Returning Fans to the Racetrack, And Problems That Have Driven Them Away
Friday, March 11, 2005
9:00 a.m. - 10:00 a.m.

Mr. Scherf: This was supposed to be the first panel of the morning and I guess it works out fine as the second because we just had the marketing about how to get better business and now we are going to sort of talk about where the rubber meets the road. The topic is returning fans to the racetrack and solving the problems that have driven them away. We have two panelists, and I guess the empty seat is the racetrack fan that we have been missing. I don’t know about the symbolism, but our first speaker has some comments and he is from the California Horse Racing Board. He just joined last year, and he hit the ground running. He has some very definite opinions about this business because he has been in it all his life. His grandfather raised and bred horses, Silver Diver, Native Diver. Then he has worked at racetracks – Western Harness. He probably worked in every capacity there was, rose to be president, has fought the fight to bring fans into the racetrack, understands the challenge, has actually lived it. He is the president and manager of WinCo Asset Management, which is a real estate and asset management company in Calabasas. He also races and breed thoroughbred horses, and as I said, he joined the California Horse Racing Board last year and has been extremely active in a variety of ways. Please welcome Richard Shapiro.

Mr. Shapiro: As Chris said, I sat where you did 25 years ago being an operator of a racetrack. When I left, the stands were full. As a harness racing operator, we would have 15, 18, to 20,000 people. I disappeared for 25 years, but I did not really in that I would go to the track periodically to see my horse race or something like that. 

When I came back, I was stunned. After my first racing board meeting, it was on a Thursday, was in Arcadia, and I went over to Santa Anita afterwards. I walked through the stands and I was amazed. There were 3000 people in attendance. 

So I looked at what racing has done and I came on the board as a very critical person. I looked at racing, and I said to myself, “What did these people do to this industry?” And it came down, in my mind, to greed. I think that there is greed throughout this entire industry, and racing sold its soul. I say that in that today there aren’t people at the racetracks. You have reduced racing not to a spectator sport, but simply to a sport of gambling, a studio sport. I personally am horrified at it. I look at this and say, “Racing has not brought itself to the 21^st century.” It is not an easy task, I understand it, but racing needs to reinvent itself. I heard part of the prior presentation, and I keep listening to it, and racing has sold its soul. Racing sold out. When I left, the only off-track wagering was in New York. So, simulcast comes, and we have ADW, and we have all of the simulcasting, and what we did was tell people, “Stay home. Don’t go out the track. Don’t come here. You can bet from home, and the data you can get from home is far better.” I have met with and toured TVG and Youbet, and frankly it is amazing. If you are a gambler, I do not blame you for not going to the racetrack. The show stinks except for those special occasions. The other day at Santa Anita, Handicap Day was terrific. There were 35,000 people there. We had stars to see. There are no stars now. What we have are 5,6,7 horse fields. The average field size for thoroughbreds is 8 horses per race. They are lousy gambling races. This airplane which was at 35,000 feet, in my mind, is at 5,000 feet and headed downward. I think racing has to reinvent itself and do it quickly. Otherwise I expect there will be a tremendous amount of attrition and I think that racing is going to disappear as we know it today. I do not see how these tracks can make the capital investment, get a return on their investment, to build these facilities with the show that is put on. The show is terrible in my mind. We need to get fans. Racing does not take care of its fans. We ask them to pay to park their cars, buy a program, buy a form, pay admission. What other gambling does that? Why do we charge people to come into the place? They are not making any money on it anyway because there is nobody in the stands. And then when we get there, we do not do anything with them. We say, “Here it is.” Now for those of us that are really familiar with the racetrack and understand the game, it is okay. We can read a racing form. But in today’s world of competing gaming, and here in California, where now we have casinos springing up everywhere, and if you just drove by and saw the new Morongo casino, it is jam-packed. They have wagers that are easy to understand. They will attract a younger audience. They will attract people who can mindlessly put money into a machine and it says you win or you lose. You can play 21, you win or you lose, but we ask people to handicap races and people do not understand how to do it. Then, we have cheating. Racing is, and thank goodness the feds are looking at it in New York. I hope they come to California, because the regulators, of which I am now one, and I am trying to adjust to being a regulator, have done a terrible job. If you just read, we have trainers telling our fans that they are addicts and idiots and we have allowed it to go on. Racing has not done much to promote itself. I don’t know if we are entertainment or we are gambling. Today I think we are just gambling, and as a form of gambling we will lose. We have created bets that basically are disadvantaging the small gambler, the guy that is our everyday person. When I was in the game 25 years ago, we did not look just at handle. What we looked at was per capita and attendance because that meant that we were bringing people in. If our per capita was $100 a head, we were happy. If you look at Santa Anita’s handicap day, their per capita was smaller. That meant we were exposing the sport to new people. Today all the emphasis is on reward cards and how much they gamble. Well we have rebate shops. Our takeouts are too high. So if we are just going to be gambling, then a lot of the racetracks should not exist today and they will not exist tomorrow. So I am very critical of racing, and I think racing needs to work to create a fan base. Our stars, they show up for a couple of years, they are quickly retired because the breeding sheds far more valuable, so we don’t have any celebrities to promote anymore. In the old days, we had that, but greed has infiltrated at every level. We have year-round racing. There is nothing new when racing starts at Santa Anita and then goes to Hollywood Park and then straight to Del Mar. What is the excitement? There is nothing to look forward to in racing. So greed has been very evident in the expansion of racing dates. Today we have large corporations who are running the tracks, who are looking at earnings per share. Magna loses $200 million, they are not going to keep putting money into it. Churchill is lost in California. God knows what is happening there. The only meets that really make it are the small meets. Look at Del Mar. Del Mar and Saratoga. Why are they so successful? Because they have short meets, they have great racing, and they promote it to the fans. There is something that people look forward to. I think that racing today is in very sad shape, so Bill, I do not know if you are going to agree with that.

Mr. Hoge: Well, I am going to agree with a little of that.

Mr. Scherf: Before you do, let me introduce our second panelist. Bill Hoge was formerly a member of the California State Assembly where he chaired the government organization committee which had the oversight of gambling matters. Among his achievements in that position were the legislation that created the Thoroughbred Owners of California as the horsemen’s primary representative and also the first major license fee relief bill. During his chairmanship also, they passed a bill that returned harness racing to Sacramento. Since then, however, he considers himself a full-time horse player. He can bring the perspective of a serious handicapper to our discussion of returning fans to the racetracks. He admits because he is a serious handicapper, he does most of it not at the racetrack. What is your reaction to the couched feelings of Mr. Shapiro there?

Mr. Hoge: First of all, let me say that I have had the opportunity to have been a degenerate politician and have now risen above that to the level of professional gambler.

Mr. Shapiro: What is your next step?

Mr. Hoge: This is it, baby, there is no more. Let me say that horse racing to me has been a lifelong passion. I love this game. I love horse racing. There is nothing I like to do better than handicap a race and have all my figures work out, and the race runs exactly as I pictured it. There is something extremely satisfying about that, and it started when I was a kid. In fact, driving out last night from LA to come over here, I had an old record that I had transferred to a CD and it is a record that Santa Anita put out about 25 years ago of Joe Hernandez’s best race calls, and my first race that I attended was in 1950. It was the Santa Anita handicap of 1950, and it was Noor and Linmold that were the two horses that came down to the wire, with Linmold winning by a nose. I have to tell you, I kind of did that to get in the mood of today and being with all of you, and I like to do that. Then my all time favorite race, the San Juan Capistrano, 1966, Johnny Longdon’s last ride. We all think back of these great things that racing has, and times with family members and friends, and there is just something about it. I don’t mean to go on, but this is the flavor of what we do. We, as all of us, as a handicapper, as a player, we are all together in this thing to promote the greatest game in the world. I do not think it is an end to the game. I don’t see a dire future for racing, but I think the game is going to change dramatically over the course of the next few years. By gosh, it already has. In 1993, as a member of the California State legislature, I introduced a bill, and Ralph Scurfield, who was at that point chairman of the California Horse Racing Board, may remember me doing this, but I introduced a bill in 1993 that would have brought slots to the tracks in California. You would have thought I was the devil incarnate. Incredible! Well, it only took a few years before every track in the state is dying to have slots and they are not about to get them any time soon. So there was an opportunity that we had at that point and we certainly could have put a deal together with the Indians, but that was not to be. 

          As far as play today, in listening to the first presentation this morning, there were some extremely astute points made and things that I do not need to reiterate, other than the actual time in the races that I have been able to get involved with and handicap and the amount of time that I have been able to spend at the tracks. In 2002, I had attended on-track 70 percent of the races at Santa Anita at the track. In 2003 I attended 80 percent of the races on the track. In 2004 I attended four races on-track. I am a guy who loves to be at the track. I love to play the races. It is a business for me. I became a winning player in 1997 after leaving the state legislature. I would love to be that winning player and be on-track. What has driven me away? Well, if you are going to take this seriously, and be a serious handicapper, and treat it as a business, then you need to have facts and figures and the comfort and ease, and really a little less distraction than is at the track today to pay attention to what you are doing. There is one other ingredient, and it was a part of the presentation this morning. From the tracks that I attend throughout the year, especially tracking my play because I put that little card in when I go through the turn style when entering the track, they know how many times, certainly at Santa Anita, of the times I have been on-track, and all of a sudden I stopped coming. Did I die? A lot of our friends and associates certainly have passed away has we have an aging track population. No, I did not do that. But did they know? No phone calls. There was absolutely not contact with somebody that was a very frequent attendee, and not just an attendee, I have been a Turf Club member at Santa Anita since 1970. So here was somebody that probably played a little bit more than the average guy. No contact. Well, I have not received any contact from any of the tracks in the country, and I do play all over. I attend 12-15 tournaments each year, and I am going to get into that if we get a chance. Anyway, I think that is probably my most important message to you folks today, is the contact from you to the player. It is simple marketing, simple business. “Bill, we know that you are a regular here, and we have not seen you. Are you okay?” That would be really neat. Or, “Bill, you are one of our better players. We know you are here constantly. What can we do for you to make your day at the races better?” “Bill, we noticed that you have not been coming. We want you back. What can we do for you?” This is another little point that I do think you need to identify your bigger players, put whatever level of play that you want on that. We need to do in the racing industry, we need to go out and find whales as the Las Vegas casinos and now casinos all over the country have done. They have found major players. I have a lot of friends that play quite a bit of money, some of my prime handicapping associates. Most of them have never had any contact from the tracks as far as their level of play and getting them back. Anyway, just one of my concerns and something that I hope you hear today.

Mr. Shapiro: I agree with you. When I first got on the board we formed a committee, which was a bring back the fans committee, and the whole point there was to try to bring all of the racetracks together and to try and create a marketing base so that everybody would share data. Direct mail, Bill is absolutely right. We do not go back to our people and we don’t take care of them. The whales should be put in a whale room. They should be given free drinks. They should have some woman in a short skirt bringing them a drink and saying, “Can I get you some food too?” We do not do that. If you look at Las Vegas, why are they so successful? They have the gambling component, but they have the entertainment component and they take care of their people. People today come to the racetrack and they are left on their own and we do not reach out to them. The direct mail campaign, California should pool its resources and find those people to come to the track, and it should bring them to the track, but we do not. 

But one of the other things that you mentioned, Bill, was slots. Today everybody has got racinos, and California certainly wants them. And I understand that here in California, we are now disadvantaged because we do not have them and we need them to keep horses. We need them to supplement racing. Racing needs to learn to stand on its own two feet. I do not know how many of the people, I have been to West Virginia, I went to Mountaineer Park, and I was amazed that I saw all these people there. They were not watching the races. They were playing slot machines. Now the purses are there, so the horsemen are going there, and they are running for bigger purses than we can offer out here. Is that what horse racing is reducing itself to? Where it needs the big band-aid to stay alive? We need to find a way to reinvigorate our own sport. We have bets today where you have the exotics, you have the daily doubles, exactas, pick three, four, five, six, trifecta, superfecta, you have all of these bets that basically sweep all the money and give it to a few big people. Who is winning those big bets today? The whales are winning those bets. So what are we doing? We are knocking our fan base and we are taking them out of the game. We are robbing their pockets full of their money. They are going to lose and they are not going to come back. Racing keeps going for the big band-aid. Get a big payoff, and what happens is you empty the pockets of the small bettor. They are not going to come back.

Mr. Hoge: Richard, if I can comment on that. I agree with that, only one of the things that I believe racing should do is to promote what we do, and we are a gambling sport. Yes, it is an agricultural sport, I got into all of that in the legislature, but it is a gambling venue. What makes Las Vegas successful?  A lot of things, but you go there to gamble, and they do not excuse them gambling. So often racing excuses gambling. By gosh, don’t excuse what you do! You are a gambling venue and lets get people in that want to gamble. 

          Tournament play, what is going on today when you watch television? ESPN and these cable networks have gone crazy with televising poker events. How exciting can it be sitting there and watching a lousy poker game. I like poker, but to sit there and watch poker on television. Well they have made it interesting because they show you what hands the players have and who is going to win, but it has caught on like crazy across America with a younger audience. Chris Moneymaker wins the World Series of Poker two years ago. He qualified on a tournament on a satellite tournament for forty dollars to win several million dollars for the big prize when he got to Las Vegas. It is a wonderful story. What stories like that do we have in racing? Why don’t we, with the limited press that we have, why don’t we expose that? Instead of for the television advertisement for the coming race, races that we have, they are coming up at a particular track, get out to Santa Anita for the handicap, which nobody gets all excited for, but the excitement of Chris Moneymaker at the track winning some money, getting together with some buddies and hitting a big pick four.

Mr. Shapiro: I agree with you, but racing ignores the television medium. What we have is replay shows. We have TVG, Youbet, HRTV. So, okay, we are showing results. We are not promoting it. The only time that we get national coverage primarily is around the Breeder’s Cup and the Triple Crown. There are a lot of stories, but I have lots of friends that come to me and say, “You know, I have never been to the track.” I ask why. They say, “I don’t understand how it works.” We do not offer a place for the people to be able to go there and not feel alienated. Everybody knows how to go to a ball game. Everybody knows that they have a ticket that says where they are going to sit. Racing doesn’t do that. What we do is we say, “Come out. There are some windows, there are some stands, and oh by the way, you can sit on a bleacher or a metal chair.” Racing has to change its facilities. It does need to make it more intimate and it has to improve it, and we have to televise it. We need to have shows that are not replay shows, that are already for our dedicated fans, but we have to promote what is going on at the racetrack. We have to be able to show the human side, the horse side, and we have to show that is an in place to be. Racing is out. Poker is very much in. You are right. You have 12 and 13-year-olds playing poker. I agree with you that we need to promote our gambling and gambling is our life blood, I am not ignoring that. But if you lose the fan base, today in California, if you go to a harness race, and you can only see harness racing at one place in the state of California, there may be 200 people at the track, is that a sport? What is exciting about it? You can watch it on television, and what you are going to see is a race go by and there is nothing that is going to attract anybody to get involved with it unless they are an already addicted fan who likes it. I agree with you that you have to promote the racing, but if you don’t promote a venue, and there is another reason for it, you are going to lose owners, you are going to not have people in attendance. Why then have it in California? Why do we need a track in California? If 75 percent of the wagering dollar is going to come, why not Meadowlands? They have better racing. We need to turn back and look at building an audience. Look at all of us in the room. None of us are 20 or 30 years old, and if there is anybody, I am sorry.

Mr. Hoge: I would suggest, and without a show of hands, I would ask each and every one of you how many are serious handicappers? How many really play the races for real and have an interest in making money at it? Again, if you looked at that, I have found over the years that most of the folks that are involved administratively at the track in one form or another at the track in racing are not players. Well if you are not a player, or have the players on board or on your staff, you lose the item of the relationship, or that little tie in being able to relate to that important part of the track. 

           As far as Richard talking again about the gambling, let me just for a moment talk about tournaments. I can see, and envision, I love tournaments, my gosh. My play, everybody wonders how much I play. I am not going to tell you how much I play, but I will tell you what percentages I play. 70 percent of my play is win bet, 20% are on exactas, and ten percent is on everything else. Now, in addition to that, I have another chunk of money that I have set aside that is for tournament play. As I said, I play in 12-15 a year. I can envision a track today having a tournament much like the poker tournaments on-track and advertising on television. Once you start having a few winners that you can bring to the forefront, daily satellites just like they do with poker. Where you have the folks at the track, and for ten bucks you can be a part of the tournament. For every 50 players for ten dollars, one will qualify for the main tournament. Whatever the details are, you can have daily satellite tournaments, and you can have a monthly, or you can have once a year for that track, however you want to put it together. I am telling you. How many here have played in tournaments?

Mr. Shapiro: But, Bill, are you our typical guy. I don’t think so. How is racing going to survive on a professional gambler? You, admittedly are a professional gambler. How many professional gamblers are there? I don’t think that many. If we do not bring people out and expose them to the sport for the sport of it, the sport of kings…

Mr. Hoge: What is the sport of it?

Mr. Shapiro: The sport of it is going to the track, having a nice day, going for the entertainment, having a meal, seeing the show. Otherwise, fine, you are going to choose to gamble as a professional gambler, or handicapper, on horse racing, but if the show is not good, you may just switch over to poker. That is not going to build racing. That is not going to sustain racing. If racing thinks that they are going to sustain themselves based on professional handicappers, then we do not need to have all the tracks. California has 14 different racetracks. Of the 14, all of them but one are over 50 years old. There is no reason those people are going to go to those tracks, and professional gamblers do not need a racetrack. You do not need one.

Mr. Hoge: Out of the 14 tracks, the great majority of those tracks are at the state fairs, so they only run for two weeks a year anyway, and…

Mr. Shapiro: But where does racing come from? Look at harness racing. Harness racing was born at the fair. That is where you get the families. That is where you get people out to enjoy a day. That should be the philosophy of racing.

Mr. Hoge: Well, we have harness racing in California, and this is not a knock on harness racing, but on CalExpo, there are 150 players there a day. So we don’t have harness racing in California from a fan base, we do from a satellite facility.

Mr. Shapiro: You are right, and that is what is wrong for harness racing. Harness racing is dying on the vine out here because there is no venue that is working to bring people out. When we had Western Harness, how did we have 14 to 15,000 people? We had concerts, we had fireworks, we had shows, and people went there as an alternative form of entertainment and they went there to see the show. We put on TV shows to promote it.

Mr. Hoge: I am not disagreeing with that at that time. That was 25 years ago and horse racing was the only venue in town. There was no competing gaming opportunities in the state.

Mr. Shapiro: I understand. So racing can’t compete with the casinos. That is why everybody needs to have the slot machines to supplement and keep racing alive. We cannot compete for the average guy who doesn’t have to go through the intellectual curve of learning how to handicap a race. It is too complicated, but we do have to work to get them exposed. If you don’t expose racing to the new audience, racing is going to die. We have to bring people to the track.

Mr. Hoge: Again, to bring them to the venue, let me do it from a handicapper, from a player’s perspective. I have enough younger friends. My son is 30, and he has been a player all of his life, and so have a lot of his buddies, so it kind of does stay within the family a little bit.

Mr. Shapiro: Did dad teach him to bet?

Mr. Hoge: I did. He is a good handicapper. 

Mr. Shapiro: Okay, but dad taught them. What do you do for the guy that doesn’t have dad to teach him, who says, “You know, I am tired of going to the movies.”

Mr. Hoge: You advertise that here is this game where you can win lots of money at the track, and we can create some new games too, I bet. Lots of money at the track, and guess what? We have training, educational, handicapping facilities at the track. Well they have them, but they don’t advertise them the best. One of my good friends, Jim Quinn, great handicapper, most prolific handicapping author in the country, gives an outstanding class on introductory handicapping.

Mr. Shapiro: Okay, but now you are telling people if they are going to learn to gamble, they need to be educated and they need to work. People don’t want to work. They don’t want to learn—the general people. You have to get them to see something else about it to where then they get intrigued to want to gamble. I agree with you. We do need new forms of bets, and just today when I checked in there was something in here about, from some company that has now invented a new bet where you can choose three groups. You can choose the favorite, the next favorite, or you can bet the long shots. I agree with you. Racing needs to simplify some of the wagering to attract people so that they do not have to sit there and read a form.

Mr. Hoge: Here is another bill when I was in the legislature that I put in, but I wanted to lower the takeout, and I promised that I was not going to talk about takeout today. It is important to me, but it is not the top of my agenda. But I had a bill that would have gone in and created in the state of California, and it would be good all over the country, every bar in this country, we have the technology to do it, ought to have the opportunity to play the races. They do it in Arizona. They have it not in bars, but in restaurants. You could expand this to liquor stores, whatever, but at every bar in the country. We would start out with a little simple bet while everybody is sitting at the bar, you could bet odd or even on the saddle blankets, whichever is going to win, and you could lower the takeout to ten percent. That is just something simple, and we could all figure out the reasons why that would not work. We need to get over that in this industry about what won’t work. We have to try new things because obviously what we are doing now is not working. Try new things.

Mr. Shapiro: I agree and my guess is you worked with Norm Towne on that because he and I spoke about that. I agree with you. We need to either invent, I am betting the blue horses or the red horses, and get them to understand it and use video clips from past great races to show what went on. I agree with you, but racing needs to get on television and it needs to spend the money to promote itself to a place and a venue to go. It can’t just be on gambling. There is room for both. There is room for you there, but what we also have to do is compete with the rebators. Takeouts are way too high. In California our average takeout is 19.67 percent, and today my guess is, do you bet through the pari-mutuel pools or do you go through a rebate shop where you get a discount?

Mr. Hoge: I am not one who plays through a rebate shop. That does not mean that I will not and that I am not interested.

Mr. Shapiro: So let me ask you a question as a gambler. My view is that there should be different takeouts for on-track versus off-track. Why not lower the takeout for the venue that is hosting the races to give the gambler, the guy who is going to say, “Okay, I have to fight this traffic. I will drive across town because my takeout is lower than if I bet over ADW or I go across town. Again, if you look at the increase in betting, the rebate shops are flying in terms of increases. Look at ADW. Look at TVG’s numbers that were  just released. They are taking our market. They are cleaning our clock, and we have sold our signal to them and it is not going to come back. What we have to do is we have to give more people an incentive to go to the racetrack. Give them a higher payoff at the racetrack to come and see the show.

Mr. Hoge: Great idea.

Mr. Shapiro: That is the only way, if we put on a show, we have got to have full fields. You have got to cut back some of these racing dates. You can’t race year-round. Just nothing to look forward to another day at the track. We need to cut back our dates, and frankly I would be curious, I think when you go to the track and they throw so many races at you now. If you go to any track and you watch your nine live races, and in between you get another nine races, it is too much.

Mr. Scherf: You should go to the racetracks on the east coast. We will get you 18 tracks going at the same time. 

Mr. Hoge: Richard, on that one, I really disagree strongly, from a handicapper’s standpoint, we need to be able in California to have every race available, every race going on the day, and have the opportunity to play all of them. We can only play 23 in the state of California today other than your on-track menu and it is not enough. 

Mr. Shapiro: Well, some of your friends have legislation that is, they are attempting to change that right now.

Mr. Scherf: We are in an argument that is not new to this group and I would like to invite anyone who wants to get brave enough to jump up and join in, but it is the schizophrenia between, in our industry, are we a sport or are we gambling entertainment. We have been having these discussions for as long as I have been coming to meetings like this and I come down to it myself—we are both, but gambling pays the bills most of the time. Certainly when you have a short meeting like a Saratoga or Del Mar, it is a sport, it is a spectacle, and you have big days at any track. Every track shows we still have fans who want to watch horses and major events around the Triple Crown and things like that. I have been the PR guy in the New York Racing Association. I was a pretty damn smart guy when we were at Saratoga. I was an idiot when we were at Aqueduct in February. At that point, there was no diluting yourself after a while. It is not a sport. If there aren’t gamblers making the track out on the A train, you don’t have anybody in the stands.

Mr. Shapiro: So if 75 percent of your betting now is not on-track and is growing, then maybe what we are saying is that attrition should take place and a lot of these tracks should disappear. 

Mr. Scherf: I sit here and I wonder about that because I am sitting here, and it is really strange as you count off things, I want to totally disagree with you and yet I also totally want to agree with you. Obviously there are too many race dates. If you want to sell this as a sport, you cannot be ping-pong balls that run 365 days a year, and I think that is the quandary that race tracks are finding. They all know that, I believe…

Mr. Shapiro: But if it is a sport, if it is not a sport, we cannot compete. Racing is a complicated form of gambling. It is for the guys like Bill that want to sit there and try to outsmart the other guy. How much betting in all of gambling is made up of that. I do not think a large majority of it. 

Mr. Scherf: That is the biggest impediment to building new fans. It is a difficult game to learn.

Mr. Hoge: We are talking about something that I think is critical, and it is understanding the psychology of winning. We are different. Horse players are a different breed. We do take time to analyze each individual race. It does take a lot of time. You have to have some kind of feeling for numbers, some kind of numerical analysis, I suppose to kind of fit the scene. But here is something on the psychology of winning that I want you to take home. Everybody sitting in this room loves to see their name in print. Everyone here loves to see their name, because there is nothing more special that you have than your name. So when you are playing in a tournament or when you go to the track and you hit some big deal and you have the wall of fame, or the hall of shame, or whatever you want to call it, that you put up on the wall, and your name is there on a list of tournament participants, let me tell you, every person that plays in those tournaments keeps going back and looking at the scoreboard. Where am I? That scoreboard is important because your name wants to be at the top. I would suggest to racing, whatever you can do at the track to have people come, to broadcast it, to put it on TV, where you can put up someone’s name will benefit you.

Mr. Shapiro: I own three horses, okay? I have owned these three horses for a year. Not one dollar has been made. They cost me $3,600 per month to keep in training. It is a loser. There is no chance I am going to make any money. Why do I do it? I am not a gambler. I could care less. I could go to the track and be very happy and never place a wager. I do it because I want to see my horse, my name, and my silks in the winner’s circle. I totally agree, but that is why you need owners. My guess is that most owners are not gamblers. They want to be able to take their friends, and they want to be able to go there and say, “That is my horse.” Without owners we do not have racing. You need them.

Mr. Hoge: Without players you do not have racing. 

Mr. Shapiro: I agree with that too.

Mr. Hoge: We are not going to get it on TV and have a major ad campaign and bring people to the track talking about horse ownership. That is for TLC to do and Thoroughbred Owners of America to do, but not for the tracks to do to bring people to the track for racing.

Mr. Scherf: From a sporting perspective, I think this is one of our problems. You are talking about how we do not have stars. I live in an area, which is a suburb of Philadelphia, and you want to talk about exposure to racing, we had Smarty Jones last year. We got more free publicity and yet you had 12,000 people show up to watch the horse work out at Philadelphia Park.

Mr. Shapiro: And right to the breeding shed.

Mr. Hoge: You do have stars. You have got Andy Beyer, Jim Quinn, and guess what? Bill Hoge. That’s who you have got. You have got stars.

Mr. Scherf: My question for you is if you get a good horse that has done that and you have borne the burden of all the horses that have not made you money, they have cost you money, and the breeding shed says, “$40 million, but you have to retire him as a three-year-old…”

Mr. Shapiro: Give me an incentive to keep that horse on the racetrack. That is what needs to be done. It should have been more lucrative or give them some incentive to keep that horse racing. I grew up at a time where I was very fortunate. We had the first horse in the state of California to make $1 million. He raced 81 times. He won 34 stakes races. Now, he stayed on the track. Look at our horses today. What do they race in their lives? 20 races and they are gone. We need to find a way to get the people that have these horses not to immediately send them. That is why it is greed again. Everything comes back to greed. There is greed at every segment of our industry. 

Mr. Hoge: I want to have Pittsburgh Phil at the races. That is what I want to know.

Question: Mr. Shapiro, you do not really think you are an idiot for owning horses, do you? Because of you do, then I think you deserve the same fate I think Mr. Mullins should get, which I hope is exclusion. But I have a question for Mr. Hoge.

Mr. Shapiro: First of all, I am extremely critical of Jeff Mullins. I think it is offensive what he said. What I am saying in terms of owning horses is if you are expecting to make an economic profit, I think you are fooling yourself. It is not a profitable venture. I have the luxury where I can afford to that, but I love owning horses. If you are doing it to make money, then I think that is a fool’s game.

Mr. Hoge: Before you ask me the question, let me ask Richard one quick question before I forget. I love this venue, by the way, this is great. The California Racing Board and its charter, the primary aim is to advance and promote racing, and I remember I had this discussion several years ago with Ralph. I think, again this is not from a player’s perspective, you just look at the California Horse Racing Board as a policing organization, but to advance and promote racing is not policing. All that we hear about when Bill Christine writes his columns, but it is the interest in the off beat, the criminal activity, which is so rare in racing. This is all that people think about when they think about racing. I want to see the California Horse Racing Board in their budget start to put in some money and to do some statewide promotion of horse racing. Maybe that is where you can talk about the entertainment venue. 

Mr. Shapiro: I could not agree with you more, so I need you to call your friends at the legislature and get them to give us some money to do that. Right now we are about to take over the milkshake testing. I happen to favor pre-race detention barns on all races. I think we have to eliminate this problem and anybody caught cheating should not be getting little slaps on the hands that this racing board has given them in the past. I believe that they should be sanctioned and banished. If it were up to me I would tell Jeff Mullins to load up his van and head down the highway.

Mr. Hoge: And by the way, from a handicapper’s perspective, I don’t care about that. That does not mean anything. I just need to know that Jeff Mullins does that and I enter that into my handicapping. I want you to understand that.

Mr. Shapiro: We should have any horse racing out of a detention barn indicated in the form and in the program. I totally agree with that.

Question: As a professional handicapper who relies on all the variety of information you take, what value do you place on interacting with other professional handicappers, and since you don’t go to Santa Anita very much anymore, how do you interact with them? The last part of the question, if I could get your comment would be, don’t you find the anecdotal information you have gained by talking to other handicappers, or maybe comments trainers make on changing routines or track surfaces or biases of surfaces as seasons change, don’t you find that so valuable that you have to be at the track?

Mr. Hoge: Good question. I find that of very little value, actually in my handicapping. I have never particularly paid any attention to trainers comments of how the horse is going to do or not, we all laugh about that, but that is the truth. The interaction that I miss has nothing to do with my handicapping. If I have a big race that is coming up, and it may be a $10,000 claimer is a big race to me, it is just sizing up something, and I think this is a great betting opportunity and I think I am missing something, I will call one or two of my buddies and ask them if they have looked at the same race and ask them what they think. Mainly it is my ability to handicap, and I get all of the information that I need off the Internet today, so that interaction is not there. What I get and what I miss is the comrades at the track, which actually detracts a little bit from my play, but I will give up some winnings if it could be done in a facility where the racetrack wants me there. I don’t think they give a hoot.

Mr. Shapiro: I agree with you totally.

Mr. Bergstein: I have heard everything you have said unless I missed one thing. I did not hear why you went 70 times, then 80 times, then four times. What happened?

Mr. Hoge: I became very comfortable at home. I have HGTV, TVG, and Youbet and Youbet is wonderful, and by the way, that is the biggest winner that I have had in the last three years. I got Youbet at 50 cents a share and they are now up to five bucks.

Mr. Bergstein: You just answered Richard Shapiro’s question as to why you can’t ignore technology. What has happened is technology is the reason you do not go to the track. You have to solve the problem of technology or either match it or meet it.

Mr. Shapiro: Stan, you are 100 percent right.

Mr. Hoge: Give me a nice room where I can take my papers, my form, a computer hookup, and you don’t need to worry about phones with everybody having a cell phone, but I need to have the line for my computer.

Mr. Shapiro: Stan, I went over to Youbet and I was blown away. They showed me how they could look at every horse, you could see the replays, they could pop up the past performances on video. Racing needs to put in Internet cafés and places for these people to go to the track, give a higher payoff, to get Bill back.

Mr. Bergstein: Your solution, because there are 10,000 people like him who stay home, and there are going to be 100,000 more in the next couple of years who will have in their hand the racetrack, so they do not have to go to the racetrack unless you can give them some reason to do it.

Mr. Shapiro: We have to give them a reason to go because technology is going to eat racing’s lunch. 

Steve Molnar, United Tote: Hi, I am Steve Molnar with United Tote, formerly CEO of Youbet back in its founding days. I have been sitting back here and there has been about a dozen questions and things I have wanted to say. I do appreciate your passion, and especially yours at the CHRB meetings, Mr. Shapiro, where it is intelligent, you are articulate, you care, and you keep everybody else from falling asleep on the board. I want to make a comment to the point that you just made. Back in the days with Youbet, we had a problem with content in the initial stages of Youbet and some of it is old history with the TVG/Youbet battles in the early days, and one of the things that really worked that I had the responsibility for was that we went out and we were trying to get the tracks just to put their content on Youbet, and one of the first was Oaklawn Park. What we did was this—as a part of the enticement was that we said that what we will do is that we will promote Oaklawn Park, people coming to Oaklawn Park who we have playing on Youbet so that there was a special promotion and a special marketing tool. If they were Youbet customers they got free admission for coming to the track, and they got a table in the turf club, or whatever they called it at Oaklawn. That really worked, and as far as I know, they were the only track that took advantage of that. If I were in your shoes, and again I can say this because all of my stock options are gone from Youbet a long time ago, but I would insist that TVG and Youbet, as a part of the deal of putting my tracks content on your system is that we have a partnership in which you proactively promote getting people to the track. It is a perfect vehicle or a perfect tool to get people to go. I would say that if you found out as a Youbet player that you had you can get a free turf club pass, get free parking, and do those kinds of things, but use it as a vehicle.

Mr. Shapiro: I totally agree with you. I think that there should be a Youbet room, there should be a TVG room, and there should be an HRTV room or Express Bet. I think they should be set up as lounges and there should be cocktail waitresses, and there should be laptop hook-ins. Everything is portable. Make it wireless in there and encourage people to have a place where they get to associate with others, they can see the show, and they get used to coming there, and you have to give them a higher return on their gambling dollar than if they sit at home on their couch.

Mr. Hoge: Let me mention one of the players’ biggest gripes at the track, and it is mine, and everyone else that is at the track that I know. It is standing in line at the betting machines, and standing behind those damn machines. Now what can you do for your better players? If it is the $2 player, okay. I mean, it is not really okay, but so be it. But when you have a $1000 and $2000 player, I think, and those guys are basically going to want to wait until the last moment to make their bets, you need to give them the opportunity to have their own machine at the track.

Mr. Scherf: Well, I have news for you, the $2 bettors, the guys that you get in there for the first time to experience it, they don’t like having to jump up and stand in line 9 times a day.

Mr. Hoge: No, I know they don’t, but you sure as heck don’t want to disenfranchise your better players.

Mr. Shapiro: Well, they are intimidated. They don’t even know what to do when they get there. I agree with you, and, frankly, we should have people that are there to take their wagers. Have people doing that.

Mr. Hoge: Now let me tell you how I solved that problem. It is no secret because you all talk about it between yourselves—the little telephone. Pick up the telephone and you can call whoever the telephone betting service is you use—Youbet, TVG—and it doesn’t much matter. You can sit there at the track and do that, and then you are not getting your on-track bet, which is why you have got the person there in the first place. Give them a damn machine at the track that can be their own that they can use and they don’t have to sit there and use the phone to do it. 

Mr. Shapiro: I will agree with that one too.

James Oge: There are actually some people in this room who have done a good job of keeping their bigger bettors. I know there are a lot of impediments to bringing new customers, but I will get to that in a second as far as California goes. I have only been to Hawthorne Park three times. The first time I was there I went to the turf club and a lady named Anne introduced herself to me. The second time, she asked me my name again, and the third time, which was one year later, she remembered it. They actually are able to keep, and I am not an Illinois guy, but the fact that she could remember my name and that when I hung out at the big players area near the turf club, every single one of those players not only knew Anne, which is good, it is good to have someone servicing your best players who could betting off-shore or over the phone, they actually know Thomas Carey III personally. He actually knows all of his players. I have to tell you, in California here I am a pretty decent player and so are you, but Bill, I think if you walked into Golden Gate Field, just walked in, I am not sure if anybody would specifically recognize you.

Mr. Hoge: Let me tell you where I have found to be the best. I play tracks all over the country, and I agree, I like Hawthorne very much, and I play in Scott McManis’ two tournaments there every year—one just before the Derby and one over Thanksgiving weekend. It is a fun tournament, and yes, I was there, and for being the person that traveled the furthest to play in their tournament, Carey came up and introduced himself and said, “Bill, I want to thank you for being here.” So it is exactly what I just said. I think probably the best treatment that I have found is at Arlington. My gosh! It is just absolutely super, everything is spotless, clean, the people are nice, lines move.

Mr. Shapiro: At Arlington they have family days on Sundays, they have picnics, I mean, yeah, they do it right. 

Mr. Oge: They also have the facility, the newer facility.

Mr. Shapiro: They have the facility, and that is the issue. 

Mr. Hoge: And their satellite facility across the street is great. 

Mr. Oge: Mr. Shapiro, if I may, you are right onto something about getting the old casual fan and not only that, the current player back to the track, and I would beseech you for one thing in California. That is that I had my brother-in-law call me the other day, and it is Santa Anita handicap day, and he knows that Golden Gate Fields is always open that time of year, well just not this year. Just for the second time in the last 34 years, it is just not open on Santa Anita handicap day. He actually wanted to go see the live races at Golden Gate Fields. Northern California particularly has taken what were two clearly obvious seasons, Bay Meadows starting on Labor Day and running until around the Super Bowl, and then Golden Gate taking from the Super Bowl until Father’s Day. First it started with three weeks here and four weeks there, now suddenly Bay Meadows ran until just before Thanksgiving and then Golden Gate, and now it is back to Bay Meadows, and Golden Gate is going to run in May. Nobody knows. Here is a guy who actually makes $200,000 a year, and would go out and bet $500 at the races and was very excited about it, and there was no live racing, so he thought, ‘I will sit home and play it on the computer.’

Mr. Shapiro: Well, live racing was going on at Bay Meadows. 

Mr. Oge: Well, that is correct, and again, he could do that, and that is a 45-mile drive through traffic. Again, that is another incentive. My point is that he actually thought he knew when the racing was in northern California goes, and as far as that goes it has been shifted all over the place. I would just ask you, if you could, as you are thinking about getting fans back on track, give them actual racing dates.

Mr. Shapiro: I understand that in northern California, Bay Meadows is on the brink of disappearing. That track’s tenure is going to be up and there is a development plan to redevelop the property. I think the planning commission just turned it down 3-2, but they are not through.

Mr. Oge: Respectfully, Mr. Shapiro, I remember a plan being on the table ten years ago like this. I worked there for 12 years, and there was a plan like this ten years ago.

Mr. Shapiro: Alright, but look at the facility. Have you been to Bay Meadows? 

Mr. Oge: Sure, I am on track a lot.

Mr. Shapiro: It is not a modern, comfortable place. They are not going to put any money into Golden Gate because of the new casino, and Magna is losing their ass, so you are right. So what do we do? What is going on?

Mr. Hoge: Shut down northern California racing or move it to Cal Expo in Sacramento.

Mr. Shapiro: Well, you can’t do that because harness is at Cal Expo and harness wants to make that their year-round home. They can’t even fill the races at Bay Meadows. 

Mr. Oge: I agree there is too much racing in northern California.

Mr. Shapiro: If you are a gambler, how can you bet on six and seven horse fields? 

Mr. Hoge: I don’t.

Mr. Shapiro: You can’t, so where is all the money going?

Mr. Hoge: I have not made a bet at Golden Gate or Bay Meadows in three or four years. There have been some races I could have, I just didn’t.

Mr. Oge: I agree, you are right, there is too much racing, and you are also right, I love the idea of lowering the takeout on-track. Also I like the idea of letting the on-track customers, so that we do not have the odds swings, let them be the last people who can actually bet everywhere.

Mr. Shapiro: I agree with that. We have to fix this past, post change of odds. That is really wrong. Unfortunately, I floated this idea out to the industry and I got a response of zero. Now, I am just a regulator. I am supposed to sit up there, and you are right, police. It is ridiculous and absurd. I am in the role of policing. I agree with you—I am supposed to be promoting the sport. I am supposed to be bringing more money to the state. The state of California, when I left in 1980, was getting over $100 million from racing. Thanks to you, the state of California today gets $47 million because lots of relief was given to the racetracks. Now, here we are again, and all of California is focused on one thing—compacts with the Indians to get slots. My argument with that is, and I am in favor of it, is it is not promoting horse racing. We are looking for a handout. We are looking to be supplemented by another form of gaming and I just don’t agree that racing has to rely on another for to keep itself alive. We have to see if racing on its own can be viable. California is in dire straits because without it, we are losing horses, we are losing owners, and our racing is ugly. 

Mr. Scherf: We are going to have to wrap this up. I will have one more question and then we will end.

Question: Well, what I see between you guys are the juxtaposed positions that we face. I am from Rosecroft, a harness track in Maryland. This is exactly what we see every day when we are trying to do something. We have the player, so we have a restaurant. We want to have a club upstairs. You have the players downstairs saying, “I can hear the music.” You can barely hear it, but it is there. They say they can’t think. They can’t think because they can hear this music upstairs, so they can’t play. I do agree wholeheartedly with Mr. Shapiro that racing needs, and I am new to racing. I have been in it for about seven years. I came from Marshal-McClennen, where we were focused on growth. What I see in racing is that it is going to die because we are doing things, and one of the things I have heard from several of the speakers is change, and embrace change. I don’t think that the people of racing, those of us that run it, are doing that very well.

Mr. Shapiro: They don’t embrace change. 

Question: I think the horsemen’s associations which, we all are negotiating with them, they need to embrace change too. I don’t know what changes they make, but my view is that the sport needs to become more vibrant. Otherwise all we are going to be left with are the players, and unfortunately, I think that is a small number of people.

Mr. Shapiro: It is an invisible audience. The problem is you have an invisible audience. People do not know Bill is out there because he is betting from home. Now, the Youbets know Bill is there, so we need to bring them into the game with us. Unfortunately, racing is so splintered. Tracks don’t get along, horsemen’s organizations don’t get along, we have a Guild that is out in left field. It is unbelievable. At Santa Anita, they had a TV show, the American Dream Derby. Now here was TVG. They came out, did a reality show around racing. Boy, were we lucky. It was great that some TV show wanted to a horse racing-based reality show. On Sunshine Millions day, I happened to end up sitting with the president of that, and I said, “So, what do you think?” He said, “You know, I really like racing. There are a lot of stories here. There are a lot of good things. The production costs are really high.” So what happened for the grand finale where these guys are finally going to race? They take a group of eight $1000 claimers. They had to buy the horses. Alright, not a big deal. So now, they have a concert. LeAnn Rimes is going to come out and sing and they are going to do their live finale. The purse was raised to $35,000, much more than normal. The jockeys were offered triple mount fees for the race. The jockeys would not come out of the jockey’s room. Why? Because of their media rights. They held up the final part of this unless they were paid $2000 each as an appearance fee. Now that is what is wrong with racing. Here we are. I spoke to Guild’s attorney two days ago, and I said, “Barry, this is just what I am talking about. Your guys want racing to be receptive to their needs. They want to increase rates. They want to be treated like partners. That is not being a partner. Why would they do that?” Well, nobody consulted them. It is absurd, and in racing today you have all these factions. You have all these different groups and nobody gets together and decides how to put a plan together.

Mr. Scherf: We are going to need to wrap this up.

Audience comment: From my view, everybody, or a great number of people, from the horsemen to a variety of managers are living in what used to be 1950—build it and they will come. The problem is that the world is interactive these days. Look at our kids. They go down and play X-Box, push a button and they get immediate reaction and adrenaline rushes. Racing needs to give the public that adrenaline rush.

Mr. Shapiro: What track is sending out DVDs to all these kids and saying, “Here is how to make a wager. Bring this to the track, get in for free, we have a seat for you, here is ten dollars worth of free food, and give them the tutorial to teach them what racing is about and how it works. Racing does not do that. 

Mr. Hoge: I know that time is up, but the title of this panel was getting the player back to the track, and the fans back to the track.

Mr. Shapiro: Bill is not the fan that we are getting back to the track. Bill is a player.

Mr. Hoge: That doesn’t mean that you can’t get me back and that is important. I am, you are talking about stars. I am a star! Why don’t you promote me? I am a star, me and Andy Beyer. Get it out there! Let the folks know so that we can get out the message that you can win at the races! It is the greatest game in town! 

Mr. Scherf: We will leave it at that. Thank you everyone. That was great. That was terrific.