Correct Frank - my post was on 9/22/15. They actually replied via email, and multiple phone calls. Good guys, not gamblers as far as I can tell, but I felt the math was convincing as was pointed out by others here first. We shall see. JB did they ever call you? That was the end of my final phone visit with Eric Halstrom, racing director. Again, good guy, who enjoyed talking wagering. Not taking credit - just affirming as you said I suggested the simple math to them from a non-shareholder. Most of the letter is below below with as I mentioned lots of it garnered from the gist of numerous posts here on this issue. The 9/22 post has the links referred to I believe. bb

Dear Mr. Sampson,



I read with interest the season reviews in the publications from the Star Tribune, the Bloodhorse, or the Shakopee Valley News. Congratulations on a successful season. Bucking the national trend as you did gives racing hope in Minnesota. My wife and I are former horse owners at the previous Canterbury Downs, and hardly missed a full weekend of live racing for years. Now our racing summers are mostly centered around Saratoga visits, but it with state interest that I send this note.

I am a racing fan, but also a gambler on races who understands that that is really what drives the industry. Without wagers, all the pony rides, dollar hot dogs and camel races are just fluff. Money has to be wagered to produce profits. Profits help attract horses from the inevitable list of tracks that will fail, for there are not enough Minnesota breds to be able to fill the races otherwise like New York breds can in New York. I quit wagering on Canterbury when as a Minnesota resident I was not allowed to wager on Canterbury races online. I miss wagering on them, but it is out of my control. However, as I watch the industry, I think Canterbury is in such a unique position to be kind of able to "re-write" the way this business works, that I am prompted to offer this letter.

The Native American purse funding deal is so unique as you know, that every state would love to be in your shoes. New York tracks have millions coming to them from casino's but the prospect of that being pulled from them looms constantly, and the state bureaucracy prevents them from making meaningful change in the wagering menu. Other states with casino pacts run the gamut from racing is treated like the plague – see Churchill, to some of the harness tracks that pay out tens of thousands per day in purses with daily handles less than $250,000. How long before state politicians want to dig deeper into that pot of “gold”. You know you have at least 6 more years to be able to put the business in position to move forward potentially without another Native American pact. Hopefully that does not occur, but if it does, Canterbury is back to life support like the nearest neighbors in Iowa and Illinois without some changes right now.

As I try to convince people to try racing with the dollars they spend at the casino or on sporting events, I get arguments like those listed below. Many of them come from Thorograph players/acquaintances who put more money through the pari-mutuel windows than the average bettor, and are diehard racing folks. These are some of the comments they share in regards to racings future:

All my sports betting friends point to the 17-30%+ rake as to why they will not expand or come back into horses. I've got no counter argument.

IGT the world's largest slot machine manufacturer figured out 8% take out in slots maximizes slot income and I don't see why racing handle would be any different.

Racing has lost $5 billion of handle from its peak. Elvis has left the building.
Fantasy Sports betting has Wall Street, private equity, the NFL, NBA and major networks looking closely. Growth rate of Fantasy Sports still exploding and projections have its growth potential near $7 billion within 5 years. That can't be good for future racing handle. Why get into racing? Racing handle projections are all neutral at best, no real upside. Watch an NFL game for 15 minutes and count the number of adds for fantasy wagers that will suck the life out of racing.

Another acquaintance put it well - racing has 3 major problems - take out, testing of medications, and transparency.

Canterbury is in the best position of any track in the country to become the new standard in all 3 area's. Do that, and you instantly move to the head of the racetrack industry. And as all those new bettors on fantasy football loose their funds (see the Wall Street Journal last week pointing out how over 90% of the money is won by less than 5% of the gamblers), maybe that new generation of bettors can be drawn to racing?

Start with take out. As my quotes above note it is a deterrent to any savvy bettor. As the simple chart below shows, (with different bet amount/take out rates, and what is LOST to take out in % terms, after 9 races), the take out just wipes out people. The industry needs churn, and the current rake eliminates that. As the chart shows, somewhere between 5-10% takeout seems to be about the optimum amount to make the game healthy. So, try it. Make a Pick 3,4,5 with 8% takeout like the casino's say is optimum. Cut the exacta and other exotic bets to 10%. Same for win, place, and show. These numbers say your handle, and in particular that lucrative out of state handle with the most savvy bettors goes way up. You could try it, knowing you have the guaranteed money for purses anyway. If, and when you might someday not have that luxury, you would not have the option to try these suggestions. Advertise it heavily and watch bettors, and horsemen, flock to the product. Push your handle to $2 million/day at 8% average takeout yields $160,000. The current setup of roughly 22% on average with a $760,00 handle yields $167,000. 2 million might be conservative. Don't try it, and, well Canterbury is just a Midwest track sitting on a gold mine that went untapped and remains with the same problems that the rest of the tracks in the country have. As it currently stands, HANA ranks Cby 29th out of 62 tracks in the country. It rates Cby an F in signal distribution. Those are the numbers that need to change to move the track along. Change these and the large bettors needed to pay for the purses (and the camel races) will appear. It just seems so short sighted to NOT try them, especially in light of what we know of racings demographics. Put it another way. The track record crowd on July 3, averaged about $48/person in handle. The majority have no idea how to wager, set up wagers, or even give themselves a chance to succeed and maybe, just maybe come back to the races sometime in the future. No track can survive long term on those numbers. The only way to get the larger bettors is to have the lowest takeout of any track in the country. No other track is in position to try it other than you. And then it is up to you to educate the novices on the intricacies of wager creation on the best game around.

Next, testing. The testing and results need to be transparent for the public to believe that cheaters are not ruining the horses and the game. Random testing for medication not legally allowed, with results shown publicly will at least start to gain the faith of bettors who have dropped racing due to the proliferation of the super trainers, who get unbelievable move ups on stock at tracks around the country. This could be a 10-page note alone, so I will save it as testing, including out of competition testing. The transparency part is obvious. Publish the results like they do in other racing venues around the world.

Knowing how racing works I am not to confident that this will be even read, much less taken into consideration on a serious level. But if I were an investor in Canterbury Park Holdings, I would be clamoring for these changes at the annual meetings, for I know that sooner or later that tracks either make changes like these, or they face a very uncertain future which as an investor would be out of the question.

I really hope for the best for you, as I see you as having one of the few opportunities to reshape the future of racing.