BOOK REVIEW OF “THE GREATEST GAMBLING STORY EVER TOLD”

The title of Mark Paul’s book The Greatest Gambling Story Ever Told is hyperbole but Mr. Paul’s book is nonetheless a captivating true narrative of two highly risky gambles.  The first gamble was betting in the 1988 Kentucky Derby futures pool that the filly Winning Colors would run in and win the race and the second gamble was that the bet could be collected on even if she did.

In the winter of 1988, D. Wayne Lukas was prepping the massive 3-year-old Winning Colors for the Kentucky Derby or Kentucky Oaks on behalf of her owner Eugene Klein, who also owned the San Diego Chargers of the National Football League.  Mark Paul and two acquaintances of his from California are convinced that Winning Colors has a solid chance to win the Derby.  They want to bet on her in a futures pool, taking on the risk that Lukas and Klein will opt instead to run her in the Kentucky Oaks for 3-year-old fillies, in which case their futures wagers will be worthless. 

Paul and his friends decide to bypass the Las Vegas casino futures pool and instead bet at the allegedly drug-gang-owned Agua Caliente Racetrack in Tijuana, Mexico, where they can get much higher odds.  This decision is treacherous because they may not be able to collect if Winning Colors wins the Derby…or if they do collect, they could be robbed and possibly killed in Mexico.  Another obstacle is how to get winnings of over $200,000 back into the United States without notice from U. S. border guards. 

Mark Paul, a commercial real estate broker nicknamed “Miami,” and his two accomplices are Damon Runyon-like characters, similar to so many racetrackers.  Paul has raced motorcycles, sailed a motorcycle through the Panama Canal, and was incarcerated in a Mexican jail for six days at age fifteen.  His buddies Dino and a rotund Big Bernie are expert horse-racing handicappers, who spend much of their days-off from work at Santa Anita and other West Coast tracks.

While the vagaries of betting on Winning Colors to win the Kentucky Derby—and collecting at a racetrack run by a suspected drug cartel—is the theme of the book, Paul also delves into the personal lives of himself and Dino and Big Bernie, notably Paul’s sometimes rocky relations with his girlfriend.  This provides a human subplot to a story ostensibly about gambling.

The 147 pages of Paul’s paperback fly by if you enjoy tales of risk-taking adventurers and horse racing.

Copyright © 2020 Horse Racing Business

WHY A 2020 KENTUCKY DERBY WITH SPECTATORS IS ILL-ADVISED

Greg Cote of the Miami Herald just published an article titled “Is MLB Walking into a Mess it will Regret,” which discussed whether the 2020 season should be played at all. He asked a troubling question: “Should it be happening…in the midst of a pandemic that has taken more than 120,000 lives and is showing a worrisome uptick in cases?”

The very same question looms large about the 2020 Kentucky Derby, at least a Derby with fans in attendance trackside.

Consider pertinent facts pertaining to Churchill Downs, Inc.’s decision to hold a scaled-down 2020 Kentucky Derby complete with spectators.

First, the coronavirus is spiking in 29 states as people venture out and try to resume some semblance of their lives before the coronavirus.  On Meet the Press this past Sunday, Health and Human Service Secretary Alex Azar warned the country that increased outbreaks in southern and southwestern states are likely to spiral out of control without immediate intervention.

He cautioned: “The window is closing.  We have to act, and people as individuals have to act responsibly. We need to social-distance. We need to wear our face-coverings if we’re in settings where we can’t social-distance, particularly in these hot zones.”

A 2020 Kentucky Derby with spectators is not acting responsibly because crowds spread Covid-19.

Second, all public events with ties to the Kentucky Derby, such as the parade and Derby-eve charitable fundraising events, have been cancelled over Covid-19 concerns.

Third, the World Championship Horse Show at the Kentucky State Fair, held the week prior to the Derby, will not be able to have spectators by edict of Kentucky governor Andy Beshear.  (The fairgrounds is located less than four miles from Churchill Downs.) Why a horse show that draws perhaps 5,000 fans on its closing night in a 19,000-seat arena is deemed unsafe for spectators but the Derby with a much larger crowd is not is inexplicable. 

Fourth, the most optimistic projection for a Covid-19 vaccine is early 2021.

Fifth, while the Kentucky Derby 2020 is about two months away, the pandemic is likely to be worse in September than it is now. The World Health Organization said on June 29 that “the worst is yet to come.”

Given the forgoing facts, as of July 2020, there is no sound reason to believe the Derby can be held safely with spectators.  Even with reduced attendance, the Derby will be a contagion enabler, particularly in light of the party-like atmosphere and booze that encourage social proximity rather than social distancing.  

Moreover, from a business standpoint, Churchill Downs is inviting lawsuits from attendees and employees who later claim they contracted Covid-19 as a result of track management’s negligence. (On Monday, the union representing Las Vegas hospitality workers filed a lawsuit against casino operators for allegedly failing to protect employees from Covid-19.)

The board of directors and upper management of Churchill Downs have shown themselves to be skilled executives who have richly rewarded long-term shareholders. With the obvious health and financial risks of a Derby with spectators, they surely may soon reconsider and prudently decide to run a spectator-free Derby after all…following the lead of states that have reversed course and once again closed restaurants and other facilities as cases of Covid-19 have increased dramatically.

In the words of Dr. Anne Schuchat of the Center for Disease Control about the pandemic: “This is really the beginning. I think there was a lot of wishful thinking around the country that, hey its summer, everything is going to be fine…We are not over this and we are not even beginning to be over this.”

Copyright © 2020 Horse Racing Business

A NEW VEHICLE FOR INVESTING IN PREMIER ONLINE BETTING AND SPORTS WAGERING COMPANIES

Legalization of sports betting by state legislatures is spreading across the United States, with casino/racetrack companies Churchill Downs, Inc. and Penn National Gaming already in on the action.  Individual investors are able to play this trend, as well as capitalize on wagering at established foreign sports books, by buying a brand-new exchange traded fund, or ETF, with the symbol BETZ.  The BETZ ETF endeavors to track the Roundhill Sports Betting & iGaming index and it is the first ETF with the theme of international online betting and sports wagering.

(An ETF owns a portfolio of stocks or bonds and trades on a stock exchange throughout the day just like an individual corporate stock.)

BETZ began trading on June 3, 2020, and was an immediate hit, especially with traders on the Robinhood app so popular with younger people.  By the close of its second day of trading, 8,600 Robinhood users had purchased BETZ, which was a 273% increase from the first day of trading. By June 12, BETZ had $70 million invested in it.

Following are the top ten BETZ holdings, and these account for about 55% of total holdings:

WeightNameTickerThematic RelevanceCountry
8.72%GAN LTDGANTechnologyBritain
6.95%DRAFTKINGS INCDKNGSportsbookUnited States
6.31%FLUTTER ENTERTAINMENT PLCFLTR LNSportsbookIreland
6.19%KINDRED GROUP PLCKINDSDB SSSportsbookMalta
6.15%GVC HOLDINGS PLCGVC LNSportsbookIsle Of Man
4.41%PENN NATIONAL GAMING INCPENNCasinosUnited States
4.33%SCIENTIFIC GAMES CORPSGMSTechnologyUnited States
4.16%TABCORP HOLDINGS LTDTAH AUiGamingAustralia
4.13%OPAP SAOPAP GAiGamingGreece
4.04%CHURCHILL DOWNS INCCHDNSportsbookUnited States

This article is informational and is not a recommendation to buy BETZ. As with investing in any equity, BETZ is potentially risky owing to price fluctuations. Moreover, its newness means it has very little track record. The ETF’s expense ratio of 0.75% is also a consideration. Therefore, individuals should exercise due diligence before buying. 

(Full disclosure:  I do not currently have a position in BETZ and was not compensated in any way to write this article.)

Copyright © 2020 Horse Racing Business