Archives for September 2022

This past weekend, media reported that the Pennsylvania Racing Commission had stopped several cars entering PARX racetrack in Philadelphia and discovered syringes and an electrical device.  Déjà vu: this is eerily similar to an incident at PARX in 2021 that resulted in a two-year suspension of a trainer. Earlier in the week, a harness racing trainer was sentenced to federal prison for 30 months for doping horses.

Out of curiosity, I ran a Google internet search for the phrase “cheating in sports.”  A flood of results appeared. A sampling:

• “The Pros and Cons of Cheating in Sports
• The 40 Worst Cheaters in Sports History
• 9 Doping Scandals That Changed Sports
• The 10 Greatest Sports Cheaters of All Time
• The Most Infamous Professional Sports Cheating Scandals
• Before the Astros, 7 Other Cheating Scandals That Rocked the Professional Sports World”

The International Review of Psychiatry in 2016 published “Cheating and Sports: History, Diagnosis, and Treatment.”  I’ll leave it to the psychiatrists to figure out how to rehabilitate cheaters.  The concern here is that horse racing regulators must rigorously monitor for cheating with state-of the-art testing and appropriately sanction offenders, especially repeat offenders. No matter whether cheating is revealed in the Kentucky Derby or in a claiming race at a nondescript racetrack, horse racing’s image is tarnished.

Besides turning off bettors, doping of a racehorse is animal abuse. Horse racing is unique among sports in that medicating the athlete is done without the consent of the athlete.

While researching material for this post, I came across an article in the Wall Street Journal titled “Behind a Chess Scandal: How Would a Player Cheat And Get Away With It?”  19-year-old American grandmaster Hans Moke Niemann is suspected of defeating Magnus Carlsen, the world champion chess player, twice, by cheating through high-tech chicanery. (Previously, during the pandemic in November 2020, Chess.com detected widespread cheating going on in online tournaments and closed 18,000 accounts, including those of average players as well as grandmasters.)

Bettors and fans of horse racing have (unfortunately) become inured to reports of cheating, but pervasive cheating scandalizing the genteel game of chess?  Really?  Chess and serious horse-race handicapping are intellectual pursuits, but chess does not depend on the patronage of bettors for its viability.

Copyright © 2022 Horse Racing Business

While reading a media report of 30 yearlings being auctioned for more than a million dollars each in the first week of the Keeneland fall sale, I thought of what trainer Kenny McPeek said in an interview during the recent Saratoga meet about his approach to buying racehorse prospects: “I’m not a pedigree guy.”  I took this to mean that what he looks for most is athleticism rather than ancestry, or what coaches refer to as “physicality.”

McPeek’s website states that he is a “proven buyer of moderately priced horses with graded stakes success.”  Indeed, his record shows that he is.  Consider some of his yearling purchases:

Bought two-times horse of the year Curlin for $57,000.  Won over $10.5 million.  Paid $35,000 for Swiss Skydiver, who had $2.2 million in career earnings.  Take Charge Lady, with $2.48 million in earnings, was a $175,000 buy.  Tejano Run, who finished second in the Kentucky Derby, was a $20,000 bargain.  Pure Fun won $487,000 after being auctioned for $27,000.

A high-priced yearling, with impeccable conformation and close-up relatives that have won Grade I stakes, obviously has a better chance of being a top-class racehorse than a yearling with a pedestrian pedigree, nondescript relatives, and some minor conformation faults.  However, a seven-figure price shelled out for a yearling is hard to justify, given the expected value owing to the high percentage of million-dollar-plus yearlings that disappoint as racehorses. (Click here for a detailed analysis by Ray Paulick that corroborates this point with data .)

The potential value (the price vs. quality calculus) of a bargain-basement yearling purchase is compelling when the person doing the selection has the keen eye and proven record of a Kenny McPeek.  He and other skilled buyers have demonstrated that a Grade 1-caliber equine athlete does not have to come from a family of exceptional achievers or have a nearly flawless physique. Moreover, the downside monetary risk of purchasing a relatively inexpensive yearling that does not pan out as a racehorse is mitigated.

Copyright © 2022 Horse Racing Business

On September 8, 2022, Churchill Downs, Inc. and FanDuel Group announced a multi-year partnership that “includes Wagering Rights to Horse Racing Content, Totalizator Services, Certain Television and Media Rights and a Kentucky Derby Sponsorship.”  While most people with a connection to horse racing know that Churchill Downs owns casinos and racetracks, they may not be as familiar with FanDuel.  The Churchill Downs’ media release describes the company:

“FanDuel Group is an innovative sports-tech entertainment company that is changing the way consumers engage with their favorite sports, teams, and leagues.  The premier gaming destination in the United States, FanDuel Group consists of a portfolio of leading brands across gaming, sports betting, daily fantasy sports, advance-deposit wagering, and TV/media.  FanDuel Group has a presence across all 50 states with approximately 17 million customers and nearly 30 retail locations.  The company is based in New York with offices in California, New Jersey, Florida, Oregon, Georgia, Portugal, Romania and Scotland. It’s network FanDuel TV and FanDuel+ are broadly distributed on linear cable television and through its relationships with leading direct-to-consumer OTT platforms [on-demand streaming]. FanDuel Group is a subsidiary of Flutter Entertainment plc, the world’s largest sports betting and gaming operator with a portfolio of globally recognized brands and a constituent of the FTSE 100 index of the London Stock Exchange.”

Following are verbatim excerpts from the rest of the Churchill Downs media release followed by my comments about the partnership.

“Under the Agreement, CDI will provide certain technology and services to enable FanDuel’s customers to place pari-mutuel wagers on horse racing via FanDuel’s sports wagering and ADW platforms.  CDI will also authorize wagering on CDI’s owned or controlled horse racing content via FanDuel’s platforms in the United States and grant FanDuel certain television and media rights to broadcast CDI-owned racing content on FanDuel’s television network(s).  In addition, the Agreement provides FanDuel non-exclusive Kentucky Derby sponsorship rights within the sports wagering category.

Beginning in January 2023, FanDuel will pay for CDI technology and services provided by United Tote Company (‘United Tote’) to facilitate pari-mutuel wagering on FanDuel’s platforms in the United States, including FanDuel Sportsbook and TVG.  As previously announced, CDI has entered into an agreement to sell 49% of United Tote to New York Racing Association, Inc. in a transaction that is expected to close by the end of 2022.

CDI will provide FanDuel wagering rights to horse racing content owned or controlled by CDI, including the Kentucky Derby, and will receive customary content fees when FanDuel accepts wagers on CDI-owned content. FanDuel will also receive exclusive television rights to the racing content of all CDI thoroughbred racetracks, including Churchill Downs Racetrack, once its existing non-Derby media rights deal expires in 2023.  The Agreement excludes certain specified racing content, including Kentucky Derby Week.

As part of the Agreement, FanDuel will also receive a non-exclusive sponsorship of the Kentucky Derby in the sports wagering category beginning in 2023 in exchange for an annual sponsorship fee.”

The media release did not report on the specific financial terms of the agreement, so that part of the agreement can’t be evaluated here.  Conceptually, however, the partnership is very promising, mainly for the rationale espoused by Amy Howe, CEO of FanDuel: “With the launch of FanDuel TV last week and the upcoming integration of premier racing content into our market-leading sports book, we believe this is an inflection point in our ability to offer our customers a seamless wagering experience with a single wallet.  …we will have exclusive broadcast rights to the Churchill Downs Incorporated family of tracks on FanDuel TV.  We look forward to creating new audiences for horse racing (emphasis added).”

FanDuel’s sports-betting customer base represents a remarkable opportunity for introducing pari-mutuel wagering on horse racing to a large and growing audience of confirmed bettors. A negative is that FanDuel’s exclusive broadcast rights to racing at CDI racetracks will exclude CDI racing from Fox Sports cable.

Horse Racing Business September 13, 2022