Archives for May 2014

Nate Silver is a widely respected statistician and writer because his forecasts in politics and sports have been extremely accurate.  He makes predictions that are based on data analyses and probabilities absent emotion or personal bias.  He is the editor-in-chief of the FiveThirtyEight blog and an ABC Special Correspondent.

Benjamin Morris, a researcher and writer for FiveThirtyEight, wrote an article titled “The Triple Crown is Even Slumpier than You Think.”

According to Morris:

“The last 12 horses to win the Derby and the Preakness have failed to complete the Triple Crown [I’ll Have Another in 2012 was scratched]. With a historical success rate of 33 percent, the current 12-race slump is unlikely:  The odds of it happening by chance are about 1 in 130 – nearly the same as the 2011 Atlanta Braves failing to make Major League Baseball’s playoffs with 18 games remaining and an 8.5-game lead for the wild card.”

Since Affirmed won the Triple Crown in 1978, 11 colts have won the Kentucky Derby and the Preakness only to falter in the Belmont.  Morris calculates that “The odds of all 11 horses that raced in the Belmont losing at their race odds (by chance) are only 1 in 20,000–about the odds of a random pitcher throwing a perfect game on a given night (and that’s not counting I’ll Have Another, who in 2012 was 4:5 to win…).”

The Wall Street Journal published an article (May 31, 2014) titled “The Odds on Chrome’s Run for the Triple Crown.”  The Journal compared California Chrome’s odds of winning the Triple Crown prior to the Kentucky Derby (9-1) with the odds on the seven reigning champions in the NBA, NFL, MLB, NHL, and college football and college basketball.  The analysis revealed that “Only Connecticut, at 66-1 before the NCAA men’s basketball tournament, faced longer odds heading into the postseason, or in Chrome’s case, the Derby.”

Further, the Journal said that Las Vegas in September 2013 had California Chrome at 300-1 to win the Kentucky Derby–and his odds to win the Triple Crown would have been 3000-1.  This compares to preseason odds on Connecticut of 33-1 and the Boston Red Sox at 30-1, which were the longest shots in the six aforementioned sports championships.

The odds of American horse racing going 36 years without a Triple Crown winner, given that 12 colts had the opportunity to do so, speak for themselves.  Moreover, the preseason odds of California Chrome breaking the streak made him a longshot in a charitable sense of the word.  That longshot now has a terrific chance to break the fluke of a drought next Saturday at Belmont Park.

Copyright © 2014 Horse Racing Business

Steep declines in pari-mutuel wagering on horse racing are analogous to the struggles of iconic Coca-Cola brands.  Beverage Digest reports that sales of the flagship Coca-Cola drink (as measured in billions of cases) fell by 9.4% between 2007 and 2013.  Diet Coke did much worse, plummeting by 19.2%.

Coca-Cola leaders and industry analysts tend to differ on how Coca-Cola should respond to the unfamiliar world it faces, a world characterized by marked changes in consumer tastes and stagnant global sales of soft drinks.  Top executives at Coca-Cola view the situation as one that can be turned around by significantly increasing expenditures for advertising and sports sponsorships.  But many analysts outside Coca-Cola believe that sales of carbonated soft drinks are in a largely irreversible downward trend due to cultural changes having to do, for example, with concerns about health.   In the latter view, Coca-Coca’s ideal strategy, given the circumstances, is diversification into new kinds of beverages.

The same sort of difference of opinion about appropriate strategy is seen in the horse racing industry.  As pari-mutuel wagering has deteriorated, the racetrack companies have diversified away from horse racing into alternative forms of gambling.  Horse racing has been maintained in the product line, but not aggressively cultivated.

Horse racing does not have access to the billions of dollars that Coca-Cola is committing to its effort to reverse its sagging soft-drink fortunes.  But racing does have an intrinsic strategic advantage that purveyors of bubbly sugar water do not possess.  Wagering on horse racing is an intangible and can be delivered digitally almost anywhere via the information and communications technologies so ingrained in hurried present-day lifestyles.   Continually embracing new ways of combining the centuries-old sport of horse racing with the latest in technologies is the best bet for keeping the sport relevant in an age in which even venerable Coca-Cola drinks are faltering.

Copyright ©2014 Blood-Horse Publications.  Used with permission.

MTR Gaming Group (MNTG) owns and operates three casino/racetrack enterprises.  Thoroughbred racing, slots, and table games are offered at Mountaineer Casino, Racetrack & Resort in Chester, WV and Presque Isle Downs & Casino in Erie, PA.  Scioto Downs in Columbus, OH is a slots and harness racing combination.  Mountaineer is the only MNTG facility with a hotel.

For the twelve months ending on December 31, 2013, MNTG reported net revenues of $497.8 million, up by 2.2% over 2012.  Operating income in 2013 declined by three percent to $63.9 million and the company incurred a net loss of $9.1 million, following a net loss of $5.7 million in 2012.  MNTG has been buffeted by new competition from casinos in Ohio and Pennsylvania; and abnormally inclement weather during the fourth quarter of 2013 impacted performance.  Even so, MNTG”s common stock price increased in 2013 by 28.8%.

MNTG revenues in 2013 were comprised of $454.6 from gaming, $11.2 million from pari-mutuel commissions, and $40.6 million from food, beverage, and lodging.  Promotional allowances reduced total revenues by $21.3 million.

Mountaineer Casino, Racetrack & Resort in 2013 accounted for 39.6 percent of MNTG’s aggregate net revenues; Presque Isle Downs & Casino contributed 31.2%; and Scioto Downs provided 29.3%.  Scioto is the MNTG property that is nearest to a competing facility, Hollywood Casino (owned by Penn National Gaming) in Columbus, OH, that opened in October 2012 and is less than 12 miles away.  Yet Scioto was the most profitable MNTG operation, with earnings (EBITDA) of $49.4 million compared to $35.8 million for Mountaineer and $23.3 million for Presque Isle.

In the summer of 2014, MNTG plans to complete its merger agreement with Eldorado HoldCo LLC, an owner and operator of gaming properties in Nevada and Louisiana.  MNTG and Eldorado will become wholly-owned subsidiaries of a newly named entity called Eldorado Resorts, Inc.

Of interest is the fact prominent California Thoroughbred owner Mike Pegram is a partner with Eldorado officials on two Nevada casinos.

A version of this article appeared in the Blood-Horse.  Copyright © 2014 Blood-Horse Publications.  Used with permission.