A Little Tea In My HANA Please

I stumbled upon a very interesting segment on TVG on Sunday. I really turned it on for the 5th at Del Mar, but instead of pre-race coverage, Todd Schrupp was discussing Assembly Bill 2414, a measure introduced in the California Assembly which would raise the takeout on exotic wagers (2% for two-horse wagers, 3% for three or more), and allow exchange wagering, though only if the various parties could agree on how to split up the revenues. The bill is, as you might imagine, strongly backed by Betfair, the UK-based betting exchange which acquired TVG last year.

So, when Schrupp introduced company CEO Stephen Burn to discuss the proposed legislation, it seemed merely like self-serving propaganda in the guise of journalism. Burn explained how the takeout increase, the revenues from which are to go 100% towards purse enrichment, would help make California more competitive. Del Mar’s president, Craig Fravel, said the bill could lead to an additional $25 million to $30 million in purses annually. [DRF] And he advocated for exchange wagering [read here for a good explanation of it if you're not familiar] as a fresh, innovative new product which will provide better value for bettors by cutting out the middleman, and attract a younger crowd.

In the past, I've criticized TVG, and Schrupp in particular, for softball interviews, and what could be softer than questioning your boss on a bill which would allow his company to expand their successful business to the US market! But then, to my surprise and to TVG's great credit, they brought on, by telephone, MI Development (MID) COO Scott Daruty. As you may know, MID is the Magna entity which now owns its tracks (Santa Anita and Golden Gate in California), and they and TVG are fierce rivals and competitors in the account wagering and televised racing fields with a history of lawsuits and rancor between them. So full credit to Betfair for letting Daruty have his say. And his say was yes to the takeout increase but, citing concerns about tracks and horsemen being properly compensated and an influx of foreign and offshore companies swooping in, a firm no to the exchange wagering provision.

And Schrupp let him have his say. Stephen Burn replied that he understood Scott's concerns, but that the legislation sets no commercial terms and leaves that all up to the CHRB and the various parties to reach an agreement, the lack of which would simply mean that exchange wagering would not be introduced. Daruty then said that he understood Stephen's point about leaving the details for later, but that, given Magna's investment in the state, he felt that it's only fair to them and their employees that there be some kind of certainty that it would be worth pursuing before being approved legislatively.

Yes, it was a little bit of Faux News here; Schrupp tossed Daruty a high slider by confronting him with Frank Stronach's own words regarding the need for innovation. And TVG surely got in the last words on the matter after Daruty, who sounded genuinely grateful for the opportunity, signed off. But high marks to TVG for inviting him on.

My impressions were 1) Betfair's position on exchange wagering made sense and seemed to present no risk, while Magna was being adversarial on the matter just to be so, and 2) it was refreshing to hear two well-spoken people discuss their disagreements calmly and respectfully rather than being in a studio or on a split screen simultaneously so that they could yell over each other. Maybe the political shows should consider reverting to that format.

Then they brought on, also by telephone, HANA president Jeff Platt. This did not go particularly well. You could tell that the guy was nervous from the get go, and I found him to be alternately rambling and halting. He said that horseplayers like exchange wagering because, say, what if you have a five horse field and one horse is 4-5 and one is 7-5 and the others are 8-1, 9-1, and 11-1, then there's no possible reason to bet the race parimutuelly (huh? maybe you like the 9-1 shot?) and exchange betting presents better opportunities in those cases. To which I'd say, y'know you don't have to bet every single race and if you do, you should probably be logging on to GA instead of TVG. Then Platt was, obviously, opposed to the takeout increase because raising the takeout "never.... works.... for anyone!".......awkward silence here as Schrupp and his audience wait for him to elaborate just a little....never works for whom, for nobody? And why not? At that point, the producer probably whispered in Schrupp's ear to get rid of the guy, and that was that. It was an interview worthy of Sharron Angle.

In fact, HANA kinda reminds me a little of the Tea Party with their unwavering advocacy, and simplification, of a single issue (Small Government = Lower Takeout); as well as their ability, despite being somewhat ragged and rough around the edges, to gain mainstream exposure. I seem to see and read about HANA all over the place these days. Of course, and in my opinion, unlike the Tea Party, HANA is absolutely right in principle about their signature issue. But it's not always as simple as a bumper sticker slogan in my view. Lower takeout would not be a cure for all of racing's ills any more so than extending the Bush tax cuts for the rich will revive the economy. (Well, actually, that's wrong....let's say somewhat more so than the nonsensical idea of adding $36 billion to the deficit at this point in order to cut taxes for the wealthiest 2% of the population.) Casino games and horse racing are different animals with a completely different clientele and aesthetic; I just don't see where many slot zombies would be interested in handicapping horse races even if the takeout was lowered to 5%. Conversely, how many devoted horseplayers cross over to casino games because of the lower rates?

And, as a casual horseplayer who bets the races for fun rather than as a livelihood or obsession, I personally don't accept HANA's absolute position that lower takeout always trumps quality. I can well be willing to be price flexible if the product is worth the cost. No, I'm not interested in betting on Tioga Downs, thank you, and, though I'm aware that the takeout on certain bets in New York is certainly too high, I'll pay that price to play NYRA races over Evangeline Downs given the choice. It's a critical situation in California right now; the industry is desperate for ways to keep up with the states where the racing industries are subsidized by slots. The argument against a takeout increase is a solid one; but, in this situation, if not that, what are the alternatives?

Don't get me wrong; I surely understand that HANA represents large players to whom every percentage point makes a difference...and that, in turn, those players account for a disproportionate amount of handle. So HANA serves a crucial role in advocating for them, and are apparently doing it well. And, unlike the Tea Party, at least they don't have a lunatic fringe. I've never heard a HANA member accuse Alex Waldrop of being a Muslim or demanding to see Zenyatta's birth certificate.