Archives for September 2019

Results are in from the 2019 Del Mar meet and they are not good. Betting handle fell by 10.57% from 2018 in spite of a booming economy propelled by consumer spending. 

Mitigating factors certainly account for some of the decline. The year-over-year number of races decreased by 7%. In addition, the number of starters dropped by 16% in 2019 when compared to 2018, so the races were not as attractive to bettors. Fewer starters may have been due mostly to the rigid health and condition requirements Del Mar wisely put into place to clear horses to run, which led to zero racing fatalities from breakdowns during the meet.

The main reason for Del Mar’s subpar handle figures is almost certainly the 30 horse deaths at Santa Anita in 2019, which soured many people on California horse racing. The publicity from the carnage took a predictable and understandable toll on business.

On September 11, 2019, a New York Times article by Joe Drape revealed another scandal involving Santa Anita: Triple Crown winner Justify had tested positive for scopolamine after the 2018 Santa Anita Derby. Though the positive was likely the result of contaminated feed or straw bedding, the incident looks to have been covered up by the California Horse Racing Board, a regulatory body with some voting members having an obvious conflict of interest.

American horse racing’s image has suffered from the news emanating from California and storm clouds are on the horizon. California Governor Gavin Newsome warned this week:

“What happened…[at Santa Anita] was unacceptable, and all of the excuses be damned. We own that going into the next season, and we’re going to have to do something about it…I’ll tell you, talk about a sport whose time is up unless they reform. That’s horse racing. Incredible abuses to these precious animals and the willingness to just to spit these animals out and literally take their lives is a disgrace.”

One would think, given the precarious situation, that industry insiders would be especially careful not to do further damage. To the contrary, in recent instances involving the Breeders Cup and the HBPA, the opposite is true.

An objective observer would ask why American horse racing’s 2019 year- end championships, to be showcased internationally on television, will be held at the very racetrack, Santa Anita, that has proved to be so hazardous and has brought so much negative attention to the sport? (Would NASCAR or Indy Racing choose to race at a track that is unsafe for drivers?) Conspiracy theorists could provide an explanation, true or not, that would resonate with a lot of people.

On September 13, 2019, the Stronach Group, owner of several leading racetracks including Santa Anita, announced that Breeders’ Cup president and CEO Craig Fravel would resign from the Breeders’ Cup to accept the position of CEO, Racing Operations for the Stronach Group racetracks. While Mr. Fravel has a reputation for integrity and accomplishment, his hiring by the owner of troubled Santa Anita looks suspicious.

Why so? In June 2019, the Fravel-led Breeders Cup opted to keep the 2019 Breeders’ Cup at Santa Anita notwithstanding that 30 horse fatalities recently occurred there. Even though the Breeders’ Cup board voted to stay put at Santa Anita, Mr. Fravel presumably made a recommendation to do so. Moreover, a Stronach Group executive is an elected member of the Breeders’ Cup board of directors.

Following the Breeders’ Cup announcement that the 2019 event would remain at Santa Anita, Keeneland and Del Mar (Mr. Fravel’s onetime employer) promptly put out media releases that they endorsed the decision. These tracks happen to be the sites of the 2020 and 2021 Breeders’ Cup, which adds to the impression of a cabal at work.

On September 20, the National HBPA released a letter signed by 600 trainers and owners in support of race-day furosemide (Lasix). Even though Hall of Fame trainers named Baffert, Lukas, Mandella, McGaughey, and Mott did not sign the letter, the list still has well-known names. The HBPA’s timing could not have been any worse in extolling the benefits of a performance-enhancing drug in the midst of the Justify scopolamine controversy and the stern aside by California Governor Newsome: “…talk about a sport whose time is up unless they reform.”

The American racing industry, with exceptions, most notably the Jockey Club, has a tin ear and a “circle the wagons” mentality, and these failings are imperiling its future. Actions have consequences and optics count.

Copyright © 2019 Horse Racing Business

The recent New York Times story by Joe Drape pertaining to 2018 Triple Crown winner Justify testing positive for scopolamine in the Santa Anita Derby drew international attention to the incident…and a plethora of almost entirely negative commentary outside horse-racing circles. Most of the media accounts (starting with the New York Times article) were to varying degrees inaccurate and incomplete. A few were rush-to-judgment condemnations.*

Irrespective of sensationalized and often erroneous media accounts, reporters and commentators are just doing their jobs, albeit poorly in some cases, and are not to blame for the bad publicity horse racing is receiving. An objective analysis of the facts points elsewhere.

Facts:

Under California Horse Racing Board rules, there are four levels of drug violations, ranging from A to D, with level A designating the most serious drug offenses. Scopolamine is a level C violation, in the same category as aspirin and Tylenol. The penalty specified for a trainer with a first-offense C violation is a “Minimum fine of $500 to a maximum fine of $1,000 absent mitigating circumstances.”

A CHRB rule states in part: “In reaching a decision on a penalty for a violation of Business and Professions Code section 19581, the Board, the board of stewards, the hearing officer or the administrative law judge shall consider the penalties set forth in subsections…of this Rule and any aggravating and mitigating circumstances. Deviation from these penalties is appropriate where the facts of the particular case warrant such a deviation, for example: there may be mitigating circumstances for which a lesser or no penalty is appropriate, and aggravating factors for which a greater penalty is appropriate.” One of the mitigating factors listed is “The probability of environmental exposure…” (For instance, in 2016, the CHRB issued an alert over straw contaminated with Jimson weed at Del Mar.)

Justify was one of seven horses from five separate barns that tested positive for scopolamine. This strongly suggests contamination as the origin rather than a plot to cheat.

A number of leading equine veterinarians, with impeccable credentials, are on record as stating that scopolamine is not a performance enhancer. To the contrary, it can be poisonous.

The point system to determine which horses qualify for the Kentucky Derby is not a rule or regulation, but rather is simply a selection methodology that Churchill Downs can modify by fiat. Track management can change or abandon the point system and expand or contract the field size if it so desires because Churchill Downs owns the Kentucky Derby.

Analysis

The CHRB should have announced the Justify scopolamine positive immediately after the lab result came back and explained that since seven horses from five barns tested positive, feed contamination was the leading suspect. In other words, that there was a mitigating circumstance. And that a scopolamine positive is not automatically a disqualifying infraction.

Then Churchill Downs and the Kentucky Horse Racing Commission would have been able to articulate a rationale for permitting Justify to run in the Kentucky Derby, perhaps as the 21^st entry. Since the CHRB was still investigating at the time and had made no final decision, Churchill Downs and the Kentucky Horse Racing Commission would have been in no legal or ethical position to bar Justify’s owners from entering their colt in the Kentucky Derby before their due process with the CHRB was completed.

Because the CHRB did not publicize the Justify positive in a timely manner, the omission understandably gives the appearance of a cover up and favoritism toward trainer Bob Baffert. Lending credence is that members of the CHRB are prominent California horse-racing insiders who may not be impartial enforcers of rules and regulations, especially when it comes to their friends, acquaintances, and business associates.

The Justify positive for scopolamine would have elicited extensive media coverage no matter when it became public, but leaked information to the New York Times nearly a year and half after the 2018 Santa Anita Derby yields the inescapable look of a coverup at the CHRB. The CHRB’s bungling of the Justify case is indicative of what is likely to happen when regulators are cozy with the people being regulated.

And American horse racing is paying the price.

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* To illustrate, a sports writer, formerly with the Louisville Courier-Journal and presently with a national online publication, concluded that the Times’ revelation is the “beginning of the end of horse racing.” This deduction, apparently rendered with confidence and surety, is contrary to a vast wealth of contemporary evidence from Major League Baseball, cycling, track and field, the NFL, the NBA, and other sports, which remain popular in spite of repeatedly having far worse substance-abuse (and domestic-abuse) issues surface. Gymnastics still draws fan interest notwithstanding ongoing publicity from a despicable scandal, arguably the most egregious in sports history, that makes illicit medication of human and equine athletes look like a minor traffic violation.

Copyright © 2019 Horse Racing Business

Follow the money.  That adage does not always prove true in discerning outcomes but it is often a reliable guide of things to come.  For instance, betting sites are usually a more accurate predictor of who is going to win an election than expert forecasts and public opinion polls.  Bettors have “skin in the game” and therefore more closely research and weigh possible results. 

Follow the money is my preferred context for evaluating the possible effects on the American horse racing enterprise of yesterday’s expose by Joe Drape in the New York Times.  In capsule, Triple Crown winner Justify turned up positive for the performance-enhancing drug scopolamine after his win in the Santa Anita Derby.  Tests by two different laboratories came back positive.  Moreover, the California Horse Racing Board and Justify’s trainer Bob Baffert may have covered up the violation.  (The Racing Board attributed the presence of scopolamine to jimson weed, which could have been in straw used for stall bedding, and Mr. Baffert professes his innocence.)

The New York Times story understandably provoked plenty of comments from readers of newspapers and online reports.  PETA, as expected, was quick to condemn. The majority of the feedback was harsh and accusatory as to where the blame lies.  And in some cases, the comments were along the lines of “the world as we know it is coming to an end.”

Meanwhile, down in the Bluegrass of Kentucky, in Lexington, the September sale of yearlings is in full swing.  On the very same day that the New York Times story was published, a filly sold for the highest price ever, $8.2 million.  This followed a colt going for $4.2 million the day before.  In fact, the market is so buoyant that a $1 million sale is hardly worthy of mentioning.

If one follows the money, Mr. Drape’s report does not seem to phase deep-pocketed investors and speculators in Thoroughbred horses.  If the people buying horses at Keeneland are worried about the future of horse racing, their bidding behavior sure doesn’t show it.

So, there is a parallel universe of sorts and time will tell who is correct.  The view here is that while negative publicity is detrimental, the public has become inured by almost daily scandalous news.  In this era of social media, cable TV, talk radio and scandals de jour, a failed drug test of a racehorse will be of little or no interest or concern to the vast majority of people…or to bettors. Then too, polls show that public trust in mainstream media is at an all-time low.

The social psychology phenomenon known as the “spotlight effect” is that we tend to believe that other people are paying more attention to us than they are. Folks in the niche sport of horse racing are no exception.

Mr. Drape’s story would ordinarily have received more attention than it did.  But a bombshell incident involving the National Football League dominated the day and crowded out other news. Media reports and radio/TV shows were consumed with the civil-suit filing against an already high-profile and controversial New England Patriot player.  His former personal trainer said he sexually assaulted her.

Most people with a financial stake in horse racing, or an ardent fan’s interest, want the sport/business to adopt a uniform medication policy with a strict enforcement mechanism.  The folks buying yearlings at Keeneland s seem to be betting on that outcome, or that it does not matter.

Copyright © 2019 Horse Racing Business

On September 18, Horse Racing Business will publish a fact-based analysis of the California Horse Racing Board’s actions after Justify tested positive for scopolamine in the Santa Anita Derby.