» 2007» December

The effects of takeout starting with $100,000

After Race	15%	20%	25%	30%	35%

1	85,000	80,000	75,000	70,000	65,000
2	72,250	64,000	56,250	49,000	42,250
3	61,413	51,200	42,188	34,300	27,463
4	52,201	40,960	31,641	24,010	17,851
5	44,371	32,768	23,730	16,807	11,603
6	37,715	26,214	17,798	11,765	7,542
7	32,058	20,972	13,348	8,235	4,902
8	27,249	16,777	10,011	5,765	3,186
9	23,162	13,422	7,508	4,035	2,071
10	19,687	10,737	5,631	2,825	1,346

Number of wagering combinations depending on field size

Field Size	Win	Quinella	Exacta	Trifecta	Superfecta

3	3	3	6	6	X
4	4	6	12	24	24
5	5	10	20	60	120
6	6	15	30	120	360
7	7	21	42	210	840
8	8	28	56	336	1680
9	9	36	72	504	3024
10	10	45	90	720	5040
11	11	55	110	990	7,920
12	12	66	132	1,320	11,880
13	13	78	156	1,716	17,160
14	14	91	182	2,184	24,024
20	20	190	380	6,840	116,280

Number of wagering combinations for average field size

Ave. Field Size	Double	Pick 3	Pick4	Pick5	Pick6

6	36	216	1,296	7,776	46,656
7	49	343	2,401	16,807	117,649
8	64	512	4096	32,768	262,144
9	81	729	6,561	59,049	531,441
10	100	1,000	10,000	100,000	1,000,000
11	121	1,331	14,641	161,051	1,771,561
12	144	1,728	20,736	248,832	2,985,984

Morning Line

A morning line is someone’s estimate of what each horse’s closing odds will be. It also could be someone’s opinion of what they think each horse’s chances should be. I’m never quite sure which one the author of a morning line is trying to convey. I do know that many morning lines are mathematically incorrect. There is a correct way to make a morning line and hopefully this will help in making a more mathematically correct morning line.

The first thing to do is take the number 100 and add to it the track takeout for win. If the track takeout were 18% our starting number would be 100 + 18 = 118 or 118%. The odds assigned each horse, when converted to a % and added up must = 118%. I don’t believe being a point or two off is the end of the world, but being 5 or more points off is a disservice to the racetrack patron who looks at a morning line for guidance.

To convert odds to percentages you add the divisor to the dividend and divide that number into the divisor. Example: (dividend/divisor) say the odds of a horse are 3/1. Add the 1 (the divisor) to the 3 (the dividend) = 4 and then divide 4 into 1 = .25%. When someone makes a horse 3/1 they are saying that the horse has a 25/118 or will win once every 4.72 attempts. If there were zero takeout, then the horse would win (25/100 = 4) once in every 4 attempts if this line were accurate.

Listed below are the correct percentages when converting odds to percentages.

Tote Odds	Formula		Percent	Tote Odds	Formula		Percent
1/9*	1+10 = 11	10/11	.909	7/1	7+1 = 8	1/8	.125
1/5	1+5 = 6	5/6	.833	8/1	8+1 = 9	1/9	.111
2/5	2+5 = 7	5/7	.714	9/1	9+1 = 10	1/10	.100
½	1+2 = 3	2/3	.667	10/1	10+1 = 11	1/11	.091
3/5	3+5 = 8	5/8	.625	11/1	11+1 = 12	1/12	.083
4/5	4+5 = 9	5/9	.556	12/1	12+1 = 13	1/13	.077
1	1+1 = 2	½	.500	13/1	13+1 = 14	1/14	.071
6/5	6+5 = 11	5/11	.455	14/1	14+1 = 15	1/15	.067
7/5	7+5 = 12	5/12	.417	15/1	15+1 = 16	1/16	.063
3/2	3+2 = 5	2/5	.400	20/1	20+1 = 21	1/21	.048
8/5	8+5 = 13	5/13	.385	25/1	25+1 = 26	1/26	.038
9/5	9+5 = 14	5/14	.357	30/1	30+1 = 31	1/31	.032
2/1	2+1 = 3	1/3	.333	35/1	35+1 = 36	1/36	.028
5/2	5+2 = 7	2/7	.286	40/1	40+1 = 41	1/41	.024
3/1	3+1 = 4	¼	.250	45/1	45+1 = 46	1/46	.022
7/2	7+2 = 9	2/9	.222	50/1	50+1 = 51	1/51	.020
4/1	4+1 = 5	1/5	.200	60/1	60+1 = 61	1/61	.016
9/2	9+2 = 11	2/11	.182	70/1	70+1 = 71	1/71	.014
5/1	5+1 = 6	1/6	.167	80/1	80+1 = 81	1/81	.012
6/1	6+1 = 7	1/7	.143	90/1	90+1 = 91	1/91	.011

* The tote board will display odds of 1/9 but it should correctly be displayed at 1/10.

How I make a morning line is give every horse a % chance of winning and list it in decimal form. The chances of every horse must add up to 1 or 100% (.55 is the same as 55%). Once I have my “chance of winning” I need to multiply by (the takeout + 1). If the takeout is 14% or .14 then the multiplier is 1.14. Looking at row #1 the true “chance of winning” for horse #1 is .55556. If the takeout is 14% then .55556 x 1.14 = .633338

Now that we know how to convert odds to percentages we can construct a morning line that is mathematically correct. An example of making a morning line is listed below.

Horse #	Chance of Winning	14% Takeout	24% Takeout

1	.55556	.633338	.688894
2	.22222	.253331	.275553
3	.11111	.126665	.137776
4	.04762	.054287	.059049
5	.03030	.034542	.037572
6	.02299	.026209	.028508
7	.01020	.011628	.012648

Total	1.0000	1.140000	1.240000

Effects of Box Wagering in a Trifecta Pool

Listed below is a 7 Horse field with each horse’s theoretical chance to win, place and show.

Horse	Win	Place	Show	Total
1	0.55556	0.22778	0.07889	0.86223
2	0.22222	0.32999	0.22222	0.77443
3	0.11111	0.22222	0.27333	0.60666
4	0.04762	0.08624	0.16295	0.29681
5	0.0303	0.06722	0.11668	0.2142
6	0.02299	0.04615	0.09911	0.16825
7	0.0102	0.0204	0.04682	0.07742
Total	1.00000	1.00000	1.00000	3.00000

If each horse were to be wagered on in exact proportions to it’s assigned chance of finishing first, second or third, a near perfect distribution of money wagered on each combination would look as follows:

Note: Place and Show Odds on all horses were re-normalized to reflect each combination’s correct money distribution. Distribution based on a $10,000 pool.

1-2-3	0.55556	0.42733	0.39109	0.09285	$928.48
1-2-4	0.55556	0.42723	0.23316	0.05535	$553.54
1-2-5	0.55556	0.42733	0.16695	0.03964	$396.35
1-2-6	0.55556	0.42723	0.14181	0.03367	$336.67
1-2-7	0.55556	0.42733	0.06699	0.0159	$159.04
Total			1.00000	0.23741	$2,374.08

1-3-2	0.55556	0.28777	0.34305	0.05484	$548.45
1-3-4	0.55556	0.28777	0.25155	0.04022	$402.16
1-3-5	0.55556	0.28777	0.18012	0.18012	$287.96
1-3-6	0.55556	0.28777	0.153	0.02446	$244.61
1-3-7	0.55556	0.28777	0.07228	0.01156	$115.56
Total			1.00000	0.3112	$1,598.74

1-4-2	0.55556	0.11168	0.2931	0.01819	$181.85
1-4-3	0.55556	0.11168	0.36052	0.02237	$223.68
1-4-5	0.55556	0.11168	0.1539	0.00955	$95.49
1-4-6	0.55556	0.11168	0.13072	0.00811	$81.11
1-4-7	0.55556	0.11168	0.06175	0.00383	$38.31
Total			0.99999	0.06205	$620.44

1-5-2	0.55556	0.08705	0.27624	0.01336	$133.59
1-5-3	0.55556	0.08705	0.33978	0.01643	$164.32
1-5-4	0.55556	0.08705	0.20257	0.0098	$97.96
1-5-6	0.55556	0.08705	0.12321	0.00596	$59.58
1-5-7	0.55556	0.08705	0.0582	0.00281	$28.15
Total			1.00000	0.04836	$483.60


1-6-2	0.55556	0.05976	0.27034	0.00898	$89.75
1-6-3	0.55556	0.05976	0.33252	0.01104	$110.40
1-6-4	0.55556	0.05976	0.19824	0.00658	$65.82
1-6-5	0.55556	0.05976	0.14195	0.00471	$47.13
1-6-7	0.55556	0.05976	0.05696	0.00189	$18.91
Total			1.00001	0.0332	$332.01

1-7-2	0.55556	0.02642	0.25417	0.00373	$37.31
1-7-3	0.55556	0.02642	0.31263	0.00459	$45.89
1-7-4	0.55556	0.02642	0.18638	0.00274	$27.38
1-7-5	0.55556	0.02624	0.13346	0.00196	$19.59
1-7-6	0.55556	0.02642	0.11336	0.00166	$16.64
Total			1.00000	0.01468	$146.79

2-1-3	0.22222	0.33997	0.39109	0.02955	$295.46
2-1-4	0.22222	0.33997	0.23316	0.01761	$176.15
2-1-5	0.22222	0.33997	0.16695	0.01261	$126.13
2-1-6	0.22222	0.33997	0.14181	0.01071	$107.13
2-1-7	0.22222	0.33997	0.06699	0.00506	$50.61
Total			1.00000	0.07554	$755.48

2-3-1	0.22222	0.33167	156.39	0.01153	$115.27
2-3-4	0.22222	0.33167	0.32303	0.02381	$238.09
2-3-5	0.22222	0.33167	0.2313	0.01705	$170.48
2-3-6	0.22222	0.33167	0.19647	0.01448	$144.81
2-3-7	0.22222	0.33167	0.09281	0.00684	$68.40
Total			1.00000	0.07371	$737.05

2-4-1	0.22222	0.12871	0.12831	0.00367	$36.70
2-4-3	0.22222	0.12871	0.44456	0.01272	$127.15
2-4-5	0.22222	0.12871	0.18978	0.00543	$54.28
2-4-6	0.22222	0.12871	0.1612	0.00461	$46.11
2-4-7	0.22222	0.12871	0.07615	0.00218	$21.78
Total			1.00000	0.02861	$286.02

2-5-1	0.22222	0.10033	0.11933	0.00266	$26.61
2-5-3	0.22222	0.10033	0.41344	0.00922	$92.18
2-5-4	0.22222	0.10033	0.24648	0.0055	$54.95
2-5-6	0.22222	0.10033	0.14992	0.00334	$33.43
2-5-7	0.22222	0.10033	0.07082	0.00158	$15.79
Total			0.99999	0.0223	$222.96

2-6-1	0.22222	0.06888	0.11624	0.00178	$17.79
2-6-3	0.22222	0.06888	0.40274	0.00616	$61.65
2-6-4	0.22222	0.06888	0.2401	0.00368	$36.75
2-6-5	0.22222	0.06888	0.17192	0.00263	$26.31
2-6-7	0.22222	0.06888	0.06899	0.00106	$10.56
Total			0.99999	0.01531	$153.06

2-7-1	0.22222	0.03045	0.10793	0.00073	$7.30
2-7-3	0.22222	0.03045	0.37393	0.00253	$25.30
2-7-4	0.22222	0.03045	0.22293	0.00151	$15.08
2-7-5	0.22222	0.03045	0.15963	0.00108	$10.80
2-7-6	0.22222	0.03045	0.13559	0.00092	$9.17
Total			1.00001	0.0677	$67.65

3-1-2	0.11111	0.29286	0.34305	0.01116	$111.63
3-1-4	0.11111	0.29286	0.25155	0.00819	$81.85
3-1-5	0.11111	0.29286	0.18012	0.00586	$58.61
3-1-6	0.11111	0.29286	0.153	0.00498	$49.79
3-1-7	0.11111	0.29286	0.07228	0.00235	$23.52
Total			1.00000	0.03254	$325.40

3-2-1	0.11111	0.42427	0.15639	0.00737	$73.72
3-2-4	0.11111	0.42427	0.32303	0.01523	$152.28
3-2-5	0.11111	0.42427	0.2313	0.0109	$109.04
3-2-6	0.11111	0.42427	0.19647	0.00926	$92.62
3-2-7	0.11111	0.42427	0.09281	0.00438	$43.75
Total			1.00000	0.04714	$471.41

3-4-1	0.11111	0.11088	0.13994	0.00172	$17.24
3-4-2	0.11111	0.11088	0.3942	0.00486	$48.57
3-4-5	0.11111	0.11088	0.20698	0.00255	$25.50
3-4-6	0.11111	0.11088	0.17581	0.00217	$21.66
3-4-7	0.11111	0.11088	0.08306	0.00102	$10.23
Total			0.99999	0.01232	$123.20

3-5-1	0.11111	0.08643	0.12933	0.00124	$12.42
3-5-2	0.11111	0.08643	0.3643	0.0035	$34.98
3-5-4	0.11111	0.08643	0.26714	0.00257	$25.65
3-5-6	0.11111	0.08643	0.16248	0.00156	$15.60
3-5-7	0.11111	0.08643	0.07676	0.00074	$7.37
Total			1.00001	0.00961	$96.02

3-6-1	0.11111	0.05934	0.12571	0.00083	$8.29
3-6-2	0.11111	0.05934	0.3541	0.00233	$23.35
3-6-4	0.11111	0.05934	0.25966	0.00171	$17.12
3-6-5	0.11111	0.05934	0.18593	0.00123	$12.26
3-6-7	0.11111	0.05934	0.07461	0.00049	$4.92
Total		1.00001	0.00659	$65.94

3-7-1	0.11111	0.02623	0.11604	0.00034	$3.38
3-7-2	0.11111	0.02623	0.32687	0.00095	$9.52
3-7-4	0.11111	0.02623	0.23969	0.0007	$6.98
3-7-5	0.11111	0.02623	0.17163	0.0005	$5.00
3-7-6	0.11111	0.02623	0.14578	0.00042	$4.25
Total			1.00001	0.00291	$29.13

4-1-2	0.04762	0.24928	0.2931	0.00348	$34.79
4-1-3	0.04762	0.24928	0.36052	0.00428	$42.80
4-1-5	0.04762	0.24928	0.1539	0.00183	$18.27
4-1-6	0.04762	0.24928	0.13072	0.00155	$15.52
4-1-7	0.04762	0.24928	0.06175	0.00073	$7.33
Total			0.99999	0.01187	$118.71

4-2-1	0.04762	0.36113	0.12831	0.00221	$22.07
4-2-3	0.04762	0.36113	0.44456	0.00765	$76.45
4-2-5	0.04762	0.36113	0.18978	0.00326	$32.64
4-2-6	0.04762	0.36113	0.1612	0.00277	$27.72
4-2-7	0.04762	0.36113	0.07615	0.00131	$13.10
Total			1.00000	0.0172	$171.98

4-3-1	0.04762	0.24319	0.13994	0.00162	$16.21
4-3-2	0.04762	0.24319	0.3942	0.00457	$45.65
4-3-5	0.04762	0.24319	0.20698	0.0024	$23.97
4-3-6	0.04762	0.24319	0.17581	0.00204	$20.36
4-3-7	0.04762	0.24319	0.08306	0.00096	$9.62
Total			0.99999	0.01159	$115.81

4-5-1	0.04762	0.07356	0.10951	0.00038	$3.84
4-5-2	0.04762	0.07356	0.30848	0.00108	$10.81
4-5-3	0.04762	0.07356	0.37943	0.00133	$13.29
4-5-6	0.04762	0.07356	0.13758	0.00048	$4.82
4-5-7	0.04762	0.07356	0.06499	0.00023	$2.28
Total			0.99999	0.0035	$35.04

4-6-1	0.04762	0.05051	0.10691	0.00025	$2.57
4-6-2	0.04762	0.05051	0.30114	0.00072	$7.24
4-6-3	0.04762	0.05051	0.3704	0.00089	$8.91
4-6-5	0.04762	0.05051	0.15812	0.00038	$3.80
4-6-7	0.04762	0.05051	0.06345	0.00015	$1.52
Total			1.00002	0.00024	$24.04

4-7-1	0.04762	0.02233	0.09983	0.00011	$1.06
4-7-2	0.04762	0.02233	0.28121	0.0003	$2.99
4-7-3	0.04762	0.02233	0.34589	0.00037	$3.68
4-7-5	0.04762	0.02233	0.14765	0.00016	$1.57
4-7-6	0.04762	0.02233	0.12542	0.00013	$1.33
Total			1.00000	0.00107	$10.63

5-1-2	0.0303	0.24419	0.27624	0.00204	$20.44
5-1-3	0.0303	0.24419	0.33978	0.00251	$25.14
5-1-4	0.0303	0.24419	0.20257	0.0015	$14.99
5-1-6	0.0303	0.24419	0.12321	0.00091	$9.12
5-1-7	0.0303	0.24419	0.0582	0.00043	$4.31
Total			1.00000	0.00739	$74.00

5-2-1	0.0303	0.35377	0.11933	0.00128	$12.79
5-2-3	0.0303	0.35377	0.41344	0.00443	$44.32
5-2-4	0.0303	0.35377	0.24648	0.00264	$26.42
5-2-6	0.0303	0.35377	0.14992	0.00161	$16.07
5-2-7	0.0303	0.35377	0.07082	0.00076	$7.59
Total			0.99999	0.01072	$107.19

5-3-1	0.0303	0.23823	0.12933	0.00092	$9.24
5-3-2	0.0303	0.23823	0.3643	0.00263	$26.30
5-3-4	0.0303	0.23823	0.26714	0.00193	$19.28
5-3-6	0.0303	0.23823	0.16248	0.00117	$11.73
5-3-7	0.0303	0.23823	0.07676	0.00055	$5.54
Total			1.00001	0.0072	$72.09

5-4-1	0.0303	0.09245	0.10951	0.00031	$3.07
5-4-2	0.0303	0.09245	0.30848	0.00086	$8.64
5-4-3	0.0303	0.09245	0.37943	0.00106	$10.63
5-4-6	0.0303	0.09245	0.13758	0.00039	$3.85
5-4-7	0.0303	0.09245	0.06499	0.00018	$1.82
Total			0.99999	0.0028	$28.01

5-6-1	0.0303	0.04948	0.1006	0.00015	$1.51
5-6-2	0.0303	0.04948	0.28337	0.00042	$4.25
5-6-3	0.0303	0.04948	0.34855	0.00052	$5.22
5-6-4	0.0303	0.04948	0.20779	0.00031	$3.11
5-6-7	0.0303	0.04948	0.0597	0.00009	$0.89
Total			1.00001	0.00149	$14.98

5-7-1	0.0303	0.02187	0.09431	0.00006	$0.62
5-7-2	0.0303	0.02187	0.26565	0.00018	$1.76
5-7-3	0.0303	0.02187	0.32675	0.00022	$2.16
5-7-4	0.0303	0.02187	0.1948	0.00013	$1.29
5-7-6	0.0303	0.02187	0.11848	0.00008	$0.79
Total			0.99999	0.00067	$6.62

6-1-2	0.02299	0.23879	0.27034	0.00148	$14.84
6-1-3	0.02299	0.23879	0.33252	0.00183	$18.26
6-1-4	0.02299	0.23879	0.19824	0.00109	$10.88
6-1-5	0.02299	0.23879	0.14195	0.00078	$7.79
6-1-7	0.02299	0.23879	0.05696	0.00031	$3.13
Total			1.00001	0.00549	$54.90

6-2-1	0.02299	0.34594	0.11624	0.00092	$9.24
6-2-3	0.02299	0.34594	0.40274	0.0032	$32.03
6-2-4	0.02299	0.34594	0.2401	0.00191	$19.10
6-2-5	0.02299	0.34594	0.17192	0.00137	$13.67
6-2-7	0.02299	0.34594	0.06899	0.00055	$5.49
Total			0.99999	0.00795	$79.53

6-3-1	0.02299	0.23296	0.12571	0.00067	$6.73
6-3-2	0.02299	0.23296	0.3541	0.0019	$18.97
6-3-4	0.02299	0.23296	0.25966	0.00139	$13.91
6-3-5	0.02299	0.23296	0.18593	0.001	$9.96
6-3-7	0.02299	0.23296	0.07461	0.0004	$4.00
Total			1.00001	0.00536	$53.57

6-4-1	0.02299	0.09041	0.10691	0.00022	$2.22
6-4-2	0.02299	0.09041	0.30114	0.00063	$6.26
6-4-3	0.02299	0.09041	0.3704	0.00077	$7.70
6-4-5	0.02299	0.09041	0.15812	0.00033	$3.29
6-4-7	0.02299	0.09041	0.06345	0.00013	$1.32
Total			1.00002	0.00208	$20.79

6-5-1	0.02299	0.07047	0.1006	0.00016	$1.63
6-5-2	0.02299	0.07047	0.28337	0.00046	$4.59
6-5-3	0.02299	0.07047	0.34855	0.00056	$5.65
6-5-4	0.02299	0.07047	0.20779	0.00034	$3.37
6-5-7	0.02299	0.07047	0.0597	0.0001	$0.97
Total			1.00001	0.00162	$16.21

6-7-1	0.02299	0.02139	0.09237	0.00005	$0.45
6-7-2	0.02299	0.02139	0.26019	0.00013	$1.28
6-7-3	0.02299	0.02139	0.32003	0.00016	$1.57
6-7-4	0.02299	0.02139	0.19079	0.00009	$0.94
6-7-5	0.02299	0.02139	0.13662	0.00007	$0.67
Total			1.00000	0.0005	$4.91

7-1-2	0.0102	0.23252	0.25417	0.0006	$6.03
7-1-3	0.0102	0.23252	0.31263	0.00074	$7.42
7-1-4	0.0102	0.23252	0.18638	0.00044	$4.42
7-1-5	0.0102	0.23252	0.13346	0.00032	$3.17
7-1-7	0.0102	0.23252	0.11336	0.00027	$2.69
Total			1.00000	0.00237	$23.70

7-2-1	0.0102	0.33686	0.10793	0.00037	$3.71
7-2-3	0.0102	0.33686	0.37393	0.00128	$12.85
7-2-4	0.0102	0.33686	0.22293	0.00077	$7.66
7-2-5	0.0102	0.33686	0.15963	0.00055	$5.48
7-2-6	0.0102	0.33686	0.13559	0.00047	$4.66
Total			1.00001	0.00344	$34.36

7-3-1	0.0102	0.22685	0.11604	0.00027	$2.69
7-3-2	0.0102	0.22685	0.32687	0.00076	$7.56
7-3-4	0.0102	0.22685	0.23969	0.00055	$5.55
7-3-5	0.0102	0.22685	0.17163	0.0004	$3.97
7-3-7	0.0102	0.22685	0.14578	0.00034	$3.37
Total			1.00001	0.00232	$23.14

7-4-1	0.0102	0.08804	0.09983	0.00009	$0.90
7-4-2	0.0102	0.08804	0.28121	0.00025	$2.53
7-4-3	0.0102	0.08804	0.34589	0.00031	$3.11
7-4-5	0.0102	0.08804	0.14765	0.00013	$1.33
7-4-6	0.0102	0.08804	0.12542	0.00011	$1.13
Total			1.00000	0.00089	$9.00

7-5-1	0.0102	0.06862	0.09431	0.00007	$0.66
7-5-2	0.0102	0.06862	0.26565	0.00019	$1.86
7-5-3	0.0102	0.06862	0.32675	0.00023	$2.29
7-5-4	0.0102	0.06862	0.1948	0.00014	$1.36
7-5-6	0.0102	0.06862	0.11848	0.00008	$0.83
Total			0.99999	0.00071	$7.00

7-6-1	0.0102	0.04711	0.09237	0.00004	$0.44
7-6-2	0.0102	0.04711	0.26019	0.00013	$1.25
7-6-3	0.0102	0.04711	0.32003	0.00015	$1.54
7-6-4	0.0102	0.04711	0.19079	0.00009	$0.92
7-6-5	0.0102	0.04711	0.13662	0.00007	$0.66
Total			1.00000	0.00048	$4.81

True Chance*: This is the true chance of a particular combination coming in using the probabilities that were assigned to each horse.

Distribution**: This is the amount of money that would be wagered on each combination based upon its true chance probabilities. The distribution above was calculated using a $10,000 trifecta pool. The distributions used can be adjusted using simple multiplication for any size pool. Example: A $200.000 pool is 20 times larger than the ($10,000) pool we used, so a distribution of $4.00 in our chart would equal an $80.00 distribution in a $200.000 pool.

Number Of Four Horse Box Combinations ($200,000 pool)

Combinations	Highest Distribution	Lowest Distribution
1-2-3-4	1-2-3 = $18,570	4-3-1 = $324
1-2-3-5	1-2-3 = $18,570	5-3-1 = $189
1-2-3-6	1-2-3 = $18,570	6-3-1 = $135
1-2-3-7	1-2-3 = $18,570	7-3-1 = $54
1-2-4-5	1-2-4 = $11,071	5-4-1 = $61
1-2-4-6	1-2-4 = $11,071	6-4-1 = $44
1-2-4-7	1-2-4 = $11,071	7-4-1 = $18
1-3-4-5	1-3-4 = $8,043	5-4-1 = $61
1-3-4-6	1-3-4 = $8,043	6-4-1 = $44
1-3-4-7	1-3-4 = $8,043	7-4-1 = $18
1-4-5-6	1-4-5 = $1,910	6-5-1 = $33
1-4-5-7	1-4-5 = $1,910	7-4-1 = $18
1-4-6-7	1-4-6 = $1,622	7-6-1 = $9
1-5-6-7	1-5-6 = $1.192	7-6-1 = $9
2-3-4-5	2-3-4 = $4,762	5-4-2 = $173
2-3-4-6	2-3-4 = $4,762	6-4-2 = $125
2-3-4-7	2-3-4 = $4,762	7-4-2 = $51
2-4-5-6	2-4-5 = $1,086	6-5-4 = $67
2-4-5-7	2-4-5 = $1,086	7-5-4 = $27
2-5-6-7	2-5-6 = $669	7-6-5 = $13
3-4-5-6	3-4-5 = $510	6-5-4 = $67
3-4-5-7	3-4-5 = $510	7-5-4 = $27
3-5-6-7	3-5-6 = $312	7-6-5 = $13
4-5-6-7	4-5-6 = $96	7-6-5 = $13

Looking at the 1-2-3-7 trifecta box the 1-2-3 combination would have $18,570 while the 7-3-1
combination would only have $54. What pari– mutual manager would not welcome a $20 trifecta box wagered into a $200,000 pool? Listed below are some facts surrounding a $20 trifecta box wager.

Prices of the highest and lowest trifecta dirived from the 1-2-3-7 box combination.

Takeout %	Remaining Pool	Combo	Odds*	$2 Payoff

0	$200,000	1-2-3	9.7-1	$21.40
20	$160,000	1-2-3	7.6-1	$17.20
25	$150,000	1-2-3	7.0-1	$16.00
30	$140,000	1-2-3	6.5-1	$15.00
35	$130,000	1-2-3	6.0-1	$14.00

0	$200,000	7-3-1	3702.7-1	$7,407.40
20	$160,000	7-3-1	2961.9-1	$5,927.80
25	$150,000	7-3-1	2776.7-1	$5,557.40
30	$140,000	7-3-1	2591.5-1	$5,185.00
35	$130,000	7-3-1	2406.4-1	$4,814.80

Effect Of A $20 1-2-3-7 Trifecta Box

Takeout %	Remaining Pool	Combo	Odds*	$2 Payoff	Return
0	$200,240	1-2-3	9.7-1	$21.40	100%
20	$160,192	1-2-3	7.6-1	$17.20	100%
25	$150,180	1-2-3	7.0-1	$16.00	100%
30	$140,168	1-2-3	6.5-1	$15.00	100%
35	$130,156	1-2-3	6.0-1	$14.00	100%

0	$200,240	7-3-1	2704.9-1	$5,411.80	73.00%
20	$160,192	7-3-1	2163.7-1	$4,329.40	73.00%
25	$150,180	7-3-1	2028.4-1	$4,058.80	73.00%
30	$140,168	7-3-1	1893.1-1	$3,788.20	73.00%
35	$130,156	7-3-1	1757.8-1	$3,517.60	73.00%
Takeout %	Remaining Pool	Combo	Odds*	$2 Payoff	Return
0	$100,240	1-2-3	9.7-1	$21.40	100%
20	$80,192	1-2-3	7.6-1	$17.20	100%
25	$75,180	1-2-3	7.0-1	$16.00	100%
30	$70,168	1-2-3	6.5-1	$15.00	100%
35	$65,156	1-2-3	5.9-1	$13.80	98.60%

0	$100,240	7-3-1	2131.7-1	$4,265.40	57.60%
20	$80,192	7-3-1	1705.2-1	$3,412.40	57.60%
25	$75,180	7-3-1	1598.5-1	$3,199.00	57.60%
30	$70,168	7-3-1	1491.9-1	$2,985.80	57.60%
35	$65,156	7-3-1	1385.2-1	$2,772.40	57.60%

Odds*: After breakage.

Box wagering is batch wagering. The wager made above was a $20 wager on 24 different trifecta combinations. The patron boxed the 3 favorites with the long shot into a medium size pool (by US standards) yet affected the long shot combination dramatically. A mere $20 reduced payouts by 42.4% and lowered the $2 payoff by as much as $3,142.00. When professionals batch wager they would never affect payoffs as dramatically as amateurs do by using boxes and wheels.

My Perspective On Racing

By Dana Parham

I have been a fan of horse racing for over 35 years and have been involved in many capacities, as a racehorse owner, farm owner, breeder, and player.

Being passionate about racing I can’t help but feel a growing anxiety about the state of racing today and the challenges it continues to face.

As I see it, horse racing today is a complex industry, which is arguably in disarray. Our industry is uniquely complex and diverse. Our industry consists of many segments: Racetracks, OTBs, Tote companies, Breeders, Owners, Jockeys, Trainers, Drivers, Regulators, and Bettors, whose interests are often misaligned. Not to mention the fierce competition between states attempting to increase their share in the horse racing and slot machine market. Legislatures juggling the interests of racing against other interests, and the public who have varying levels of interest and opinion regarding horse racing.

The main point I’d like to make this morning concerns what I see as the key challenge facing the industry, and that is, in this new online world, horse racing is increasingly forced to face direct competition from other forms of gambling which from a wagering perspective provide a better deal for the player. A larger proportion of gambling in general is taking place online, in a more competitive environment than we are used to or know how to compete in. In general there are just more choices available for the entertainment and gambling dollar.

Horse racing is facing a growing pressure from market forces, which are forcing it in a direction we might not be ready for, and these forces are not going to go away. I think these pressures will continue to persist until we make favorable market changes.

While we have traditionally seen ourselves as an entertainment business, our revenue stream depends on gambling customers choosing to place wagers with us, and as increasingly other forms of gambling and other forms of entertainment provide a better return, more and more customers are choosing to spend their gambling dollars elsewhere. The gambling customer today is a lot less interested in the entertainment and spectacle of racing, and more interested in getting value for money on his gambling dollar.

The key question I’d like to ask is, should the horse racing industry think of itself primarily as an entertainment experience or primarily as a betting market? I think the answer has become more and more obvious, that it’s a betting market. The reasons I have this opinion are as follows:

Horse racing, with few exceptions, is in decline as an entertainment industry. Well-run financial markets on the other hand enjoy tremendous success in a free capitalistic environment. (See NYSE Timeline below)

The glaring exception to the decline (when adjusted for inflation) in horse racing handle is Betfair, which is run as a financial market.

The information that we disseminate is similar in character to the information that financial markets disseminate.

The wagering part of our industry has been billed as “the thinking mans game”, similar to a financial market.

The amount of dollars our industry needs will not be met by advertising our wagering pools as a form of gambling entertainment.

Opening and advertising our pools as financial markets will attract large risk capital and will grow handle and revenues at a much faster rate than trying to win over one $2 bettor at a time.

If we treated Horseracing more like a financial market, more trading instruments could be developed which in turn would attract more fans, handle and revenue.

Random Thoughts Current Issues and Possible Solutions

Drugs: We need a uniform drug policy that enforces uniform fines and penalties towards violators. If we don’t get the drugs under control we will drive out many good owners. When a trainer chooses to use drugs he cheats other owners, trainers, and bettors out of their rightful money.

We cannot expect our sport to grow until we get our integrity back. We need to be serious about enforcing our drug rules.

One idea would be to set up a national drug-testing laboratory that would be privately owned and operated. The private sector would bring costs down, bring uniformity, and be more thorough than state run programs.

People who choose to cheat should be heavily fined (up to $500,000)* and be suspended from the sport or barred for life when warranted.** Until we send a real message the public will not come back in any meaningful numbers.

*My thoughts on fines of this magnitude would be multiple offenders using banned substances. We could guarantee that large fines would be paid through an assurance bond or a personal guarantee. Since the first offense would be substantially less non-offenders would not need to provide this large of a bond or personal guarantee

** Having a uniform drug program would make everyone aware of the penalties involved and as a last resort a lifetime barring would eliminate the habitual offender. Finding other revenue to fund our sport: Most companies as they evolve seek out new streams of revenue, whether it’s a mom and pop restaurant adding new items to its menu or General Electric adding new divisions. Our industry also needs to find new streams of revenue for its long-term success. Some suggestions for new revenue streams would be:

Skyboxes: The major sports in the US derive a good portion of their total profits from selling skyboxes. I believe racetracks could have success emulating what the major sports have done. This could be a great way to receive corporate sponsorship our sport badly needs.

Hotels: Encouraging a national hotel chain to build on racetrack property could be appealing to both the hotel and the racetrack/racino customer.

Restaurants: Why do racetracks insist upon running their own restaurant? For the most part they are not very good at doing this and it dilutes management’s abilities to manage the racetrack itself. Racetracks should lease out space to people who are in the restaurant business. Racetracks would then be associated with brand name companies, and that association should attract new clientele to the racetrack. Having great food is part of the winning formula that Las Vegas has understood for years. In fact, most Las Vegas casinos now lease space to professional and well-respected restaurateurs.

Retail space: Envision a racetracks’ clubhouse located above a popular shopping mall. Everyday, thousands of people visiting the mall and being exposed to our industry. Imagine racetracks receiving lease payments that cover the cost of having a clubhouse.

A profitable backstretch: Charging the horseman a realistic price for services rendered (see my thoughts on backstretch).

Utilizing a racetrack facility during the days, weeks, and months it is closed for some other purpose. Whether you host private parties (weddings, divorces, birthdays, etc.) or concerts on your dark days or rent your facility out for weeks or months when you are closed. It is a crime to see racetracks not fully utilized.

The suggestions I have offered may have little or no merit but the idea is for track management to find new revenue streams going forward.

We need a superstar: Every major sport has stars that the general public is aware of except horseracing. Every year we introduce to the public our newest stars at the Kentucky Derby or the Breeders Cup. No sooner does the public become aware then we quickly send our newfound stars to the breeding shed. Can you imagine how the NBA would prosper if the likes of Michael Jordan, Magic Johnson, and Larry Bird were sent to the breeding shed (never to be seen again) after playing just ten games? We need to keep our super stars on the racetrack longer in the hope of obtaining brand recognition. When Cigar was racing as a 5-year-old it was estimated that he drew between 15,000 and 30,000 extra people to the racetrack. One idea would be to not allow horses to breed until the age of five or six. I believe in the long run that this could also help the breeders in the sense that if our fan base grows it should be good for all parties concerned.

Conditions: My comments are mainly aimed at Harness Racing but Thoroughbred Racing can also consider this issue. When we card races for NW1, NW2, NW3, etc… this creates a situation where it becomes in the best interest of some horses not to win. When horses are better off not winning this creates an integrity issue. Once you race yourself out of these conditions there may not be a suitable class for this horse to continue to earn. The Meadowlands handles this by having a NWs with a lifetime earnings cap and this is a good way to write this type of condition. My suggestion would be that 3 second place finishes = a win, and 2 third place finishes = a second. Example: A horse has 2 seconds and 2 thirds in a NW1. This would force the horse out of this class rather than see this horse race in NW1 for six months and accumulate substantial earnings while never winning. Canada uses an earnings allowance for 2, 3, and 4yo in calculating a horses lifetime earnings. This permits horses to stay into their class longer and helps ease the perception that some horses are not giving their best effort.

Another situation I would like to address is when we race eliminations. We need to insure that all horses are giving their best effort, while it maybe in the interest of the horse (once it has qualified for the final) to take it easy. Once again this creates integrity and perception issues. The Meadowlands rewards its elimination winners with their choice of post positions (which I think is a good idea) but is that enough to insure all horses are giving their best efforts? I believe adding a cash bonus for anyone winning its eliminations plus winning the final would be another idea. One last thought would be to increase the purse on eliminations and decrease the purse on the finals. This would be an incentive for horses to give their best efforts. A by-product of increasing elimination purses is that more owners’ would benefit in the distribution of purses.

Net pool pricing: I question if net pool pricing is really beneficial for our industry. Yes, it does put new handle into our pools (and I believe that’s a good thing) but at what cost? One way racetracks market and brand themselves is by using lower takeouts. When racetracks with low takeouts accept net pool pricing they just gave away a huge competitive edge. It seems ludicrous for the Meadowlands to promote their pick 4 at 15% takeout, yet a certain segment of the bettors will pay 24% and the operator pockets the difference and the customers bankroll is diminished in a much shorter time frame. The other problem I see with net pool pricing is the average customer can no longer judge possible payouts from the information that the tote board displays.

Withholding taxes: Withholding taxes are a huge drain on our handle. Money that could otherwise be reinvested is taken out of the pools. In states where they impose an additional income tax the drain is accelerated. With takeouts and breakage causing the average bettor to be playing into a 25% negative sum game, most withholdings are going to be refunded when the bettor files his tax return. Between the drain on the handle and the cost to implement this procedure it costs horseracing countless millions. Our industry has shown the ability to have exemptions and special privileges in the eyes of the state and federal government. Obviously our industry has the ability to reach lawmakers at the state and federal level. It would behoove us to revise these withholdings as to not affect handle quite so adversely.

Getting people back to the track: When attendance continues to fall the message the customer is sending is he or she would rather be somewhere else. People smarter than I am should be able to identify why racetracks have lost so many of their on track customers. Certainly many customers do not want to leave the convenience of their own home, but I think there is more to it than this. Overpriced bad food, rude tellers, and lack of amenities are a huge reason for the mass exit. One of my pet peeves is charging the customer $.75 for a golf pencil. Isn’t it enough that we cut 20% of their money without having to gouge on golf pencils? One of the things that make racing interesting is having 20,000 screaming fans when the horses hit the top of the stretch. Obviously as attendance dwindles the great atmosphere at a racetrack is lost. One last thought is how counter productive can a racetrack be that implements a surcharge on its on track customers???

Increasing handle: Field size, quality of fields, number of race days, takeouts, critical mass in the pools, integrity in our sport, and number of betting outlets affect our handle positively or negatively. Our industry continues to employ strategies that affect handle negatively. If our industry’s goal is to increase handle (which in turn will increase revenue) employing the above variables in a positive manner can only increase handle. Field size– large fields (See number of wagering combinations depending on field size) allow for more wagering opportunities consequently more wagers. Another factor that has a positive influence is the larger the field the greater the chance of varying opinions, which dictates a greater chance for overlays. Quality fields attract a higher betting interest than a cheap field. Diluting our product with too many race days negatively affects the handle. The higher the takeout the less money is available for future wagering (See the effects of takeout starting with $100,000). Having small pools discourages handle. Two racetracks handle $1M each. Track A carded 14 races and offered 8 separate pools for each race for a total of 112 pools for the day. Each pool would average $8,929/pool. Track B has a 9 race card with an average of 5 pools/race. Track B’s average pool size would be $22,222/pool or each of Track B’s pools would be 2.49 times bigger than Track A’s pools. Larger pools allow your larger customers to potentially wager more. Many people in the general public believe that our sport is fixed or a high degree of cheating is prevalent. That persona needs to be erased and our ability to deal with negative perceptions needs to be upgraded and possibly centralized. Today, racetracks are forced to deal with a growing number of betting outlets. When a racetrack does not allow its signal to be carried by as many outlets as it otherwise could this causes our industry to be fragmented and hundreds of millions if not billions of dollars are lost. Lost handle can never be recouped!

Bringing down the cost of our sport: The first thing that every racetrack in America should do is charge rent (the going rate) for their stable area, and use of their facilities to the horseman who use these facilities. This is an out and out subsidy given to horseman who board on track paid for (through lower purses) by horseman who board privately. On top of that racetracks use this expense to attempt to justify high fees and takeouts to the bettor. I find it a disgrace that we allow people to live, let alone raise children on the backstretch of our racetracks. These privileges are abused and the racetracks call for little accountability from those that they subsidize. Health insurance, which is subsidized, through lower purses, represents another program that is abused and lacks accountability.

Random Thoughts II

Wagering Issues

Rebates: “A deduction from an amount to be paid or a return of part of an amount given in payment.” In our industry a rebate is money given to the bettor that otherwise would have been the givers profit. Rebates offer a HUGE incentive for bettors to wager more than they otherwise would normally wager. Big City Racetrack takes wagers from two different outlets, Outlet 1 we’ll call Mevada and Outlet 2 we’ll call Pirates of the Caribbean SPMO. Big City Racetrack has a blended takeout rate of 20% and charges Mevada a 2½% fee for its signal. Mevada sends Big City a $100 wager in which Big City keeps $2.50. Mevada keeps $17.50 and has many competing products (blackjack, craps, roulette, sports wagering, slot machines, poker, big 6 wheel, etc.) that may entice the racetrack bettor to become Mevada’s casino customer. Big City Racetrack appears to welcome this arrangement, where Mevada keeps 85% of the takeout and may convert Big City’s patron into a Mevada casino patron. With the money Mevada makes it advertises nationally and on occasion some of Big City’s customers go to Mevada at the expense of Big City. Big City has a different arrangement with Pirates; it charges them a 5% fee for the signal. Pirates sends Big City a $100 wager in which Big City keeps $5.00 and Pirates keeps $15.00. Pirates then takes most of the $15.00 and returns it to the loyal bettors who in turn re-bet with both fists. Because of Pirates business model Big City receives huge handle from Pirates. Pirates does not have a casino or a big 6 wheel in which to convert racetrack patrons into casino patrons. Pirates does not do any advertising so it can never compete for Big City’s customers. What amazes me is that Big City seems so content with Mevada and their low fees and competing nature, yet has issues with Pirates who continue to subsidize the racetrack patron and never competes for Big City’s customers. This is just counterintuitive why Big City continues to welcome Mevada, their lower fees, competitive nature and unsupportive ways (casinos even had legislation passed so it is illegal for them to rebate racetrack handle while they cash rebate virtually every other endeavor under their roof). If Big City even threatens a fee increase, Mevada threatens to keep the entire handle and go back to booking the wagers (if Big City only knew, see my comments on Nevada).

Nevada: Nevada is the gambling capital of the United States and has created a fantastic atmosphere and experience for most gamblers. Excluding lotteries, (lotteries are outlawed) Nevada casinos offer every socially excepted form of gambling. Before 1977-78 Nevada casinos did not have race and sports books as part of their gaming arsenal. Sports wagering was economically unfeasible and racing required sophistication in management that the casinos did not possess. Before 1977 only independent operators indulged in the art of booking sports and horses. This changed when the federal tax on sports wagering was reduced from 10% to ¼%. The lower tax allowed licensed sports book operators to be competitive with illegal bookmakers. The large casinos then recognized that offering sports and racing would be a competitive edge over their competition. In the beginning only the Union Plaza in downtown Las Vegas and the Stardust hotel and casino located on the Las Vegas strip entered the race and sports book business. These casinos were drawing customers from the other casinos at an alarming rate and by the mid 80’s every major hotel entered into the race and sports business with many hotels building elaborate race and sports books. By the mid 90’s every independent race and sports book was out of business. Because of this mad scramble for every casino to get involved in a business that many new little or nothing about this created a huge opportunity for the professional sports and horseracing handicapper. This situation created quite the dilemma for the casinos; they needed racing and sports to hold their current casino customers yet struggled to hold their unrealistic margins against the professional handicapper. The racetracks came to the rescue on the race book side offering Nevada pari-mutuel wagering but Nevada was still vulnerable on the sports book side. The major casinos went to the Nevada legislature for help and a number of laws were passed to ward off the professional sports bettor. Examples of these laws were no cell phones inside race and sports books, no one-way or two-way communication devices, reporting of sports wagers to the Nevada gaming board that exceeded $3300. The barring of winning sports players from the Nevada sports books was another favorite tactic used. New laws were passed that made it illegal for a person to make a sports wager for another person.

In the mid 90s a few of the smaller casinos in Las Vegas started offering cash rebates to the racing patron. This caused the larger horseplayers in town to shift their business from the mega resorts to the smaller casinos that offered rebates. Large racing customers from other states started to move their business from the local racetracks to the Las Vegas rebaters. The big mega resorts cried foul and tried to get the racetracks to outlaw rebates in their contracts but racetracks failed to see the harm in rebates until they started to lose their biggest customers. At this same time the large casinos lobbied the Nevada legislature to pass laws against rebates, which was right in line with their standard thinking. “If you can’t beat your competition, get laws passed that will eliminate your competition”. At this same time Nevada passed a law to make it illegal for a Nevada resident to make a wager outside the State of Nevada if you are physically in the State of Nevada.

Today Nevada casinos offer non-cash rebates such as food, show tickets, and free rooms to horseracing patrons. Nevada casinos sponsor large handicapping contests (that racetracks co-promote?), which take racetracks best customers away from them for days or weeks every year. How many everyday racetrack patrons (when they retire from their 9 to 5 jobs) move to Nevada every year that now plays horses there? Since the mega resorts have the more desirable amenities they now are assured of getting the bulk of the business. The pecking order has now been re-established. Life is now again good for the mega resorts to rule the roost that they think is rightfully theirs.

Nevada likes to point out that it only receives ½ of 1% of its gaming revenues from racing and if it does not take racing they are no worse off without it. They also point out that slot machines return the highest revenue/sq. ft. and racings revenue/sq. ft. produces their lowest return. (If return/sq ft. was the only matrix considered then why would a casino offer restrooms?). I’m sure that this is all true but lets look beyond Nevada’s propaganda. Nevada casinos put in race books to retain casino customers that they were in danger of otherwise loosing to casinos who did have race books. It was the racetracks that bailed the casinos out when they gave them full access to the pari-mutuel pools. The racing patron spends his money throughout the casino not just in the race book. Race book patrons bring their family and friends to casinos that offer horseracing. Nevada casinos have made a substantial investment into the promotion of their race books and they are not about to walk away from the benefits that a race book provides for their overall profits. Make no mistake about it; Nevada needs horseracing way more than they will ever let on.

What is the point to all of this, well I as a race horse owner and breeder am concerned why my purses receive such a small % of Nevada’s handle, while I as a bettor pay much higher fees yet would single handily wager more than the whole State of Nevada if given their current fee structure and access to their current racetracks. I fail to see the logic, practicality, or fairness in this current arrangement. I am not advocating Nevada pay higher fees (even though this could be considered) I am suggesting that mega bettors start paying lower fees or at least stop raising fees before more of this handle is lost.

Batch wagering: Batch wagering (as I understand it) is grouping more than one wager with a single command and all of the wagers that were in the batch are made at one time. Batch wagering is a technological tool used by horse bettors that allow them to get in multiple wagers quickly. Batch wagering has been offered to everyone for years in the form of box and wheel wagering (see my paper “Effects of Box Wagering in a Trifecta Pool”). Tote companies offer technologies that allow players to make multiple wagers that are not boxed or wheeled. The players currently using a form of this technology allows them to give the racetracks many more wagers, and enables the player to wager at many more tracks. Without batch wagering handle and revenues will certainly fall. It is totally inconceivable to me why our industry continues to discourage technology, innovation, handle and revenue. Even McDonalds offers a form of batch wagering called “batch ordering”. Instead of the customer having to say give me a big mac, large order of fries, and a medium coke, with “batch ordering” we just need to say I’ll take a #1.

Last minute odds changes: This still seems to be an issue with some racetracks. Last minute odds changes are just a byproduct of our pari-mutual system. What’s the issue? If a horse is an overlay people are going to wager accordingly. If a horse is a huge overlay it is part of a markets makeup to over react and in our industry that means over bet. Whenever I hear that once again this is someone’s issue I always envision a $2 bettor complaining that he felt he was entitled to $14 and is only receiving $12.60. Track management then reacts by making this an issue. What I believe would be more prudent is for track management to be honest with its customers and explain that last minute odds fluctuations is one of the perils of the pari-mutual system and the higher the takeout the more adverse a large wager becomes. The alternative to this would be to discriminate against your largest customers and not accept their wagers. As absurd as this may seem there are racetracks that actually entertain these thoughts. Increasing handle, and increasing fan base are the two key ingredients for insuring our industry’s survival and longevity. Any thinking that threatens growth is counter productive for our industry’s future.

Betting exchanges: Betting exchanges are a relatively new idea that offers the horseplayer an alternative to pari-mutual wagering. The advantages of an exchange environment are the much lower commission rates, having the ability to wager on a horse to lose, and fixed odds. The disadvantages are exchanges cannot offer multi-horse wagering, and the less sophisticated player will tend to lose more money, and at a faster rate because it is a more informed market. I believe racetracks should attempt to embrace and incorporate an exchange into their business model. I’ve seen exchanges handle fifteen times the amount of money the track handled in their win pool. Having a national betting exchange would create huge pools and bring horseracing back on par against its gambling competition (online poker, online sports betting, etc…). In an exchange environment horseracing props would be a new and exciting product that we currently do not offer. Some examples: Triple Crown futures, jockey and trainer wins, etc… An exchange is an ideal format for match races, which is something the pari-mutual industry seldom offers and is never highly received.

A Level playing field: This seems to be the buzzword of the decade. Racetracks are falling all over themselves to get into this brand new unproductive non-revenue producing business. Racetracks seem to believe that it is their job to insure that all customers have an equal chance in losing less than the takeout. So whoever appears to be doing well will need to be handicapped and those not doing as well will need new advantages. What is conveniently missed here is that the customer who does well is a customer that gives the highest handle. This has to be the only industry in the world that wants to punish its best customers and reward its worst. Just for kicks lets actually look for some ways to make horseracing an equal chance for all. The first thing we should do is not allow jockeys, trainers, owners, and connections to wager. Certainly trainers have knowledge about their horses that the rest of us are not privileged to. Allowing this group of people to wager is equivalent to insider trading on Wall Street. Perhaps the racetrack should provide a Daily Racing Form for free to any player who cannot afford one in the name of “a level playing field”. Any player who’s IQ is to high or too low should be barred from wagering as to not upset this level playing field. I could go on and on with my silliness but hopefully one gets the point. Racing (like so many things in our society) is not and never will be a level playing field. Certain people will always have resources over others. The resources that are available to the biggest players are also available to everyone else. Not everyone else wants or can afford these resources, but penalizing those that do or can doesn’t seem in keeping with the principles that this country or capitalism was founded upon.

Taking wagers from a facility that has no investment in horseracing: This is an interesting topic that keeps being thrown about. Does a dog track or Jai Alai fronton have an investment in horseracing? Do Nevada casinos or NYCOTB have an investment? If so, is their investment large enough to count? What is the point to all of this? Is their money not green or do we need to have a duel-pricing model? Racetracks will charge each other super low fees because they all have an investment. Track A costs $1M back in 1896 to build and races 30 days a year. Track B costs $250M to build in 1993 and races 300 days a year. I guess they both have an investment. The Hilton Hotel in Las Vegas spent $20M to build their race book and races zero days a year. Do they have an investment in horseracing? U-bet invests millions into software that services racing customers at a level never achieved before. Does U-bet have an investment in horseracing? An SPMO brings new customers to our industry, employs 50 people, builds the infrastructure necessary to provide a high level of service for it’s customers, reinvests most of its profits back to its players, and pays hundreds of millions in fees. Does this SPMO have an investment in horse racing? Consider a customer of this SPMO who has paid over $100M in track fees, invested $5M in a farm, spends millions on horses, and directly employs 50 people in his horseracing/breeding operation. Does this customer have an investment in horseracing? Should Thoroughbred racetracks give Harness racetracks the same fees they give themselves and vice-versa or are these just two competing industries? I’d like to think that all of us are in this together. We need to unite our resources for the betterment of the industry. Together we could form a strong base and bring horseracing back to the levels it once enjoyed in prior years.

Positive cash receivers: Bob and Joe go to Big City Racetrack for a day at the races. They both wager $1000 for the day, Bob lost $300 while Joe had a fantastic day (according to racetrack standards) and only lost $100. Because Big City has a blended takeout of 20% both Bob and Joe should have lost $200 each (maybe Bob and Joe were not on a level playing field). Since Joe only lost $100 would that make him a positive cash receiver? Certainly if Joe was wagering off track that is what he would be! (If Joe was wagering off-track where Big City was receiving a 3% fee the take-out would be $200 but Big City would only receive $30, the difference would be $170 in which $100 was lost by Joe leaving $70 to be sent back to the off track facility making them a positive cash receiver). One last thought positive cash receivers are required to wait weeks if not months for settlement. This can only be viewed as a nice perk to the racetracks that seems to go unnoticed.

Past Posting: From time to time this topic is brought up by the racetracks or by racetrack patrons. To my knowledge past posting only exists at the racetracks and within their own infrastructure. Any racetrack that employs a cancel delay allows its employees to be in position to past post a race. The way one can employ this ingenious technology is to make a wager before the race begins and if the bettor does not like how the race shapes up he has somewhere between 10-25 seconds to cancel his wager. Since the player hasn’t officially had to make up his mind until after the race began this is past posting. This tactic (I am told) can be employed at some self-betting terminals that can only be found inside racetracks. This form of past posting is especially lethal in Harness Racing. I have been told that management at some racetracks were aware of the abuses but turned a blind eye toward this activity (since this was on track handle maybe it should be forgiven). Another example of past posting is one or more OTBs located in a highly regulated state or states allowed Tote company employees to enter their wagering system (unsupervised) and change the bets after 4 legs of a pick 6 had become official. Back in the 70’s a South Florida dog track had 3 employees that had access to the Tote system and they would print themselves a winning Trifecta ticket after the race was run but before the race became official. They admitted to cashing several tickets every week for over 6 years. These are the only cases of past posting that I can recall, but I’m sure there have been others. All these cases have several things in common, they all occurred inside US regulated racetracks or US regulated OTBs with management’s help or under management’s nose.

Last minute betting: Bettors wait until the last possible minute before wagering for only one of two reasons. They either can’t make up their mind on what to bet, or they’re trying to get a sense of what a horse will be paying. The better the estimate of the final odds a player can make the more mathematically correct he can be on his wagers. There are advantages to late wagering such as accurate estimation of final payouts. If everyone would choose to wait until the final minute there would be less of an advantage in last minute betting. Some people in our industry have raised a concern that at some point everyone will be waiting until the final minute before wagering. Their further concern that if everyone waits until the final minute that at some point this would hurt handle. My question is “are we making an issue out of nothing or is this truly a future issue that forward thinking individuals are ahead of the curve on?” I believe this could be a problem until one examines how free markets work. Let me explain– presently there is an advantage (for the knowledgeable horse player) in waiting to wager late. If everyone would wait until the final seconds before wagering the advantage in waiting would be eliminated. This would now create an advantage for the person who has the abilities to take a lead. The game would change and some of the people who bet last would find a bigger advantage in betting first. Overall I do not believe this cycle will continue to the point of everyone waiting to the last minute. In summary, I believe we are premature in making this an issue and if this theory does prove true new forces will enter the market to make this a moot point.

The Mega player:

1 ) This is an individual or group of bettors who wager hundreds of thousands or millions of dollars every day.

2 ) They play multiple tracks and multiple pools.

3 ) Their bet size is determined by estimated edge, pool size, bankroll, and takeout.

4 ) They play everyday, rain or shine.

5 ) When racetracks increase their handle the mega player will increase his.

6 ) In some cases they are willing to over bet their edge to increase handle strictly to show good faith toward the racetracks.

7 ) They sometimes have to wait months to get paid by the racetracks but never receive compensation on their money. In rare occurrences they don’t get paid at all.

8 ) In many instances the mega player is responsible for helping implement new technology (at no small cost) that benefits everyone who’s livelihood is associated with pari-mutuel wagering.

9 ) They generate tens and hundreds of millions of dollars in fees for the racing industry yet seem unappreciated by track management, horsemen’s groups, and the industry in general.

10 ) Needs the latest technology to assist in insuring handle will continue to grow.

Random thoughts summery: Our industry has many facets and many problems with no real leadership to guide us through the troubled waters that lie ahead. Many of the people that have the power to help make the changes our industry needs to insure its longevity seem to have their own agenda or, simply put, are very uninformed. I believe the true solution involves a total makeover from whom do we welcome as owners, trainers, drivers, and jockeys to how are we going to fund and grow the sport. Until today no one has ever asked for my opinion or what ideas I have as an owner, breeder, farm owner, player, or just racing fan. I thank everyone for taking the time to read through all of the materials and giving me your undivided attention.

Timeline of NYSE 1961-2007

Timeline of NYSE 1961-2007 Ave. daily volume exceeds 4 milion shares

1975 fixed commissions abolishes

1976 odd-lots trade enabled

1979 major upgrade in modernization of its trading floor

1982 first 100 million share day

1984 super dot 250 launches

1992 ave. daily volume surpasses 200 million shares

1997 trading in sixteenths

1997 volume tops 1 billion shares

2000 decimal pricing begins

2001 volume tops 2 billion shares

2007 record volume day-over 4.1 billion shares

Win Pool with a 20% Takeout and Dime Breakage

New wager	Pool size	Pool after take	Amt on winner	Odds	$1 Payout	$2 Payout	Breakage	%Loss on new wager	Profit
0	100,000	80,000	5,000	15.00-1	16	32	0	0	0
1000	101,000	80,800	6,000	12.47-1	13.4	26.8	400	16.25%	12,400
2000	102,000	81,600	7,000	10.66-1	11.6	23.2	400	27.50%	21,200
3000	103,000	82,400	8,000	9.30-1	10.3	20.6	0	35.63%	27,900
4000	104,000	83,200	9,000	8.24-1	9.2	18.4	400	42.50%	32,800
5000	105,000	84,000	10,000	7.40-1	8.4	16.8	0	47.50%	37,000
6000	106,000	84,800	11,000	6.71-1	7.7	15.4	100	51.88%	40,200
7000	107,000	85,600	12,000	6.13-1	7.1	14.2	400	55.63%	42,700
8000	108,000	86,400	13,000	5.65-1	6.6	13.2	600	58.75%	44,800
9000	109,000	87,200	14,000	5.23-1	6.2	12.4	400	61.25%	46,800
10000	110,000	88,000	15,000	4.87-1	5.8	11.6	1000	63.75%	48,000
11000	111,000	88,800	16,000	4.55-1	5.5	11	800	65.63%	49,500
12000	112,000	89,600	17,000	4.27-1	5.2	10.4	1200	67.50%	50,400
13000	113,000	90,400	18,000	4.02-1	5	10	400	68.75%	52,000
14000	114,000	91,200	19,000	3.80-1	4.8	9.6	0	70.00%	53,200
15000	115,000	92,000	20,000	3.60-1	4.6	9.2	0	71.25%	54,000
16000	116,000	92,800	21,000	3.42-1	4.4	8.8	400	72.50%	54,400
17000	117,000	93,600	22,000	3.25-1	4.2	8.4	800	73.75%	54,400
18000	118,000	94,400	23,000	3.10-1	4.1	8.2	100	74.38%	55,800
19000	119,000	95,200	24,000	2.97-1	3.9	7.8	1600	75.63%	55,100
20000	120,000	96,000	25,000	2.84-1	3.8	7.6	1000	76.25%	56,000
25000	125,000	100,000	30,000	2.33-1	3.3	6.6	1000	79.38%	57,500
30000	130,000	104,000	35,000	1.97-1	2.9	5.8	2500	81.87%	57,000

The chart above is an illustration of the effects of a win wager and the breakage associated with the wager. This also demonstrates the negative effects a bettor can have on his own return. Because of exorbanent takeouts and breakage that ractracks and governments charge, this is the single biggest barrier to increasing handle.

Chance of winning the pick 6

Real Win Odds	Chance of Coming In	Tickets Hit/Billion	Odds
1-1	.015625	15,625,000	63-1
2-1	.001371742	1,371,742	728-1
3-1	.000244141	244,141	4095-1
4-1	.000064	64,000	15,624-1
5-1	.000021433	21,433	46,656-1
6-1	.0000085	8,500	117,646-1
7-1	.000003815	3,815	262,122-1
8-1	.000001882	1,882	531,349-1
9-1	.000001	1,000	999,999-1
10-1	.000000564	564	1,773,049-1
15-1	.00000006	60	16,666,666-1
20-1	.000000012	12	83,333,332-1
25-1	.000000003	3	333,333,332-1
30-1	.000000001	1	999,999,999-1
35-1	.0000000005	.5	1,999,999,999-1
40-1	.0000000002	.2	4,999,999,999-1
50-1	.00000000006	.06	16,666,666,666-1
60-1	.00000000002	.02	49,999,999,999-1
70-1	.0000000000078	.0078	128,205,128,204-1
80-1	.00000000000354	.00354	282,485,875,705-1
90-1	.00000000000176	.00176	568,181,818,181-1
100-1	.000000000000942	.000942	1,061,571,125,264-1

Tote Board

TOTE BOARD

One thing that a racetrack could do to make things easier for its patrons is change the way we present the odds. Currently we display odds in an antiquated fashion displaying odds like 3:2, 4:5, 1:9 (which really mean 1:10 or even 1:20). This is confusing to the new fan and at the same time it is not as accurate as converting odds to a decimal display. When the tote board displays odds of 5 or 5:1 is the horse currently 5:1 or 5.9:1? The difference in return is $12.00 verses $13.80. For those that may argue that changing to a decimal display may confuse the current customer. We already display closing odds in the charts and DRF using the decimal form. Another thing that most racetracks do is display odds in increments such as 35:1, 40:1, 45:1, 50:1, 60:1, 70:1 and so on and when they get to 99:1 it stops. If a horse is 39.3:1 why can’t we display the accurate odds?

Listed below is an example of how the odds would look in the decimal form.

Current Display	Decimal Display
1/9	.05 or .1
1/5	.2 or .3
2/5	.4
½	.5
3/5	.6 or .7
4/5	.8 or .9
1 1	1.1
6/5	1.2 or 1.3
7/5	1.4
3/2	1.5
8/5	1.6 or 1.7
9/5	1.8 or 1.9
2 2	2.1, 2.2, 2.3 or 2.4
5/2	2.5, 2.6, 2.7, 2.8, or 2.9
3 3,	3.1, 3.2, 3.3, or 3.4
7/2	3.5, 3.6, 3.7, 3.8, or 3.9

Years ago I visited Roosevelt Raceway and was impressed with one of the features that their tote board offered. It displayed the range of place and show prices each horse would pay. I don’t recall seeing this features before or since but I believe this would be helpful to racetrack patrons and possibly encourage higher handle for these pools.

My Presentation at The 2007 Racing Symposium!!!

Good morning,

Before we get started:

I’d like to thank Doug Reed, The University of Arizona, and all the students in the Racetrack Industry Program.

I would like to thank everyone for attending and I am honored for this opportunity to give some of my views on racing.

I have prepared a folder of material that covers many of the issues we are facing and some of my thoughts on horse racing. I encourage everyone to take a folder, and if we run out I will be happy to mail you one. At the conclusion of my presentation I look forward to taking any questions you may have.

I would like to start off by talking about MacDonald’s corporation, which happens to be a DOW 30 Company. Back in November of 1999 MCD stock price was above $48/share. In March of 2003 MCD stock price hit a low of $12/share. WHAT HAPPENED?

Every quarter MCD had excuse after excuse why they could not meet expectations, and their stock price reflected this.

1. The general market was in a downturn, but Wendy’s stock appreciated 20% during this same time.
2. Currency exchange rates were unfavorable, but most multi-nationals were not affected.

A few years ago MCD spent $5M on a study to get customer feedback. What they learned was that they had forgotten how to treat the customer. They had stopped saying words like Welcome, Thank You and Please Come Back Soon. In short they had forgotten how to be friendly and courteous.

Since March of 2003 MCD has improved their Customer Service, their Product and their stock has risen from $12/share to a high of $60/share. What MCD did was:

RECOGNIZE WHAT YOU NEED TO DO, THEN DO IT. THAT IS THE ESSENCE OF HIGH PERFORMANCE

I use the MCD story to make this point: MCD had all of these excuses why they could not meet expectations. When they stopped making excuses and took a close look at themselves, then they EXCEEDED expectations!

Our industry needs to do the same, take a hard look at ourselves and:

RECOGNIZE WHAT WE NEED TO DO, THEN DO IT. THAT IS THE ESSENCE OF HIGH PERFORMANCE

Next I‘d like to talk about the NYSE and what I believe is an industry with many parallels to our industry. I have included in the folders an insightful paper, “Reflections on a Lifetime in the Securities Industry” written by By William C. Freund P.H.D.

Dr. Freund Joined the NYSE in 1968 as senior VP and chief economist – He spent 20 years at the exchange and witnessed many of the dramatic changes that have helped to make the exchange what it is today.

Also in 1968 the government began questioning the entire concept of fixed commissions in the securities industry. The DOJ submitted a statement to the SEC questioning the anticompetitive effect of the NYSE fixed commission rates, and asked the SEC to investigate whether fixed rates were justified. A federal court of appeals ruled in 1970 that the NYSE was required to justify its prohibition on commission rebates.

When it came to adopting rules that would allow for rates to be set competitively in the marketplace Dr. Freund cites (and I quote)

“The NYSE’s members failed to understand the immense power of competition and that they could no longer stem the powerful tide of competition. In the end, good economics has a way of prevailing over artificial price fixing. By 1975, after extensive hearings, the SEC declared rates fully open to competition.”

The argument made by those opposed to competitive pricing was that it was an industry with such heavy fixed costs that competition would lead to “destructive competition”, leaving only a few monopolistic survivors. These are the same types of arguments we are hearing in our industry today.

According to Dr. Freund the NYSE spent over a million dollars on their economic consultants, a fee they earned by delaying fully competitive rates for nearly 7 years. But before the battle was lost, the clear-thinking president of the NYSE (Bob HAACK) had had enough.

Here was the president of the NYSE attacking fixed rates as an outdated anomaly that could not continue because it was not in the best long-run interests of the securities industry itself.

His expectation that the industry would benefit from competitive rates was vindicated by subsequent events. New competitive opportunities arose for markets and firms as a result of competition. The industry discovered new ways to enhance productivity by automating processes, streamlining the clearing and settlement of security transactions, and generally reducing unit costs. New competitive ideas proliferated.

Let’s take a look at the history of the NYSE.

The NYSE increased its non-member commission rates 5 times between 1934-1965

I feel that this is similar to what we are seeing today in our industry as track fees continue to escalate.

In 1975 the NYSE began changing the way they did business and FIXED COMMISSIONS were abolished.

Since then they have experienced spectacular growth in volume, which would be the equivalent to what we call, handle.

Over the past 40 years the NYSE has made many changes to create a better trading experience and to bring the price of trading down. Some of the changes they made in addition to abolishing fixed commissions were the major modernization of the trading floor, introduction of electronic trading, trading in 16ths and then to decimal pricing.

Let’s take a look at the growth that these changes created:

* 1961 average daily volume exceeded 4M shares
* 1982 1st 100M share day
* 1992 Average daily volume surpasses 200M shares
* 1997 Volume Tops 1 Billion shares
* 2001 Volume tops 2 Billion shares
* 2007 Record Volume day over 4,1 Billion shares

Even with the phenomenal success that the NYSE has enjoyed, they missed an even bigger opportunity that was virtually handed to them.

One day a Wall Street Journal reporter presented the idea that options should be standardized and traded like stocks. At that time the NYSE had a shortsighted and conservative individual at the helm, a poor leader who rejected the idea - - equating it with turning the NYSE into a LV style gambling casino. He even went so far as to forbid the research department from studying the idea.

The idea was however adopted by the CBOT soon after. The result was that options trading on the CBOT reached the point where it exceeded the volume of the NYSE. The NYSE later realized their mistake, but it was too late. The CBOT already had the liquidity and best prices as determined by competition. The NYSE missed the boat because the chairman lacked vision.

One area where Racing may be missing boat is betting exchanges. Unlike the NYSE it may not be too late.

I have been a fan of horseracing for over 35 years and I am involved in many capacities as a racehorse owner, farm owner, breeder and player.

Being passionate about racing I can’t help but feel a growing anxiety about the state of racing today and the challenges it continues to face.

As I see it, horse racing today is a complex industry, which is arguably in disarray. Our industry is uniquely complex and diverse. Our industry consists of many segments: Racetracks, OTBs, Tote companies, Breeders, Owners, Jockeys, Trainers, Drivers, Regulators, and Bettors, all of whose interests are often misaligned. Not to mention the fierce competition between states attempting to increase their share in the Horse Racing and Slot Machine Market. Legislatures are juggling the interests of racing against other interests, and the public who have varying levels of interest and opinion regarding horse racing.

The main point I’d like to make this morning concerns what I see as the key challenge facing the industry, and that is, in this new online world, horse racing is increasingly forced to face direct competition from other forms of gambling which from a wagering perspective provide a better deal for the player. A larger and larger proportion of gambling in general is taking place online, in a more competitive environment than we are used to or know how to compete in. In general there are just more choices available for the entertainment and gambling dollar.

Horse racing is facing a growing pressure from market forces which are forcing it in a direction we might not be ready for, and these forces are not going to go away. I think these pressures will continue to persist until we make favorable market changes.

While we have traditionally seen ourselves as an entertainment business, our revenue stream depends on gambling customers choosing to place wagers with us, and as other forms of gambling and other forms of entertainment provide a better return, more and more customers are choosing to spend their gambling dollars elsewhere. The gambling customer today is a lot less interested in the entertainment and spectacle of racing, and more interested in getting value for his gambling dollar.

The key question I’d like to ask is, should the horse racing industry think of itself primarily as an entertainment experience or as a betting market? I think the answer has become more and more obvious, that it’s a betting market. Some of the reasons I have this opinion are as follows:

1. Horse racing, with few exceptions, is in decline as an entertainment industry. Well-run financial markets on the other hand enjoy tremendous success in a free capitalistic environment. (See NYSE Timeline)
2. The glaring exceptions to the decline of horse racing are betting exchanges, which are run more like a financial market.
3. The information that we disseminate is similar in character to the information that financial markets disseminate.
4. The wagering part of our industry has been billed as “the thinking mans game”, similar to a financial market.
5. The amount of dollars our industry needs will not be met by advertising our wagering pools as a form of gambling entertainment.
6. Opening and advertising our pools as financial markets will attract large risk capital and will grow handle and revenues at a much faster rate than trying to win over one $2 bettor at a time.
7. If we treated Horseracing more like a financial market, more trading instruments could be developed which in turn would attract more handle and revenue.

Our Industry has many facets and many problems with no leadership to guide us through the troubled waters that lie ahead. Many of the people that have the power to help make the changes our industry needs to insure its longevity seem to have their own agenda, or simply put, are uninformed. I believe the true solution involves a total makeover from whom do we welcome as owners, trainers, jockeys and drivers to how we are going to fund and grow our sport.

I would like to interject this thought: CHANGE YOUR THINKING AND YOU CHANGE YOUR WORLD

As I have said there are many challenges facing our industry. Many of these are covered in the handout. We will certainly explore some of them further on Thursday during the “High Volume Customers“ panel. For now I would like to touch on a few areas that are of particular importance to the future success of our industry.

Drugs: I believe this is our number one concern. For any financial market to flourish, integrity of the product is critical.

We cannot expect our sport to grow until we get our integrity back. We need to be serious about enforcing our drug rules.

We need a uniform drug policy that enforces uniform fines and penalties towards violators. If we don’t get the drugs under control we will drive out many good owners. When a trainer chooses to use drugs he cheats other owners, trainers, and bettors out of their rightful money.

*My thoughts on fines of this magnitude would be that they should apply to repeat offenders using banned substances. We could guarantee that large fines would be paid through an assurance bond or a personal guarantee. Since the first offense would be substantially less, non-offenders would not need to provide this large of a bond or personal guarantee.

** Having a uniform drug program would make everyone aware of the penalties involved and as a last resort a lifetime barring would eliminate the habitual offender.

Withholding taxes: Withholding taxes are a huge drain on our handle. Money that could otherwise be reinvested is taken out of the pools. Between the drain on the handle and the cost to implement this procedure it costs horseracing countless millions. This drain is accelerated further in states where they impose an income tax. Our industry has shown the ability to have exemptions and special privileges in the eyes of the state and federal government. Obviously our industry has the ability to reach lawmakers at the state and federal level. It would behoove us to revise these withholdings so as to not affect handle quite so adversely.

Increasing Revenues: It has been suggested that handle is no longer relevant when evaluating the success of racing. Although revenues are the ultimate goal of any business, racing must continue to realize that handle is ultimately the engine that drives the business. Correct pricing is essential for the success of our sport, but actions that limit handle are ultimately doomed to limit our potential success. Since the traditional fan base of racing is declining, racing must look for new sources of revenue. Like the NYSE racing may find that greater success can be achieved by having a Smaller piece of a Much Much larger pie rather than trying to find ways to squeeze out every penny from a shrinking pie.

One example of new money is myself - - I am directly responsible for over 2.4 billion in handle since Jan of 2000 and have conservatively paid over $100 million in fees to tracks and horsemen. 100% of this is NEW money that would not otherwise be in the pools at any level.

If racing wants to attract new customers raising takeout and fees is not the way to do it. I can honestly say that if the current environment of pricing and hostility to the mega player existed when I started I would not have put forth the time and effort to even get involved. Although discouraging competition for me may be in my best interest, it is not in racing’s long-term best interest.

A major misconception about batch wagering is the belief that it is the cause of late odds changes. In reality it only takes one large wager to affect the odds of any given runner.

Furthermore the efficient processing of wagers does not give anyone any better opportunity to pick winners. In fact reduction in the efficiency will only force the Mega Players to limit their wagering to their best wagers.

If our industry fails to provide efficient ways to wager, handle and revenues will certainly fall. It is totally inconceivable to me why our industry continues to discourage technology, innovation, handle and revenue. Even McDonalds offers a form of batch wagering called “batch ordering”. Instead of the customer having to say give me a Big Mac, large fries, and a medium coke, with “batch ordering” we just need to say I’ll take a #1.

Taking wagers from a facility that has no investment in horseracing: This is an interesting topic that keeps being thrown about. Does a dog track or Jai Alai Fronton have an investment in horseracing? Do Nevada casinos or NYCOTB have an investment? If so, is their investment large enough to count? What is the point to all of this? Is their money not green or do we need to have a dual-pricing model? Racetracks will charge each other super low fees because they all have an investment. Track A cost $1M back in 1896 to build and races 30 days a year. Track B cost $250M to build in 1993 and races 300 days a year. I guess they both have an investment. The Hilton Hotel in Las Vegas spent $20M to build their race book and races zero days a year. Do they have an investment in horseracing? Youbet invests millions in software that services racing customers at a level never achieved before. Does Youbet have an investment in horseracing? An SPMO brings new customers to our industry, employs 50 people, builds the infrastructure necessary to provide a high level of service, reinvests most of its profits to its players, and pays hundreds of millions in fees. Does this SPMO have an investment in racing? Consider a customer of this SPMO who has paid over $100M in track fees, invested $5M in a farm, spends millions on horses, and directly employs 50 people in his horseracing/breeding operation. Does this customer have an investment in horseracing? Should Thoroughbred racetracks give Harness racetracks the same fees they give themselves and vice-versa or are these just two competing industries? I’d like to think that all of us are in this together. We need to unite our resources for the betterment of the industry. Together we could form a strong base and bring horseracing back to the levels it once enjoyed in prior years.

Good economics has a way of driving out bad policies.

It was Winston Churchill who said: “Americans always do the right things – after they have exhausted all other alternatives”.