NYRA Looks Out for Its Customer; Good for Them

The Week in Review by Bill Finley

It's not often in this sport that John Q. Horseplayer gets a break, but that's exactly what happened last week when it was revealed that NYRA was no longer accepting bets from the so-called computer-assisted wagering (CAW) players on its Empire Six wager. The Empire Six wager joined the Cross Country Pick 5 and the late Pick 5 as NYRA wagers that are no longer available to the CAW players.

The computer players use algorithms that predict the probability of a particular outcome. If their programs tell them that a horse has a 50-50 chance of winning and is 3-1 they will bet accordingly. They use the same methods for most pools and bet huge amounts of money. Because they receive rebates in the neighborhood of 10%, they don't even have to show a profit on their bets, just as long as their rebates are bigger than their losses.

The number of bettors out there using these methods is minimal, no more than six or seven groups. But they bet so much money that they can severely tilt the pools and drive down prices by significant numbers. The Thoroughbred Idea Foundation estimates that CAW play accounts for as much as 35% of all monies wagered on U.S. racing. That would mean their annual handle is about $3.5 billion.

Not that they are doing anything wrong or breaking any rules. These are very smart and innovative people who are willing to risk huge sums of money and have designed computer programs that put them several steps ahead of the average player. A case can be made that they deserve every last nickel they have made betting on racing, not just in the U.S. but around the globe.

CAW players are, for obvious reasons, coveted by most American tracks. Tracks make money off of their percentage of the betting handle. Taking a micro view of how the business of racing works, why would any track turn away customers that might be betting tens of millions of dollars every year on their product?

If only it were that simple.

This is pari-mutuel wagering, gambling's version of survival of the fittest. The successful bettors are taking advantage of the unsuccessful ones. It's their money that they are winning, not the house's money. With the CAW phenomenon, which appears to be growing all the time, betting on the horses has turned into a matter of the whales vs. minnows. The whales have been gobbling up the minnows and after a while all the minnows will be gone.

It's already happening. The CAW players are pumping billions into the pools across the country, which is a fairly recent phenomenon, yet handle has been stagnant over recent years when it comes to real numbers and has declined sharply when adjusting for inflation. That can only mean that a lot of those who might bet $20 on a race, $200 on a card and play the races once or twice a week have been driven out of the game. Horseplayers only have so much money to spend on the sport and once you tap them out they are going to move on.

The regular players are getting particularly hurt in the jackpot wagers. The pools build up on their losing dollars and are too often scooped up by the CAW players, sometimes on a mandatory payout date.

NYRA took a look at this and, obviously, had some concerns.

“We are trying to level the playing field with these particular multi-race wagers so it's not tilted towards those folks with distinct advantages, meaning complicated algorithmic trading tools and an extremely high volume,” NYRA spokesman Pat McKenna told Steve Byk on his “At the Races” radio show.

McKenna noted that NYRA can operate differently from other tracks because it is a not-for-profit and doesn't always have to adhere to the bottom line. It would be far more difficult for a Churchill Downs track or a Stronach Group track to turn away the CAW money. But even NYRA hasn't gone so far as to ban the CAW players all together. They are still welcome in all other pools and they are the reason why so many horses go into the gate at 4-1 and drop to 8-5 during the running of the race, which is a terrible look for the sport. CAW wagers go directly into the pools and can be played at the very last second.

The status quo is not sustainable. Every day that this persists, another casual horseplayer gives up on the game. Racing cannot do without these everyday players. After a while, you're going to have nothing left but whales vs. whales.

But good luck trying to get a for-profit track to turn away bettors willing to wager millions on their product. Probably the best anyone can hope for would be for NYRA to extend the exclusion into other pools and for other non-profit tracks like Del Mar and Keeneland to also experiment by barring CAW players from some pools.

This is a serious problem for the sport and it's not going away. At least NYRA is trying to make a bad situation better.

Dream Shake Impresses

There were expectations that a star would emerge from Sunday's fifth race at Santa Anita, a maiden special weight going 6 1/2 furlongs. It happened, but just not with the horse everyone was expecting to win.

Sent off at 20-1, 'TDN Rising Star' Dream Shake (Twirling Candy) turned in what might have been the most impressive 3-year-old debut so far this year. Trained by Peter Eurton and ridden by Joel Rosario, he kicked into high gear in the stretch and won going away, by 4 3/4 lengths.

Eurton admitted that he never envisioned such a performance.

“He went way beyond my expectations,” he said. “I had never really challenged him whatsoever. He was an unknown. For him to have closed and ran fourth with a nice finish and a nice gallop-out would have been satisfying, especially against the field of horse we were facing. There were a lot of horses in there that people thought highly of.”

All indications are that the horse will be even better when stretching out.

“He acts like, to me, a two-turn horse,” Eurton said. “He's not ultra quick but neither is he slow. Once he gets going, he covers quite a bit of ground. Going two turns is, hopefully, in the cards for his next race.”

Eurton said he has not picked out the next start for Dream Shake but said a stakes race is a possibility.

The same race included a rare bad showing from the Bob Baffert barn. He entered two highly regarded first time starters in Bezos (Empire Maker), the 3-5 favorite, and Tivoli Twirl (Twirling Candy) only to have them both get beaten by 15-plus lengths. That was bad news for the people who foolishly bet on Bezos in the Derby Future wager before he had even had a start, sending him off at 26-1. The Baffert horses deserve a second shot, but it seems highly unlikely now that either one will make the GI Kentucky Derby.

The Katie Davis Saga

Earlier this week, we wrote about Katie Davis's unhappiness over the New York Gaming Commission's coupled entries rule.

The real point of the story is that she is being penalized by what is quite possibly the silliest, most out-of-touch rule on the books over at the Gaming Commission. There's no valid reason why her mounts must run as an entry with husband Trevor McCarthy's mounts when the two are in the same race. Protecting the betting public is one thing, but it's completely unnecessary in this situation.

This is hurting Davis. It is hurting McCarthy. And it's cutting into NYRA's handle. It's well past the point where the Gaming Commission should have revisited the rule and taken it off the books.