Last month, Rhodes College economics professors Marshall Gramm and Nick McKinney published in these pages a study showing the estimated impacts at Aqueduct over the past four winters from CAW players during the last cycle.
They found that since 2022, the percentage share from last cycle monies wagered into the Exacta, Trifecta, Superfecta and Early Pick 5 pools (among others), had grown significantly.
There was a problem, however, with the study: unbeknownst to Gramm and McKinney, the New York Racing Association (NYRA) had switched to a new Tote operator in the fall of 2023, leading to what the organization said were “material differences” in how the pool cycles are managed.
With this new Tote operator came an extension to the last cycle from 10 seconds to 30 seconds. And so, how does this operational change alter Gramm and McKinney's findings?
Updated Numbers
According to Gramm, the estimated percentage share from CAW players of monies wagered into the Place, Show, Exacta, Trifecta, Superfecta and Early Pick 5 pools at the last cycle (now moved to 30 seconds) has increased noticeably since 2022, though not quite at such marked rates as when the last cycle is calculated at 10 seconds.
He found that the estimated increase in CAW participation in these pools is significantly higher than that seen in the Win, Late Pick Five, and Pick Six pools, for which NYRA has taken tough steps in recent years to curb CAW play.
The largest apparent increase in last cycle money occurred in the Place pool (a 23.2% increase since 2022), and the Show pool (a 22.7% increase since 2022), according to Gramm.
While Gramm and McKinney's work has focused on NYRA, the issues they've found are very much applicable industrywide. For insights into what this revised data means both locally and nationally, the TDN spoke with three influential figures from the world of gambling.
In short, NYRA's efforts in recent years to curb CAW play remains something of a nationwide model that more tracks should be mirroring, they say. Still, much more needs to be done overall to need to better manage CAW play (especially in the exotics) while at the same time incentivizing retail players.
Maury Wolff
Maury Wolff is a retired professional gambler who has watched CAW teams significantly magnify their footprint over the years on horse racing's gambling landscape.
“The question is, what does the industry want to do about this?” said Wolff, who is critical of the measures the broader industry has taken to manage CAW play.
“Basically, the only handle they're confident they can grow is with the [CAW] groups, and so, they're catering to them in every legal way they can,” Wolff added.
The main takeaway from the study is clear, Wolff said-these teams are being allowed to exert too great an influence on the betting pools, to the detriment of a healthy wagering marketplace. But what should the industry be doing to better manage it?
Dr. Marshall Gramm | Lucas Marquardt
In an ideal world, takeout would be reduced for all, so that the CAW teams wouldn't have their “pricing advantage,” said Wolff. And if the takeout was priced correctly, “there wouldn't be any need for rebates,” he added.
Another reason to reduce takeout? “Outside of the lottery, racing is effectively the most expensive gambling product on the market,” Wolff said.
At the same time, the tracks should, at the very least, adopt the same steps NYRA has taken.
This action would help curb CAW play in the Win, Late Pick Five, and Pick Six pools, Woolf said, and do more to keep the CAW teams out of the exotic bets where they're cannibalizing the retail players.
Not only that but shout these changes from the rooftop.
“The win pool at NYRA is the best in the business,” said Wolff. “I just wish they'd promote that more than they do,” he added.
“If I were running NYRA, every time there was a terrific win price against an Exacta that's way shorter than the win pool price, I'd be saying, 'hey, look at this, it's paying X dollars to win.'”
Jerry Brown
Jerry Brown, president of Thoro-Graph which sells high-end handicapping data to big bettors-and someone currently involved in litigation with NYRA on a non-CAW related matter-sees the findings of Gramm's and McKinney's paper as applicable to the industry nationwide.
Brown pointed to the standard practice of issuing handle numbers from a meet rather than revenues-in other words, the amount of money the tracks and the horsemen keep-describing this as a way of shielding from public view the hard financial impacts to the industry from increasing CAW play.
“What the industry makes from a dollar wagered from CAW is about one-third what it makes from a dollar wagered by conventional handicappers. And so, even if you're replacing dollar-for-dollar what you're losing [from retail play] with CAW play, in terms of revenue, you're only getting one-third of what you otherwise would,” said Brown.
As a general rule-of-thumb, said Brown, CAW handle as a percentage of overall handle comes out to about one-third nationwide-a figure that's too high, said Brown (though obviously that can change track to track and from pool-to-pool-midway through Santa Anita's last meet, it reportedly came out to about 20%).
Tracks can reduce CAW play “significantly,” said Brown, by following and broadening the steps NYRA has already taken in its Win, Late Pick Five, and Pick Six pools, potentially cutting the rebates they receive, so the tracks make more on each dollar bet.
Jerry Brown | courtesy of Jerry Brown
“Retail players are losing the money that caw is winning, which in the long run is unsustainable. Whether it's by having some pools restricted to retail [players], or by lowering the edge CAWs have in existing pools by cutting down rebates or by shutting them out of the pools at two or three minutes to post time, you have to reduce their play, but you don't necessarily have to eliminate their play,” said Brown, pointing out how even under restrictions, some caw teams will still be able to show a profit.
“Instead of a 5% advantage on the game,” he said, “they might have a 2% advantage.”
Brown said that he also understands the predicament racetracks now find themselves-that if they cut CAW play cold-turkey, they run the very real risk of driving away a key customer base, which is why he suggests tracks take these steps in incremental fashion, gradually winding back the damage done.
“Cutting them off cold will cause handle figures to drop off precipitously, which racetrack executives don't want because it looks like they let business drop under their watch,” said Brown. “So, what you have to do is take incremental steps.”
At the same time, Brown raised potential conflict-of-interest issues, arguing that NYRA is a not-for-profit corporation that's “supposedly serving the people of New York state,” and yet is a co-owner with The Stronach Group of Elite Turf Club, the largest CAW wagering platform in the country.
“By giving the guys [CAW players] an advantage, they are giving the regular New Yorkers a disadvantage, because they're playing against them. But what makes it much worse is that they own a part of Elite, whose entire reason for existing is to facilitate caw,” said Brown. “If that's not a conflict of interest, I don't know what is.”
Nick Tammaro
Nick Tammaro is a long-time horseplayer and public handicapper. As he describes it, NYRA cutting off the last cycle at 30 seconds (as opposed to 10 seconds) is something of a step backwards that makes price discovery more difficult for the average punter. “The longer the cycle the worse it is for optics,” he said.
Nick Tammaro | Sam Houston
In terms of curbing the impact from these teams, Tammaro said he'd like to see a cap on CAW play as a percentage of overall handle at each cycle.
“For example, if you're at zero minutes to post, but you're at Tote-cycle A, you can only bet 20 percent of what's in there. If you're at Tote-cycle B, you can only bet 20 percent of what's in there,” said Tammaro. “Something along those lines.”
As for incentivizing retail play, Tammaro pointed (like Woolf) to overall reduced takeout, and he suggested giving retail bettors the mechanism to batch-bet on an ADW platform in the same fashion for CAW players on their wagering platforms.
“I have a friend who is about 30. He put together a small Pick Six model. He's the kind of guy that would love to be able to batch bet, but he's limited by what [his ADW] will take from a rank-and-file player,” said Tammaro.
“If he had the ability to send in more bets, he would certainly make more of them,” Tammaro added.
Retail players should also be given access to a larger, more comprehensive rebate system than is currently the case, said Tammaro.
“If you're playing with an ADW, you should have access to at least a very basic rebate system. I don't think there's any harm in that whatsoever,” said Tammaro, adding that such a scheme would generate more play.
“It's a pretty safe bet that if you're an ADW and you have anybody that bets six figures a year, if you put them into a system where they're eligible to earn up to five percent in the form of a rebate, you and I both know they're betting that money right back in. They're not withdrawing that money,” he said.
And lastly, said Tammaro, racetracks can do much better at explaining and calculating projected odds.
“Take last week, for example. The computed odds in the Acorn Belmont Daily-Double, which is a two-day wager, made it look like Baeza could possibly have been favorite [in the Belmont],” said Tammaro, who spoke in the aftermath of the Belmont Stakes.
“That was an inefficient pool where he [Baeza] clearly got a lot of recreational money,” Tammaro added. “But when all was said and done, he was a distant third choice.”
NYRA Response
In a recent segment on the TDN Writers' Room, NYRA CEO and president David O'Rourke broached the CAW question by arguing that any serious, strategic approach to managing CAW play needs to be industrywide.
“We need throttle controls” agreed upon across the industry as to “how much we're going to allow them in,” in terms of “pace” and percentage of pools, he said.
“If we can get consistency from each of the major content providers, I think then you start to get control of the situation,” said O'Rourke.
David O'Rourke | Coglianese
Is the industry ready for this? “I think we need to push it, and I think I should be on a couple of panels, and other people should be on them as well, pushing what we as an industry and as a group agree on what makes sense here,” O'Rourke replied.
The TDN additionally posed some of the points and criticisms posed above to NYRA, which issued the following statement.
“NYRA has a record of prioritizing the interests of the everyday horseplayer by actively restricting the involvement of CAW groups within our wagering pools.
“In addition to the establishment of retail only multi-race wagers, NYRA's policy on CAW groups in the win pool has eliminated the dramatic late odds shifts that had become a source of frustration to betters in New York and around the country. Looking forward, NYRA is developing technology to empower retail players by providing access to high-speed order execution and sophisticated wagering models designed to enhance the horseplayer's toolkit,” wrote NYRA spokesperson, Pat McKenna.
“These actions represent an approach designed to achieve a sustainable and healthy balance between professional gamblers and the wagering public.”
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