How to start a new racetrack

[highnote]

Originally Posted by elhelmete

Had to check my calendar to make sure it's not 4/1...

4/20 more like it.

But seriously... the max budget is $1 million -- probably 5% less.

I believe a company is only allowed to raise $1 million from Equity Crowd Funding. Fees have to be taken out of that. The crowd funding site probably takes 5-7%?

Lawyer fees, accounting fees, etc.

Then you also have to set aside money to leave yourself some runway to get off the ground.

So maybe you have a budget of $500,000 to start and set aside another $250-350 thousand to make it through a year.

Midwestern farm land prices are on the decline. Ohio and Illinois lead the list. Wealthy people are leaving Illinois due to the high taxes. It's going to get worse there because the state has enormous pension problems. That means higher taxes. When states are hungry for revenue that opens the door for innovative businesses that can startup for low cost.

It would be great to be an auto parts magnate and have hundreds of millions to throw at racetracks, lobbyists, and expensive horses.

In order for BLD to get up and running a lot of outside the box thinking is needed.

Investors need to know there is a big risk that the track won't make it through a year -- maybe won't even make it to opening day.

But if it does get off the ground, it could become a nice little revenue generator and the stock could become worth substantially more than it was bought for.

The same principles apply to investing in startups as in betting on horses -- is there an edge, what are the odds, how large is your bankroll, is it scalable, how much can you afford to lose?

You can either be part of a revolution or sit on the sidelines. As Andy Beyer said, people who don't bet on horse races do not understand the deliciousness of uncertainty. Same with investing in startups.

There are samurai and there are rice pickers and there are a lot fewer samurai. It's dangerous and it's lonely. But the rewards can be huge.

Profit is the reward for taking risk.

[MonmouthParkJoe]

Rolling pick4s and 5s and find a new pair of Beulah Park twins. Boom successful race track

[highnote]

Originally Posted by MonmouthParkJoe

Rolling pick4s and 5s and find a new pair of Beulah Park twins. Boom successful race track

I like it! There are plenty of commentators and analysts who would love to have a shot at getting some on-air experience. They'll have to do it for free, though. No money in the budget.

With 6 races per day, every card will have rolling bets as well as pick6 and pick5.

10% takeouts across the board on all bets -- lower, if possible.

What is the lowest viable amount a signal can be sold for?

I assume popular tracks like Belmont or Santa Anita can charge a premium while less popular tracks like Canterbury must sell at a discount?

BLD must have the lowest cost signal in the industry, but will still need to generate money from betting handle to cover some expenses and subsidize purses.

Sponsorship is another source of revenue.

BLD will encourage jockeys to wear silks with corporate sponsors and trainers to put sponsors' names on the horses -- like NASCAR.

The goal is for the track to at least breakeven in year 1. We want the jockeys and trainers to feel racing at BLD is worth their while. We want horseplayers to enjoy the lowest takeouts in the world.

If this happens in year 1 then shareholders equity will increase.

[MonmouthParkJoe]

Originally Posted by highnote

I like it! There are plenty of commentators and analysts who would love to have a shot at getting some on-air experience. They'll have to do it for free, though. No money in the budget.

With 6 races per day, every card will have rolling bets as well as pick6 and pick5.

10% takeouts across the board on all bets -- lower, if possible.

What is the lowest viable amount a signal can be sold for?

I assume popular tracks like Belmont or Santa Anita can charge a premium while less popular tracks like Canterbury must sell at a discount?

BLD must have the lowest cost signal in the industry, but will still need to generate money from betting handle to cover some expenses and subsidize purses.

Sponsorship is another source of revenue.

BLD will encourage jockeys to wear silks with corporate sponsors and trainers to put sponsors' names on the horses -- like NASCAR.

The goal is for the track to at least breakeven in year 1. We want the jockeys and trainers to feel racing at BLD is worth their while. We want horseplayers to enjoy the lowest takeouts in the world.

If this happens in year 1 then shareholders equity will increase.

You can sell your signal for whatever you want, but keep in mind you would need ALOT of handle to make up for the difference. In todays market we live in a simulcast/export world. Wagering is trending towards online platforms so expect your on/off handle split to be something like 15/85. Could be worse depending on location.

Outlets love high takeout and most ADWs kick back rebates and whatever else to their players. Say you charged 4% for your signal, takeout is 10% on all wagers. Guest earns the takeout, we get 4% and they have 6% to work with to make stat payments/horsemen before they even get to a figure they earn. With $1 in every $5 wagered from CRWs that operate just to earn a rebate, you can expect that handle to disappear. Add to that, your 4% earned in a host fee usually gets split 50/50 with horsemen, then your stat payments.

I am all for lower takeout, just a fine line to walk when you line up all the pieces and where the money goes. You can see why racing trends towards big days. If the track has luxury amenities, that is where the money/margins are.

[highnote]

Originally Posted by MonmouthParkJoe

You can sell your signal for whatever you want, but keep in mind you would need ALOT of handle to make up for the difference. In todays market we live in a simulcast/export world. Wagering is trending towards online platforms so expect your on/off handle split to be something like 15/85. Could be worse depending on location.

Outlets love high takeout and most ADWs kick back rebates and whatever else to their players. Say you charged 4% for your signal, takeout is 10% on all wagers. Guest earns the takeout, we get 4% and they have 6% to work with to make stat payments/horsemen before they even get to a figure they earn. With $1 in every $5 wagered from CRWs that operate just to earn a rebate, you can expect that handle to disappear. Add to that, your 4% earned in a host fee usually gets split 50/50 with horsemen, then your stat payments.

I am all for lower takeout, just a fine line to walk when you line up all the pieces and where the money goes. You can see why racing trends towards big days. If the track has luxury amenities, that is where the money/margins are.

Excellent info. This is exactly the kind info that is needed to build a plan around. There are a lot of constraints. The tough questions to answer are how to optimize (maximize/minimize) all the different objective functions.

[AlsoEligible]

So just to recap, we're talking about leasing farm land in a rural area, and paying for that farmer to maintain the track with his own tractor. There will be no grandstand, no starting gate, no crowds, and presumably little to no amenities.

Are you budgeting money for a totalizator company? You can sell the signal to ADWs, but you still need a conduit for ADW money to get into your pools. You also need a totalizator to be able to calculate odds leading up to the race, lock betting on time, and calculate prices after each race finishes.

For the people who do show up, how will they bet? Will you lease terminals from the tote company to have on-track? If so you probably need some sort of structure to put them in (you can't leave them out in the elements, unless you want to pay for new equipment every time it rains). Plus you'll need electricity and internet access.

If you are going to have betting machines on-track, will you have tellers as well, or only self service?

If you're going to export your signal to ADWs, people need to be able to watch the race online. How are you broadcasting a video signal? Again you're talking about a decent amount of equipment, electricity, networking, etc. Or will someone with a GoPro just stream the races for free online?

After a day of racing with $2.5k in handle from TVG, and $4k from XpressBet, $3k from TwinSpires, etc...you need to be able to settle up with all of these entities. Are you hiring accountants for this, or paying for a third party service that specializes in pari-mutuel accounting? Neither option is cheap.

Even if you were able to address all of the items we're talking about, and even if this bastardized track met all of the requirements to be granted a racing license from a state commission...which are both long shots....you still need people to bet on it.

I can't speak for everyone here, but my bankroll is only so big, and even if the takeout was 0%, I can't see myself spending any of it on flag-drop heat races between $500 horses on a shoddy track in the middle of a farm. You're cutting way too many corners for this to be an appealing product to players - which is the entire point.

[castaway01]

Originally Posted by highnote

People will gamble where they can find an edge. Arabian races are fairly popular. It's all a matter of how you structure the racing. If every race was a a true handicap that gave each horse a good chance of winning, handicapping would be important. Too many short fields with low priced winners in the U.S. make for an unpopular product, even though I have argued low priced winners are exciting if you bet enough money on them.



No way it would take tens of millions. In fact, the budget is going to be $1 million. This is going to be a country track with no grandstand. Look at those jump courses down south. I doubt they cost tens of millions to cut a track through a field and put up some timber jumps and railings.



1500 horses would be unrealistic at first because there is no place to keep them. It doesn't make sense to build a 1500 horse stable. This ain't going to be the Hong Kong Jockey Club. Remember this is Bush League Downs and it will be a short meet. If it looks promising then more dates can be added.

In order to be a going concern, BLD might have to return to the roots of racing -- heat racing rather than dash racing. In heat racing, the horses ran 4 miles heats. The first one to win two heats was declared the winner. Nowadays, heat races are far more popular and the winner of one heat (a dash) wins the race.

The breed has tilted toward speed and away from stamina. I would love to see stamina become more highly valued like in early colonial days of American racing. Back then heat races were popular. I'm sure they could still be exciting and popular

I have thought of some interesting twists on heat racing that do not require a large population of horses. The heats would be handicap races. So it would be more like betting on NFL football than a match race between Secretariat and Onion where Secretariat would be 1/20 and Onion would be 20/1. Sometimes Onion would win, but most of the time it would not be a great betting event. But what if Secretariat carried 168 points to Onion's 125? Which horse would be the first to win two four mile heats? Now it starts to get interesting.

Granted, the cheap claimers at BLD would not be anywhere in the same league with Big Red, but that's not the goal. The goal is to make interesting and novel betting events. Handicapped heat racing can accomplish that.

It might be possible for, say, a field of 14 horses to run six 6 furlong heats -- that's a total 4.5 miles. The winner of each heat would win a small purse. Knowing that they have to race 6 heats, I would expect the jockeys to rate their horses for the first 4 furlongs and then sprint to the wire. At the end of the day, the horses would have sprinted only 8 furlongs over about an 8 hour period. The winner of the most heats or perhaps the winner of the final heat would get the largest share of the purse.

With this method, only a small group of horses are needed to run a full day of races. Plus they would be handicap races which would help even out the odds.

This is the first iteration of the idea. Its a start. It might have some potential. If not, then maybe I will think of something else.

So you're going to get $500 horses that are probably broken down (I deleted that part to shorten it) AND make them run 4.5 miles a day for "a small purse" AND make them carry heavy handicap weights AND want jockeys to basically risk their lives for free AND you also claim this racing is somehow horseplayer-friendly?

I admit that I want some of whatever you're smoking, but if you actually read what you wrote it's not only stupid but cruel to people and animals alike.

[highnote]

Originally Posted by castaway01

So you're going to get $500 horses that are probably broken down (I deleted that part to shorten it) AND make them run 4.5 miles a day for "a small purse" AND make them carry heavy handicap weights AND want jockeys to basically risk their lives for free AND you also claim this racing is somehow horseplayer-friendly?

I admit that I want some of whatever you're smoking, but if you actually read what you wrote it's not only stupid but cruel to people and animals alike.

Our $500 horse had never raced. It was as healthy as a newborn.

Horses can run a hundred miles a day. A typical horse can sustain a gallop of two miles. Running 4.5 miles spread out over the course of a day is nothing for horses that have been properly conditioned.

Most American horseplayers seem to think that horses can only run a maximum of 12 furlongs in the Belmont Stakes once in a lifetime.

As far as being dangerous. Anytime you get on the back of a horse there is some danger -- even if you're taking a trail ride. Have you seen the steeplechase races in England? Now some of those amateur rides do risk their lives for small purses.

Galloping at a steady pace on a wide open turf course, but not flat out sprinting, is not nearly as dangerous as riding in the KY Derby. Hell, I've galloped on horseback plenty of times and I'm not even a jockey and I weigh a helluva lot more than jockey. Have you ever seen some of the weights steeplechase horses carry? It's more than a 150 pounds sometimes. It's way more than a dash horse would carry.

Further to your point about being dangerous, in the old days of flat heat races jockey skill wasn't even a big factor because the horses basically galloped at a steady pace and perhaps sprinted near the wire. The horse did all the work. The jock was just along for the ride and to encourage the horse to keep up the pace and stay inside the boundries.

If you really think racing is cruel then you should join PETA. They would love to take up your cause. In fact, I told one guy in the Keeneland thread who was upset by the takeout increase he should call PETA and have them protest at the entrance to Keeneland. That would help kill handle.

Horses are a lot tougher than you think. Lewis and Clark reported one of their horses falling over a ledge and tumbling (hundreds?) of feet head over heels. They couldn't believe it got up and walked away uninjured. They also reported riding their horses over 100 miles in one night to escape a band of Indians after they killed one of the Indians.

I saw a deer run into the side of a car the day before yesterday. The car was traveling at highway speed. The deer couldn't stop and slid head first into the rear quarter panel. It spun around and got knocked to the ground. But it jumped up and ran away up a hill. It was scary and weird. But it didn't get killed.

To reiterate, if you condition the horses properly distance won't be dangerous.

http://www.horseracing.com/types-of-...ing/endurance/

I appreciate you taking time to post a response to my post. It shows you care. I welcome your criticism, but if you are just here to do name calling then it's not that helpful. What solutions are you doing to try to improve racing for horseplayers? Maybe I can borrow some of your ideas for BLD?!

[highnote]

Originally Posted by AlsoEligible

So just to recap, we're talking about leasing farm land in a rural area, and paying for that farmer to maintain the track with his own tractor. There will be no grandstand, no starting gate, no crowds, and presumably little to no amenities.

I think you've got that just about correct.

Are you budgeting money for a totalizator company?

Not yet. Needs to be studied more to see what all the options are. This is a big job for one person. If someone is crazy enough to offer to jump in and help then maybe things will move along as fast as the negative posters in this thread would like to see them move.

I wonder if the negative posters are racetrack shills or just sourpusses.

You can sell the signal to ADWs, but you still need a conduit for ADW money to get into your pools. You also need a totalizator to be able to calculate odds leading up to the race, lock betting on time, and calculate prices after each race finishes.

Right. The pool will be needed to be aggregated somewhere.

I used to bet an OTB that took the NYRA signal but the OTB pools and NYRA pools were not co-mingled. There were a lot of mispricings to exploit. I had some nice scores back then.

For the people who do show up, how will they bet?

By cell phone I presume. We will not have on-track betting.

Plus you'll need electricity and internet access.

Not much problem there. Electricity infrastructure is just about everywhere a track would be built. Cell phone service is available most places.

If you are going to have betting machines on-track, will you have tellers as well, or only self service?

No on-track betting. Moot.

If you're going to export your signal to ADWs, people need to be able to watch the race online. How are you broadcasting a video signal? Again you're talking about a decent amount of equipment, electricity, networking, etc. Or will someone with a GoPro just stream the races for free online?

It might only be audio at first. I used to bet English racing and could only hear the call over the internet. At the OTB I used to go to there was no video -- only the live call.

After a day of racing with $2.5k in handle from TVG, and $4k from XpressBet, $3k from TwinSpires, etc...you need to be able to settle up with all of these entities. Are you hiring accountants for this, or paying for a third party service that specializes in pari-mutuel accounting? Neither option is cheap.

I doubt those entities would be interested. All I know is that it's a big world out there.

Even if you were able to address all of the items we're talking about, and even if this bastardized track met all of the requirements to be granted a racing license from a state commission...which are both long shots....you still need people to bet on it.

Definitely a long shot. It might be too daunting of a task. That's ok. Nothing ventured, nothing gained.

I can't speak for everyone here, but my bankroll is only so big, and even if the takeout was 0%, I can't see myself spending any of it on flag-drop heat races between $500 horses on a shoddy track in the middle of a farm. You're cutting way too many corners for this to be an appealing product to players - which is the entire point.

I can see why you wouldn't bet on races over a shoddy track, but this track would not be shoddy. Making a good quality turf track is probably the easiest part of the process.

If the races are competitive, with large fields who cares how cheap the horses are.

I'll paraphrase Steve Roman -- cheap speed is a valid expression of a horse's genetics. A slower horse is just as worthy of an animal as an expensive horse.

People need to expand their awareness of what is a "horse race" and realize that just because a race is not held at a multi-million dollar racing palace does not mean it has to be less interesting or that slower animals are less worthy.

[elhelmete]

Originally Posted by highnote

Our $500 horse had never raced. It was as healthy as a newborn.

Horses can run a hundred miles a day. A typical horse can sustain a gallop of two miles. Running 4.5 miles spread out over the course of a day is nothing for horses that have been properly conditioned.

So you need to have enough of these horses conditioned in under a year to support enough racing and gambling on such horses to break even year 1.

I wouldn't bet on these sorts of races if the takeout was 0%.

Originally Posted by highnote

Further to your point about being dangerous, in the old days of flat heat races jockey skill wasn't even a big factor because the horses basically galloped at a steady pace and perhaps sprinted near the wire. The horse did all the work. The jock was just along for the ride and to encourage the horse to keep up the pace and stay inside the boundries.

this = unbettable races.

Originally Posted by highnote

Horses are a lot tougher than you think. Lewis and Clark reported one of their horses falling over a ledge and tumbling (hundreds?) of feet head over heels. They couldn't believe it got up and walked away uninjured. They also reported riding their horses over 100 miles in one night to escape a band of Indians after they killed one of the Indians.

I'm certain L&C rode Thoroughbreds. And even if they did...watching horses gallop and trot around = unbettable races.

Originally Posted by highnote

I saw a deer run into the side of a car the day before yesterday. The car was traveling at highway speed. The deer couldn't stop and slid head first into the rear quarter panel. It spun around and got knocked to the ground. But it jumped up and ran away up a hill. It was scary and weird. But it didn't get killed.

How is this relevant?

Originally Posted by highnote

I appreciate you taking time to post a response to my post. It shows you care. I welcome your criticism, but if you are just here to do name calling then it's not that helpful. What solutions are you doing to try to improve racing for horseplayers? Maybe I can borrow some of your ideas for BLD?!

IMHO it's sort of crass to suggest you have a new idea for a new racetrack and then basically ask everyone to do your research for you, while simultaneously making nonsensical suggestions...and at the same time suggesting that people who point out obvious, fatal flaws are nothing but shills and naysayers.

But, if you prefer...I'll sign off as Shill & Naysayer.

[AlsoEligible]

After a day of racing with $2.5k in handle from TVG, and $4k from XpressBet, $3k from TwinSpires, etc...you need to be able to settle up with all of these entities. Are you hiring accountants for this, or paying for a third party service that specializes in pari-mutuel accounting? Neither option is cheap.

Originally Posted by highnote

I doubt those entities would be interested. All I know is that it's a big world out there.

That is a nonsense answer. Did you read the entire question, or just type out the first few words that came to mind and move on?

Doesn't matter who the exact ADWs are, someone is going to be betting on your product, and you're going to have to settle with them.

This was fun for a while, but it's pretty apparent that you're delusional, or intentionally jerking our chains.

BLD will be financed by Equity Crowd Funding. We can get a few investors

[highnote]

Originally Posted by elhelmete

So you need to have enough of these horses conditioned in under a year to support enough racing and gambling on such horses to break even year 1.

This would be a short meeting. So not a lot of horses would be needed. BLD could not race 5 days per week year round.

I wouldn't bet on these sorts of races if the takeout was 0%.

That's OK. Maybe you're not the target demographic? I wouldn't bet Keeneland if they lowered takeout to 15%. I'm not right demographic for them. You will never get everyone to bet your product. You only need enough. Right now, from what I read on PA all tracks are struggling to generate revenue and horseplayers aren't happy. So I'm suggesting an alternative. Maybe this will never get off the ground. That's OK, too.

I'm certain L&C rode Thoroughbreds. And even if they did...watching horses gallop and trot around = unbettable races.

Match races in 4 mile heats was very popular at one time. There might be a small segment of the betting market that would find this unique races to be of interest. The only way to know is to try.

I'd love to see a contemporary racetrack give it a shot. This would also be an incentive for breeders to put stamina and stoutness back into the breed. That would be beneficial to the breed as a whole.

Originally Posted by Originally Posted by highnote

I saw a deer run into the side of a car the day before yesterday. The car was traveling at highway speed. The deer couldn't stop and slid head first into the rear quarter panel. It spun around and got knocked to the ground. But it jumped up and ran away up a hill. It was scary and weird. But it didn't get killed.

Four legged animals like horses are a hell of a lot more durable than you think.

IMHO it's sort of crass to suggest you have a new idea for a new racetrack and then basically ask everyone to do your research for you, while simultaneously making nonsensical suggestions...and at the same time suggesting that people who point out obvious, fatal flaws are nothing but shills and naysayers.

It's called market research. But you're right it's not necessarily good politics to question people's motivations, but I'm only human and trying to do something to help horsesplayers. I apologize. I do appreciate the comments.

But, if you prefer...I'll sign off as Shill & Naysayer.

I was the driving force behind HANA. I kept hearing from so many horseplayers about the problems in the industry and how horseplayers had no voice. When I tried to start HANA many people right here said it would be impossible or a waste of time to start a horseplayers' association. Yet, here were are 5 or 10 years later and HANA is still going strong and still getting criticism the same way it was since its inception.

Starting a racetrack is a lot harder than starting HANA, but not as hard as sending a rocket into space. Now, I'm no Elon Musk, but I know building a horseplayer friendly racetrack is not impossible. It's just a matter of finding the right set of solutions.

Maybe I don't have them, yet, but that's not stopping me from looking for them.

[PoloUK6108]

It would appear that he's getting bored with his own trolljob.

[highnote]

Originally Posted by AlsoEligible

That is a nonsense answer. Did you read the entire question, or just type out the first few words that came to mind and move on?

Probably both.

Doesn't matter who the exact ADWs are, someone is going to be betting on your product, and you're going to have to settle with them.

That's true. I am not as familiar with this part of the product chain. I need to get out and talk to owners and managers of ADWs to find out if they are willing to take the signal and walk me through the process. Or else, a partner is needed who has experience on that end of the business. It's rare that a person knows everything about everything. Although, here on PA there are more of them than in the general population.

This was fun for a while, but it's pretty apparent that you're delusional, or intentionally jerking our chains.

I'm serious, but I'm not going to throw away money if there is no interest in the product. I have to be convinced it is going to work before I can convince horseplayer investors to invest their hard earned dollars.

All I can do at this point is imagine scenarios, try them out, get feedback from horseplayers, and then iterate on the idea or pivot in a different direction.

Startup businesses are not the same as General Electric building a new factory to make washers and dryers. They have a supply chain and marketing chain in place so they can make pretty good predictions about sales.

With a startup there is no roadmap. You can have a concept and a general direction, but that's about it.

And if it was easy it would have been done by now.

[highnote]

I found another option:

It might be possible to raise money by simultaneously using Reg CF / Reg D (560c) securities that would allow both accredited and non-accredited investors to participate in a racetrack investment. This would allow more than $1 million to be raised.

It's hard to say if the risk of loss is greater by raising more money or if there is less risk.

With less money raised there is less to lose, but you have to make every penny count.

By raising a lot of money it is easy to overspend on the wrong things. The first law of economics is the more you make the more you spend.

https://www.sec.gov/rules/final/2015/33-9974.pdf

http://www.pr.com/press-release/671436