I was walking into Hawthorne Race Course outside Chicago when I stopped to bump fists with Dino, the parking lot attendant. Dino sees everyone who goes in and out of the track. He doesn't see many people these days.
"Aw, it's terrible," he said, in the put-upon tone that all horseplayers learn after throwing away a few thousand tickets. "There used to be a guy here, the Greek, he did 25 percent of the handle. He had two or three runners. Mike the Thief—he used to make a living just by skimming [money off the Greek]."
It's not surprising that a whale like the Greek stopped going to Hawthorne. It's surprising he stayed so long. When I went inside, I did see a few of my racetrack buddies. Snow, the "stooper" who picks up tickets off the floor, looking for a tossed-away winner. Plumber Bob, whose jeans sag like those on the man who comes to fix the sink. Blonde Jimmy, who's so focused he never makes eye contact with anyone but a horse. We're the regulars, but we make $5 bets with soiled bills from Velcro wallets. Of the $1.5 million wagered on Hawthorne's races that Saturday, only a tenth came from the track. Weekdays are worse: 4 percent or 5 percent.
Close to 150,000 people will jam into Churchill Downs for the Kentucky Derby, making it one of the best-attended sporting events in America. But the rest of the year, racetracks are emptier than ever—not because the sport is getting less popular but because the track is a terrible place to bet on a horse.
The whales, the big bettors who support the industry, don't show up at the track because they can get a better deal elsewhere—by calling in their wagers to phone-betting hubs in exotic, loosely regulated locales like St. Kitts or North Dakota.Say you want to lay $1,000 on a horse running at Aqueduct. You call the hub in Fargo, then an operator takes your bet and relays it to New York, where the money is fed intothe racetrack's pool. Why not just bet directly at the track? Because you get a better return on your investment by staying away.
The phone hubs take advantage of the economics of simulcasting. Racetracks "sell" their signals to one another in exchange for 3 percent of the handle. If a horseplayer sitting at Santa Anita bets $100 on a race at Belmont, Belmont gets $3. The hubs pay a little more for this privilege than the tracks—between 7 percent and 9 percent—but since they don't have to maintain a grandstand or feed horses, they can kick money back to their customers.
The bigger the bettor, the bigger the rebate. The average racetrack's house take is 20 percent. You're subject to that bite whether you bet at the track or over the phone. The difference is that the highest-rolling players—who have the clout to negotiate rates—are refunded 10 percent of their wagers by the phone hubs. That cuts their disadvantage in half. Suppose you've been betting $5 million a year at the track and only breaking even. If you bet that same amount of money through a hub, you'll get a $500,000 rebate. Suddenly, instead of spinning your wheels, you're a professional horseplayer earning a fabulous six-figure income.
Since rebates were first offered at Las Vegas sports books in the mid-1990s, they've changed gamblers' habits immensely. Maury Wolff, a professional horseplayer in Virginia, quintupled his action once he started getting rebates. He also stopped going to the track almost entirely—you'll see him there 10 days a year. "I'm exclusively out-of-the-house now," says Wolff, who was a 200-day-a-year racetrack regular a decade ago. "It's way more efficient."
At the track, Wolff has to wait in line for tickets and copy exact prices off a TV monitor. At home, he can watch the odds on his computer and get a bet down with a mouse click. Plus, he has piles of handicapping records on his desk—take those to the track, and you'll look like Groucho juggling tip books in A Day at the Races.
For some guys, rebates mean the difference between feeding bales of cash to the horses and staying at home and watching baseball on Thursday afternoons. Dana Parham, who may be the biggest whale of all, bragged to a University of Arizona symposium that, thanks to rebates: "I am directly responsible for over $2.4 billion in handle since January of 2000. One hundred percent of this is new money that would otherwise not be in the pools at any level."
What's happened here is a market correction in racetrack takeout. For years, gamblers have complained—and rightly so—that a 20 percent bite made winning nearly impossible. But there was no way to change it. The track and the OTB were the only places to bet, and their rates were set by state racing boards, controlled by politicians who sin-taxed gamblers as hard as drinkers and smokers. Now, phone hubs, whales, and the racing industry have worked out a new arrangement. It leaves out the $2 patzer, who doesn't bet enough to qualify for rebates, but so what, goes the attitude. The biggest customers get the best deals.
As a result of hubs, the horse-racing network TVG, and online gambling sites like YouBet and Xpressbet, attendance is down, but wagers are up. According to the California Horse Racing Board, the state's railbird population dropped 26 percent between 1996 and 2006, but wagering on California races increased 17 percent. It's just easier to get a bet down. Last year, I wanted to play a Pick 4 at Arlington Park, but I couldn't get to the track because, tragically, I had a job. Thankfully, I was able to turn my desk into a miniature OTB. I read the program on my laptop. My desktop played streaming video from the track. Just before the first race, I ran outside with my cell and called in my wager to a YouBet operator. (I was reluctant to actually gamble on the company's computer.)I lost the bet, and, eventually, I lost my job—not for playing the horses at work, but for reasons somewhat related to the anti-authoritariantraits that make me a devoted racetrack bum.
Now that I'm unemployed, I have moretime to go to Hawthorne and to wonder if, someday, I'll be the only one there. When I started following horse racing, I was 29 years old, and I was the youngest guy in the grandstand. Now I'm 41, and I'm still the youngest guy in the grandstand. When bettors stay home, they follow the big tracks—Keeneland, Saratoga, Gulfstream. As a result, racing fairs and small-town bullrings are closing. Last year, we lost Great Lakes Downs, the only Thoroughbred track in Michigan. Where will the next generation of pathological gamblers come from? Nobody gets hooked at an OTB or a Web site.
As a writer, I also have to mourn the decline of the racetrack culture. The track and its characters—misfits, losers, and dreamers every one of us—provided the casts for Charles Bukowski's Longshot Pomes for Broke Players, Damon Runyon's Guys and Dolls, and Jay Cronley's Good Vibes, which became the movie Let It Ride. A few years ago, I wrote a book called Horseplayers: Life at the Track, the story of a year spent trying to beat the races and all the oddballs I met along the way. That was 2003. Finding those characters is tougher today. Hawthorne is so empty that management has sealed off half the grandstand. The Handicapping and Business Center, where I met so many of my subjects, has been stripped of everything but a few TVs. The Professor, a former b-schooldean who taught classes there, now holds court at an OTB. His sidekick, the Stat Man, handicaps for a tout sheet, leaving his apartment only to hit the Wendy's drive-through. He now places bets on his computer. Somehow, I can't see myself writing about a guy leaning toward a laptop screen, squinting through his glasses and shouting, "Come on with that nine!" at a horse the size of a scampering vole. It wouldn't make much of a movie, either.