03/12/2004 12:00AM

Letters to the Editor

Email

Legal rebating is no enemy to the game

Three weeks ago Daily Racing Form published an article about my formation of a company to meet the rebate needs of Thoro-Graph players ("New rebate outfit formed," Feb. 22). The article inspired calls from nervous racetrack executives, and at the recent DRF Horseplayers Expo in Las Vegas I was asked more questions about rebates than about speed figures. On March 7 the Form brought me up in another rebate article, "Owner group puts kibosh on XpressBet's rebating," this one far more incendiary, so I feel compelled to address the questions, and the rebate issue in general.

We have developed a pretty large customer base, much of it online, and over a year ago several companies approached us about steering our serious players to them. At the time I knew very little about rebates, and this sounded like an attractive idea all around: The players get a much better return and bet a lot more - which ultimately is good for the industry - and buy more product from me. Fourteen months and a hefty bill from my lawyer later, I've learned a lot.

One company that approached me was an offshore bookmaker that wanted to set up a link on my website, but there were obvious problems that led me to reject this one out of hand. Since they were booking the money, it wasn't going into the pools, which meant the tracks and horsemen weren't getting their share, which is a problem both morally and politically for me. I have made my living in this business and worked with horsemen for a long time, and I want to support the industry. Also, bookmakers are not in business to lose money, so if my guys started beating them (and we have some pretty sharp customers) they figured to get cut off, and possibly even stiffed. That could have led to a DRF headline with the word "Thoro-Graph" in it that I don't ever want to see.

We were also approached by a couple of outfits associated with smaller Native American tribes, and we checked these out pretty thoroughly. The people who contacted us seemed okay, and this had the advantage of being parimutuel, so everyone would get a share. The problem was that the tribes themselves would not execute a written contract. Try to get your money if something goes wrong, especially from a sovereign nation. Another potentially disastrous headline.

After thorough vetting, I finally came up with the right partners. Their company is run by a former high-ranking racetrack executive, and it models its approach after the casino industry - meaning, they treat big players as something special, the way the casinos do, and the racetracks don't. Money is not booked - it goes into the parimutuel pools of the host tracks - and we have written contracts. And contrary to what the Form wrote, my customers are not joining some kind of "betting syndicate," they are individual large bettors who receive discounts and good customer service.

To me, the most interesting event of the DRF expo was the National Thoroughbred Racing Association's Player's Panel. Several members spoke out in favor of rebates, discussing how it was helping the game, and the estimated figure quoted for rebate handle was $1.5 billion annually. Keep in mind that's just for what is going through the rebate outlets into the pools. A lot more money is going to those offshore bookmakers, and into the head-to-head markets, which don't pay the industry a dime.

The article was driven by the reporter's opinion, voiced while interviewing me for the original article, that encouraging bigger players to bet more creates more "smart" money in the pools, which makes it tougher for smaller players. By this logic the industry should discourage all betting, let alone growth in handle, from bigger players. Excellent reasoning - one wonders whether the stock market should adopt the same approach to "assist" the small investor, rather than offering discounts to big investors, and how many tracks would close if our industry followed such logic.

A humorous postscript: In the days following the first article, the advertising department at DRF called us twice to see if we wanted to buy advertising for the rebate venture. Later, when the subsequent article about my partners ran on the DRF website on March 12, directly below it was an ad for someone offering rebates. Maybe I should have bought an ad.

Hopefully the industry will someday soon find a way to lower the absurdly high takeouts across the board, which I and many others have been pushing for publicly for many years. In the meantime, industry leaders need to recognize that legal rebate outfits that service bigger players are not their enemies - they have created an enormous amount of handle that without the discounts would either go to the non-parimutuel vendors, or simply vanish. As Tim Smith of the NTRA said at the expo, players are voting with their feet. The huge (and growing) amount of rebate handle itself tells us that the big players are price-sensitive, and voting with their bankrolls.

Jerry Brown
President, Thoro-Graph Inc.

Magna tactics far from inspired

Let me get this straight. First, Magna Entertainment Corp. withholds the signal for Gulfstream and Santa Anita from other betting services to force the horseplayers to bet with Xpress Bet. This brilliant idea blows up and they are forced to lower purses at Santa Anita and the racing at Gulfstream is getting to be mediocre at best. (But those concerts are really packing them in!)

Evidently they realized their mistake, so they made a deal with a group of high rollers to open up the Santa Anita signal and even give them an added perk of a rebate on the wagers they originally did not want to take. Every other horseplayer in America is stuck with no rebate and a server at XpressBet that is out of action when all the big races are due to be run - it's probably all the action the rebate high rollers are pumping in that forces the system down.

Increasing handle is the goal of every racetrack in America. That being said, it's nice to see that Magna is trying to correct its first mistake of limiting the signal by opening it up to other sources. It's just sad to see that the first thing they came up with was rebates to a group of high rollers. Nothing ticks the average player off more than knowing he or she is not getting the same deal as the other players. Look what just happened to Martha Stewart.

State racing officials and horseman in California should take a hard look at the way Magna has operated the past few years. They certainly have not delivered as originally promised.

As a horseplayer in New York, I cringe at the way the New York Racing Association operates, but I sure hope Magna never gets a foothold in this state. Then again, maybe by that time I will be among that high-roller group and can get a piece of the rebate action.

Rod Dillon
Canandaigua, N.Y.

Cash back for your dollars is simple modern math

In regard to the article "Trying to help the handle, tracks shut off the big shots" of Feb 15:

The race tracks have to just understand that these large professional bettors who are getting around 10 percent rebated are not going to continue betting horses if the rebates are outlawed. It is not 1950 where if you wanted to partake in gambling you had to fly to Las Vegas or go to the track. There are a number of sporting events available to bet from your home where the takeout rate is around 10 percent. Many betting outlets offer a bonus on your initial cash deposit.

If the tracks think they can continue to get this huge handle from these guys without rebates they are crazy. They will seek a venue with less than the 20 percent average takeout that racing has.

Many of the smaller bettors, who don't often care if they win or lose, have long since parked themselves in front of a slot machine far from the track or are busily scratching lottery tickets. I predict the greatest decrease of handle in history if the rebate shops are shut down.

Tom Zangrilli
Berwyn, Ill.