Page 14 - March 2005 The Game

14 The Game, March 2005 Your Thoroughbred Racing Community Newspaper
David Willmot:What Scares Him Most
By Peter Gross
Continued from February 2005 Edition
A long, long time ago, not quite in the Precambrian age, but certainly in the Pre-cellular age, there were no public telephones at the racetrack. This was to discourage the bookies, who would send their messengers to the racing site to call in the odds. Bookies hurt the racing game by tak- ing bets from those who found it inconvenient to get to the track. The bookie did well because he had virtually no expenses; the racetrack suffered from the loss of funds that should have gone into the pari-mutuel pools.
In November, 1995 when David Willmot became the President and CEO of the Ontario Jockey Club (now known as Woodbine Entertainment Group), the least of his worries would have been some guys in a smoky backroom taking a little action on the ponies. The emergence of a network of Champions Betting lounges made it easier for the fan to put money into the legal pools and the subsequent innovation of telephone account wagering meant it made much more sense to talk to a recorded prompt than a guy named Bubba who might be unhappy with you if you were late with your payment.
Willmot's energies were spent re- invigorating the sport of horse racing. And he did this by spending millions to renovate Woodbine, expanding the role of off-track theatres, promoting and marketing the sport to make it competitive, and enthusiastically embracing the latest technology to enable the player to place bets from his home, his car or his computer.
Willmot also fought the paper battle to install slots at Woodbine and Mohawk. The result was 6 years of impressive increases in wagering. The seventh year, 2004, presented some difficulties.
"2004 was our first year of declining numbers," admits Willmot. Part of that had to do with a newly implemented no smoking policy, which drove slots revenues down close to 20%. Woodbine also had a costly labour dispute in January, 2004, which Willmot characterizes as "hopefully, a non-recurring expense."
Strangely, the one big problem facing horse racing in Canada; in fact all across North America, is..bookies.
Not your traditional old-style
bookie, cigar in mouth, flash-paper in hand ready to ignite the moment a suspicious knock is heard, but a new third millennium bookie capable of operating in the relatively un-policed world of cyberspace.
"The big thing that should be a concern to the racing world is the clear impact of the emergence of Bet Exchanges, off-shore pirates and rebaters," says Willmot," They're betting on our product, they're charging a very low take-out and they're paying nothing or very little for our product."
Betfair, a company based in England, is the most established and affluent of the new breed of bet exchanges. Actually Betfair is less an actual bookie than a gambling dating service. It brings together bettors who gamble against each other, then takes a cut of the winner's share. On a typical day, Betfair offers several cards of racing from North America and invites its customers to bet on or against a horse. The player can actually choose the price he wishes to get and if another client wishes to match, the bet is on.
"This is much like the music industry with Napster," Willmot points out, "We're an industry that has lost control of its distribution and pricing."
The rebaters also frighten Willmot. Because the Bet Exchanges and off-shore Casinos have virtually no expenses as far as the races are concerned, they lure the big players by giving back from 5% up to 12% of the bettor's overall action. This is a number Woodbine simply cannot match. Horseplayer Interactive does have a rebate system, but it's very much on the modest side. For a 'minnow' like myself, $5 is deposited in the account for every $1600 I bet - that's a rate of about 1/3 of 1%. For the 'whales' who really play with gusto, the rebate can grow to 3% if betting totals exceed $75,000 a month. If the whale can get three times that much elsewhere, the temptation could be overwhelming.
"I have no problem with the customer buying the product he wants at the lowest price -that's the way free enterprise works," says Willmot, "The problem is that there is a cost in the product we produce. Horse racing is the most expensive means of determining a winning bet."
Half of Woodbine's income goes into the purses that the horses run for. There is also the extraordinary cost of the building, the upkeep, the staff, the backstretch and the marketing; these are all expenses that the on-line betting places don't have to worry about.
"You can't buy a Mercedes over the internet at 20% of the retail price," argues Willmot, " Mercedes won't sell to a distributor at less than the cost of production."
Imagine if a guy was selling cases of Coke at Yonge and Bloor for 50 cents a case. You might be inclined to buy a case or two, and the police might be inclined to ask where the stuff came from; the logical conclusion would be it was stolen.
Somehow, that same thinking doesn't seem to apply to horse racing. And Willmot can get a full head of steam when he thinks about it.
"I don't like to call them competitors because I believe they're stealing our product and our customers and they don't pay us for it."
There is also a very real and scary aspect to the Bet Exchanges that concerns Willmot.
"With the Bet Exchanges, you can actually bet a horse to lose." He says, a clear level of disdain evident in his voice, "If you want to bet a lot of money on the favourite to lose, there are ways in which people can stop that favourite from winning and it requires no interaction with any other horse."
In recent months, British racing authorities are investigating a number of racing outcomes that seemed to have deviated from the norm and would have benefited individuals betting a horse to lose.
The danger to Canadian racing is immediate, suggests Willmot
"Our attendance is up. We know on a Saturday afternoon, there are 1000- 1500 more people than there were three or four years ago," he says, "But those new people bet $2 or $5. You can get 1000 new people in the door betting $5 a race and that positive impact is offset by losing one whale who bets $5000."
The solution, insists Willmot, is for the Bet Exchanges and the off-shore casinos to pay a fair price for using the horse racing product. Somehow, these new services will have to be
coerced into an equitable agreement with the racetracks that provide the action. Willmot has an anecdote that illustrates just how fragile the whole system might be.
"We had a convention in Florida and I was debating two big horse- players who suggested that racetracks ought to reduce their take-out to the level of the bet exchanges and the rebaters. I pointed out, that in order to do that costs, including purses, would have to be slashed, to the point where there would be no owners and breeders and we would be betting on frog races. One of the big bettors responded by saying,
'Then I'll just find the fastest frog!'"
During the 70s and 80s, the Ontario Jockey Club let its game slip, failing to maintain competitiveness with the new entertainment available - the Blue Jays, the Raptors, Skydome, Casinos and the explosion of lottery products. Fortunately, the Woodbine Entertainment Group has reclaimed a viable share of the market, despite a full twenty years of corporate lethargy.
Twenty years of dawdling won't work this time. It's very clear to David Willmot that wearing blinders will not make the Bet Exchanges go away.
"Woodbine has identified 83 inter- net sites that offer betting on racing without paying for the product," says Willmot morphing into lawyer mode, "Even though the activity of most of these sites is clearly illegal they appear to be beyond the reach of the law."
A mere touch of a computer key will prove that, despite continual urging by the racing industry, the internet bookies continue to thrive, unabated by government or police action.
For almost ten years now, David Willmot has been the voice of progress and passion and endless possibilities for Canadian horse racing. But when considering the effect of this wave of pari-mutuel interlopers, Willmot strikes a pessimistic pose,
"If horse racing can not find a way to force these operators to pay a fair price for the product then horse racing will have to find a away to be competitive and that, I fear will necessitate possible unpleasant structural changes."
Did You Know....
That John R. Gaines, founder of the Breeders’ Cup and former owner of Gainesway Farm, passed away in February, 2005. He was 76.
John Gaines was one of the first to import stallions from Europe on a major scale and was touted as one of the true innovators of the sport.
John originally started in the business when he took over the Standardbred operation started by his grandfather in 1925 and opened a
Thoroughbred division of Gainesway Farm in 1962 with champions Oil Royalty and Bold Bidder and former broodmare of the year Cosmah.
Did You Know.....
That Jockey Gary Boulanger was seriously injured in a spill
in late January at Gulfstream Park in Florida. The 37-year-old jockey suffered a head laceration and internal injuries which necessitating emer-
gency surgery to remove his spleen and a blood clot from his brain. A golf tournament to benefit Gary has been scheduled
for March 29 at Rain Tree Golf Resort.
According to most recent reports, Gary is making slow but steady
progress recuperating.