FAKE NEWS

Following is a partial list of noteworthy developments in American horse racing over the past couple of years:

The U. S. Department of Treasury and the Internal Revenue Service finally modernized regulations pertaining to tax withholding on winning wagers.  This has resulted in an estimated $75 million annual increase in pari-mutuel wagering on U. S. horse racing.

Racetracks offering the vast majority of Grade I and Grade II races are closely collaborating  in scheduling of major stakes races, and this has provided a $150 million boost to pari-mutuel wagering, as predicted by a McKinsey & Company study done for The Jockey Club.

Keeneland opted for maximum takeout rates on its customers’ wagers but had a change of mind and reversed the decision.

Almost all of the states with racinos no longer earmark a portion of gaming revenues to horse-racing purses.

The Equine Injury Database reveals that fatal injuries have continued to dramatically decline–to .50 fatalities per thousand starts–as improvements have been made in racetrack surfaces and research has identified what horse profiles are most at risk, which has allowed state veterinarians to more accurately screen out horses that should not be racing.  Another reason for the decrease in fatalities is that more racetracks have installed safer synthetic surfaces.

The federal Thoroughbred Horseracing Integrity Act of 2015 became law. Consequently, a government-sanctioned but private non-profit organization is setting and enforcing uniform medication rules for Thoroughbred horse racing, including out-of-competition testing.  The organization designated furosemide or Lasix as a performance-enhancing drug.

Penn National Race Course has become a model for integrity.

The horse-racing industry reluctantly came to grips with the reality that its aftercare initiatives, while greatly commendable, were not saving nearly enough former racehorses.  The outcome was a dependable and much increased flow of dollars to aftercare facilities funded by racetracks, auction houses, owners, trainers, breeders, and others whose businesses depend on racehorse commerce.

A major racing operation headquartered in Europe is plotting to achieve, arguably, the most difficult feat in horse racing: to win the Kentucky Derby on dirt in early May and the Epsom (English) Derby on turf in early June…with the same colt.  Only two owners have ever attempted to do so, with Bold Arrangement in 1986 (2nd in the Kentucky Derby and 14th in the Epsom Derby) and Dr. Devious in 1992 (7th in the Kentucky Derby and 1st in the Epsom Derby).

A very lucky low-roller by the name of Bill Shanklin was the sole winner of the biggest Pick-6 payout in Breeders’ Cup history.  Since then, only a few people and the IRS know of his whereabouts.

Copyright © 2017 Horse Racing Business

CAVEAT EMPTOR AT AUCTIONS

The Keeneland September Yearling Sale is about to begin and that brings to mind a television program I watched recently on CNBC’s series “American Greed” about shill bidding.  Ebay defines the practice as follows:

“Shill bidding happens when anyone—including family, friends, roommates, employees, or online connections—bids on an item with the intent to artificially increase its price or desirability… Shill bidding is…illegal in many places and can carry severe penalties.”

(“Ghost bidding” is a term sometimes used to describe both shill bidding and “ceiling bidding.”  In shill bidding, an actual person colludes with the auctioneer to drive up the price, whereas in ceiling bidding, the auctioneer pretends that a real bid has been made.)

The American Greed episode pertained to Bill Mastro, who operated an Illinois auction house that sold baseball cards and other sports memorabilia.  CNBC explained how Mastro defrauded his clientele out of at least $1 million by rigging auctions, which got him a 20-month prison term:

“In 2013, [Mastro] admitted using a system of so-called shill bidders whose sole purpose was to drive up prices and bring him higher commissions.  He also tried to pass off a baseball that he falsely claimed was from America’s first professional baseball team, the Cincinnati Red Stockings.  And in a collector’s sacrilege, he trimmed the edges of a rare Honus Wagner baseball card in order to make it look more attractive to bidders.  Had they known the card was altered, it would have drastically reduced its value.  But Mastro failed to disclose it.”

CNBC concluded: “…the industry he helped create remains loaded with pitfalls.

A cursory Internet search revealed that shill bidding is a problem in auctions tendering all kinds of goods and services.

While Keeneland, Fasig-Tipton, and the other well-known horse auctions have endeavored to increase transparency, unscrupulous sellers can sometimes game the system.  Caveat emptor is truly sound advice when it comes to selecting honest bloodstock agents who know what they are doing at auction and to buying racehorses at their fair auction value.

Copyright © 2017 Horse Racing Business

DYING SPORTS?

Every year like clockwork, a few reporters and media commentators write or talk about how horse racing and/or professional boxing are “dying” sports, economically deteriorating remnants of the past.

Yet these two “moribund” activities had quite a day on August 26.  Dying is not a word anyone with a rational regard for facts would use to describe what transpired.

The Floyd Mayweather-Colin McGregor fight, pitting an undefeated world champion boxer against a world champion mixed martial arts champion who had never fought in a professional boxing bout, was a 38-minute monetary blockbuster.

The fight was front-page news, not only in the United States and Ireland (McGregor’s home) but in faraway places like Australia.  I heard people talking about the match-up who surprised me, folks you definitely would not expect to be at all interested.  The first question my wife asked me Sunday morning was “Who won the fight?”

The demand to watch the showdown was so strong that live-streaming Internet sites could not cope and therefore some customers had poor reception or buffering, so much so that refunds are forthcoming and a class action suit is (predictably) already in the works.

According to USA Today, the guarantee to Mayweather was $100 million and to McGregor $30 million “before any of the Pay Per View or Sponsorship money is divided up.”  Turns out that Mayweather’s purse is approximately $300 million and McGregor’s is $100 million.  USA Today said: “That means Mayweather will make more in one night than any NFL, NBA, or MLB player has made in their entire career (excluding sponsorships).  If that’s not crazy enough, that’ll also be close to three times more than Tiger Woods made in on-course earnings during his entire golf career, though, again, that doesn’t include Tiger’s off-course earnings, which put his total earnings over $1 billion.”

These astronomical dollar figures would have been even more impressive had the almost 3 million viewers who watched illegally paid up.  Pirated signals came from people holding smartphones in front of their television screens and sharing pictures on social-media sites like Facebook and YouTube.

Meanwhile, earlier in the day in upstate New York, 47,725 people were elbow-to-elbow at Saratoga Race Course (attendance was limited to 50,000) for Travers Day, and millions more watched on NBC, TVG, at simulcasting facilities, and online.  All-sources betting on the 13-Race Travers Day card was $47.9 million, the second-highest in the history of the Travers and a 5-percent increase over 2016.  (The most ever bet on the Travers card was in 2015, when Triple Crown champion American Pharoah ran second in the feature race.)

The next time a reporter or commentator has a creative block and decides to resort to the all-too-familiar subject of how boxing and/or horse racing are withering away, think about Mark Twain’s retort to the rumors of his demise:  “The reports of my death are greatly exaggerated.” Horse racing and boxing assuredly “ain’t what they used to be,” but their capacity to generate billions of dollars in revenues annually is not what you would expect from anachronisms allegedly one-step away from the grim reaper.

Lately, I have been seeing and hearing more and more about how football’s days are numbered because of head injuries and how baseball’s popularity is diving among younger generations for lack of action, so reporters and analysts now have some more impending death knells to expound upon.

Copyright © 2017 Horse Racing Business