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HOW DO WE SAVE THE SPORT OF THOROUGHBRED RACING SO WE CAN ONCE AGAIN CALL IT A “GREAT GAME”?

by BILL FINLEY SPONSORED BY

s Rachel Alexandra made her way most tracks, Monmouth included, primary reason why so many gam- Ainto the Monmouth Park pad- is about 20 percent, gamblers lost blers have abandoned horse racing dock for the 42nd running of the more than $2.4 million playing for gambling pursuits where the Haskell Invitational, the reaction the Haskell card. Had the same odds are more in their favor. from the thousands of fans press- $12,297,624 been put through At least people who bet on Rachel ing against one another to catch a slot machines at nearby Philadel- Alexandra won some money, but glimpse of her was nothing short of phia Park, gamblers would have lost their return on a $2 win bet on her hero worship. Some held up signs, $1,082,190, less than half of what was just $3. Why? Because a day ear- some cheered. They all smiled. Monmouth players lost. The take- lier, the Kentucky Derby winner ran Despite some of the most miser- out on Pennsylvania slot machines in a race that has no prestige and no able weather the denizens of the Jersey is 8.8 percent. history but a purse fattened by slot Shore could ever remember, 37,090 machine profits, the West Virginia showed up to watch a horse race. They Derby. That weakened the field and AND came because the Haskell is an event. “As Haskell deflated Rachel Alexandra’s price. To They came because Rachel Alexandra have the Belmont winner (Summer is a superstar with crossover appeal. Day proved, Bird) and the Preakness winner (Ra- They came because Monmouth Park chel Alexandra) run in one race and is a facility that has class, grace and horse racing can the Kentucky Derby winner (Mine beauty. They came because betting That Bird) in another on the same on a horse race is risky, invigorating, be an appealing, weekend is insanity. But racing was challenging, fun, and you might actu- helpless to stop it. It has no com- ally make a few bucks. Some came be- alluring product missioner and, outside of the Triple cause the beer is reasonably priced and Crown series, no structure to speak of. they wanted to get wasted and have a that can be, at Which is probably why the entire good time. Not that there’s anything weekend was a bust when it came to wrong with that. times, magical.” television. Without the three Triple Is this a great game or what? Crown winners showing up in the Well, not exactly. With the exception of the lot- same starting gate, the major tele- As Haskell Day proved, horse tery, which offers the possibility of vision outlets passed. The Haskell racing can be an appealing, allur- life-changing riches, no gambling appeared only on TVG, while only ing product that can be, at times, enterprise in this nation gouges its a small player, the Fox Sports Re- magical. But something clearly players like racing does. Nothing, in gional Network, showed the West isn’t right. A great game wouldn’t fact, comes anywhere close. That’s a Virginia Derby. be reeling the way this sport is; a great game wouldn’t be struggling photo: sarah k. andrew, equi-photo for relevance or getting battered by casinos, lotteries and a host of other gaming options in the battle for the gambling dollar. So, what is wrong? Look beyond Rachel Alexandra and the 37,090 people, and it was all there to see on Haskell Day. Even when the sport gets it right, it gets it wrong. A total of $12,297,624 was wagered on Haskell Day across North America. It was a healthy number and betting activity like that is among the reasons the track could afford to award $1.25 million in purse money to the Haskell participants. But there was a cost. Considering The crowds turned out in droves to catch a glimpse of Rachel Alexandra that the melded takeout rates for in the Haskell. A sign of a healthy sport? Maybe... or maybe not.

TDN Magazine, Summer 2009 | 2 SPONSORED BY

A nd

photo: sarah k. andrew, equi-photo

All Alone At the Haskell Finish. “To have the Belmont winner (Summer Bird) and the Preakness winner (Rachel Alexandra) run in one race and the Kentucky Derby winner (Mine That Bird) in another on the same weekend is insanity.”

Television, though, was the least three days later, the attendance was The situation is so bleak that the of management’s worries. Once 3,848 and $2,480,883 was wagered state’s largest and most influential Haskell Day was over, they had to through all sources. Those numbers paper, the Newark Star-Ledger, ran a brace themselves for a jarring return don’t work, and Monmouth Park is stinging editorial in mid-July, which to reality. When racing returned losing money. pointed out the state-owned Mead- owlands and Monmouth racetracks are now losing $21 million combined a year, and advocated an end PARI-MUTUEL HANDLE to racing in the state. “…Taxpayers (DOLLARS IN BILLIONS) are keeping the tracks alive. Why not let horse racing die a natural 18 death in New Jersey?” the editorial U.S. writers asked. The editorial continued: Canada & Puerto Rico “The United States, in its worst 16 economic crisis since the Great De- pression, can let Chrysler and GM fail (and obsolete auto manufactur- ing jobs disappear), but the Garden 14 State nags must run to keep hay farms in business. Do the math: At a $21 million loss, it’s costing New Jersey taxpayers $5,497 per year to 12 keep each person employed at the tracks—in a dying industry.” The answer, New Jersey racing of- 10 ficials insist, is slot machines. After 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 all, they argue, haven’t they made

Source: the jockey club fact book everyone in Pennsylvania racing happy and prosperous? It’s conve-

3 | TDN Magazine, Summer 2009 SPONSORED BY nient, it’s easy, and it doesn’t take races run each year) hasn’t changed that we can once again call it a “great any creative thinking. that dramatically. The result is an game” and do so without hesitation It’s just not quite that simple. Not economic recipe for disaster: the de- or reservation. That’s asking a lot, everyone, it seems, in Pennsylva- mand does not come close to meet- but they were up to the task. nia is happy. Politicians there have ing the supply. The panel consisted of some of the figured out that the millions going So how do you fix that? You have best and sharpest industry leaders to horse racing from slot machines to either increase the demand or and thinkers (see box, below). might just be better spent on help- reduce the supply. The harder ques- They may not have been gathered ing the state out of its own finan- tion is, with such a complex indus- in the same room, but what follows cial morass. There are rumblings try, how do you do that? is a round table discussion. How are that the state will find a way to take For the answers, the Thorough- we going to fix racing? $100 million from the slots money bred Daily News turned to 11 of the In the following pages, we will that had been going to purses and brightest and most influential peo- cover the most talked-about, most- AND take it for itself. If that happens, ple in the industry. We asked them debated topics. First up, ways to Pennsylvania is likely to be the first to work their way through this mess make betting on horses a more of many states to reduce racing’s slice and tell us how to fix this sport, so popular pursuit: of the pie. The result is that the economics of horse racing are out of whack BILL in New Jersey, just as they are just On our NADER about everywhere. It’s an expensive Executive Director of game to put on. Horses must be Racing, Hong Kong fed. Large buildings must be main- panel Jockey Club tained. Racehorse owners have to be fairly compensated. It takes a greg Nick lot of revenue to make this work, avioli Nicholson revenue that has traditionally come President and CEO, President and CEO, from the track’s share of the pari- Breeders’ Cup Keeneland mutuel handle. Its sensibilities vis-a-vis a growing portion of the American public may EUGENE jeff be out of whack as well. CHristIANSEN platt A horse died on Haskell day. His Chairman, President, name was Tale of Victory. A 3-year- Christiansen Horseplayers Associa- old by Tale of the Cat, his life ended Capital Advisers tion of North America as he made his way into the far turn and broke a leg. A race earlier, four Steve dennis horses went down in a spill, though, Crist robinson apparently, none of the horses were Chairman and President and CEO, seriously hurt. Jockey Fabrizio Ji- Publisher, New Jersey Sports and menez did break his leg in the spill. Daily Racing Form Exposition Authority A story about the spills and acci- dents in the on-line version of the bob Alex area’s local paper, the Asbury Park evans waldrop Press, included this reaction: President and CEO, President and CEO, “Yes, folks, this is a great sport, Churchill Downs National Thoroughbred the only sport where they use a Racing Association whip to get the contestants off and running, even if it is going to kill Charles Barry ‘em.”—Hookman Hayward weisbord But if the demand for horse rac- President and CEO, Co-Publisher, ing’s product is dropping precipi- New York Racing Thoroughbred tously, for myriad reasons, the sup- Association Daily News ply of the product (the number of

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photo: REED PALMER AND

Churchill downs’s successful night racing experiment has found an audience.

TDN: Most would agree that gamble on other sports, or nightclub that had some racing go- the industry hasn’t been gamblers around the world ing on as opposed to what had been very innovative or success- to discover American horse typically been tried. Other tracks ful when it comes to creat- racing, or to entice existing have said we’re going to feature ing new and different ways horseplayers to bet more? night racing and we’ll have a band as to attract people to bet on Don’t be afraid to think out- an extra bonus. We tried to change horses. The proof of that can side the box. the character of the place to be a be found within the handle nightclub, and I think that worked. figures released each year. Bob Evans: The problem is, People were there to party and there Despite the explosion of it’s not an easy product to interest was racing going on. The per caps simulcasting, total handle someone in. There’s a lot you have fell like crazy, but the people were was stagnant for years, in to learn. You have to spend some there and they got involved. They the $15 billion range and, time with the product in order to may not bet as much as you’d typi- over the last two years it has understand it and understand that cally see at a racetrack on a Friday or been dropping precipitous- using it and consuming it is a fun Saturday, but they were there. That’s ly. Is there some new and thing to do. What we’ve been trying good. Can you turn all those of peo- different way to entice the to do is to present racing differently. ple into racing fans? I don’t know. American public to try our There’s nothing unique about the But I bet we got some. sport, either luring current dark or running at night, but the Another example of presenting non-gamblers, those who idea we had in mind was to create a racing differently is what we did

“There’s nothing unique about the dark or running at night, but the idea we had in mind was to create a nightclub that had some racing going on as opposed to what had been tried.” Bob Evans

TDN Magazine, Summer 2009 | 6 SPONSORED BY

this year with the Oaks. We didn’t ophies, you could have a wide vari- photo: horsephotos continue to deal with ESPN, which ety of funds. presented the Oaks in a traditional The experiments here convinced way, as a sporting event. Instead, we me that there’s a market for that. put it on Bravo and attached it to We did it here, and were it not for the Susan G. Komen Foundation, the problems with the IRS tickets, it the breast cancer awareness charity. would have been a great hit. We presented it as a female-centric product as opposed to a male-cen- Greg Avioli: There’s a huge up- tric product. We saw an improve- side for U.S. horseracing when it ment in attendance and we saw a comes to international commingled much different television audience. pools. The last I checked, betting We got about the same number of on U.S. races is a little more than 10 viewers, but a much different type percent of the world total. We have A nd of viewer. It was much younger au- four race cards a year that have $100 dience and more than half the audi- million in handle. Pretty much ev- ence was female. I believe about 22 ery day they race in Hong Kong or percent of the audience was female Japan, they have $100 million in when the race was shown on ESPN. handle. By fully expanding international Nick Nicholson: You can’t be commingled pools, I believe we afraid to try things. I’d like to see could double the Breeders’ Cup us try something along the lines of handle pretty quickly. It helps, of mutual funds. I’d like to see people course, to have horses from some of come to the track and be able to these other countries participating bet along with Andy Beyer or Steve in your event. For example, if we Crist or Longshot Louie. There had horses from Hong Kong run- are all kinds of different ways you ning in the Breeders’ Cup, I think could do this and you could do it we’d see a significant increase of wa- just like you buy mutual funds. We gering from Hong Kong bettors on tried some experiments here and the Breeders’ Cup. “We’re like a they really were well received. And It was only a few years ago that the you know what brought it down? Japanese star Deep Impact ran in lot of other What brought it down was the the Arc. There were something like businesses. It worry that an IRS ticket would have 4,000 Japanese fans who came to to be signed by every member that Longchamp to watch him run and makes perfect bought into ticket. So the people I recall the on-track handle was way that were making the bets for the up. There’s no question that when sense for the mutual fund could not make bets international stars run outside their that could win an IRS ticket. So we countries they attract handle from U.S. to look to are working with Washington and around the world. the American Horse Council to try We’re like a lot of other business- expand beyond to get this changed. es. It makes perfect sense for the This would be a great new way to U.S. to look to expand beyond the the borders of play the races. You would buy into borders of our country in terms of a fund and the people you invested growing our business. We continue our country in in would place the bets for the fund. to have the most, and I believe, the I think that would appeal to a lot best racing in the world. But we terms of growing of novices who aren’t experienced haven’t done a great job as an indus- bettors and don’t quite know how try in bringing international handle our business.” the game works. Just like you’ve in. With the Breeders’ Cup, I’d got large caps, small caps, foreign, like to see us get 50 percent of our Greg Avioli domestic, all the different types of handle internationally compared to mutual funds with different philos- current levels of around 10 percent.

7 | TDN Magazine, Summer 2009 SPONSORED BY

photo: horsephotos AND

“We added superfectas, Pick threes, pick fours. we never came up with any simple bets, even though the public was telling us that’s what it likes at casinos.” —barry weisbord

The problem is we have major trade no intellectual investment and have public was clamoring for simple issues that ultimately may have to high positive reinforcement and low high positive reinforcement games be addressed with help from the takeouts have been wildly successful. was to promote the Pick 6 or the U.S. Government. For instance, Slot machines have been the growth Pick 6 carryover, which is totally there is the absolute closure of the game of the last 30 or 40 years. They the opposite. We added superfectas, Japan wagering markets to races occupied a small part of casinos 50 Pick Threes, Pick Fours. We never from the United States. We freely years ago and now they’re a vast part came up with any simple bets, even allow our citizens to bet on Japanese of casinos. Small parts of the handle though the public was telling us races, but the water doesn’t flow used to come from them and now a that’s what it likes at casinos. both ways. In Hong Kong, they’ve vast part of the handle comes from Prior to the Internet, that was the recently expanded their policy from slots. People realized that you could wrong strategy. Since the Internet, a total of 10 international races they build big buildings based on dollar it’s criminal. We have the only legal can import to 15, which is progress. slot players and not necessarily some gambling allowed on the Internet, But again, we want that to get to guy who’s going to bet $10,000 on yet we have not have invented any the point where it’s open simulcast- the line at the crap table. games that are Internet-centric. So ing for international races just like Racing’s response to that popu- many regular bricks-and-mortar in the U.S. I mention those markets larity–besides saying I’d like to sell commerce companies invented new because they’re potentially the most that product, too, which is a recent ways for people to book travel, buy lucrative, but there are many oth- response–was to continue to invent books or bid on someone else’s junk, ers. There’s an opportunity for a lot wagers that are more complicated. ways that only work on Internet. of new customers outside the U.S. to If you walk up to a slot machine Racing did none of that. Someone bet on our product, particularly if we and you play for five minutes, you else came along and found a model offer them our very best products. win something and you don’t have which could be applied to racing, to think. If you spend an afternoon the betting exchanges, and they Barry Weisbord: There has at the races, you can go a whole af- have been massively successful. Ob- been a trend in the gambling busi- ternoon without cashing a bet. But viously, the handle they have created ness, where games that take almost racing’s response to the fact that the over the last few years is staggering.

TDN Magazine, Summer 2009 | 8 SPONSORED BY

The technology is fantastic, but they ditional state pari-mutuel tax struc- via the phone and getting a rebate, are offering an A-B proposition at ture model. That model is dead. I probably churn through seven or a low takeout and a very fair price. There is absolutely no reason why eight grand a day. That’s all because That has a lot to do with why they the consumer should pay $20 for a of the pricing. If you talk to any have been so successful. movie ticket if they can see the same serious horseplayer that turns any movie for $9. It’s just that simple. amount of money, they’ll tell you TDN: There’s one very Until the industry is willing to face that takeout is too high. It makes easy way to increase the up to that and try to do something the game extremely difficult from a demand for horse rac- about it, I don’t really think there good gambling standpoint. ing’s product and that is is hope for horse racing. Consumer So through HANA (Horseplay- pricing is fundamental, and if your ers Association of North America), to decrease the takeout. consumer pricing is higher than one of the things we’re advocating Can this be done? Must it the other guy’s and the other guy’s is that if racing reduced the take- be done? Aren’t we guilty product is easy to access, you have a out—all pools, all tracks, every day, A nd of way overcharging our huge problem. everywhere—to nine or 10 percent, customers with a takeout I do not see any way to create re- and marketed the game as the great- rate in the neighborhood newed fan growth without includ- est gambling game on the planet, of 20 percent, which isn’t ing enormous pain. The price of that would turn things around. It betting has to come down to com- wouldn’t happen overnight. It would competitive with so many petitive levels, which would put it take a while for people to catch on. other forms of gambling? at something like eight percent of But the casual racegoer would actu- handle, not more. That’s more than ally have more money in his pocket Eugene Christiansen: Rac- a 50-percent cut and you might after a day at the track. ing has to distinguish between need more. The near-term conse- If that player made any kind of things that can be changed and quence of that for horsemen would serious effort, he would realize that things that are beyond its control. be catastrophic, but it offers the there are certain kinds of bets he Things beyond its control include hope of regenerating consumer in- makes in certain situations that are the enormous increase in gam- terest in horse racing. It could make actually profitable. And he might bling of all kinds that has become this product price-competitive with share that with his friends. And available over the last generation. other products. To be price-compet- through word of mouth, the better Racing cannot control this. The itive with betting on NFL games, gambling aspect of it would get out. marketplace has changed forever it’s not even eight percent, it would I’m from Arizona and in Arizona and irrevocably. have to be four-and-a-half percent the tracks, they’re just dying. Dur- Having said that, let’s look at of handle. I think you can see just ing the middle of the week on a things racing can control. The single how serious this problem is. Tuesday, there might be 300, 400 biggest problem this industry has is people roaming around Turf Para- that the price of its product is too Jeff Platt: If I go to the track, dise. Half of them are there be- high. It is simply idle and unpro- I might bet 60 bucks or so. It’s cause they’re owners, or friends of a ductive to try to force bettors who more a social thing, a way to hang trainer. There aren’t nearly as many have all kinds of gaming options out with friends. I won’t bet more gamblers there. these days, including the Internet, because the takeout is so high. At And yet, Phoenix is inundated to wager their money into the tra- home, when I’m betting online or with Indian casinos. And if you

“I do not see any way to create renewed fan growth without including enormous pain. The price of betting has to come down to competitive levels.” Eugene Christiansen

9 | TDN Magazine, Summer 2009 SPONSORED BY walk into any Indian casino, you’ll see it jammed packed, elbow-to-elbow, retirees, trying to feed quarters “I guarantee you that the people operating into slot machines. And you talk to casinos, Indian casinos, Las Vegas, Atlantic City, the operators of those casinos and they’ll tell you that the typical slot online poker, sports books, all the places that machine is programmed to pay back 92 to 94 cents on the dollar. racing has to compete with for gambling If you compare that to a blended takeout rate where they’re only dollars, those people have figured out what paying back 80 cents on the dol- their optimal price point is.” lar or less, people have discovered that their money lasts a lot longer Jeff Platt AND at a casino. Racing has to find a way of competing with other forms of gambling that are kicking its butt. The only way that’s going to happen is if the people that run racing drop the takeout and stop demanding such a huge slice of the pie. At some point, there is what I call an optimal pricing point where you can get takeout to a point where you have the maximum amount of money flowing in to state coffers, to tracks and to horsemen in the form of purses. Every single one of these studies has indicated that the current 20 percent blended takeout is well above that optimal pricing point. There has to be a mechanism in place to allow takeout to seek out that optimal pricing point. And without it, racing is fighting an up- hill battle. I guarantee you that the people operating casinos, Indian casinos, Las Vegas, Atlantic City, online poker, sports books, all the places that racing has to compete with for gambling dollars, those people have figured out what their optimal price point is. And when I hear the argument that well, lower takeouts just won’t work, and this is what all the track operators tell me every time I talk to them, I can point them to real world case studies in the state lottery mar- ketplaces. In two states, Massachusetts and Georgia, the state lotteries were per- forming horribly compared to other state lotteries. They figured out that photo: horsephotos

TDN Magazine, Summer 2009 | 10 SPONSORED BY

photo: horsephotos

A nd

“PEOPLE SAY THAT HAVING FEWER HORSES IN A RACE AFFECTS HANDLE. THE FACT OF THE MATTER IS, IT SHOULD BE an irrelevant factor...We need to peg takeout to field size.” —barry weisbord by lowering the takeout on their in- the pari-mutuel system as we know a 30-horse handicap than they do stant scratch-off games, they were it. We have to price our product on six-horse Group I race. There’s able to drastically improve their much more competitively with no statute that tells them to do that. sales. The extra amount of revenue other forms of gambling. Rebaters It happens that way because they they took in added up to about $50 have proven this is a true fact. If understand the customers, and they million to $70 million a year. It had we’re taking 20 percent out and the know what the customer is willing a massive effect. players are getting kicked back 10 to pay. The reality is the customer is The people scratching those tick- percent, they are willing to invest entirely willing to pay more to bet ets, they don’t know what the take- $25 million, but if they don’t get on something with 30 possible out- out is, but they do know that they kicked back to 10 percent they’re comes than something that has six bought tickets and they were start- willing to invest zero. They’re saying possible outcomes from a takeout ing to see some money coming back that with a 10-percent takeout the perspective. Yet, here, we’re locked to them. game is such that they can eke out in to charging the same rate no Racing is not doing the same a two percent win and they are will- matter the size of the field. thing. And again, if state lotteries ing to put up the $25 million. At 20 That’s why people bet less money can figure out how to get some- percent they’re not willing to invest on races with smaller fields. If the where close to their optimal perfor- a penny. It tells you how wrong the handle were prorated, you might mance number in terms of takeout, takeout is. have your biggest handle on races we believe that racing should at People say that having fewer hors- with small fields. With the right least consider it. es in a race affects handle. The fact takeout, you’d have something of the matter is, it should be an ir- along the lines of a football wager, Barry Weisbord: We haven’t relevant factor. That’s an easy prob- where there are only two outcomes solved the fact that the price of our lem to solve. Tie takeout to field and the takeout is minimal. Wa- betting isn’t competitive any more. size, which is what they do in Eu- gering on football is tremendously There has to be a total overhaul of rope. Bookmakers take out more on popular and successful. No one

11 | TDN Magazine, Summer 2009 SPONSORED BY minds that there are only two out- sense, that charges the consumer do we go about chang- comes because the takeout is fairly less, creates more churn, creates ing the economics of the pegged at five percent, something more positive experiences, creates game so that the custom- the consumer is willing to pay. more players. If we do that, instead er gets a better deal? What the consumer is not willing of other forms of gaming stealing to do is pay 17 percent for six pos- from us, we might be able to reverse sible outcomes. But he may be will- the trend and see gamblers come Alex Waldrop: I’m not sure ing to pay 17 percent for 12 possi- back to our fold because we have whether we’ve had a true test yet ble outcomes. Maybe that’s still not become the game offering fair value. when it comes to takeout reduc- priced properly. Maybe the right tion. Laurel did a test. Ellis did a price is 12 percent. TDN: There’s no doubt test. But none of these tests ever This is why so much handle mi- seem to work. They always tend to

that a lower takeout AND grates to exotics. The consumer, would boost business, but work against the operator and they while they’re not mathematicians, are abandoned. I’d like to see a more they understand that with a 10-horse it’s hard to imagine how cautious approach to testing, may- field, there are 90 outcomes in the any racetrack could slash be sale bets, like this is 10 percent exacta. There are only 10 outcomes its takeout rate across Tuesdays. Do it sporadically. Doing in the win pool, yet one bet is taxed the board to something it across the board will result in fail- at 17 percent and the other at 20 in the area of 10 per- ure in the short term. We need some percent. When the difference is only long-term strategies. I don’t know if three percent, bettors understand cent. For one, horsemen we’ll ever get the takeout to where there’s more value in the exacta bet. would never approve of people would like to see it, in part The consumers aren’t stupid. it. Secondly, the receiving because states continue to tax us. This is a big problem, but some- tracks would probably Charles Hayward: thing we can easily solve. We need not take the signal of any You do it to peg takeout to field size and re- in increments. You could start by adjust the takeout for the various bets. host track that had such going from 20 to 15. The problem We need a system that makes a low takeout. How, then, is that the simulcast-pricing model photo: horsephotos

“...BETTORS UNDERSTAND there’s more value in the exacta bet. The consumers aren’t stupid. “ —barry weisbord

TDN Magazine, Summer 2009 | 12 SPONSORED BY

does not properly compensate the quality net exporting tracks. If we have a 20 percent blend on the takeout and I am selling our signal for “The problem is that the five or six percent, then I’m getting far less for every dollar bet than we simulcast-pricing model does did 30 years ago when all the bets were made on track. Fix that and not properly compensate the you open up all sorts of opportuni- quality net exporting tracks. ties, including takeout rates. ...Fix that and you open up Bill Nader: Frankly speaking, the enthusiasm demonstrated for the takeout quick fix does not allow A nd all sorts of opportunities, the business operator (racecourses) including takeout rates.” to generate enough revenue to make capital investment and mar- Charles Hayward ket effectively to all customer seg- ments–including the mass market that may not see price sensitivity as the key driver. No racetrack executive would have the guts to admit this, but they all think this way, some more than others. They do not believe the upside in business would offset the reduced margin. Further, the casino industry could argue that its effective takeout on sports betting and table games is still less than a nine percent takeout and therefore more attractive. Summary point: I am all for reduced takeout, but in a more tar- geted and structured format. It is only one piece of the solution and a multi-layered approach is needed to really break through.

Nick Nicholson: Keeneland is not afraid to be a laboratory for the industry, and so we try things. And some things we tried worked, and some things we tried didn’t work. We lowered the takeout here a few years ago and immediately got cut off from most other signals. One group was the Mid-Atlantic, and one of the leading members of that was Maryland. And I almost laughed out loud when I read that Laurel was going to cut their takeout last year, after the way that they photo: horsephotos treated us when we did it. We, of course, took Laurel’s signal.

13 | TDN Magazine, Summer 2009 Performance. Buyers look for it in a Thoroughbred. And in a Thoroughbred auction company.

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to come in and guarantee the amount of revenue that is now being paid to the A nd participants, then everybody would be in favor of betting exchanges.”

after its Fiscal year ended in april, betfair reported a 27 percent growth in Bob Evans revenue and net profits of $121 million.

TDN: It’s not true that Alex Waldrop: Exchange bet- getting their fair share back or the the entire gambling in- ting scares me to death and it’s participants are keeping a proper dustry is faltering under not because of integrity issues. I share to maintain their costs. We’re the weight of the current think they do an admirable job of always trying to find the right line. dealing with that. With a betting With exchange betting, the fan gets economic climate. Betting exchange, someone else is control- it all. I want to fan to get a lot, trust exchanges, and in par- ling your wagering product and me, but he can’t get it all in contrast ticular Betfair, are flour- the margins are razor thin. So little to the participant. ishing. After its fiscal year money comes back to the indus- ended in April, Betfair try through exchange betting. I Bob Evans: It’s a math problem. reported a 27-percent fear betting exchanges the way the As an industry, we’d be pretty dumb South should have feared kudzu. It to adopt a new way of betting that growth in revenue and came in from Japan and everyone results in us getting less revenue. It’s net profits of $121 mil- thought it would be perfect, some- a simple as that. If a betting exchange lion. Clearly, Betfair has thing that would control erosion of wanted to come in and guarantee created a method of wa- the clay banks. Instead it took over the amount of revenue that is now gering with wide appeal everything. It’s invasive, you can’t being paid to the participants, then that grows more popular stop it and it takes over everything it everybody would be in favor of bet- touches. A betting exchange would ting exchanges. But the truth is they by the day. Shouldn’t U.S. do exactly the same thing to us. produce less. Until that problem is racing either embrace If allowed to, it will take over our overcome I can’t see them being em- Betfair or create a betting pari-mutuel wagering system and braced. If a betting exchange is tak- exchange of its own? Isn’t do so for a fraction of the amount ing bets on the outcome of a tennis this exactly what U.S. rac- of money that now goes back to the match, that’s one thing. There isn’t ing is looking for—a way industry. There has to be a balance really a market for that anyway, at between the players and the partici- least a legal one. With horse racing, to get new fans and to in- pants. That’s why takeout is such a there is a legal market and a way of crease the popularity of controversial issue. There’s always conducting that business and it pro- betting on horses? a question whether the players are duces more revenue than a betting

15 | TDN Magazine, Summer 2009 SPONSORED BY

BY THE NORTH AMERICAN PURSES NUMBERS (DOLLARS IN MILLIONS) Gross purses in North America in 1400 2008 slipped 1.3% from the re- U.S. Canada & Puerto Rico cord level achieved in 2007 as a decline of more than $1 billion 1200 in pari-mutuel handle in 2008 reduced the contribution to purses from wagering. Bucking the trend, 1000 however, was Pennsylvania, where available purse money increased AND 44.5% in 2008 and has more than 800 doubled during the last two years following the introduction of al- ternative gaming at the state’s race- 600 tracks and the opening in 2007 of Presque Isle Downs. Penn- sylvania trailed only California 400 and New York by offering $110.2 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 million in gross purses in 2008. TEXT AND DATA source: the jockey club fact book exchange would. I’ve had people sumer pricing is. I even know casual that if you give the consumer what shout at me and say that’s not true, bettors that will hang out on betting he wants, he will bet horses. Betfair betting exchanges are great. Then exchange sites because they think it has proven that. Lower consumer guarantee it. If you are so sure that is fun. That to me is so fundamental. prices are a big part of their success. they’re going to produce the same One of the things this industry did rewards, just guarantee it and every- not do that it should have done, in Barry Weisbord: There are one will go right along with it. 1999 or 2000 at the latest, when it companies, Betfair and the other became clear that Betfair was taking betting exchanges, that have invent- Eugene Christiansen: It is off, was to wholeheartedly embrace ed an Internet-only style of betting not true that the public, either in betting exchanges. If it had gotten and they have been massively suc- the United States or globally, has into the business at that point, we cessful. Obviously, the handle they lost interest in betting or betting on wouldn’t be having this conversation have created over the last few years is horses. Betfair has proved this and today about the woes of racing. Just staggering. The technology is fantas- proved it abundantly. Betfair did trying to ignore betting exchanges tic, but the reason betting exchanges not exist until 1999 and today it is wasn’t the answer. The consumer is work is because they are offering an a vibrant, growing business and an- always right. The consumer is never A-versus-B propositions at a low ecdotally, a very large percentage of wrong. It is not wrong for the con- takeout and a very fair price. There their total business is on horse racing sumer to want lower prices. Betfair are issues about betting exchanges, globally. But look at where the con- has demonstrated to my satisfaction particularly how much money goes back to the industry, but those are solvable issues. The important thing “Just trying to ignore betting exchanges wasn’t is that you match up buyers and sell- ers in an unbelievably time-efficient the answer. The consumer is always right. The manner, even to the point that you can bet during a race. That’s how consumer is never wrong...Betfair has demon- quickly they can process your wa- strated to my satisfaction that if you give the gers. The idea of incorporating betting exchanges in this country seems consumer what he wants, he will bet horses.” like one of the logical steps that need to be taken. How can we turn our Eugene Christiansen backs on something that has been so successful?

TDN Magazine, Summer 2009 | 16 SPONSORED BY

failed, generally because everyone got very provincial and wanted to “We need to get past this situation where protect their piece of the pie. Nobody wanted to turn over a we have 14 different account wagering business they thought they could make money on to a broader group.

companies and exclusivity problems. It Some people may not remember should be: just go to horseracing.com and in 2000 the NTRA tried to found a national betting-services hub bet on horse racing. Figure out how to for the whole industry in Oregon, carve up the money. That’s such a minor which didn’t work for a lot of reasons. I think this failure to act col- side issue. Just have one person do it, with laboratively is among the reasons we haven’t gotten as far as we could A nd one blended rate, have everyone get have with the Internet betting. paid fairly and move on.” What you’re seeing now, though, is a concerted effort on behalf of a Steve Crist number of tracks and associations, largely not-for-profit, to come together to develop something that TDN: We’ve already talk- paign on the fact you can bet on would have the necessary scale to ed about Betfair and how horse racing from home? I really be meaningful. You’re still going successful it is. Its success don’t understand why. to have for-profit companies that obviously has something How do we do a better job? For go their own direction on this be- one, simply telling people it’s out cause they have their shareholders to do with how it has there. I don’t think the general pub- to answer to. found a way to effectively lic even understands you can bet But for the not-for-profits, there’s take wagers on horse rac- horses over your computer. People a real opportunity to come togeth- es with a takeout of five are always sitting in front of their er. Del Mar seems to be ahead percent or less. It also, computers looking for new games to of the curve. They have come out no doubt, has something play and looking for new sites and with their own, Del Mar-focused to do with how that com- they don’t even know there’s one out Internet betting site and it’s quite there where you can go and gamble good. Their ideas include lessen- pany has figured out how real money. The industry has done ing the barriers of entry for the to make wagering on the a terrible job getting the word out. consumer and that’s a good step in Internet fast, easy, simple We need to get past this situation the right direction. and fun. The U.S. racing where we have 14 different account To make our overall industry situ- industry has Internet wa- wagering companies and exclusiv- ation better, including how people gering, but it’s fair to say ity problems. It should be: just go bet on the Internet, we have to have to horseracing.com and bet on horse multiple entities in the industry we have yet to figure out racing. Figure out how to carve up working together as opposed to ev- a way to really exploit the the money. That’s such a minor side eryone pursuing their own solution. Internet. What should we issue. Just have one person do it, be doing? with one blended rate, have every- TDN: Where else can tech- one get paid fairly and move on. nology help us? Steve Crist: The big opportunity that the industry has blown com- Greg Avioli: We need to be a Jeff Platt: What racing really pletely is with online betting. It’s much more collaborative industry. needs to do is step up and either the only thing people can legally bet The fact is there have been multiple purchase or contract out for a tote over the Internet in this country. It’s efforts to try to bring one indus- system fast enough to render odds like the monopoly we had 60 years try-wide account wagering firm to and payoffs in a real time. It has to ago, and nobody is exploiting it or fruition, where customers could bet be secure and it has to be monitored. pushing it. Where is a single race- through that entity, sort of like an And the analogy I can draw is if track focusing its marketing cam- iTunes for horseracing. And they all you look at what you have when you

17 | TDN Magazine, Summer 2009 SPONSORED BY buy stocks or you sell stocks, your photo: TRAKUS price quotes are instantaneous. I buy 1,000 shares of XYZ company, that order is processed in real time. Somebody else getting a quote, their quote will have my order, my exe- cuted order, reflected into it, their quote will be updated a nano second after I make my buy or sell. And vice-versa. That’s what racing needs. In this day and age, it’s an embar- rassment that it takes 45 seconds for odds info to cycle through. AND

Nick Nicholson: I think we should take more advantage of technology than we do. Once again, I have seen it first-hand. I feel it, I watch it every day when we’re racing: this crowd appreciates the fact that we’ve got a computer chip in each saddle and that we can demonstrate all this data to them. We can demonstrate a blimp shot, we can demonstrate the chicklets. And we need to get our arms around racing fans at keeneland watching the track’s state-of-the-art infield this. Now, Barry (Editors’ note: toteboard. Thoroughbred Daily News publisher Barry Weisbord is an officer and And then they’ll come by and they sheets that people buy to bet on, board member of Trakus) will love might follow them, but they’re no that analyze the “trip” that a previ- that sentence. He won’t like the longer looking left. ous horse had. That is all subjec- next sentence. The fans like the high definition tive, much of it based on what path The company that’s doing this, shots that we show and the close- the horse was in. Well, when you’re Trakus, has been unable to make ups and the head-on shots. We’ve watching a replay or you’ve got a set its technology, for whatever reason, got sometimes four, sometimes five of binoculars, and you’re hundreds fit the economic needs of most race different things going on at the of yards away, and you’re going to tracks in America. Either we need same time. And the fan likes it. It’s say four path, five path, three path. to find a way to invest in Trakus, or closer to what they’re used to in oth- Computer chips give us the ability we need to find a way to have Trakus er sports. And when I go to a track to tell you exactly how many inches cheapen the price. We need to create that has not invested in high-defini- away from the rail a horse was every a market for the data so that they can tion equipment, and which has not step of the race. I can tell you at the sell more data. invested in computer chip technolo- end of the race exactly how many That would be one of the areas gy, the difference is startling. We’ve feet each horse ran. where we should not accept the sta- got to find a better way of displaying I never claimed to fully understand tus quo. And I am a huge advocate the race and then we’ve got to find the horseplayer. One of the things I for the fact that we’re not going to be a better way of using the data from don’t understand is why these play- able to bring in this next generation the race. ers are not screaming for more of this without toys like this. If you peel the onion back, there’s information. And I’m convinced At least once a day I try to watch a a guy in a press box with the binocu- that the more they understand about race from behind the fans. I watch lars screaming into a tape recorder, it, the more they’ll start screaming. where their heads are. They’re and he’s guessing how many lengths watching this tote board. And even behind each horse is. And that’s the Barry Weisbord: People love when horses are 200 yards to their foundation of the information. simple, and they love convenient. left, they’re watching the tote board. You’ve got very “sophisticated” What’s more convenient than reach-

TDN Magazine, Summer 2009 | 18 SPONSORED BY

ing into your pocket to bet on your any idea of how to make The commissioner prevents the phone? We’re more convenient than that happen. Let’s start haves from beating up the have-nots lotteries, casinos, and technology with Dennis Robinson, and, hopefully, at some point bal- exists now where we can deliver the President and CEO ances the interests of the individual a race or its graphic equivalent on of the New Jersey Sports athletes and the owners of these your phone. We should be exploit- franchises—in our case, the tracks. ing our advantage. We grew up and Exposition Author- Right now, there is an imbalance playing the races accessing the data ity, which operates the of power between the horsemen’s that the Racing Form delivered us. Meadowlands and Mon- groups and the racetracks because Shouldn’t we be able to see all types mouth. Prior to taking at the end of the day, what happens of data that can be collected with over as the head of the in our industry is that the horsemen new technology on the internet, at Meadowlands, he was are able to control your ability to the consumer’s choice? distribute your product. It would Streaming technology has also the deputy commissioner be like the players’ association of A nd given us the ability to not just read of the NBA, where he saw any league being able to tell the about past performances, but watch first-hand how important league whether you can broadcast races on the internet, not only from it is to have an effective, on ESPN, ABC, NBC, whatever. the U.S. but from other parts of the powerful commissioner in Basically, horsemen have unilateral world. It’s a fantastic tool, and it David Stern. Does racing power to pull the signal if there’s makes betting on and owning horses need a commissioner? something out there that doesn’t more fun. Why can’t we offer video suit their purposes. There is a tre- past performances, where instead of mendous imbalance of power that reading about the fact that a horse Dennis Robinson: I wouldn’t exists within the industry and is leg- was checked at the quarter pole, you get too caught up in the term “com- islatively embedded in the industry. can watch it? The consumer should missioner.” That’s just a word, Racing may not be able to have a dictate how much or how little in- something that is symbolic of an commissioner, but it needs to find formation he wants to access. economic and competitive structure a way to get things back in balance. that works. It just so happens that, Could we have a commissioner? The TDN: We could have one with the way professional sports question is if you think that model industry-wide Internet have evolved, there is tremendous is something that should be emulat- betting site if we had a power in the office of the commis- ed by the racing industry, how does commissioner. Everyone sioner. The teams, the owners and one get there? You’d have to have the seems to understand even the players realize that having major players in the industry agree a commissioner’s office is in every- to this concept and have the major that having a racing czar one’s best interests because the com- players be willing to cede some con- would be beneficial for missioner balances the interests of trol and potentially even cede some the industry as a whole, the owners and the athletes and has revenue streams to help build this but no one seems to have to play the middle. over a period of time. You’d have to agree to a legal structure, a constitu- tion and bylaw structure, potentially a franchise-type agreement, agree “Anything, including finding a way to a season and schedule that doesn’t compete for the same athletes from to have an effective commissioner’s day to day, week to week. The only way that will really happen is if the office, can happen if you have industry decides that it had better do these things or else it won’t have participants that want to make it a future. Anything, including finding a way happen. It’s as simple as that.” to have an effective commissioner’s office, can happen if you have partic- Dennis Robinson ipants that want to make it happen. It’s as simple as that. Is it practical? Is it more of a pie-in-the sky idea,

19 | TDN Magazine, Summer 2009 SPONSORED BY

“Talking about leagues and commissioners is good long-term thinking, but today what we need are practical achievable results and that’s why we created the Alliance.” Alex Waldrop AND more of an idealized version of the photo: horsephotos way the world could be? Probably. But on the other hand, if the major participants in this industry decide that the only way this sport is going to survive is to put some structure together, then it could happen. I understand that it has to be re- flective of the unique nature of racing. You cannot just duplicate something else that is out there. But if people are willing to cede some control and power and, in many respects, some revenue streams for the good of the whole, then I think something can happen here.

Alex Waldrop: I probably think about that issue more than any other single issue. People of- ten judge the NTRA based on our ability or inability to achieve the results people generally expect from a commissioner’s office. Former NFL commissioner Paul Tagliabue and current commissioner Roger Goodell were both labor lawyers and they came from the same firm. We have sat down with people from that firm and have worked very closely with them. We were looking at the Alliance and talking about how this was the time to restruc- ture racing. We sat down with them and explained to them how racing is configured and its decentralized nature, and how frustrating that was for just about everyone involved. We asked them to help us put some structure around this business. How alex waldrop at the congressional steroids hearing on capitol hill in can we use the NFL as an example june, 2008.

TDN Magazine, Summer 2009 | 20 SPONSORED BY

photo: getty images

A nd

many in racing have long talked about the need for a ‘czar,’ like the nba commissioner david stern.

and how could we give a commis- We determined that in the near make progress based on the realities. sioner some real authority? term the only way to try to put These individuals told us that any structure into this business was Charles Hayward: A czar will there is not any analogy between through the Alliance, through a never happen. But we have had a football and our business. Theirs is voluntary cooperative effort where series of conversations among like- an employee-employer relationship. people say they will agree to abide minded non-profits. One of the When Roger Goodell sits down to by a code of standards and if we do things that has become very clear is talk with Michael Vick to decide not abide by the code we will suffer that in the racing industry, which is whether he can come back, that’s whatever sanctions the organization a no-growth business right now, the because Michael Vick has signed puts out. We can’t fine anybody, but for-profit public companies cannot away his rights contractually and we can deny them membership and necessarily put their horsemen first he knows to get into that league, he there may be other things we can or the fans first. They have to put the has to sign a contract to become an deny them in the future. In the near shareholders first. That’s what they’re employee of a team and live by the term, that’s probably the best solu- required to do as a public company. league’s rules. Roger is free to say he tion we have. A league is ultimately It shouldn’t be of any surprise to can’t be an employee. a cooperative effort—a voluntary anybody if Churchill Downs is be- I’ve looked at various ways we could agreement to put your hands in the ing more aggressive in the account- structure the industry and I’ve looked hands of a third party. wagering business, which seems to at leagues and privatization. There are It’s more helpful for us to play be one of the more rapidly growing, significant legal impediments, wheth- the cards we’re dealt. Talking about higher-margin businesses, and less er they are anti-trust or the fact that leagues and commissioners is good inclined to expand racing dates or the state interjects itself in our busi- long-term thinking, but today, what buy new racetracks. We have had a ness and they are not going to give we need are practical achievable re- series of informal conversations that that up. As long as you have states sults and that’s why we created the have included Keeneland, Del Mar inserting themselves into our business Alliance. We have cooperation and and Oak Tree about initiatives we and declaring they have jurisdiction people are buying into the concept. might work together on. It could be over our business, then you’re going to That’s progress. Politics is the art of a consolidated tote. It could be ac- have racing commissions, and when the achievable. At the end of the day, count wagering. That’s not having you have racing commissioners, they you have to do what you can achieve a commissioner, but it would be a become effectively the commissioners and you dream, think big, aim high, matter of some tracks working to- in each state. but at the end of the day, you have to gether for common goals.

21 | TDN Magazine, Summer 2009 SPONSORED BY

TDN: If the sport had a to say who is going to be the first to size of Des Moines is an idea that is commissioner, probably close, but take Prairie Meadows, the going to have to go out the window. the first thing that per- first real slots bailout track. There son would do is to cut probably isn’t a market for eight Nick Nicholson: There is down on the numbers months a year of live racing in Des no professional sport that tries to Moines, Iowa. There’s not enough play at the same facility for 100 of tracks we have and interest. Considering the economic days in a row. It leads to flat, bor- the amount of races we realities everyone is facing, it figures ing sports. If we had to do that run. If we can’t increase that racing is going to get a lot less at Keeneland, if we had to run for the demand for racing’s money from slot machines because 200 days a year, we would have product, shouldn’t we cut governments are going to take that boring, low- quality racing that money for themselves. So you might would have no relevance to the na- down on the supply? Is it AND see a slots track like Prairie Mead- tional championships. It would inevitable that that will ows have a six-week meeting instead be racing that beats down our fans happen? of an eighth-month meeting. and our participants. Maybe that’s not the worst thing I believe all things are on a pen- Steve Crist: One of the lessons of in the world. Maybe that six-week dulum and all things come and go simulcasting is that a lot of people meeting becomes a little more of an with an ebb and a flow. Perhaps a are perfectly happy to wager on a event. We know it’s not going to be generation ago, it made sense to race 1,000 miles away looking at a Keeneland, but at least it might be have year-round circuits every- TV set and maybe we don’t need “Prairie Meadows is open again and where. It’s now time for the pen- as many tracks and can’t sustain as for six weeks in the summer they’ve dulum to go back the other way. many tracks as we used to. There got a decent race meet.” Once you The modern consumer has so absolutely has to be less product. take away some of the slots money many more choices in front of There are going to be contractions they’re obviously not going to do them; there’s so much vying for in every part of the industry, includ- eight months a year. I don’t think their attention. We have to start ing the breeding industry. You have we’re going to see a cataclysmic series giving them a better product or a reduction now in the foal crop and of shut downs, but I think we will they won’t respond because they if you lose 10 tracks it’s got to fall see a lot of tracks run shorter meets. don’t have to respond to medioc- even further. I don’t know enough The idea that you need virtually rity when they have so many high- about each track’s financial position year-round racing in a market the quality options looking at them.

NUMBER OF NORTH AMERICAN RACES U.S. Canada & Puerto Rico “The idea that you 70,000 need virtually year- 60,000 round racing in a 50,000 market the size of

40,000 Des Moines is an idea that is going 30,000 to have to go out 20,000 the window.” 10,000 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Steve Crist

Source: the jockey club fact book

TDN Magazine, Summer 2009 | 22 SPONSORED BY

Bob Evans: We have a factory. assets are and you build on those than any racing country Calder is factory. It’s hard to imag- assets. You start with the Triple in the world and there ine those economics will work for Crown and then the Breeders’ Cup. are many horseplayers many more years and not just at You take that as a foundation and out there who firmly be- Calder but anywhere. Here, it’s say, okay, what really works and let’s a Tuesday and we probably have, look at how we can borrow from lieve the races aren’t won counting harness and the overseas them and make the entire sport by the best horses but by guys, 25 tracks that are available on better. Of course, it’s hard getting the horses with the best TwinSpires.com. I imagine TVG consensus and having people buy in drugs in their systems. has about the same amount. Prob- like they must in order to make seri- How big a problem is this ably on Saturdays and Sundays, you ous changes. and what can the indus- have 30-something tracks running. What does the U.S. have, 51,000 With 10 races a card, that’s 300 plus races a year? Whatever the number try do about it? races you are offering the public and is, it’s too many. Just as importantly, A nd that’s too many. there are too many Grade I races. Charles Hayward: As a rac- There’s probably a niche for one There are too many of them that ing fan, a wagering customer and or two factories. Everyone can’t don’t mean anything anymore. You a racetrack executive, to me, head be special. But what are the most need to cut that number so a Grade I and shoulders the biggest problem popular race meets in the country? race starts to mean something again. racing has is the perception people Del Mar, Keeneland and Saratoga, have that there’s not a level playing all boutique tracks. Do you think TDN: Why are we losing field from a medication standpoint. any of them would be as popular existing customers and So how do we fix that? We have 18 if they ran 180 days a year? I don’t labs today and we’re spending $30 think so. You’re going to see tracks having a hard time at- million on testing, which is exactly have shorter meets. There just aren’t tracting new fans? Many what we spent 30 years ago. A lot of enough horses to go around and the believe that has some- people in the industry say the cheat- economics of running 300 days a thing to do with the un- ers are always going to be ahead of year aren’t working any more. We’re the regulators and the racetracks and going to see more and boutique- derlying perception, I just don’t accept that. There has to style racing. whether it’s true or not, be more money invested in the Rac- that racing is a sport over- ing Medication and Testing Consor- Bill Nader: It’s not just that the tium. There has to be consolidation U.S. has too much racing. You need run with drugs. We allow of the labs. We have eighteen. There to take inventory of what your real more legal medications should be four or five. That way, you

“You need to take inventory of what your real assets are and you build on those assets. You start with the Triple Crown and then the Breeders’ Cup. You take that as a foundation and say, okay, what really works and let’s look at how we can borrow from them and make the entire sport better.” Bill Nader

23 | TDN Magazine, Summer 2009 SPONSORED BY can spend the same $30 million and get a lot more bang for your buck. We have to employ some of the re- “There has to be more money verse engineering research they did with the BALCO steroid situation invested in the Racing Medication to catch those guys. I don’t think the racing fans and Testing Consortium. should have to worry about what vets are working for what trainers, There has to be consolidation of the and, unfortunately, that’s how a lot of people handicap today. We have labs. We have eighteen. to do more R & D on drug testing and try to figure out what we should There should be four or five.” AND be testing for and what’s the proper way of testing for it. Charles Hayward Then there are penalties. They have to get reset. Right now, we have the same penalty structure for minor overages of therapeutic drugs that really aren’t performance-enhancing as we do for serious over- BY THE ages of other more serious drugs. In my view, it’s a solvable problem, but it’s going to cost mon- NUMBERS ey. The one glimmer of hope we The average field size for Thoroughbred races in the U.S. and Can- have is how quickly this industry, ada has declined slightly over the last half century but is largely un- which was very embarrassed by changed since 1995. The decline in average annual starts per runner steroids in the Big Brown situa- was consistent over the 30-year period 1960-1990 before the rate of tion, reacted to the steroid situa- decline began to lessen marginally. Between 1960 and 1990, annual tion. In a period from the Derby starts per runner declined by an average of 0.112 starts per year. to the end of the year, we pretty Since then, the average annual decline has been 0.097 starts. much got a uniform enforcement of steroid protocol, fairly consistent penalties and fairly consistent AVERAGE STARTS AND FIELD SIZE withdrawal periods. That’s some- Average Starts Per Horse Field Size thing that didn’t exist with any 12 other drug-testing initiative.

Steve Crist: I’d love to be able 11 to get up in front of the people at The Jockey Club Round Table and 10 say drugs are making you lose 10 percent of your customer base a year and if you don’t do something 9 about it you’re not going to have any customers left. I can’t honestly 8 do that. There’s no evidence to sup- port that. That doesn’t mean that 7 people aren’t upset. But, in and of itself, I don’t think it is eroding the existing customer base. 6 Is it scaring off potential newcom- 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2008 ers? Yes, I think to some extent it is. TEXT AND DATA source: the jockey club fact book At the end of the day on the medica-

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photo: horsephotos name of his assistant. Nothing really changes except the name that you read about in the Racing Form as to who the trainer is. That sends the wrong message to the fans. It tells the fan and the would-be fan, that hey, the game of racing might not be entirely on the up and up. HANA believes that the game of racing needs to be regulated in a way where there are absolutely no questions whatsoever about integrity. AND We don’t have that right now. We need a national drug policy with teeth. I’m not going to purport to know what drugs are what, what should be allowable and what the tolerance levels should be. But I do believe it has to be consistent from one racing jurisdiction to the other and the rules have to be enforced. And if you’re caught cheating, there has to be a far more severe price to be paid than what you have now. You have to clean this game up.

Alex Waldrop: We test 120,000 horses each year and we test for more drugs and medications than any athletic competition in the “most of the participants will tell you that when it comes to legal medi- world. We spend $30 million a year cations, we have it about right--that we are balancing the interests of the on drug testing a year in this coun- horse and the interest of integrity.” —Alex Waldrop try. Yet, we still have this specter tion issue, people, especially those at the TV that guy is a crook and a over our heads that drugs are ram- the top of the sport who have influ- cheater. That’s kind of built into pant in this business and that for ence and power are going to have to the game. It’s not that different health, safety and integrity reasons make a moral, sporting, ethical de- from anything else. In every sport, they have to go. Clearly, the core fan cision and not a business one. That there’s a healthy slice of fans that is genuinely concerned. It’s getting will be, do we want to set high stan- think everything is fixed. The NBA harder and harder to justify the use dards and hold ourselves to them games are fixed. They’re putting the of any medication in the current en- because that’s the right thing to do big market teams into the finals. vironment. Having said that, this is for the horses and the right thing There’s no dealing with that kind of a Herculean task. The RMTC (Rac- to do for something we consider a “Joe from Queens, first-time caller” ing Medication and Testing Con- sporting undertaking? nutty sports fan paranoia. sortium) continues to be the best You can’t really make a business forum for these discussions because argument that drugs are a seri- Jeff Platt: You see trainers get a you talk to participants and most ous problem. When I first came 30-day or a 60-day suspension and of the participants will tell you that around, people were standing $1,000 fine for their ninth, 10th when it comes to legal medications, around the televisions and calling or 11th or 13th career drug posi- we have it about right--that we are Ferriola and Moschera cheaters. tive, and they might be ruled off balancing the interests of the horse Whoever the hot claiming trainer the grounds for 30 days. But he’s and the interest of integrity. It’s a is, you’re always going to have some still calling the shots from his cell hard thing to communicate to the percentage of the people yelling at phone and the horse goes under the core fan, so there is work to be done.

TDN Magazine, Summer 2009 | 26 SPONSORED BY

A nd

photo: horsephotos

“eight belles created such an outcry on the part of our casual fans who said they want us to do everything we can to ensure the safety of our equine and human athletes.” —alex waldrop

TDN: While drugs certain- the one we are in, you have to look wrong, people are most concerned ly give racing a black eye, at how you market your business about the equine athletes. the specter of horses like in order for it to grow. We came to People are not able to understand Eight Belles and Barbaro the conclusion at the NTRA a long why our athletes sometimes die in time ago that there are certain fun- competition. That is the single big- dying as the result of inju- damentals that have to be addressed gest challenge we face as a market- ries sustained in marquee as part of a marketing plan. Those ing strategy. How do we convince events has to be an even fundamentals were safety and in- people that we are doing every- bigger problem. Whether tegrity, and that’s why we formed thing we can possibly do to keep it is fair or not, there are the alliance. We saw people, cer- our equine athletes safe? That’s a lot of people out there tainly in the wake of Eight Belles, something we took for granted for who believe that horse raising huge questions about the a long time in this business. Ev- safety of our thoroughbreds. The erything that I see and read, every- racing is a barbaric sport. realization that our athletes die in thing I hear through my blog, tells There’s no doubt that that competition was a major trauma me this issue is primary. perception stands in the for a lot of our casual fans. They We’ve structured the Alliance to way of this sport truly didn’t know it. They didn’t under- look at the environment in which flourishing. How bad of a stand it or had never witnessed it the races are conducted and re- problem is this and what first-hand. That’s why Eight Belles search is being done to determine created such an outcry on the part how to make horses healthier. We can be done about it? of our casual fans who said they are also looking at solutions con- want us to do everything we can cerning what to do with the horses Alex Waldrop: With any busi- to ensure the safety of our equine after they are finished racing. ness, to come out of a malaise like and human athletes. And, right or Still, some people will never ac-

27 | TDN Magazine, Summer 2009 SPONSORED BY cept that any horses die in compe- pen on the racetrack. It sickens me. Steve Crist: A contraction is tition. There’s no question there’s We can’t just accept the status inevitable, but there is a kind of a segment of the public that will quo on safety, and it goes both unrealistic vision out there. Peo- not accept that. I recognize there ways for humans and horses. You ple say, “let’s get rid of all these is an increasing sensitivity to the have a breakdown in front of the small tracks and just have six to abuse of animals in this country. crowd and every time it happens 10 supertracks.” That won’t work It’s a reality of life. What we can there are thousands of people that because something like half of all do, at least with the people who say, “I’ll never come back to this. horses don’t pan out. You have to have an open mind, is convince This is not a sport.” have a minor league. But the mi- them we are doing everything we We love these horses and the nor leagues have gotten too big can. Initially, that means gather- wonderful athletes who ride them. and they race too much. What I ing the data to determine what the These horses are our passion. That think would be ideal would not be causes and the solutions are. Then has to be very real, very believable, to pray for all the Beulahs of the AND we must come up with a plan and or else the modern consumer is go- world to go out of business, but do whatever is necessary. ing to walk away from us. The old the Beulahs of the world should adage, “it’s part of the game,” that’s have six to eight-week meetings Nick Nicholson: If we’re go- a horrible sentence. and not six to eight-month meeting to grow the sport, if we’re go- ings. You absolutely need that ing to connect with young people, TDN: If horse safety is a circuit. You can’t say let’s just then we have to have a certain problem at the top-tier have top-class racing at six super philosophical foundation. They tracks, is it a bigger prob- tracks. What are you going to do have to believe that we, the leaders with the rest of the horses? You of this industry, care about our hu- lem in the minor leagues? need a minor league. It would be man athletes and our equine ath- Is there a role for these great to have little meetings in letes. We all hate it when a horse tracks, and do they ulti- dozen of markets because that’s breaks down. It’s the worst part of mately serve some pur- how you turn those people into my job. As long as I’ve been in the year-round simulcast customers, industry, I still get literally nau- pose in marketing our network television viewers. It’s seous when I see an accident hap- sport? still the best way to generate interest, to have some sort of racing in the small markets.

Alex Waldrop: I don’t ascribe to the notion that we need fewer “We love these horses and the tracks or that we need 20 supertracks. I don’t think that’s where wonderful athletes who ride them. we are heading and I don’t think that would be good for racing. These horses are our passion. That Kentucky is a prime example. Under most scenarios, Ellis Park has to be very real, very believable, would not be a survivor if you had just 20 tracks, but talk to anybody or else the modern consumer is in Kentucky and they will tell you that the Ellis Park portion of the going to walk away from us. The Kentucky circuit is vital to Ellis and Keeneland. Perhaps we need old adage, “it’s part of the game,” less racing, but not fewer racetracks. It’s the racetracks that give that’s a horrible sentence.” people the opportunity to come and fall in love with racing. I don’t Nick Nicholson think that’s the solution. More vital racetracks, yes. But having fewer tracks would not be positive development for us.

TDN Magazine, Summer 2009 | 28 SPONSORED BY TDN: Let’s stick with this “In Hong Kong, racing outperforms the lottery subject. We all know that the very best product rac- by a margin of 10 to 1. That illustrates how ing can offer the public much people like to bet on horses here. I’ve is the rich, high-quality seen first-hand how people will respond when stakes races that attract the game’s biggest stars. you give them only the very best when it But we have stakes sched- comes to your racing product.” ules with no cohesion, tracks competing against Bill Nader one another for the biggest names and, outside A nd of the Triple Crown, no rhyme or reason to how we do things. Never was this more evident during Haskell weekend when Mine That Bird went off to West Virginia to compete instead of facing Summer Bird and Rachel Alexan- photo: horsephotos dra in the Haskell. All that did was to diminish the TDN: One of the reasons ones with the best product will be importance of the week- the idea of “supertracks” the ones to survive. end and allowed the ma- appeals to people is be- jor TV networks to ignore cause the consumer obvi- Bill Nader: In Hong Kong, racing outperforms the lottery by a what was going on. Can’t ously wants quality rac- margin of 10 to 1. That illustrates we do a better job when it ing. A supertrack might how much people like to bet on comes to structure? Must have a 15-race card with horses here. But it’s also a case of we do a better job when 14 horses in every race them preferring to bet on some- it comes to structure? and pay out $1 million a thing where they believe that have day in purses. Whether a realistic chance of winning. They study hard. They know they’re go- Barry Weisbord: The Triple we have six tracks or 600, ing to get 12.5 runners per race, Crown is what commands the most shouldn’t the industry find which has been our average for the attention. Those are the races with a way to give people more last three years. They know they’re structure. But we can and we have of what they want, which going to get integrity because the to go beyond that. We no longer is quality product? There’s enforcement of the rules and regu- can have a situation where a major clearly not enough of that lations here is much more stringent horse wins a major race and every- out there. than anywhere else. They’re going one is guessing where he will show to get deep wagering pools. We bet, up next. The next start should be Bob Evans: With the way things on average, almost $12 million per obvious. It should be within a series are now, what you’ve got to do in race. And then you get really good, of races. It should be a matter of the horse business to survive is to fo- competitive races. The average mar- if the horse is healthy, there’s really cus on quality. What we’re breeding gin of victory here is very small. I’ve only one place to go. or what we’re trying to race or what seen first-hand how people will re- You need something where, like we’re doing with the racetracks--the spond when you give them only the with the Triple Crown, people un- focus has to be on quality. If there very best when it comes to your rac- derstand what’s going on and how are going to be fewer tracks, the ing product. this works. People will get more

29 | TDN Magazine, Summer 2009 SPONSORED BY familiar with the horses, jockeys, moting some wide umbrella where series of top-class races run in con- trainers and owners, and those are we have one-stop shopping, where cert with one another, something the things that drive interest. By you can find out everything you that gives the whole thing cohesive- putting a very bright light on a fi- want to find out about racing, the ness. The current stakes schedule is nite number of races and defining top horses and what they are doing. a remnant of how racing operated them as the best we offer, we create 50 years ago. How can it be that the structure and an easily understood Steve Crist: I completely agree foal crop is half of what it used to be format of top-quality races. with what Barry Weisbord has been and we have 20 percent more Grade If you throw out the right car- saying. We just need to start over I stakes than we used to have? These rot, owners will respond. The rea- with the stakes schedule in this races have lost their meaning and son this could work, next year country. We need something where, nobody gets excited when they hear more than any time in recent years, for eight or 10 months, you have a there is a Grade I stakes at their local is because breeding stock values day each month where there are a track on Saturday. It doesn’t mean AND have plummeted. The promoters of the game didn’t make that happen, but they can benefit from it. NORTH AMERICAN FOAL CROP We’ve found ourselves in a situa- U.S. Canada & Puerto Rico tion where owners are going to be more willing to keep their horses 45000 in training and run for big money. Now, all you have to do is get the right carrots out there and behavior 40000 can be changed. There will be a new paradigm of good behavior. Good behavior might be, “How do I earn $10 million running my horse?” 35000 Once you create this structure, you have to create finances that work. How do you get the carrot 30000 big enough so that you can get the best horses to consistently run against one another? Once you’ve done that, you have to promote 25000 1990 1992 1996 2006 2008 2009 this properly. If you want to un- 1991 1993 1994 1995 1997 1998 1999 2000 2001 2002 2003 2004 2005 2007 derstand how to properly promote Source: the jockey club fact book a sport in this modern era, just go precipitous decline? the jockey club announced a projected foal crop of to mlb.com and you’ll get a really 30,000 in 2010. good idea of someone who understands promoting theit sport in the modern way. The amount of content they have is amazing and there is something for every level “How can it be that the foal crop of fan, from the casual to the hard- core. It is unbelievably well done is half of what it used to be and and it is free. With our sport in general, there’s we have 20 percent more Grade I so much that can be done elec- tronically. The trouble now is that stakes than we used to have? we have no place to have this body of work distributed because the These races have lost their meaning.” Breeders’ Cup promotes Breeders’ Cup races, NYRA promotes NYRA Steve Crist races and Churchill promotes Churchill races. Nobody is pro-

TDN Magazine, Summer 2009 | 30 SPONSORED BY

Game. To grow the sport’s popularity, you have to have something a lot more than that.

Bob Evans: Look at the other sporting events. There’s something on the order of 40 NASCAR race days a year. If you add in the Crafts- man Truck Series and the Sprint Cup Series, you’re still in the neighborhood of 80 or 100 days of racing. We’ve got, roughly speaking, 50,000 races and 5,000 days of racing. NASCAR has 100-something, A nd and the PGA has 40 events, four days each--160 days of professional golf. We have way too many days, as well as days that don’t mean anything. This idea that the future is a photo: getty images smaller number of premium products doesn’t surprise me. Somebody will eventually figure out how to structure this. I doubt “What’s the most exciting part of the that it will get done solely by put- baseball season? Opening day. You go from ting the best horses together on that day. You’re going to have to find opening day, you have the season, the playoffs, other ways to attract the people to the World Series and then you crown an this thing called horse racing. Here’s an interesting conundrum. Our ultimate champion. Our champions don’t best product, theoretically, is graded stakes races. Yet, they are the least even want to compete against each other. profitable races to run. Rarely does a That’s because we have no structure.” graded stakes races procure enough purse dollars itself to pay that purse. Dennis Robinson As goofy as it sounds, our best products aren’t paying for themselves. That’s like having a Super Bowl and saying it costs a boatload of money anything. You need a cohesive year- no season. Think about every oth- but we have to do it anyway because long series building to the Breeders’ er sport. What’s the most exciting we need a championship game. The Cup to give the sport some kind of part of the baseball season? Open- opposite is true. The Super Bowl is overall structure. People need to ing day. And then the World Series. a huge economic success. know there’s one day a month when, You go from opening day, you have People are going to want to do if they like racing, that’s the day they the season, the playoffs, the World that to create the next big event. should pay attention. Start with that Series and then you crown an ulti- My guess is, it doesn’t start with and you’ll take people from follow- mate champion. Our champions someone saying, “we’ve got the very ing races three days a year to 12 days don’t even want to compete against best horses in the race that day and a year. From there, it’s not a stretch each other. That’s because we have therefore it must be interesting to to think you can get them to be- no structure. You need a season, a the public.” It’s going to have to come everyday fans of the sport. league, a championship, something have a story line that interests the that builds up to a crescendo. We general public and racing is going Dennis Robinson: This is have some very exciting individual to be a part of the outcome. You what’s missing from this sport. We events and we have the Breeders’ could pretty much argue that the have no opening day, no closing day, Cup, which I see more as an All-Star Derby isn’t about the race. It’s a

31 | TDN Magazine, Summer 2009 SPONSORED BY three-week, almost four-week cel- for building on the entertainment a racetrack, management tends to ebration in the city of Louisville values of this sport and rebuilding be dominated by the casino perspec- and it starts to pick up a national it. It hasn’t happened here and a lot tive, because that’s where the money flavor in the last couple of days be- of people have tried. I have to say it is. That is a continuing concern and fore the Oaks and Derby. The race is a concept that hasn’t worked any- I don’t know how you ever get be- itself takes two minutes. What we where and it’s probably not the best yond that. You have to legislate. have is pageantry, spectacle and the idea. The only way to create new Clearly, racetracks and casinos do entertainment value. fans in large numbers is to drasti- not peacefully co-exist. The single Look at NASCAR. NASCAR cally reduce the takeout or the price biggest threat to racing is the indig- went a long time conducting races people pay for the product. enous expansion of casino gambling that the general public wasn’t the throughout this county. We obvi- least bit interested in. Then all of TDN: There might be ously have to figure out how to co- AND a sudden they hit on a way of pre- some out there thinking exist and take from those operations senting the product differently. It right about now that we what we need to thrive and prosper became important that the drivers on a long-term basis. were attractive and young and per- shouldn’t be spending so sonable and were doing things the much time focusing on Bob Evans: Slots keep you in the public was interested in. It’s just what’s wrong with racing game with your racing. The slots how you present it. In racing, some- because the sport is flour- business is a source of additional one will come along and invent the ishing in the many, many profits to the racing company that newest, best thing. places that have slot ma- operates it and it’s a source of new information about customers. Can TDN: So, if we can make chines. Mountaineer Park I use that additional money and horse racing a lot more just had a $750,000 that additional information to in exciting as a sporting race that attracted the some way generate more business event, will the industry Kentucky Derby winner. for racing? The first reaction people Tracks like Philadelphia will probably have to that is `no.’ flourish? That’s a popu- People think, “Why bother?” The lar sentiment within the Park have $50,000 al- industry. But it also ig- lowance races. Still, most nores the gambling com- know the slots phenom- ponents of the game. Will enon is a double-edged “Racing needs people flock to bet great sword. Let’s look ahead. races that don’t offer Where is the slot era go- to be able to great betting value? ing and what can racing do to get the most out of hold its own Eugene Christiansen: In the slots money and avoid in this new concept, it should be possible to a situation where the slot revive horse racing through promo- machines start working environment... tions and big events. In practice, against us, not for us? though, people have been trying to This is a do that since the sixties and no one has succeeded. That says something Alex Waldrop: Racing now subsidy, and a about how hard it is. Entertain- plays second fiddle to a much big- ment, whether it is sports, movies, ger business, which is gaming. subsidy can be what have you, is a tough business. That is an environment we need It’s only an easy business when you to monitor very carefully. Racing here today, have someone like Steve Wynn in- needs to be able to hold its own in volved, who is good at it and makes this new environment. That’s my gone tomorrow.” it look easy. If Steve were to buy half primary concern. a dozen big racetracks, look at them This is a subsidy, and a subsidy can Alex Waldrop for a couple of months, he might be here today, gone tomorrow. The come up with a winning strategy challenge is, when gaming comes to

TDN Magazine, Summer 2009 | 32 SPONSORED BY

slot operations are cranking out a photo: horsephotos bunch of cash and there is a contribution to the purses. That may not always be the case, because eventually the slots business has to stop growing. The markets in which casinos exist are getting saturated. With the growth rate slowing down, people are going to look at other ways to make money. I think people will start to take another look at racing as a potential moneymaker. Imagine the customer impact if, A nd instead of taking the purse subsidies and doling them out they way people do, running a racing factory for 250 days a year, you tried to do something really interesting with dubai world cup festival, 2009. the purse money. Why not create a festival that rivals what they do lieve there is adequate return. Peo- The day is going to come when in Dubai? With most casinos you ple will say, “I have this capital and I the politicians go, “Wait a second. could easily do that based upon the can deploy it in a lot different ways. Why are we subsidizing a dying amount of money already going I can build a Dairy Queen or I can sport? They’re going to take your into the purses. You just couldn’t do invest it in the racing business or I money away. Then what do you it for 250 days a year, but you cer- can put it into more slots.” When do? That’s pretty much what has tainly could do it for 10. racing can put itself in a position happened. I can’t think of a sin- I’m back to that boutique angle. where it makes most economic gle slot track, starting with Prairie The people who get innovative with sense as a way to invest capital, then Meadows and Delaware Park, that that sort of thing will be the winners it will take off again. has said, “Let’s use this bonanza in the long run. The amount bet on for something else besides throw- horse racing every year in this coun- Steve Crist: The mistake hasn’t ing money at horsemen.” To have try may get down to $10 billion, but been taking the slots money. If $5,000 claimers race for $25,000 it may be bet on only a very small anyone says, “We’re going to throw is a ridiculous imbalance. Who is number of races compared to what you millions and millions of dollars investing that money for the fu- it is today. When you get the handle at you every year,” you’re not go- ture and building wonderful paper race up to a high enough num- ing to say no. The mistake is when latial facilities or doing real mar- ber, it gets pretty economically at- you don’t use that money wisely keting for horse racing? Instead, tractive to keep running races. You to rebuild the infrastructure of the everyone has been just taking a go back far enough, and it used to sport and do some real marketing handout that everyone knows is be an economically viable business. and build some kid of fan base for going to disappear some day. That Capital will go where people be- the future. is scary. “Imagine the customer impact if, instead of taking the purse subsidies and doling them out they way people do, running a racing factory for 250 days a year, you tried to do something really interesting with the purse money. Why not create a festival that rivals what they do in Dubai?” Bob Evans

33 | TDN Magazine, Summer 2009 An independent voice dedicated to you, our shareholders.

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Eugene Christiansen: I do TDN: Everyone knows the as fans of horseracing. That’s not not believe that subsidizing racing sport has problems and all that different from golf, ten- is healthy. I do not believe that it that its back is against the nis, figure skating, etc. That hasn’t is a sound basis for planning this wall. Some will tell you changed if you look at those num- industry’s future. You can do the that the sport is doomed bers going back for a decade. That numbers yourself. Just take out all 30 percent to 35 percent range is of the purse money that is generated if it does not fix its prob- pretty consistent. from slot machines and look where lems. Yet, racing is notori- So we have a strong fan base for this industry would be. Look how ously slow to change or to the sport. You’re going to get a tele- many racetracks would close tomor- fix anything. What might vision rating for the Derby and, row. That can still happen. The happen if the status quo when the Triple Crown is on the problem with subsidies is that gov- persists and the indus- line, for the Belmont, that’s going ernment can give them, but govern- to be as good as any sporting event ment can take them away too. Since try doesn’t find a way to in the U.S., other than the NFL A nd we advise a lot of governments, I make drastic changes? Is and the Olympics. That’s some- find it increasingly common to have racing doomed? thing a lot of sports would die for. people in the governors’ offices or in As a sport, I honestly believe we’re the legislatures’ offices ask me why, Greg Avioli: I probably have better positioned than most in this exactly, when the state treasury is a different perspective than most increasingly diverse world of sports broke and we need money so badly, when you bring up these gloom- and entertainment. are we subsidizing horse racing with and-doom scenarios. I think we slot-machine revenue that actually spend far too much time talking Bob Evans: This perspective that belongs to us? about what’s wrong with racing somehow racing should be saved be- If there is a way forward, it isn’t and talking about the negatives. We cause it should be saved, well, that’s more subsidies. If you think there need to focus more on the positives what you do with a museum. You is a way forward and it is relocat- and what’s good in the game, what raise money and sustain something ing capital into the slot machine we have to offer and how you build that otherwise probably wouldn’t business, that means you are essen- on that. be sustained. You keep something tially ignoring horse racing. That, Last week, the Sports Business around for the next 10 generations of course, is no way to revive and Journal put out the list of popular- so they can see what it used to be restart growth in the fan base. For ity over the last three months for like. horse racing, nothing else matters. all sports. Interestingly enough, I see that as a completely unac- Making new fans is the whole ball although we continue to rank near ceptable future. If you get to that, of wax. You cannot make new fans the bottom of the list, we are ahead you’ve missed the boat. I think clever unless you give the consumer what of NHL, ahead of WNBA and people will find ways to deploy capi- he wants. The consumer has said we’re actually within the range of tal into racing that is economically as clearly as anyone ever could say the majority of the sports, exclud- viable. I don’t think we’ve hit the that he wants lower prices. If you ing football and basketball. answers yet. My guess is it involves don’t, you’re just going to have a Thirty-plus percent of people presenting it differently, trying to do slow death. in this country define themselves more online and making the quality

“For horse racing, nothing else matters. Making new fans is the whole ball of wax. You cannot make new fans unless you give the consumer what he wants. The consumer has said as clearly as anyone ever could say that he wants lower prices. If you don’t, you’re just going to have a slow death. ” Eugene Christiansen

35 | TDN Magazine, Summer 2009 SPONSORED BY of what you produce as good as you photo: sarah k. andrew can make it. Otherwise, so be it. There are a lot of things that I am interested in personally that I wish there were more of. I’m sure there’s somebody out there that loves curling, but try to find it on TV. There are people who love bicycle racing and, other than the Tour de France, it doesn’t get television coverage. I like horse racing. I like the beauty of it, the athleticism of the horse, the chal- AND lenge of trying to breed the best horse you possibly can. I like that, but if not enough people do, so be it. We’re never going to be able to force an unwilling public to pay attention to it.

Nick Nicholson: I don’t think “I don’t think this sport will die. the status quo will persist. Things are not going to get perfect. We’re It’s too great a sport and not going to wake up tomorrow and discover a magic wand. This is going too beautiful a sport to die.” to be a journey, and that’s what I’d like to see. I’d like to see us begin- Jeff Platt ning the journey and figuring out where it is we want to go. Instead horseplayers of today have never field size, pool integrity, drugs of spending years talking about ‘oh, had it so good in a lot of ways, in and signal availability. Eventually, woe is us,’ let’s start acting. terms of the quality of information, enough customers will act, and that the access of television signals with will leave racing with no choice but TDN: Will racing start act- simulcasting, with more interest- to change. There is going to be a ing? It’s easy to be skepti- ing and varying betting menus. The track somewhere that will realize cal and frustrated. Frank- Internet is so well suited to horse that it can either change or close its ly, racing doesn’t ever racing in so many ways in terms of doors. That track will try a much viewing races and getting informa- lower takeout. seem to do much of any- tion. Yes, playing the game for the Our group has already had an thing about anything, at customer is better than it was 20 impact. Hawthorne began offer- least when it comes to se- years ago. I still don’t have any con- ing a program last year where play- rious issues and making fidence that the so called “Lords of ers could get a rebate of up to four serious changes. Will the Racing” are going to sit down and percent if they bet on track. That’s sport get its act together, be farsighted and strategic any more a step in the right direction and than they have in the past. Every- you’re going to see more tracks try- do the right things and one just seems to be trying to get ing that sort of thing. get through this mess? through the day, the week, the quar- I don’t think this sport will die. ter and the current financial crisis. I It’s too great a sport and too beauti- Steve Crist: I don’t have a whole don’t see a lot of visionary planning ful a sport to die. But you’re going lot of confidence. Weren’t we all going on out there. to see a lot of tracks close and you’re kind of talking about these things already seeing serious problems like 20 years ago? There are things that Jeff Platt: Yes, and here is how Magna being bankrupt and Holly- have improved for the better and it is going to happen: the consumer wood Park closing. My God, that have changed for competitive rea- is going to become more and more had better be a wakeup call that what sons or technological advances. The conscious of things like takeout, you are doing is not working. 

TDN Magazine, Summer 2009 | 36 SPONSORED BY We gave our panelists one sentence to tell us what is important to them: If you had the power to fix one thing in racing today, what would it be? Greg Avioli: I would replace the U.S. tote system with state-of-the-art technology that would allow for additional security, better flow of information to our customers and real-time processing of wagers with the same ef- ficiency that is currently found in the international securities markets. A nd Eugene Christiansen: Lower the consumer price of pari-mutuel betting to competitive levels.

Steve Crist: I would replace the synthetic racing surfaces recently in- stalled at major tracks with new and improved dirt tracks, to correct a terrible mistake that is not making racing the slightest bit safer but is clearly driving away customers, tearing the industry apart, and ruining the form and significance of many of the sport’s most important events.

Charlie Hayward: I would rationalize and strengthen drug testing and penalties for the Thoroughbred racing industry; this would include uniform testing protocols and consistent rules for all states, a significant increase of funding for research and development and a separation of penalties for mar- ginal overages of therapeutic medications and much more severe penalties for trainers and owners for positives for performance enhancing substances.

Bill Nader: I would wipe the slate clean, wish for a complete industry do-over, and chair a 12-member panel with absolute authority to create an all-new American Racing blueprint.

Nick Nicholson: I would mandate that racing do everything in its power to ensure that no rider or horse would ever be injured.

Jeff Platt: I’d reduce takeout to about nine percent—every track, every pool, every day, all the time—and then market racing as the greatest gambling game on the planet: creating an explosion in interest from new players and an upward explosion in handle to go with it.

Dennis Robinson: I would create a one-hour, race-of-the-week program on national television highlighting the stars of our game from around the country.

Alex Waldrop: I would institute unprecedented industry cooperation and collaboration and focus our combined efforts on creating innovative ways to improve our business where all participants are concerned including not only horsemen and tracks but also horses, jockeys and fans.

Barry Weisbord: I would reform the pari-mutuel product—lower takeout to make betting on horse racing more competitive, while also intro- photo: sarah k. andrew ducing new, simplified, low-takeout bets. 

37 | TDN Magazine, Summer 2009