Come January of next year, the New York Racing Association (NYRA) will limit Computer Assisted Wagering (CAW) play one minute to post in nearly all pools, according to NYRA president and CEO David O'Rourke during Tuesday's Global Symposium on Racing in Tuscon, Arizona.
By far the most aggressive step taken yet to manage CAW play by any track operator in the country, this will mean that all CAW players will be limited to a maximum six-bets per second when they bet into the NYRA product within one minute to post in these pools, putting them on the same footing as retail players.
The steps that NYRA has already taken to manage these high-volume players–limiting their access to the win pool and the Late Pick 5 and Pick 6 pools–will remain unchanged.
O'Rourke was part of a panel titled, “The Sustainability Algorithm: Balancing CAW Growth with Racing's Long-Term Health,” arguably the most eagerly awaited of the whole symposium given the sharp focus on these high-volume players and their impacts on the sport's coffers.
O'Rourke described NYRA's “multi-phased” approach as a data-collection strategy to see how the pools react, then to tweak their approach accordingly if necessary.
“What I'm saying here is we draw a line now, we start measuring what's going on within that period of time, and then we start looking at other things,” said O'Rourke. “You're really talking about volume and throughput here.”
Moderator Pat Cummings, executive director of the National Thoroughbred Alliance (NTA), jumped in to ask some of the other the panelists if they would take NYRA's lead and similarly restrict CAW play at their facilities.
Scott Daruty, president of The Stronach Group's (TSG) Monarch Content Management as well as the company's CAW wagering platform, Elite Turf Club, was non-committal.
“It's something we would consider,” said Daruty, before pivoting to a prior remark of Cummings's: that even with the new one-minute to post restriction in place, CAW players can still make their large winning bets at six bets a second, potentially still having an undue influence on the pools.
“The answer is 'yes, they can.' Does that mean this policy's a failure? I don't believe so. But if you believe that that means this policy's a failure, then you have to realize what you really want isn't a level playing field, you just want winning players out of the pool. And I have a very, very big philosophical problem with that approach,” said Daruty.
O'Rourke also floated another new idea soon to be made available through NYRA and TSG's 1/ST Racing and Gaming, which is a centralized hub of raw odds data easily accessible for every player, large and small.
“I believe 1/ST and NYRA will make our data feeds available–same raw data feed to everyone,” said O'Rourke.
“This is the same data feed that the ADWs are getting, the same one that Scott's Elite [Turf Club] players are getting,” said O'Rourke, referencing co-panelist Scott Daruty.
With this data feed available to everyone, “somebody could either create their own graphics, they could ingest it into their own model,” said O'Rourke.
“Now again, it's the same data that's already out there and anybody who has any rudimentary coding ability can currently go on their Xpressbet, TVG, TwinSpires account and just scrape the data and get it into this format,” said Daruty.
“But that's a step that our current customers currently have to take that we asked ourselves, 'why are we making them take that step?' So, we can eliminate that step for them,” Daruty added.
Cummings once again jumped in to ask if this was something that could be made available to all players at other tracks around the country. O'Rourke seemed open to the idea.
“For sure,” said O'Rourke. “Ideally, this could become a marketplace for other forms of data related to the game or offered out. I think it gives the opportunity for people to make products. Let's let people get creative. Let's get this out there. Let them create their own models.”
“We've got [artificial intelligence] AI machine learning–you start pushing this data into one centralized place, it's raw, let's face it, 99% of the consumers are not going to be interested. But that 1%, we're going to get a lot out of that,” said O'Rourke.
As a whole, the panel was an educational seminar as much as it was a platform for new policy ideas. The following are some of the other key points raised throughout the one-hour session.
Takeout
Marshall Gramm, professor of economics at Rhodes College in Tennessee, raised a point he has made before–that horse racing is no longer priced competitively for its players, and that to bring it into line with other wagering avenues, takeout needs to be reduced.
“We are priced now worse than we were when we had a monopoly, when racing was the only thing that people could bet on outside of Las Vegas, right?” said Gramm. “Takeouts were much lower than they are now. And so, I think that's something that really needs to be looked at.”
O'Rourke argued that in order to reach a status quo where takeout can be reduced, the sport needs to come together on a uniform source market fee.
This is a fee based on where you live “above and beyond the host fee,” said Cummings.
“Let's just use a 16% takeout wager win bet,” said O'Rourke. “If you're in New York and it's on prime content, you might have a host fee in the high single digits. Then you've got a source market fee of 6.5%. So, you've basically got a fixed overhead overlay there. How can you come in with a 7% or 5% product–your distributor's essentially underwater on half the card.
“So, to get to price flexibility to get to these creative things, we need a uniform source market structure in this country. Otherwise, you're asking a distributor to distribute something that they're literally underwater on, on a fixed tax structure,” said O'Rourke.
Cummings then asked O'Rourke if takeout is held artificially high to offer the highest rebates to CAW players and to keep the mass market down. O'Rourke refuted that suggestion.
“No. Takeout essentially blends for the most part to 20% across the board. And most of the financial structure of this industry is basically based on that,” said O'Rourke, before adding that practically speaking, he's open to re-visiting the takeout structure.
“The way that we've added bets then changed and put in low takeout bets but left certain ones high, I think the whole thing needs to be revisited and re-cascaded to be honest,” he said. “And if we were able to have the flexibility with a fixed source market fee structure–because we're essentially distributing to the whole country–that gives you the pricing flexibility to actually bring takeout down on specific bets.”
Projected Odds
Eric Halstrom, vice president and general manager of racing at Horseshoe Indianapolis, talked about the success they've had using projected odds, done through the DRF Formulator.
“The good news is our retail play grew this year and our CAW handle was essentially flat. The Elite Turf Club was up one half of 1% on our races this year. FanDuel was up almost 5%. And these are good numbers. We have more brick and mortar locations this year where the handle went up on our product, which I'm really proud of,” said Halstrom.
“We're constantly trying to get to know our retail players, having them try to understand our product. Our on-track handle on live racing days went up. It's not happened in a lot of places,” Halstrom added. “We formed a really great team that loves racing and we'll continue to try to cater to the retail player, and that's how we're going to take market share off of other racetracks.”
Win Pool Restrictions
NYRA was the first track to restrict CAW play in the win pool at two minutes to post. Del Mar followed suit this summer, then came Santa Anita.
Gramm floated some stats showing how these restrictions are a successful bulwark against late odds drops.
“NYRA's changes have been extremely successful based on the data,” he said. “The favorite changes in a typical race in that last cycle one in five times. So, one of every five races the favorite changes. For NYRA, it's one in 25,” said Gramm.
“Not to pick on Del Mar before they made the change, [but] in the two weeks before the change, they had 29 major odds-droppers, meaning horses that increased their share of the win pool by 50% in that last cycle. There were 29 of them. Seven of seven of them won, including Nanci Griffith, which went from 18-1 to 6-1. Velocity, which went from 8-1 to 7-2. Seven of them were winners.
“Saratoga has had one major odds dropper in two years. NYRA's only had 14 total. So, you compare that to Keeneland that's had 130. Churchill 378. And Gulfstream 684,” said Gramm (though the data collection period for the last three tracks wasn't specified).
Clarity
At the very beginning of the session, Cummings sought answers to some basic questions about CAW, including around some common misconceptions of the issue.
Do CAW players receive additional odds information not available to retail players?
“No, they do not,” said Daruty. “There's one and only one data feed that goes to every wagering location throughout the world. It goes to the CAW players. It goes, if you're a TVG or TwinSpires or Xpressbet account holder, it's that same data feed that goes to your betting platform.
“If you're at the racetrack, it's the same data feed that is displayed on the Tote board in the infield. Now you said, 'is there any difference at all?' There's no difference in the data that's delivered, but there is a difference in the ability of the consumer to absorb that data.”
“If you're at a racetrack and you're looking at the Tote board in the infield, you're going to see what the Tote board operator puts on the board. And there may be a point in time where they're showing the win pool, and in your mind you're thinking, 'boy, I would really love to see the Exacta will pays.' But it's not being shown on the board,” said Daruty.
“For the CAW players–they're receiving that Tote feed digitally,” said Daruty.
Is there a racetrack operator that also functions as a CAW?
“No,” said Daruty. “That is nonsense. We are a platform like Xpressbet, TVG or TwinSpires.”
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