they will still have an edge over the majority of the players, they may not win as much because they would be losing more and have to bet less but they would still bet. And closing the gap between the highest rebated players and the majority of the players who receive little or no rebates, makes the game better for the majority.

One of the benefits (at least in theory) of increasing the signal fees is more money is returned to the track running the races which will lead to larger field sizes due to larger purses. Larger field sizes lead to larger pools, which will allow the larger bettor to increase their wagers.

So between Option A or Option B, Option B is better for most players and horse racing over all. Which is essentially what the Meadowlands is doing. CA is following Option A.

Of course, Option C, which is probably the preferred option of all horseplayers, is to lower the takeout so that the increase in handle would more the cover the percentage decrease in takeout. I believe this has been discussed in other threads, so I won’t rehash it here.

The point of my post wasn’t meant to support or justify the Meadowlands decision, but I merely wanted to point out the other side of the argument.

[DeanT]

For what it's worth, I’ll throw in my 2 cents as well. (trust me it ain’t worth 2 cents)




A racetrack has a few options to increase their revenue from handle. Option A is to increase the takeout. Option B is to get a larger percentage of the money bet on the races and since most of a track handle is bet off-track that means increasing their signal fees.

Option A adversely affects (or is it effects?) the majority of horse players by increasing the cost of the bets. It could actually benefit some larger players, because if the track increases the takeout but does not rise the fee by the same amount and the ADW increases their largest bettors rebate by the same percentage (or any amount more then the other players) those large players now have an increased advantage of the rest the players. We also know from experience that increasing the takeout decreases handle.


Well you lost me there. No piece of economic research since 1973 says raising take increases revenue.

And what about option 3 - increasing handle?

Why is it always about trying to take more money from fewer customers by charging them more, or squeezing someone for a slice of a shrinking pie?

Cant anyone in racing act like every other business on the face of the earth?

[Robert Goren]

Most business when they run into financial trouble, look to cut costs. The biggest cost in the race track business is purses. They don't seem to be looking at that. Just saying.

[wilderness]

Most business when they run into financial trouble, look to cut costs. The biggest cost in the race track business is purses. They don't seem to be looking at that. Just saying.

The Meadowlands cannot afford to cut purses, as they is why the horse and horsemen are leaving.

The Meadowlands competitors are subsidized by VLT's, of which M1 simply cannot compete with.

[wilderness]

Hey Dean,
I just wanted to thank you for the cordial discussion, and even though we don't agree on basic methods, we do agree that changes in the structure of the horse racing industry are eminent.

[wilderness]

Dean,
BTW, congrats on the HANA award. I know that you and others have made dedicated efforts to organize and navigate the group for a collective voice.

[Sea Biscuit]

Maybe some of the harness tracks should follow Tampa bay Downs example.

Their handle is going through the roof and their secret recipe is....lower take outs.

Its all there in one of HANA's report


http://blog.horseplayersassociation.org/

[Charles54]

For the record, there are plenty of whales in online poker who get a rebate based on the amount of money they bet.I don't see how you can have a whale in poker. I think of a whale as a bettor who had an inordinate impact on the odds due to the size of his bets. There really is no equivalent in poker, where you play in small groups.

The problem is that in a pari-mutuel system one "perfect" bettor can theoretically balance the pools in such a way that it is impossible for anyone to win. Under those conditions handicapping becomes no different than playing a casino game against the house. Why waste your time handicapping if the takeout is high and the game is unbeatable anyway?

Rebates are problematic because a mediocre handicapper with a $0.97 ROI can make huge bets and actually produce a profit. Rebates need to be eliminated and replaced with across the board takeout reductions. One way to do that is for host tracks to receive a larger share of the takeout. Given that Gural has both increased host fees at the Meadowlands and reduced takeout elsewhere, it seems that he may subscribe to that thinking.

The way for tracks to make more money is to reduce takeout and increase churn. Make it a real game of skill, with an even playing field and a reasonable takeout, where the very best players thrive (that is exactly what makes on-line poker so popular with players and profitable for operators.)

Although whales may increase handle in the short-run, I don't see how encouraging their current practices can possibly be a long-term strategy for racing's future.

[wilderness]

Although whales may increase handle in the short-run, I don't see how encouraging their current practices can possibly be a long-term strategy for racing's future.

I. e., temporary cash flow while being a detriment to the long-range viability and profitability of the product.

False temporary cash flow simply requires sustaining more long-term losses by the business.

[Robert Goren]

The equalivant for a whale in online poker is a grinder. He plays very tight on a bunch of tables at the same time. You get 4 or 5 of them at most $2-$4 blind tables. Some these guys send well over 100K a month through the site. I could explain how these guys make money and havoc they cause to online poker, but this is a horse racing site, not a poker site.

[DeanT]

Dean,
BTW, congrats on the HANA award. I know that you and others have made dedicated efforts to organize and navigate the group for a collective voice.

Everyone there is trying to up handles and drive more customers. I guess when I see something that might have us make $1M from 50 customers instead of 900k from 40, it rubs me the wrong way. I've always believed we need more customers, and if we get them, the money will take care of itself.

Harness racing is a great game to play when it is done right, that we all agree. We just need more people playing it and watching it!

[Ray2000]

JMO

I welcome whales, the dumber the better. I long for a better who makes an inordinate impact on the odds. ("Please come back Mr Bridgejumper, Don't Jump")

There are 2 ways that overlays can occur, one is if the crowd overlooks a horse or exotic combination and terribly underbets it. This is the best type of overlay maker in that all the "missing" money goes to producing a positive shift in the wager's expectation.

The second way is if the crowd (or a whale) overbets a horse or exotic combination. This shifts the expectation positively on all other horses by a smaller amount because the "extra" money is spread out over more than one betting interest. This makes the positive shift smaller than before and may not be enough to overcome the vig but board-watchers tend to spot the overbet and Jump on Board.



.

[Rutgers]

Well you lost me there. No piece of economic research since 1973 says raising take increases revenue.


Raising takeout doesn’t increase handle, in fact, it decreases handle. I really do not think any racing professional is going to dispute this. (at least in private)

But in this case we aren’t not talking about handle we are talking about the track’s share of the handle. It is a highly possible that the increase in the percentage of the takeout more then makes up for the loss of handle.

If a track has a $1 million handle with a 20% takeout rate, the takeout is $200K. Rise the takeout to 23% drop the handle to $900K and the takeout is $207K. One reason why the takeout is so high, is time and time again it has been profitable for the tracks to raise the takeout.

I’m not saying this is the best thing for horse racing, but if you really want to lower the takeout in horse racing you need to appreciate the fact that raising takeout to help the racetrack’s bottom line is a viable option.

The Meadowlands did not chose to go this route. To increase their revenue they increased the signal fees which may have an adverse affect on a few players, but will have no to a slight positive affect on most players and levels the playing field a bit. You should take this as a victory in the takeout battle. A racing jurisdiction/venue is financial uncertainty did not rise takeout.

[Charles54]

The equalivant for a whale in online poker is a grinder. He plays very tight on a bunch of tables at the same time. You get 4 or 5 of them at most $2-$4 blind tables. Some these guys send well over 100K a month through the site. I could explain how these guys make money and havoc they cause to online poker, but this is a horse racing site, not a poker site.
Yes, grinders are a nuisance, but I can't see what that has to do with the impact whales have on horse racing pools.

A small-time set miner who eight-tables at 2/4 has minimal affect on on-line poker. I don't think they would account for more than one-tenth of one percent of a poker site's churn. Nonetheless, I agree, they are a blight on the game, and poker sites react by banning software in an attempt to reduce automatic and insider play as much as possible. It's probably not all that effective, but they at least try.

Shouldn't horse racing try to make the game as appealing to regular players as possible?

[Charles54]

I welcome whales, the dumber the better.
Sure, if the whales really are "dumb." But are they?

I think whales actually use computer models which are considerably more accurate than the public odds. If that were not the case -if whales lost 15% or 20% on their wagers - wouldn't they tend to quit? And wouldn't you and Pandy and all the other successful harness handicappers be recording soaring returns? I know I'm not.

And it's tougher for you and I, but imagine the beating that "better than average" handicappers who used to lose ten percent are taking these days. I imagine their losses have likely doubled since the whales arrived in harness racing.

Don't you think this is bad for the sport?

[Robert Goren]

You can always spot the horse people when topic becames takeout.

[Ray2000]

Sure, if the whales really are "dumb." But are they?




"Whales who use computer models".... now that is a horse of a different color. :)

Most computer modelers are familiar with the "Law of Diminishing Returns" and stay away from making large bets in Harness pools, where a $50 bet drives a positive expectation bet negative. In effect, they don't tend to be whales at all, just hobbyists playing for 2-5$ dollar fun. Any whales in Harness, except for a few(?) at BigM, BMLP, WDB/MOH are not that skilled and quickly come and go. (btw, we really should define what me mean by "whale" I use the term for > $500 Win bettors)


.

[wilderness]

Meadowlands just raised their host fee 40% for the 2011 season.
Whoever approved the raise is a moron.


The Meadowlands did not chose to go this route. To increase their revenue they increased the signal fees which may have an adverse affect on a few players, but will have no to a slight positive affect on most players and levels the playing field a bit. You should take this as a victory in the takeout battle. A racing jurisdiction/venue is financial uncertainty did not rise takeout.

This entire thread has been pure nonsense?
(even though it has been interesting).

The remarkable 40% increase was a raise from 1% to 1.4%.
That's a mere 0.4-percent increase.

If any track or wagering entity (person or otherwise has margins affected by 4/10's of one percent?
Than they are definitely in the wrong game.

[DeanT]

Raising takeout doesn’t increase handle, in fact, it decreases handle. I really do not think any racing professional is going to dispute this. (at least in private)

But in this case we aren’t not talking about handle we are talking about the track’s share of the handle. It is a highly possible that the increase in the percentage of the takeout more then makes up for the loss of handle.

If a track has a $1 million handle with a 20% takeout rate, the takeout is $200K. Rise the takeout to 23% drop the handle to $900K and the takeout is $207K. One reason why the takeout is so high, is time and time again it has been profitable for the tracks to raise the takeout.

I’m not saying this is the best thing for horse racing, but if you really want to lower the takeout in horse racing you need to appreciate the fact that raising takeout to help the racetrack’s bottom line is a viable option.

The Meadowlands did not chose to go this route. To increase their revenue they increased the signal fees which may have an adverse affect on a few players, but will have no to a slight positive affect on most players and levels the playing field a bit. You should take this as a victory in the takeout battle. A racing jurisdiction/venue is financial uncertainty did not rise takeout.

I went to work today. We currently have 30 clients and we would like to make it 32, so we can grow. Simple.

It was never once discussed that we should raise prices 10%, drop back to 28 clients, even though we might make a few more bucks. That is not growth, it is long term suicide.

This is the difference between racing and normal business, and it is a big reason why other businesses grow and racing has lost half its handles in ten years (imo).

What racing defines as a revenue growth model, every economics book in the history of the world defines as a sure way to the poorhouse.

[The Bit]

Meadowlands just raised their host fee 40% for the 2011 season.



And what is the actual increase? Is it 10% to 50%? Or is it 10% to 14%?


The remarkable 40% increase was a raise from 1% to 1.4%.
That's a mere 0.4-percent increase.


I suspected this considering the way other changes have been represented lately.

After reading this thread, I'm not sure what to make of this increase. Somewhat valid points and arguments have been made for both sides it seems.

[The Bit]

I went to work today. We currently have 30 clients and we would like to make it 32, so we can grow. Simple.

It was never once discussed that we should raise prices 10%, drop back to 28 clients, even though we might make a few more bucks. That is not growth, it is long term suicide.


The private golf clubs of the world have traveled a path very similiar to horse racing. Over the last several years, due to many factors, mid to high level private golf courses have struggled. Not the Pine Valleys, Augustas and Oakmonts of the world, they will never struggle. But the courses just below that level and lower have seen a serious decrease in membership which negatively affected revenue and operating cash.

The answer a few years ago? Raise yearly dues and initiation fees ( take out ). Make up for that aging membership ( bettors ) by raising the price for those that still exist or any new members ( Those of us still here betting ). That worked a period of time, when the economy was booming and Tiger was storming the world. However, most of these places hit a breaking point, especially when the economy tanked. Raising dues no longer worked. Nobody was loooking to join. They had priced themselves out and people went elsewhere ( daily fee courses or more member friendly private clubs ).

Horse racing has gone down and continues down a very similiar path. It is just taking longer.

[DeanT]

Interesting point.

[Robert Goren]

This entire thread has been pure nonsense?
(even though it has been interesting).

The remarkable 40% increase was a raise from 1% to 1.4%.
That's a mere 0.4-percent increase.

If any track or wagering entity (person or otherwise has margins affected by 4/10's of one percent?
Than they are definitely in the wrong game.Where did you get those numbers?

[InsideThePylons-MW]

Where did you get those numbers?

Fantasyland?

[wilderness]

Where did you get those numbers?

They have snowbirds in NE?

Today in Mich a snowbird flew in my window and whispered in my ear ;)

[baconswitchfarm]

:)
. In effect, they don't tend to be whales at all, just hobbyists playing for 2-5$ dollar fun. Any whales in Harness, except for a few(?) at BigM, BMLP, WDB/MOH are not that skilled and quickly come and go. (btw, we really should define what me mean by "whale" I use the term for > $500 Win bettors)


.[/QUOTE]


I don't think you can judge a whale in harness by win bet size.The pool sizes just don't allow that. i would say a whale in harness would be anybody over 1 or 2 million a year in handle. 2 million a year in harness is 10 millon in thoroughbred size pools in my opinion. i think there are more than a few guys betting that much.

[Charles54]

"Whales who use computer models".... now that is a horse of a different color. :)
Most computer modelers are familiar with the "Law of Diminishing Returns" and stay away from making large bets in Harness pools, where a $50 bet drives a positive expectation bet negative. In effect, they don't tend to be whales at all, just hobbyists playing for 2-5$ dollar fun. Any whales in Harness, except for a few(?) at BigM, BMLP, WDB/MOH are not that skilled and quickly come and go. (btw, we really should define what me mean by "whale" I use the term for > $500 Win bettors).To me a whale is someone who consistently makes bets large enough to have an impact on the odds. I'm not sure where your categorical statements about who these people are and how they operate come from, but I just assume that most are using some kind of computer model. Why wouldn't they?

In economics, as you may know, diminishing returns usually refers to productivity; not net. So, although I agree that a $50 bet might decrease the payoff, I do not agree that the statistical models used by whales would recommend such small bets.

If your base ROI is a modest $1.08 (after rebate) and there is 30k in the win pool, as there often is at Woodbine or the Meadowlands, the optimal bet size on an even money shot is a little over $1,500 -- that's the point at which the lowered payoff causes your net to begin to drop. At a mid-level track like Dover or Monticello the pools are smaller, but even with a $5k pool, the optimal bet size is still about $256. And, of course, more money can be go through the exotics.

Of course, there is no reason people shouldn't be allowed to bet as much as they wish. I just don't think giving rebates or allowing a pipeline for huge last second bets is fair practise or a good thing for the sport. To the contrary, I think the playing field should be kept as level as possible.

It seems that is part of what Gural is trying to do. I don't really understand the crticism.

[InsideThePylons-MW]

If your base ROI is a modest $1.08 (after rebate)

Modest? Are you kidding?

If a whale bets volume on a vast majority of races (or all races) and holds $1.08 after rebate at The Big M......he is a superstar on par with Gretzky, Jordan or Tiger in their prime.

[baconswitchfarm]

I have made over 100k the last four years betting harness only. I pray for the year I make 1.08 after rebates at the end of a year. Last year at m1 I bet around 500k. After rebate profit around 2.5 %. Now the meadowlands raises its host fee from 5% to 8% on my servicer. That increase results in the direct lowering of my rebate on their product. Should I try to adjust to this? That is the question. I certainly won't bet that much and be a loser for the year. I can simply spend that time and money on better priced products. This doesn't effect everyone , but pricing the biggest customers in the game out of your product won't help long term business either.

On another front , If anyone thinks Gural can save the meadowlands witout slots they should be in a mental ward. I enjoy reading the guys thoughts and he is certainly well meaning. In reality , his racetrack management includes two of the worst harness tracks in america. Low handle and awful racing product are what his businesses offer. Raceway and Lebanon have a better product than tioga and vernon. If I had a real estate business that needed saving I would pray for his help. A harness track , not so much.

[Rutgers]

I went to work today. We currently have 30 clients and we would like to make it 32, so we can grow. Simple.

It was never once discussed that we should raise prices 10%, drop back to 28 clients, even though we might make a few more bucks. That is not growth, it is long term suicide.



I do not know anything about your company so my comments may not apply to your company, but….

Why doesn’t your company drop prices 10%, maybe give your clients a rebate as well? Your business is sure to takeoff.

Of course, if your company has high fixed costs this might be a tad risky, because if the new customers don’t make up for the price reduction the quality of your product or service could decline (which would result in losing customers) or you could run into financial problems.

Or you may want to consider raising the price, especially if you have high fixed costs. You may lose a few customers at first, but I have a hunch most of your customers will stay, because your company probably provides a good product or service (or at least one a lot of people like, even if they do complain about in once in a while.) With the extra revenue you get you can improve your product and service, which will offer your clients a better value, to the point the initial customers you lost will come back along with new customers.

[DeanT]

Why doesn’t your company drop prices 10%, maybe give your clients a rebate as well? Your business is sure to takeoff.

Many companies do just that who depend on churn and use it as a business strategy.

Of course, if your company has high fixed costs this might be a tad risky, because if the new customers don’t make up for the price reduction the quality of your product or service could decline (which would result in losing customers) or you could run into financial problems.

That is done through experimentation in perfectly competitive pricing and my and every company does that. If you have a job, yours does too. For racing it does not apply, because they still price where average cost equals price (or AC=P) not MC=P like you and me and casino's etc.

Or you may want to consider raising the price, especially if you have high fixed costs. You may lose a few customers at first, but I have a hunch most of your customers will stay, because your company probably provides a good product or service (or at least one a lot of people like, even if they do complain about in once in a while.) With the extra revenue you get you can improve your product and service, which will offer your clients a better value, to the point the initial customers you lost will come back along with new customers.

See answer two.

[Southieboy]

http://www.harnessracing.com/news/meadowlandsreplayshowontvg.html

[InsideThePylons-MW]

http://www.harnessracing.com/news/trackexecsanalyzemeadowlandsnumbers.html

After five days of racing, total handle on the 2011 Meadowlands harness meet is down 19.5 percent. Last year the track enjoyed $3 million-plus handles on the first two Saturdays of the meet. This year handle hasn’t topped $2.5 million for a single card,

[pandy]

I didn't get into the initial conversation about this, but I've heard from two big bettors that they are betting less at the Meadowlands because their rebate has dropped.

[Robert Goren]

It is everybody's and every thing's fault but theirs and their overpriced product. Typical race track management thinking.

[Zman179]

http://www.harnessracing.com/news/meadowlandsreplayshowontvg.html

From the link:

Racing From The Meadowlands will no longer air on SNY in 2011.

“SNY was a great business partner of ours and we appreciate their efforts and support of our racing in the past,” said Director of Simulcasting Sam Mckee. “We know how much fans enjoy the replay show and are pleased that Racing From The Meadowlands will continue airing on TVG in the New Year."

Brilliant. Time Warner Cable, which has a lock on the market in New York City (except the Bronx), does not carry TVG. Isolate it a little more, would ya?

[Zman179]

I didn't get into the initial conversation about this, but I've heard from two big bettors that they are betting less at the Meadowlands because their rebate has dropped.

That's huge.

[badcompany]

IMO, there will be no summer meet at the Big M. Why? Two words: George Brennan. Last year's top Big M driver has decided to race full time at Yonkers where he will make about half in 2011 than he made at the Big M in 2010. Why would he do this other than that he sees the writing on the wall?