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Keeping Pace: Try Fixed-Odds Wagering, Says Former Trackmaster Executive
David Siegel resigned as president and CEO of Trackmaster in 2020 after years of shaping the way horse racing is presented to the betting public. At Trackmaster, for example, he forged an exclusive data sharing agreement with the United States Trotting Association where, for many years, he was a director. Siegel was ousted by voters last year from the USTA in favor of a longtime horsemen loyal to the USTA’s top leadership. It was a critical loss for an organization in desperate need of dissenting voices. Siegel, you see, was open to the federal regulation of harness racing. The USTA, as you know, is not. The poor guy never had a chance.
Siegel’s value to the USTA, his added value to harness racing really, was his ability to ask tough questions of USTA leadership. Like why they decided to spend hundreds of thousands of membership dollars joining litigation seeking to strike down a federal law – the Horseracing Integrity and Safety Act – that does not yet apply to Standardbred racing. Or like why they chose to preclude themselves from negotiating with federal regulators over the ways in which HISA could be adapted to harness racing because of the differences between the Thoroughbred and Standardbred breeds. Now that he is gone, now that there’s virtually no dissent within the USTA, the industry has suffered.
David still consults for those in racing, “focusing on precision-tracking of horses for detailed performance data and enhanced TV graphics for both Thoroughbred and Standardbreds.” In his spare time, he tells me, he bike rides, plays baseball and pickleball, and drives two retired harness horses. He also owns two Standardbreds who compete at Hoosier Park in Indiana. I reached out to Siegel a few weeks ago and what follows is our back-and-forth email exchange. It has been lightly edited and condensed for space.
COHEN: It's been months now since you left the USTA's board of directors. Has the distance from USTA management and/or the passage of time given you any new insights about the organization and its priorities?
SIEGEL: It has not. Outside of HISA, I have paid little attention to what has happened inside the USTA. I rarely look at its website anymore, and other than the two horses I have that race in Indiana, and my two retired horses, I don’t have much interest in the organization. That said, I continue to believe the organization is being led in the wrong direction by its leadership with respect to HISA. Not only that, the information passed along to its members is not sufficient for membership itself to reach an informed decision about that legislation and related court actions.
On Oct. 28, however, I read an interesting news item on the USTA website. Here is the key paragraph: “During today’s Board meeting, USTA President Russell Williams emphasized that in carrying out its oversight role, the USTA must investigate and, when warranted, take action against USTA members involved in the false and fraudulent ownership of registered Standardbred horses by ineligible individuals, a practice known as ‘bearding.’ Bearding is prohibited by the USTA’s Rules and Bylaws, and for too long, the USTA has had insufficient resources to investigate and enforce violations of these Rules. That era has ended.”
I think this is terrific. Fraudulent ownership has plagued the industry for some time. Now that said, talk about missing the mark! To me, this is akin to the U.S. government announcing a crackdown on illegally owned bb guns, while our mass shootings continue. Sure, it's a good thing, but where are the priorities? Ownership "bearding" as this article referred to it, is not as significant an issue as "trainer bearding." I have not been out of the industry so long that I don't understand harness nomenclature. The term typically used is "hidden ownership." "Bearding" is the term used when a horse is listed under the care of a licensed trainer but really being trained by someone else, typically an unlicensed trainer.
But no matter the correct term, the main problem is that taking a license away (at the state level) from a trainer has little teeth when that trainer moves to a private farm, and trains the horses, and some other (licensed) trainer is listed as the primary trainer of the horse. Think of the bettor. f a .425 trainer is really training a horse, but a .150 "beard" is listed, and that bettor does not know how things "really" work, s/he can make a very uninformed wager. But if Joe Blow really owns the horse, but Buzz Lightyear is listed as the owner, how much might that make for a bad wager. I am not saying it is right, but geez, let's get the priorities straight.
Now, with all of that said, I think it is very challenging to find beards and impose sufficient penalties to stop it. Where does one draw the line between a suspended trainer "consulting" to a licensed trainer, versus fully training a barn of Standardbreds. But just because it is challenging, does not mean it should not be done. No one training today, in my opinion, sufficiently dots every possible "i" and crosses every possible "t" in attempting to hide the beard. Following the money is really all it takes to find these folks, but for whatever reasons, the energy simply has not been there.
I have had dealings with the Standardbred Racing Investigative Fund (SRIF) when I filed a complaint. As a director, I asked for some data from the group – simple stuff like how many cases came in the front door, how many were investigated, how many had outcomes that involved some level of penalty, and all I was told was that such information was private. I had even requested that someone from SRIF show up at the annual meeting to address the state of affairs. It was not done (while I was a director). To be fair, Mike Tanner informed me that there were issues there and that such issues were being addressed. But I have not seen any data reported, even in general terms, posted (perhaps it was and I missed it).
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COHEN: I don't expect you've followed the daily machinations of lawyers who are fighting for and against the Horseracing Integrity and Safety Act but have you spent any time following how the new federal regulators are doing on the Thoroughbred side? Do you have any thoughts on HISA? What's the best thing about it so far? What's the worst thing about it so far.?
SIEGEL: I have watched what has been going on from time to time. I am pleased with the way. HISA seems to be improving itself as time goes on. I have read some about contaminations and specific work that ultimately exonerated some of the accused in this area. This tells me it continues to evolve in a positive direction. On the flipside, I have seen some ridiculous decisions by state racing commissions where HISA is not in charge. It almost seems like some want to have more drugs and racing rather than fewer. This evolution is one of the best things that I have seen occur under this legislation. I guess the worst thing about it is when they have been a little bit slow to exonerate those that were truly innocent. But frankly, this is no different than state, racing commissions, and overall the speed to get to decisions has been much better than what I recall under state commission authority.
COHEN: I read a smart piece recently about how horse racing has missed some of the marketing and promotional opportunities that have come from the legalization of sports betting around the country. That the industry should have been, and still should be, more aggressive in reaching out to young men betting on basketball or football to get them used to the idea of betting on horses. Do you agree with that criticism? What can and should horse racing do to try to capture this generation of gamblers?
SIEGEL: I only partially agree with that criticism. I think the only chance that horse racing has to grab any share from sports wagering is to institutionalize fixed-odds wagering. I know it is now legal in New Jersey, but my sense is it has not done well. Believe it or not, in the UK, there is fixed odds wagering on horse racing now during a race. This so-called “in-race” wagering is small but growing. Computer modeling takes the off-odds of the horses and adjusts them as the race unfolds. But even if this was introduced in the U.S. along with fixed odds on win wagering, it would only make a small impact. I think the industry needs to do more to legalize fixed-odds wagering to compete on a level playing field as that is the wagers that are placed on sports.
Now, with all of that said, the fundamental problem is that horse race wagering is simply not compelling. That is my keyword of the day, “compelling”. Simply stated, nearly every horse race looks the same to the untrained eye, which is really what the public represents. I would guess that 99.9% of the population could not tell the difference between a Breeders’ Cup race and a $5,000 claiming race at a third-tier track. The Breeders Cup race would run a little bit faster, but otherwise it looks about the same. This is an issue with racing of all types. Whether it be humans around a track, or humans in a pool, or Thoroughbred or Standardbred horses racing around an oval.
This is fundamentally so much different than a football game or a baseball game where even an untrained eye could tell the difference between high school players and professionals. So, as I said, the basic idea of watching racing is not particularly compelling. When racing had the monopoly position it used to have, it didn’t matter. But now with the gambling alternatives that are available to much of the US population, and in particular sports, even with the fixed odds addition that I discussed above, I am pessimistic about any growth and popularity of horse racing, whether it be Thoroughbreds or Standardbreds.
Now, layered on top of that simplified analysis, you have the overall perception changes, currently ongoing in the U.S. and the world about animal rights. This to me is why HISA is so very, very important. Potentially even with HISA improving things in the area of animal rights, it still might not be enough to overcome public sentiments about the use of animals for human entertainment, and the wagering alternatives that now exist. But for sure without it, racing will be facing an ongoing decline.
Notes
You never get a second chance to make a first impression. My interview with David Siegel gives me the chance to reach back a few weeks to an interesting column by Frank Angst in Bloodhorse in which he notes that “the rising tide of sports wagering is not lifting the pari-mutuel boat.” Angst writes: “Some progress has occurred with major sports betting platforms such as FanDuel and DraftKings offering pari-mutuel wagering on apps that are a click away. And FanDuel allows a shared wallet for deposits into its sports betting and race betting.” But there have been missed opportunities.
“On takeout,” Angst writes, “racing has continued to funnel new players into a high-takeout structure that is exacerbated by the industry's welcoming of heavily rebated, high-volume computer-robotic wagering teams. New players quickly find out that pari-mutuel wagering is a far tougher game than fixed-odds wagers on sports. But racing largely has shied from the fixed-odds model that would allow it to be available side by side with other sports. One would think the money rolling in to purses and tracks from added gaming would put the industry in position to at least try something new, perhaps for a trial period?”
How much process is due? Sometimes, the FTC overrules racing regulators and grants relief to an owner or trainer that has been suspended or fined. And sometimes the FTC affirms the decision made by federal racing regulators. Take the recent case of veterinarian Scott Shell. First, HIWU officials caught Shell injecting a compounded (and banned) drug Hemo 15 into 37 racehorses – 227 times – during a roughly six-month period in 2023. First, an arbiter agreed with federal regulators. Then, an administrative law judge did. That’s two reviewing “courts,” if you will, adjudicating a case. Shell now faces a two-year suspension and a $25,000 fine.
A grace note. There’s a really nice video going around that pays tribute to George Segal and Brittany Farms, one of the leading Standardbred breeding operations that’s now winding down. Brittany is a sponsor of this column, for which I am grateful, but even if it were not I’d say this video is worth the five minutes it takes to watch. Decades ago, Segal, with the help of pedigree expert Myron Bell, built up one of the best broodmare bands in the history of the Standardbred sport. The priority was quality over quantity and it paid off for decades. Credit also goes to my friend Art Zubrod, the longtime manager at Brittany, who now gets to ride off into the sunset in Kentucky. Segal and Bell, meanwhile, are still active in the sport. That’s a good thing.
