The Breeders’ Cup Forum: Barry Meadow and the Horseplayer View

In the early 1980s, when I worked days at the Los Angeles office of Daily Racing Form and spent many of my nights playing the harness races at Hollywood Park and Los Alamitos, I was introduced to a serious and studious horseplayer named Barry Meadow (nicknamed Barry Meadow Skipper by a mutual friend in honor of the standardbred great Meadow Skipper). Barry produced his own race charts, took copious notes, and followed betting patterns closely.

Meadow switched over to Thoroughbreds around the time I moved to Kentucky in the late 1980s, and he's been at it ever since, betting on an almost daily basis. He is a prolific writer, authoring his first handicapping book (Success at the Harness Races) in 1967, and he's penned countless books, pamphlets and magazine and online articles on horserace betting, money management, and internet gambling, among other subjects. He's a regular speaker at the annual Handicapping Expo, was a member of the NTRA Players Panel, and serves as an advisor to the Horseplayers Association of North America.

How and when did you first get involved betting on horses?
I started in elementary school, betting nickels with some other kids. We'd pick a horse in each harness race using the entries in the paper, and you'd either pay the other kids or collect depending on how many winners you had. Like if you had four winners and everybody else had three, you'd have beaten them by one, so they'd each pay you one nickel.

As a teenager I was going regularly to Roosevelt and Yonkers, the two big harness tracks in New York; even though I was below the legal betting age, I was shoveling the money through the $50 windows. When I taught tennis in the Catskills, I'd go to nearby Monticello Raceway almost every night. Later, when I moved to California, I started going to Hollywood Park (which had harness racing then) and Los Alamitos. After several years, I switched to the thoroughbreds.

What has kept you in the game through all these years when you have other gambling options like sports betting, card clubs or casinos?
I love horses, and I've always loved the puzzle of figuring out how races would go. I never had much interest in sports betting – I might be the only professional gambler on the planet who's never bet the Super Bowl. Card games such as poker never held much appeal for me, though I have played blackjack extensively.

What do you consider a good rate of return on your wagering investments over the course of a year?
That's a hard question to answer because much of where I've concentrated in recent years has been the betting exchanges, where you're moving a ton of money through – far more than you would at a track, because the takeout is so low. And rebates are a very important part of making serious money at the track these days. Volume is crucial; if a guy has a 10% edge but only bets $40,000 a year, who cares? The idea is to be able to move enough money through so that you can make a decent living.

What are the biggest changes to betting on horses today vs. 30 years ago?
For someone like me, the availability of betting exchanges has been huge. Rebates, too. And convenience — I used to have to travel to the track every day, and now everything is on the phone or the Internet. But there have been negatives too — higher takeouts and smaller field sizes, to name two. There's also a lot more information available; I used to make my own trainer notes, and now anybody who goes to the track once a year has access to similar information.

What to you makes a race an attractive betting proposition?
There must be a discrepancy in the way I see the race vs. the way the public sees the race. If I make a horse 6-5 and the public lets him go at 9-5, there's a discrepancy. If I make him 5-1 and he's 8-1, there's another one. If I hate the favorite and can structure a play against him, that's good. If I understand why the public is betting a horse I don't like — maybe he has a popular jockey, maybe he's just had two lucky trips in a row so his lines look good, etc. — so much the better.

Why does takeout matter to the horseplayer?
Every horse is worth a certain price, and the challenge of handicapping is to figure out what that price should be. If I give a horse a 20% chance to win a race, fair odds would be 4-1. Since I demand a premium, I need 6-1 for that horse. The higher the takeout, the more the prices drop — not only for win, but for all other pools as well — which means I'm going to find fewer opportunities.

Takeout also matters because higher takeout causes players to run out of money faster, even if they're not aware of the takeout. If a group of players bets $100,000 on the first race, by the second race they have only $80,000 left if there's a 20% takeout; if the takeout is 22%, they're down to $78,000 — and after 10 or 100 or 500 races, they are simply ground down faster. This has a spiraling-down-the-drain effect on the handle; fewer dollars bet means that I as a player have to bet less as well. I can't bet the same amount into a Golden Gate daily double as I can into a Saturday win pool at Hollywood Park.

Generally, there are two types of players–those who care very much about the takeout (such as the whales) and those who don't. But a high takeout hurts them both.

If low takeout is important, why do players seem to focus more on the high takeout bets like trifectas rather than low takeout win, place and show bets?
Many players want to hit the home run. There's no bragging that you caught the $5.20 winner. Many players believe that unless you hit something very big like a Pick 6 or a superfecta, you can't win, so they ignore the takeout differences. I don't play as many tris or supers as many other players, though — there's more luck involved, and your bets have more of an influence on the payoffs. I do know some other professionals who love these bets, because there's a lot of “throwaway” tickets wasted by players in an effort to take down that big payoff, and certain races can be beaten by clever structuring (e.g., keying a longshot in third or fourth).

Would you be betting today if you didn't receive rebates?
No, except for betting exchanges. Otherwise, I'm too close to break even to make it worth my time.

Since rebates effectively lower takeout and improve your chances of winning, does it create an unfair advantage over players who don't have the benefit of rebates?
If I play blackjack at $10 a hand and lose $100, I get nothing from the casino — but somebody betting $10,000 a hand who loses $1 million may get $100,000 or $150,000 back in rebates; should I complain to the casino that the big player is getting an advantage unavailable to me, or should I just go ahead and play my game? Life is inherently unfair — on an airplane, one guy might pay $200 for a ticket while the guy in the next seat is paying $600. Some shoppers use coupons, or are members of buying clubs, or get store rewards, while others pay full retail with no givebacks. The guy buying 20,000 pencils gets a lower per-pencil price than the guy who buys two pencils.

This game is tough to beat even with rebates, and the extra volume provided by the rebated players keep everybody's handle up. I'm always hoping that the big computer groups that get bigger rebates than I do hate the horse I like and like the horse I hate.

Ideally, everybody would play against the same takeout, and it would be much, much lower than today's takes.

When you started playing, there were four interests sharing the betting dollar: the player, the track, the horsemen, and the state government. Today, with simulcasting and ADWs, you've still got those original four interests, but we now have the ADW companies or rebaters, the out of state horsemen and tracks where the bet may have been made, the disseminators of the signal. Bottom line: there are more hands pulling money out than ever before, with less going to the tracks and horsemen where a race is run. Is this a sustainable business model, and, if not, how can more revenue flow back to the people putting on the show?
It would take hours to answer this question. In California, the state rebates just about all the money it used to keep as license fees back to the tracks, and still nobody's happy. If you wanted to bet at Del Mar, you had to travel to Del Mar — it was the only store open, but now there are hundreds of places to bet Del Mar.

All the groups you mention have had some hand in the handles going up regularly up till 2003, so they want some share. Remember that the tracks sell their signal, voluntary, to many groups; if Santa Anita wants to allow its patrons to bet on New York races as the fans seem to want, there has to be some compromise in who gets what.

I believe that racinos are just a temporary fix, because at every racino I've been too, horse racing attracts little interest. Sure, some horsemen are making money now, but what happens when state legislators decide that all that slots money should go to health care or education instead of to horsemen? Maybe the racino doesn't need 300 days of racing each year; maybe it will have to make do with 30, or zero. And then what?

These are dark, dark times for racing, and it's only getting darker. I wish I had a simple answer.

Has racing in this country taken full advantage of technology?
The main thing U.S. racing has avoided is the Betfair model, which has proven to be tremendously successful; these guys built a better mousetrap, and it's handled tons of money in the past decade while horse racing here has been sinking. Then there's the late-odds-drop problem, which has been able to fester for years because nobody wants to put the money up to bring the tote technology into the 21st century (although I've read that this is changing). I'm not sure how being able to Twitter or put results on an I-phone is going to help much, because racing cannot sell its polka music to a hip-hop audience no matter how many apps a track might create.

Current betting exchanges return very little to purses and racetracks. Shouldn't we fear that betting exchanges will only make things worse from a revenue standpoint?
Betting exchanges have attracted a much younger audience than traditional racetrackers, and offer many more options for betting; I can play against a horse I don't like, I can get a better price on one I do like, I can bet against three longshots in a race where the three horses I like are all 5-2 or under, I can at times arbitrage, I can play against a horse I think is overbet, etc. I might only like a couple of races at the track, but I probably have some bettable opinion in nearly all of them on an exchange, so my action is going to be much, much greater. And that will be great for overall revenue.

However, at the moment, the exchanges only offer win betting (you can also bet to show at Betfair, though it doesn't presently take U.S. customers), so the exchanges will have zero effect on any of the many other bets being offered at the track. And you have to have a computer with an Internet connection, the time to play, money in your account, etc. So it's not going to be a panacea, particularly if it doesn't attract enough liquidity right from the start.

I agree that the current model (Betfair collects 3-5% of the winner's payoffs, and remits just 10% of that small number to the tracks) is quite insufficient for racetracks to have much interest. But that's just a starting point for negotiations. There are many other scenarios that could work — tracks could run the exchanges themselves, they could charge players 5-8% instead of 3-5%, they could charge market makers at a higher rate, they could have an “excess profits” tax for full-time players, they could demand half the revenue instead of only 10%, etc. It all comes down to some number that everybody can live with.