Enlightening (and scary) article on CAWs

[cj]

https://www.thoroughbreddailynews.co...omy-of-a-deal/

Kind of debunks the "can't win without a rebate" storyline. As I've said many times, I still believe betting last is the bigger advantage.

[TrifectaBox]

Betting last is an advantage, but I don't think its the primary one.





The CAW bettors seem to have very specific opinions about a race. They are not just hunting for 'overlays' .



Betting last give them more control over the sizing of all their bets, but who they bet is sourced from their data mining, and who knows what else .

[Ruffian1]

Originally Posted by cj

https://www.thoroughbreddailynews.co...omy-of-a-deal/

Kind of debunks the "can't win without a rebate" storyline. As I've said many times, I still believe betting last is the bigger advantage.

Could not agree more CJ.

[lamboguy]

there are different types of CAW. they have certain teams that don't have the direct access to the pools than the ones that have it. i have no problem with those guys. i don't care what they get for rebates, and quite frankly the more of those guys the merrier.

the ones that i have the problem with are the ones that have the direct access into the pools and can fire away into them after the rest of us. they are making their own market's into those pools. and quite frankly, i don't even know how late they can pump into those pools.

i am not sure how much of a handle these guys bring to the game, what i do know is they have scared away at least 5 times more than they put in. to get away with this, the people inside the racing industry must be getting a piece of what the CAW is stealing from all of us "regular players". the game does nothing to recruit new players to the game because they know new people will see whats going on and leave just as fast as they came in.

[ScottJ]

If you review the entire set of spreadsheets covering the DelMar 2023 Summer Meeting, you can see some of the clear and present dangers being faced by California's showcase summer meeting.

In 2023, the total Delmar handle was $644M. Without arguing about the increase or decrease over previous seasons, take a look at the composition of the handle.

If I asked you what the number one handle source was, what would your answer be?

The answer is TVG at $139.4M with FanDuel contributing another $8.8M for 23% of total handle. Other platform/ADW players include Twin Spires at $50.6M, XpressBet at $48.2M, and NYRA/Bets at $21.4M. All totaled, these ADWs account for 41.6% of handle.

Next is the Elite Player Group at $113.7M along with entities such as the Player Management Group at $14.6M; all totaled, this is another 19.9% of total handle.

Lastly, let's look at the tracks themselves in California. Delmar handled $52.9M themselves, followed by Santa Anita at $15.0M, Los Alamitos at $11.6M, and Pomona at $8.0M for a 13.6% total.

So, roughly, about 2/5ths of handle is coming from ADW platforms, 1/5 from CAW traffic, and 2/5ths from tracks and other outlets.

In short, tracks that do not own their own ADW platforms or do not have a CAW partnership cannot possibly survive longer term unless bought (and then closed) by larger organizations.

[Dave Schwartz]

Originally Posted by ScottJ

In short, tracks that do not own their own ADW platforms or do not have a CAW partnership cannot possibly survive longer term unless bought (and then closed) by larger organizations.

That was an excellent assessment.
Thank you for doing the work.

I do not understand how "... bought (and then closed)..." can be survival.

Please explain your meaning.

[classhandicapper]

Originally Posted by ScottJ

In short, tracks that do not own their own ADW platforms or do not have a CAW partnership cannot possibly survive longer term...

I don't know much about ADWs, but I know it's not cheap or easy to license, develop and operate one. So not every track is going to be able to have one.

The non track ADWs are contributing to some of the financial issues of the tracks because they take a big piece of the pie away from the tracks. That's one problem that needs to be corrected, but that may just be a fantasy. Maybe non track ADWs need to be restricted to only taking bets in states that don't have a track and some of the smaller tracks can license ADW ability from the large tracks? I don't know enough about the legal and political issues, but I know enough to know the current model is broken and doesn't work.

[ScottJ]

Originally Posted by lamboguy

the ones that i have the problem with are the ones that have the direct access into the pools and can fire away into them after the rest of us.

The biggest concern that I have had is NOT the current pricing for exacta and double pools, but suppose that direct access allowed you to see the money bet on horizontal plays (Pick-n). One could find underweighted plays and exploit inefficiencies in the markets.

Note that this was done years back in daily fantasy pools when a Draft Kings employee won a $350,000 payday playing a fantasy tournament on the rival Fan Duel platform. Just how those winning selections were made are at the heart of this controversy and in fact, were anything but random. The winner had access to the unpublished fantasy team selections made by all other tournament players and armed with this distribution, identified combinations which were underplayed by others gaining a huge advantage when outlier on-field performances occurred.

Source : http://www.nytimes.com/2015/10/06/sp...vals.html?_r=0

Originally Posted by lamboguy

they are making their own market's into those pools. and quite frankly, i don't even know how late they can pump into those pools.

The advantage is not being last per se. For example, if I were last into the pools with a $2, $10, or $100 bet would you care? The key is not just being last, but the capital that can be employed. Effectively, this is one big linear programming exercise to maximize profit based on a series of constraints (handicapping or wagering decisions).

Originally Posted by lamboguy

i am not sure how much of a handle these guys bring to the game, what i do know is they have scared away at least 5 times more than they put in.

You cannot "know" this as the numbers absolutely do not support your hyperbole. If this was true, the Delmar handle would be well in excess of $1B and nothing suggests, before or after CAWs, that such as trajectory was possible.

Originally Posted by lamboguy

to get away with this, the people inside the racing industry must be getting a piece of what the CAW is stealing from all of us "regular players".

Stealing is not the right word here. Conflating an uneven playing field with stealing is emotional and I surely understand it. You can see the percentages from my Delmar analysis. That is the type of money we are discussing. If you want to say CAW rebates make pools artificially more expensive (one of Poindexter's key themes), I completely understand your idea, but that is not stealing.

Originally Posted by lamboguy

the game does nothing to recruit new players to the game because they know new people will see whats going on and leave just as fast as they came in.

Discussing new players and the annual revenue analysis in the previous posts in the same sentence is, as my British colleagues would say, chalk and cheese.

[ScottJ]

Originally Posted by Dave Schwartz

That was an excellent assessment.
Thank you for doing the work.

I do not understand how "... bought (and then closed)..." can be survival.

Please explain your meaning.

If a smaller track is bought, it can be a feeder for the larger parent tracks making sure that field sizes are maintained so the overall product survives. If that cannot be made to work, the smaller track closes.

Take California for example. The single, most-compelling reason to maintain racing in the north is the breeding industry. Without California breds, what happens to racing in the SoCal area?

Take New York for example. If Finger Lakes were to fold, what would be the impact on New York breeding and correspondingly, NYRA's pipeline to the New York bred horses to fill cards? (Disclosure : I do not immediately understand the answer to this question, however the need for a "B"-track circuit is clear.)

[o_crunk]

From the article:

Experts recently told the TDN that the most successful CAW players can consistently win at an average rate of around 92%. At that win rate, a 13% rebate (for example) would see the player enjoy a 5% profit margin.

According to wagering reports reviewed by the TDN, that win rate is an undercount. These reports show how Elite Turf Club players can win at an average rate in excess of 105%, even before their rebate from Elite is factored in. At this rate, the profit margin would be much better than many investment accounts.

There is no timeframe given. While it's completely believable to me that over any random, shorter duration timeframe, a CRW that works like Elite could pull 105%, in aggregate over a period of say a year, I'd bet very heavily against that.

The math is pretty simple. The more you bet, and Elite in aggregate together was only ~15% of the California handle, the harder it is to approach breakeven. I say only 15% because the reporting the last couple years has suggested Elite in aggregate is 30% or 40% of total handle, which always seemed like BS. Nobody can bet 40% and break even. The math does not work even with a rebate approaching no takeout.

At 15% of total handle, 105% feels do-able to me. It would mean they are likely doing less in the straight pools and are slaves to variance of the harder horizontal exotics, where they likely receive the best rebate. Factor in a chalky and low field size circuit like California, and I'd totally believe them smashing the P4/P5 type bets over a long period.

There's a couple things I took away from this article.

One is that most people believe that Elite is a bunch of different teams but as the article explains, one Elite team bet a whole bunch one year and then another team got a better deal and they bet a whole bunch the next year while previous team's handle shrunk. To me, it boosts the theory that there is no 15 different teams. It's all one team.

The other thing I took from this article is the odds drops which have wholly been attributed to CRW teams. When you dig into the data made available, the teams are 15% of handle. There is way more money 15% of any given win pool that is moving these late odds drops. Way more. So I think people need to update their priors on that one.

[bisket]

Maryland has decided to make the “B” circuit the main circuit. Stronach wanted to have fewer dates with purse levels rivaling New York and Kentucky. The state turned over management to the breeders in favor of lower purses and more racing dates. If Stronach got their way breeders in MD would have had a hard time keeping up with horses from out of state. This is the same thing that’s playing out in California. The facts are if you’re fighting over Kentucky’s cast offs that’s a losing battle breeding wise. States having their own farms, and filling races with them, will survive in the long run. I think eventually California will go the same way MD did. 1st Racing’s model only works if states have to rely on racing’s mutual pools for tax revenue in the same way they did before internet gaming. The cats out of the bag with internet gaming and racing will revert back early 1900’s model before racing’s mutual pools were legalized. Racing is no longer the only game in town gambling wise.

[Dave Schwartz]

Originally Posted by ScottJ

If a smaller track is bought, it can be a feeder for the larger parent tracks making sure that field sizes are maintained so the overall product survives. If that cannot be made to work, the smaller track closes.

Take California for example. The single, most-compelling reason to maintain racing in the north is the breeding industry. Without California breds, what happens to racing in the SoCal area?

Take New York for example. If Finger Lakes were to fold, what would be the impact on New York breeding and correspondingly, NYRA's pipeline to the New York bred horses to fill cards? (Disclosure : I do not immediately understand the answer to this question, however the need for a "B"-track circuit is clear.)

So if a track closes, how is that called "survival?"

That's my disconnect.

[classhandicapper]

The biggest concern that I have had is NOT the current pricing for exacta and double pools, but suppose that direct access allowed you to see the money bet on horizontal plays (Pick-n). One could find underweighted plays and exploit inefficiencies in the markets.

I have yet to see any evidence that CAWs have access to pool information not available to everyone else.

I keep seeing that assertion from others (not you), but no evidence of it.

Has anyone actually seen any evidence?

Other than that, I see nothing wrong with using math and technology to gain a betting advantage over everyone else with access to the same information.

I hate to say this, but the fact of the matter is, there are players out there using advanced math and technological expertise to play horses that are simply better handicappers and bettors than most of us because we lack the expertise to develop the same tools. That puts them in the same position as expert speed and trip handicappers a few decades ago. Should we have barred or limited them?

You can either try to compete with them or quit. All I want is the same information and access. If they are so much smarter and better than me at developing tools etc.. that it's hopeless, I'll raise the white flag.

It's on the industry to figure out a solution to the problem of betting markets that are so efficient, serious and semi serious players are dropping out. If all that's left is the CAWs, the game is over.

IMO, that solution is not as easy as it sounds unless you believe barring the best players or taking away their math and computer advantages is philosophically OK and will help grow the handle. I'm not OK with that. I'm not even sure I'm philosophically OK with barring their late Win bets even though it helps me personally and is very popular among players like us.

[ScottJ]

Originally Posted by classhandicapper

I have yet to see any evidence that CAWs have access to pool information not available to everyone else.

I keep seeing that assertion from others (not you), but no evidence of it.

Has anyone actually seen any evidence?

I have not and did not want to infer that I have first hand knowledge of horizontal horse racing pool data being distributed. However, my original post highlighted that this has indeed happened in the sports fantasy wagering world as recently as 2015 which employed more recent technology in theory.

Originally Posted by classhandicapper

Other than that, I see nothing wrong with using math and technology to gain a betting advantage over everyone else with access to the same information.

I hate to say this, but the fact of the matter is, there are players out there using advanced math and technological expertise to play horses that are simply better handicappers and bettors than most of us because we lack the expertise to develop the same tools. That puts them in the same position as expert speed and trip handicappers a few decades ago. Should we have barred or limited them?

There is a difference here that is important.

Speed and trip handicappers were accessing the identical data (past performances, video replays) available to all and built a better calculator to evaluate that data.

My concern about the programmed-CAW work is that the real-time API available gives pool information that is not 30-second or 60-second sampled, but real-time. Every 200 milliseconds, give me the new pool totals. The velocity can be calculated which the average gambler cannot do with a TV monitor or even a digital browser display.

If I can be permitted to use a Wall Street example, allowing CAWs to see the transactions (bets) in real-time is similar to the payment for order flow issue with Robinhood from 2021. Yes, Robinhood clients were getting zero cost transactions, however the firms that bought the order flow could front run trades, getting a better price for themselves and therefore impacting Robinhood's clients. Here, the CAW knows where "bad money" is being bet and can exploit that situation quickly even in a parimutuel setting, before the average bettor knew the situation existed.

Originally Posted by classhandicapper

You can either try to compete with them or quit. All I want is the same information and access. If they are so much smarter and better than me at developing tools etc.. that it's hopeless, I'll raise the white flag.

It's on the industry to figure out a solution to the problem of betting markets that are so efficient, serious and semi serious players are dropping out. If all that's left is the CAWs, the game is over.

Per my earlier analysis, with 20% of total handle for Delmar being CAW based, we are not at the terminal point as yet, but you could see that outcome if their percentage (not just handle, but percentage of total handle) continues to grow.

Originally Posted by classhandicapper

IMO, that solution is not as easy as it sounds unless you believe barring the best players or taking away their math and computer advantages is philosophically OK and will help grow the handle. I'm not OK with that. I'm not even sure I'm philosophically OK with barring their late Win bets even though it helps me personally and is very popular among players like us.

I am absolutely fine with barring players in the final X minutes of any pool is their decision making is driven by raw data not available to all. If there is an advantage in data access, that is not called a level playing field and borders on insider information.

[classhandicapper]

Originally Posted by ScottJ

I am absolutely fine with barring players in the final X minutes of any pool is their decision making is driven by raw data not available to all. If there is an advantage in data access, that is not called a level playing field and borders on insider information.

My concern about the programmed-CAW work is that the real-time API available gives pool information that is not 30-second or 60-second sampled, but real-time. Every 200 milliseconds, give me the new pool totals. The velocity can be calculated which the average gambler cannot do with a TV monitor or even a digital browser display.

OK, next question.

If I had the technological skill to develop the tools necessary to access the pools the same way would I be permitted to use them and gain the same access?

If "No", I see your point and agree.

If "Yes", I feel like too bad on me if I can't or don't do it.

Maybe I'm a little crazy, but I don't tend to think in terms of "what's best for me". I tend to think in terms of what's fair so that the winners are determined by merit. I'm a reasonably bright guy that's been working hard at this game for close to 5 decades. I admit those guys are smarter and better than me overall. So I either have to continue to get better, find the holes in their game (imo there are some) or too bad for me.