Another Bet

Another Bet

January 5, 2019

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The Real Life Ventures and Adventures of Trey and Batman

by Trey Nosrac

I was reading HRU on my phone when my friend from Silicon Valley slid into the front passenger seat of my Prius.

“Heavy reading?” He asked

“A sad story from a writer who sat in at a racing symposium — lots of ideas, no real action.”

He snapped his seatbelt and nodded, “The step between idea and implementation can be a bridge too far.”

I sighed. “It’s depressing when someone says we can’t do nothing. Hell, I do nothing every day.”

He added, “And so effortlessly.”

“Thanks, I am a professional.”

“Change is hard. Plus, in your sport, there are not many people with the power to change it. By power, I mean money, influence, connections, and motivation.”

I poked him on the shoulder and said, “You come from the Major Leagues of business and technology, suppose you slipped into the Bat Cave for a huge stash — what would you DO to move the needle in horse racing?”

As I drove, he looked out the side window as gusts of wind pushed fresh powdered snow into waves on a barren field. He asked, “Big plan or small plan?”

I shrugged and said, “Let’s go big.”

He thought for a few more miles and then started talking, “I’d start purchasing racetracks. Possibly set up a corporation and offer shares to technology investors.”

“And then what?”

“Hold them short term, and then sell or lease.”

“To whom?”

“To a big data firm with artificial intelligence and existing infrastructure. I see about five or six players in the mix, companies that might USE racing when gambling legislation settles. A major tech company has the scale and the tools to find and cultivate horseracing gamblers. Algorithms, bots, and artificial intelligence are the future – and that includes online gambling. I would purchase as a spin-off, maybe an independent division with access to assets, employees, intellectual property, and the technology of the parent company.”

I sighed dramatically. “Here we go, another trip to nerd land on the cyber express. Do you have any inside information?”

“Not much. Technology behemoths are very secretive about their plans, but all you need to do is look up patent applications, which I have, and you will find Microsoft and Google with patents pending on sports gambling.”

“Do you see horse racing as an investment to flip or to hold until the big dogs come knocking?”

“Trey, don’t think about today, don’t think about tomorrow, think about three, four, five years out. Think about the Pandora’s Box of legalized sports gambling. I read yesterday that Rhode Island was the eighth state to legislate sports gambling. New York and Arkansas are on deck.”

I did some math in my head. “Ten out of 50, that’s 20 per cent since the gambling law changed this past June.”

He got to the point. “With gambling in every living room, the money is massive, the flow continuous, and the bets will flow through technology. Let me put it this way – can you see major tech companies NOT being interested in gambling revenue, NOT driving that business?”

“You think racing could fit?”

“Indirectly. These companies would not limit themselves to a small sport like harness racing, but pushing horse racing under the umbrella of sports gambling would appear to be a good position for investors to hold. Investors would not care that much about what the numbers are on horse racing today, the investment is on the future.”

“You would place a bet on the explosion of sports gambling?”

“I would place money on Larry and Sergey already considering online gambling as part of Other Bets.”

“Other Bets?”

He moved his hands as if he were holding an invisible basketball as he explained, “Google changed their corporate structure a few years ago. They formed Alphabet. They separated their financials between Google, which covers advertising, cloud computing, and hardware, and they created Other Bets.”

“Like horse racing?”

“Not to my knowledge. Other Bets is just the name of this new division. It is a bit mysterious, but Other Bets currently includes at least 11 different companies, like Waymo a self-driving car unit, and Verily a healthcare research concept. It is possible they already have an eye on gambling.”
I shook my head and mimed a pistol shot to the temple.

He explained. “Think of it like this — Other Bets is as if a very powerful owner bought 11 very promising, very expensive yearlings at Lexington and Harrisburg to send to the best trainers. They know the costs for Other Bets will be high, and they are, over a billion dollars every three months to keep the Other Bets divisions running. They know that some of these will not make it to the races. However, like high-end yearlings, if one of those Other Bets pays off, it pays off big time.”

I scratched my head, “You realize, you haven’t said a single thing about horses or races, about changing the game, about changing the product?”

He shrugged, “For the most part, harness racing is what it is, however, people from my world can change the perception, extend the market, and make improvements every day without needing permission.”

“You would perk it up to make the sale as appealing as possible?”

“Yes, and even if the future of sports gambling does not evolve as envisioned, investors still would hold some equity.”

“When could this turn from talking to action?”

“Investors could begin buying racetracks tomorrow.”

I pushed. “And when would the masters of the universe enter the picture?”

“Tech companies are strange, they are both patient and time specific. When they get the bit between their teeth they race very fast, very hard and have a lot of stamina. They crush the competition. If you have something they want or something they can use, like a sports gambling entity, you could be sitting pretty.”

I sighed, “This all seems very… sterile. Investing, flipping, buying, selling, just soulless business. It doesn’t feel like fun.

He smiled. “For fun, you should have picked a small plan.”

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