Archives for April 2011

THE PARI-MUTUEL FUTURE IS VIRTUAL

The demise of the NYC off-track betting operations was not surprising. It is just another example of how brick-and-mortar businesses are being confronted and sometimes rendered obsolete by online competitors.

The latest illustration is bookstores. Barnes & Noble is the largest bookstore in the world. During the 9-week 2010 year-end holiday season, the chain had a 9.7 percent comparable-store sales increase over 2009, its best performance in a decade. However, this is not a reason for optimism, quite the contrary, once the cause is examined. The sales spurt was due to the Nook, an electronic reader that is the number 1 bestseller in Barnes & Noble history. In effect, Barnes & Noble sold the rope that may eventually end up hanging it as e-books grow in popularity.

Similarly, the online approach of Amazon has disrupted the business of conventional bookstores. Borders has closed many of its stores and filed for bankruptcy.

The lesson is unmistakable: Racetracks must continue to aggressively develop their virtual businesses in the form of advance deposit wagering. ADW is the best means available for expanding the overall size of the pari-mutuel pie. The critical error that the bookstore chains made early on was in not vigorously answering the Amazon threat with their own online retail component. Instead, they were hesitant and upstart Amazon capitalized on it.

Concurrent with the escalating success of virtual retailers is the displacement of personal computers and laptops by smart phones and tablets. These latter devices can connect to remote servers that are the repository for email, picture and file storage, and application software. Such “cloud computing” provides smart phones and tablets with remarkable capabilities. ADW is made to order for this technological advancement in mobile computing.

Some aficionados of traditional racing lament that the gambling emphasis of ADW diminishes the sport. This kind of concern is nothing new. In the late 19th century, the aristocrats in New York who ran horse racing also thought that racing’s increased reliance on gambling to fund purses was an unseemly step in the wrong direction. A founding member of the fledgling Jockey Club even wanted to see legalized gambling on horse racing banned so that the sport could return to being a gentlemanly pastime for patrician owners. This sport-versus-gambling dichotomy was false then and it is false today.

By all means, racetracks can and should endeavor to cultivate fans by getting more people to attend live races. Moreover, the Triple Crown events and the Breeders’ Cup showcase horse racing on television as well as to large on-track audiences. However, for the comparatively fast-paced 21st century lifestyle, ADW is the best avenue for attracting new bettors, expanding handle, and augmenting purses. ADW caters to people’s busy schedules, leverages the latest communications and information technologies, compensates for the fact that passionate racing fans often do not live anywhere near a racetrack, and is consistent with the needs and requirements of large-scale bettors.

Copyright © 2011 Horse Racing Business

Originally published in the Blood-Horse. Used with permission.

THE OLD DOMINION: WHERE AMERICAN THOROUGHBRED HORSE BREEDING BEGAN

The American Civil War began 150 years ago on April 12, 1861, and the observances of the sesquicentennial have begun. The Commonwealth of Virginia was in the vortex of this confrontation that literally tore the United States apart for four years. Virginia Civil War soldiers were renowned for their horsemanship, following the likes of the legendary JEB Stuart and John Mosby into battles that are still discussed and debated today. Over a hundred and thirty years prior to the Civil War, Virginia laid claim to being the cradle of the Thoroughbred racehorse breed in the United States.

In 1730, long before the present-day Thoroughbred horse capital Kentucky separated from Virginia in 1792 to become the fifteenth state, the first Thoroughbred stallion in America, Bulle Rock, was imported to Virginia. Bulle Rock, a 21-year-old by the foundation sire Darley Arabian, had been a consequential racehorse in England. Although Bulle Rock had not been a sought-after stallion in England, he was popular in his new Virginia home.

In 1798, John Hoomes of Bowling Green, Virginia, purchased the sensational English racehorse Diomed, who won the inaugural Epsom Derby in 1780. Diomed’s English owner, Sir Charles Bunbury, sold him for 50 guineas (a guinea equaled a pound plus a shilling) because the horse had been a failure as a breeding stallion and not very virile to boot. A breeding expert in England wrote to a fellow breeder in Virginia: “…avoid putting any mares to him, for he had fine mares to him here, and never produced anything good.” However, Diomed flourished in Virginia and sired numerous top-flight racehorses, including the great Sir Archy, who was the great grandsire of the famous Civil-War era Kentucky racehorse and stallion Lexington. Diomed was still fertile at age 29 and lived to be 31.

Native Virginians and future presidents George Washington, Thomas Jefferson, and James Monroe were avid fans of horse racing, as was Old-Dominion born future chief justice John Marshall. Washington was an expert horseman and at times could be seen roaming the Virginia countryside engaged in fox hunting.

Virginia was deeply embroiled in the Civil War, beginning with the first major land battle that took place in July of 1861 at Bull Run and ending with the Confederate surrender at Appomattox in April 1865. The Army of Northern Virginia, under General Robert E. Lee, fought some of the most famous battles of the War on the hallowed ground of places like Fredericksburg, Chancellorsville, and Gettysburg.

A Confederate Captain Richard Hancock served under General Thomas “Stonewall” Jackson. After the war, Hancock married Thomasia Harris, whose family owned a farm near Charlottesville, Virginia, called Ellerslie. The former Confederate officer eventually began to breed and raise Thoroughbred racehorses at Ellerslie. One of his and Thomasia’s four sons, Arthur B., founded Claiborne Farm in 1910 in Paris, Kentucky.

The Middleburg-Upperville area of Northern Virginia is and has been home to some of the most prominent racehorse breeding establishments, among others, Isabel Dodge Sloane’s Brookmeade Stable, Elizabeth Whitney Tippett’s Llangollen Estate, Jack Kent Cooke’s Kent Farms, Paul Mellon’s Rokeby, Bertram and Diana Firestone’s Newstead Farm, Joseph Allbritton’s Lazy Lane Farm, and Edward Evans’ Spring Hill Farm. These owners are associated with such racehorses as Sword Dancer, Mill Reef, Arts and Letters, Sea Hero, and Hansel.

The recently deceased business tycoon John Kluge of Charlottesville was also a racehorse owner of note.

Secretariat, the most famous racehorse of modern times, was a Virginia-bred. He was foaled at Christopher Chenery’s Meadow Stud in Caroline County, not far from Richmond. Bowling Green, where John Hoomes brought Bulle Rock, is located in Caroline County, making the area the location for two major events in the history of the Thoroughbred breed in America.

Virginia’s only racetrack, Colonial Downs, is in New Kent, about 30 miles from Richmond. Its signature event is the Virginia Derby on the turf.

While Virginia is no longer one of the leading states for breeding and racing Thoroughbred racehorses, it is where the sport emanated in Colonial times before there was a United States. The Old Dominion was instrumental in both the U. S. Civil War and American Thoroughbred breeding.

Copyright © 2011 Horse Racing Business

BARRY BONDS, MANNY RAMIREZ, AND HORSE-TRAINING “CHEMISTS”

Major League Baseball (MLB) and U. S. horse racing both have a drug and image problem. This week, the all-time home-run king Barry Bonds was convicted of obstruction of justice in a federal probe of steroid use and last week the exceptional pure-hitter Manny Ramirez abruptly retired rather than accept a 100-game suspension for purportedly testing positive for a performance-enhancing drug for a second time. Meanwhile, back in Kentucky, Richard Dutrow Jr. had his license application denied by the Kentucky Horse Racing Commission for numerous medication violations and New York may also revoke his license. Just three years ago, Mr. Dutrow trained the winner of the Kentucky Derby and the Preakness.

At racetracks across the United States, phenybutazone and furosemide are routinely legally administered to the vast majority of the entries in every race, including the Triple Crown, the Breeders’ Cup, and other graded stakes. Never mind the administration of illegal drugs that don’t get detected or do get detected and the offending trainer is then usually punished with the equivalent of a slap on the wrist. Or, he or she may simply move on to another state jurisdiction with impunity.

Despite MLB’s widely publicized issues with drug abuse, the sport overall is still doing well at the ticket counter and in selling the product to the television networks. It seems that there may be truth, in this case, to the adage that “crime pays.” Fans don’t seem to be punishing MLB for the transgressions of many of its icons. One reason may be that MLB has instituted a very well-spelled-out policy with respect to substance abuse and enforces it. Players get a 50-game suspension for the initial violation, a 100-game suspension for the second, and a lifetime ban for the third. No one has yet received the lifetime ban.

If U. S. racing had a comparable policy, a number of trainers would have had to find other occupations countless violations ago.

The situation in horse racing pertaining to substance abuse is more damaging than it is in MLB. The majority of fans who attend MLB and/or watch on television are not betting on the games, whereas in horse racing that is not the case, at least for people actually at a racetrack or simulcasting facility. Pari-mutuel wagering has plummeted in recent years. One cause may be that bettors have left for plays they see as being more honest.

Moreover, imagine how members of the public react when they read and hear that, for instance, cobra venom was found at the Keeneland barn of the internationally known racehorse trainer Patrick Biancone. The man or woman on the street sees or learns of a breakdown during the Kentucky Derby or the Preakness and, rightly or wrongly, concludes, “Not surprising, these innocent animals are drugged.”

Offering lame excuses for why something substantive cannot be done about outlaw trainers and permissive drug policies will no longer work to sweep these problems under the rug. The action by the Kentucky Horse Racing Commission in denying Richard Dutrow Jr. a license is the right measure. Bravo.

U. S. racing has to get the drugs and thugs out of this wonderful and elegant sport and do it pronto. The alternative is the continued alienation of the betting public and the general public. That is a sure recipe for disaster. The precipice for racing may not be around the corner but it could be down the street.

Don’t wait on the Racing Commissioners International to finalize its commendable comprehensive raceday medication policy. Move now with tough measures that require a stiffer spine than the industry has shown in the past.

For starters, beginning in 2012, the racing authorities in Kentucky, Maryland, and New York should agree to prohibit raceday medication of any kind for the Triple Crown races. The Breeders’ Cup should put the same proviso regarding its races into its agreement with a host track, not in five years but in 2012. The Thoroughbred Owners and Breeders Association’s American Graded Stakes Committee should stipulate that, as of 2012, graded-stakes status will be withheld from any race in which raceday medication is permitted.

Further, the big racing states can take the lead in imposing long suspensions of trainers for an agreed-upon number of drug violations as well as an irrevocable lifetime ban for habitual flagrant behavior. MLB has accommodated concerns about due process and so can racing.

All of this is good for business, and is therefore enlightened self interest. The pari-mutuel product will be more appealing and racing’s image will be enhanced. A byproduct of no raceday medication should be popular breeding stallions and broodmares with fewer soundness problems to pass on to their progeny.

Racetracks, state racing commissions, Breeders’ Cup, and American Graded Stakes Committee: Do the right thing and do it before it is too late to salvage a centuries-old cultural icon. You need to hang together or else everyone will hang separately. Don’t let racing die a death by a thousand cuts.

Copyright © 2011 Horse Racing Business