Archives for September 2017

Following is a partial list of noteworthy developments in American horse racing over the past couple of years:

The U. S. Department of Treasury and the Internal Revenue Service finally modernized regulations pertaining to tax withholding on winning wagers.  This has resulted in an estimated $75 million annual increase in pari-mutuel wagering on U. S. horse racing.

Racetracks offering the vast majority of Grade I and Grade II races are closely collaborating  in scheduling of major stakes races, and this has provided a $150 million boost to pari-mutuel wagering, as predicted by a McKinsey & Company study done for The Jockey Club.

Keeneland opted for maximum takeout rates on its customers’ wagers but had a change of mind and reversed the decision.

Almost all of the states with racinos no longer earmark a portion of gaming revenues to horse-racing purses.

The Equine Injury Database reveals that fatal injuries have continued to dramatically decline–to .50 fatalities per thousand starts–as improvements have been made in racetrack surfaces and research has identified what horse profiles are most at risk, which has allowed state veterinarians to more accurately screen out horses that should not be racing.  Another reason for the decrease in fatalities is that more racetracks have installed safer synthetic surfaces.

The federal Thoroughbred Horseracing Integrity Act of 2015 became law. Consequently, a government-sanctioned but private non-profit organization is setting and enforcing uniform medication rules for Thoroughbred horse racing, including out-of-competition testing.  The organization designated furosemide or Lasix as a performance-enhancing drug.

Penn National Race Course has become a model for integrity.

The horse-racing industry reluctantly came to grips with the reality that its aftercare initiatives, while greatly commendable, were not saving nearly enough former racehorses.  The outcome was a dependable and much increased flow of dollars to aftercare facilities funded by racetracks, auction houses, owners, trainers, breeders, and others whose businesses depend on racehorse commerce.

A major racing operation headquartered in Europe is plotting to achieve, arguably, the most difficult feat in horse racing: to win the Kentucky Derby on dirt in early May and the Epsom (English) Derby on turf in early June…with the same colt.  Only two owners have ever attempted to do so, with Bold Arrangement in 1986 (2nd in the Kentucky Derby and 14th in the Epsom Derby) and Dr. Devious in 1992 (7th in the Kentucky Derby and 1st in the Epsom Derby).

A very lucky low-roller by the name of Bill Shanklin was the sole winner of the biggest Pick-6 payout in Breeders’ Cup history.  Since then, only a few people and the IRS know of his whereabouts.

Copyright © 2017 Horse Racing Business

The Keeneland September Yearling Sale is about to begin and that brings to mind a television program I watched recently on CNBC’s series “American Greed” about shill bidding.  Ebay defines the practice as follows:

“Shill bidding happens when anyone—including family, friends, roommates, employees, or online connections—bids on an item with the intent to artificially increase its price or desirability… Shill bidding is…illegal in many places and can carry severe penalties.”

(“Ghost bidding” is a term sometimes used to describe both shill bidding and “ceiling bidding.”  In shill bidding, an actual person colludes with the auctioneer to drive up the price, whereas in ceiling bidding, the auctioneer pretends that a real bid has been made.)

The American Greed episode pertained to Bill Mastro, who operated an Illinois auction house that sold baseball cards and other sports memorabilia.  CNBC explained how Mastro defrauded his clientele out of at least $1 million by rigging auctions, which got him a 20-month prison term:

“In 2013, [Mastro] admitted using a system of so-called shill bidders whose sole purpose was to drive up prices and bring him higher commissions.  He also tried to pass off a baseball that he falsely claimed was from America’s first professional baseball team, the Cincinnati Red Stockings.  And in a collector’s sacrilege, he trimmed the edges of a rare Honus Wagner baseball card in order to make it look more attractive to bidders.  Had they known the card was altered, it would have drastically reduced its value.  But Mastro failed to disclose it.”

CNBC concluded: “…the industry he helped create remains loaded with pitfalls.

A cursory Internet search revealed that shill bidding is a problem in auctions tendering all kinds of goods and services.

While Keeneland, Fasig-Tipton, and the other well-known horse auctions have endeavored to increase transparency, unscrupulous sellers can sometimes game the system.  Caveat emptor is truly sound advice when it comes to selecting honest bloodstock agents who know what they are doing at auction and to buying racehorses at their fair auction value.

Copyright © 2017 Horse Racing Business