I am reposting this because it is important, and I don't want it to get lost.

On Wednesday night I alerted the editor of the DRF that I was writing a letter to the editor about the response to the previous article Matt Hegarty wrote about my entrance into the rebate world, and the concerns that had been expressed to me since. They indicated they were going to run it, and had David Mc Donough work with me to facilitate that end. I sent them the letter, but lo and behold, I woke up this morning and found that they had neglected to run it, choosing instead to go with with Hegarty's piece that contains the loaded terms "vociferous objections", "syndicate", "cut off", "selected customers", "confronted", "concerns",and "incensed".

Here is the letter that was supposed to run. I will have more information for the players I spoke to as it becomes available.


Two weeks ago Matt Hegarty wrote an article about my formation of a company to meet the rebate needs of Thoro-Graph players. The article inspired calls from nervous racetrack executives, and at the recent DRF handicapping expo in Las Vegas I was asked more questions about rebates than about speed figures. This seems like the proper forum to address those questions, and the rebate issue in general.

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

One company that approached me was an offshore bookmaker who 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 OK, and this had the advantage of being pari-mutuel, 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 DRF headline.

I also considered trying to open a venue myself, but after exhaustive research and thorough vetting, I finally came up with the right partners. Their company is run by a former high ranking racetrack executive, and they model their 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 pari-mutuel pools of the host tracks, and we have written contracts.

To me, the most interesting event of last week's DRF expo was the NTRA 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.

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-pari-mutuel vendors, or simply vanish. As Tim Smith 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.



Post Edited (03-08-04 14:35)

TGJB