Hypocrisy? You Betcha!

Just a quick thought that popped into my mind as I was reviewing the fallout of Kentucky’s “No!“ to slots:

A common theme you’ll find is criticism of the committee’s Republicans’ hypocrisy, especially Senate President David “Blackjack” Williams, who happily plays the casinos in neighboring states, but doesn’t want to allow them in Kentucky.

I agree it invites ridicule, but since we’re already on the topic of hypocrisy, why not take a quick look in the mirror:

Those racing fans and professionals who support slots want them for no reason other than to fund our sport, yet it would be perfectly within the states rights to legalize slots, VLTs, even full-blown casinos, independently of racing.

Wonder if those Kentucky horsemen and the racing media would be as unanimous in their support for slots then. Or would they suddenly find themselves on the side of the Family Foundation, trumping up the values of the racing-and-lottery-only era and condemning the evils of the highly-addictive slots game?

Hypocrisy indeed.

The Sorcerer's Apprentices

Over the course of this week, the DRF’s Jay Hovdey wrote a great article about Zenyatta; the BC revamped its Win-And-You're In list (again), and Rachel Alexandra is preparing for a paid breezer in the *tongue-in-cheek* Grade 1 middle jewel of the Triple Tiara *giggle*. Meanwhile, the never-ending slots story went into the next couple of rounds in Kentucky, where racing’s corporate welfare mommies were successful in begging the State House for money, but were ultimately turned down by a non-representative Senate committee. A questionable process in a “Commonwealth”, I grant you, but I find it hard to join in the chorus of those crying about the injustice. Even if it was one, that it could happen was the Kentucky racing industry’s own fault.

Probably nothing characterizes the debate better than that in the Paulick Report article linked above, you have to go through 25 comments before #26 is the first one putting the finger on one of the underlying problems: that the Kentucky breeding industry has profited from a market bubble for the last few decades and will finally have to downsize to a level the sport can actually support.

Apart from this, the Kentucky slots drive was marred by several shortcomings. If you want to play up the heritage angle, you shouldn’t allow for the charge to be lead by a company like CDI, which has a long track record of giving an airborne turd about any kind of heritage they can’t directly translate into cash on the first Saturday in May. If your company just sacrificed a track like Hollywood Park (and by extension California racing) after that property turned out to be useless for your thinly-veiled aspirations to become a general gambling enterprise, you’re in no position to present yourself as the Temple Guardian of racing heritage.

However, CDI’s namesake property would have been the main beneficiary of any slots bill passed in Kentucky, a bill that was presented as being about Kentucky’s future as a breeding center, but ultimately was about helping Kentucky tracks and lower-level breeders. Unless huge limestone deposits are discovered in Central Pennsylvania or Indiana, the Bluegrass will remain the main region for top-level breeding in America, especially if Kentucky breeders return to breeding for the racetrack rather than the auction ring. The breeders who will indeed have a problem are those breeding livestock for Turfway and Ellis, tracks that can’t keep up with slot-subsidized purses and statebred bonuses at Mountaineer or PA. Without slots, Ellis is left for dead, while Turfway and Churchill face a major problem.

But, oops, we may have touched on a weak point in the Kentucky industry’s argument right there: It’s largely because Kentucky breeders and CDI have for decades supported the overexpansion of racing that those tracks ever could grow to be a threat to Kentucky racing. Kentucky wouldn’t have “competition” from places like Presque Isle Racino, Hoosier or Mountaineer today if the same industry tycoons that come begging for a bailout today hadn’t spent decades successfully fighting a much-needed regulatory body, which could have prevented such destructive trends as slots racing or overblown statebred bonuses from developing in the first place. Here’s a pointer for all those Kentucky industry members who so obviously missed ECON 101: free markets are dog-eat-dog markets, which is why every other sport of notice avoids them. You wanted it, you got it, don’t come crying when one of the puppies has outgrown you.

Without Slots, these are the most likely prospects for Kentucky tracks:

* Kentucky Downs holds a boutique meeting without any major races it has to bolster, it shouldn’t need a year-round casino to survive.

* Turfway Park is a winter track, and I’m not a friend of Thoroughbred winter racing in places where the most common name is neither Bubba nor José. It might fall by the wayside, but the sport isn't helped by two dozen Winter tracks in the Northern states anyway.

* Keeneland doesn’t need slots, and won’t need them in the future.

* As for Ellis Park, racing will have to downsize eventually. Unless you live in the vicinity of Florence, Ky., what’s the difference if Ellis, Beulah or Fairmount is the first one to go?

* Churchill Downs may have to cut off further race days. It might ultimately be forced to give up its status as a top-tier track and (except for a certain weekend in Spring) become a provincial track, which it actually was for most of its history. Having done little to improve racing's appeal while being one of the most influential powers in the industry, CDI exemplifies the problem of initiating the very problems that will come to haunt you later.

"From the spirits that I called, Sir, deliver me!" (Goethe)

Ultimately, the Kentucky story is representative of a racing industry that for decades has developed a sense of entitlement, a distinct conviction that no matter what problems they assemble (over-expansion, failure to attract customers, lack of direction and integrity etc.) it’s always someone else’s responsibility to bail them out (slots, states, customers etc.). Unlike with Goethe's sorcerer's apprentice however, I doubt that rescuing them now would serve as lesson for them to do better in the future.

Trojan Horse Racing

The last few days have seen a resurgence of the ongoing discussion of the merits and potential of slot-subsidized racing, stirred up first by Power Cap, then on the HANA blog and on the Pull the Pocket blog. All of these posts are strong in analysis, and the first two both try to push a concept for a more productive way of doing business.

Power Cap’s currently Utopian idea of a Mid-Atlantic circuit not relying on slot revenues and HANA’s proposition of a slot-revenue system more in tune with the interests of racing are both good in concept, but their chances of ever becoming reality are next to zero.

The reason is that both don’t address the heart of the matter, which is that slot racing has never been intended to help the sport, it has been intended to help current horsemen, state coffers and the casino industry. The difference is not a small one.

Proponents of Slot Racing come from three different camps. First there are the breeders, trainers and owners of thoroughbreds. Since the forces of the market demand that racing (at least in its current state) has to decline in size, their business is doomed, and the lower the quality of horses they handle, the more pressing this problem becomes (which explains why those states offering the worst product were the first to legalize slot racing).
It also poses a problem for state regulators, who are used to the income generated from the sport and whose attempts at getting more out of it than the industry can support is the main reason for the inflation in race dates and the horsemen ranks.
The final camp are gambling enterprises, which have no interest at all in racing, but to whom subsidizing it in exchange for opening up new markets is an investment well worth the cost.

Newsflash here, Casino operators aren’t the most socially-spirited of guys, they’re in the business of tricking you into spending your money on games you can't win, then throwing you out. Sure, if you’re completely broke they might sponsor your trip home, but they don’t do it because of their human qualities, they do it so the sight of your destroyed little remains in front of the glitzy main entrance doesn’t keep their next victims from entering.

Of course the casino industry isn’t interested in playing welfare system for the ailing horsemen population in the long term, but they figure they won’t have to. A couple of decades from now, I’m sure that historians will look back at slot-subsidized racing in disbelief. How could the racing industry not detect one of the most obvious Trojan Horse schemes in world history? The casino industry is promising a couple of frightened horsemen El Dorado, and the horsemen are happily inviting them in.

Once the casino industry has established itself in the state, once public interest in the racing product has further eroded (as it undoubtedly will in an environment in which racetracks are uninviting run-of-the-mill extensions of buzzy casinos), the time has come for them to cut off the costly leech attached to their casino empires. The state governments will be glad to help, by then they’ll have come to think of racing only as a nuisance cutting into their takeout rate too. The horsemen population, and to a large degree the sport so violated, will be spit out and left facing an environment much worse than what they started from.

"It's only a matter of time before they stop racing horses all together and just use them to cart around free booze to the gamblers."

(Greg Wyshynski, seriously under-estimating the introduction of slots to racing at rank #58 in “Glow Pucks & 10-Cent Beer – The 101 Worst Ideas in Sports History”)

Mullins in the Detention barn (sounds good, but isn’t)

Jeff Mullins, trainer of hot Derby prospect I Want Revenge, was caught inside the Aqueduct detention barn with a syringe on Saturday, the Thoroughbred Times reports. Mullins was forced by the stewards to scratch Gato Go Win from the Bay Shore Stakes after he tried to administer an above-the-counter drug to the horse. All other Mullins starters, including impressive Wood Memorial winner I Want Revenge, were allowed to proceed. The infraction, technically only a violation of detention barn rules, will also be subject to a stewards review during this week.

Tough, isn't it? Think about what the Hong Kong Jockey Club or JRA would do to a repeat offender caught with a syringe in a detention barn. Or, for that matter, to a trainer who blamed bettors for “crying about losing a $2 bet“ after being caught cheating. Any racing jurisdiction worth its salt would ban this trainer for at least a year from running any horses at their tracks, and formally warn off connections of all horses registered to his barn. In the US, the whole affair will barely reach slap-on-the-wrist proportions. In my opinion, it doesn't even matter if the substance was legal, what part of detention barn will Mullins pledge he is too stupid to understand?

How could any of this smell fishy to fans watching TV on Kentucky Derby Day: Here’s a trainer who within the last month was caught red-handed fiddling around with a syringe in a detention barn, trying to administer a performance-enhancing substance to his horse. This trainer saddles one of the Derby favorites, a horse owned by a shadowy “hedge-fund” operation run by a (former?) scam artist and white collar crook who once owned another horse which was the focus of a successful FBI investigation into organized crime at the races. How many fans of the sport will want revenge? How many casual viewers will just shake their heads in disbelief and sign the next PETA campaign against racing? How many true fans could really blame them?

Looks like contributor o_crunk was right commenting on the Railbird blog: IWR for Real Change!

Not On Its Way to the Grave

This morning, a short note on the Handride blog got me thinking. It was a link to a Top 10 list ranking horse racing as #5 of things that will follow daily newspapers on their way to the grave. It also was one more in a long line of predictions of racing’s impending doom, a notion that even many of the sport's fans seem to have accepted as truth. But the newspaper analogy is, in my opinion, a perfect example for the difference between a doomed industry and a mismanaged but potentially viable one.

Despite the grim superficial picture racing may leave (and the frequently dire touch of my own posts), I don't believe for a minute that American horse racing is on it's way to the grave.

The illness of the newspaper industry is, sadly, incurable. The costs of producing a daily local newspaper are higher than the income generated by those willing to buy the whole product for the few features that are better than the alternate, free, online feed. Simply put, few people are willing to pay a few hundred bucks a year to have a paper on their door every morning when almost all of the content is available for free on the net. Newspapers have few opportunities to save on costs without alienating their customers.

The problems of American thoroughbred racing on the other hand are caused by mismanagement and oversupply. A lot could be done to attract new fans to the sport, but even under the current circumstances racing is hardly doomed. Unlike local newspapers, American racing is, for all practical purposes, free to decline in volume without equal negative effects on its quality, up to a certain point quality will in fact increase.

As a thought experiment, racing could easily exist with only one track running per day, which is precisely the system that works fine for Chilean and Argentinian racing. In those countries the takeout rate is even higher, meaning that racing’s health is even more dependent on its attraction as a sport/event, and the lure of handicapping as a strategy game. If nations with 17 and 40 million inhabitants can maintain a viable racing industry, there shouldn't be any problem in the U.S.