California Chromed : What Horse-racing Can Impugn Upon Investing
by Joshua Enomoto
With a 36-year drought now consigned to the inevitability of adding yet another year to one of the longest losing streaks in professional sports, attention has now shifted towards the post-race interview of Steve Coburn, co-owner of racing horse California Chrome, who had just failed in the bid to secure the vaunted Triple Crown. Mr. Coburn, who must have simultaneously felt the pressure of national expectation and the alluring seduction of precontrived destiny, was obviously in a overly heightened state of emotion. That the ever-intrusive media pounces upon such opportunities of human vulnerability will inexorably raise the odds of capturing an anomalous or an otherwise unacceptable behavior.
As much as the mainstream media would like to impugn poor sportsmanship upon Mr. Coburn, he did have an extremely valid point during his salty denunciation of the team associated with Tonalist, the winning horse at the Belmont. Tonalist had the luxury and the clear performance advantage of not having raced the Derby nor the Preakness before being allowed to play the role of spoiler at the penultimate track. There is something wholly dissonant about the previous controversy surrounding California Chrome's much ballyhooed nasal strip, yet very little, if any, commotion about allowing rested horses to compete against tired ones.
That is until Mr. Coburn's so-called post-race diatribe. Casual observers, such as myself, and I suspect, millions of other bandwagon "Chromies," had suddenly found a rational explanation for the collective disappointment. Injustice is one of the few intangibles that immediately catalyzes a primordial response and it has a tendency of taking on magmatic proportions when it comes to sports. Perhaps the now embattled owner incorporated this guttural instinct into his calculus or maybe he was just plain pissed : regardless of the possible motivations, he enlightened a viewership that prior to the fanfare was ignorant of the woeful flaws within the horse-racing system.
The declining prestige and relevance of the equine sport was made no secret during NBC's coverage of the Belmont Stakes. In a crowded industry that features its own triple crown of the NFL, NBA, and the MLB, along with the upcoming FIFA World Cup that is to be broadcast via ABC and its ESPN conglomerate, California Chrome's captivating rags to riches story in a sport notorious for its high-brow antics was a God-send for NBC, unexpectedly driving millions of viewers and advertising dollars on the basis of the rarest sporting event, a moment that can only materialize contingent upon the consecutive performance of one specific contestant. That it was revealed that the field was legally rigged against California Chrome was most certainly not in the anticipated script for NBC's producers, considering the potential damage the revelation incurs upon future revenue.
But this detracts from an even greater truth : the lost millions from the consumer retail base. Caught up in the media-endorsed marketing blitz, the volume of gamblers increased exponentially simply on the basis that those who were not prone to gambling were convinced otherwise. In and of itself, this is good old fashioned American capitalism, unashamedly maximizing the profit potential of what may literally turn out to be a once-in-a-lifetime occurrence. More importantly to the general horse racing industry, there is no liability here. No one forced anyone to gamble : all decisions ultimately were handed down by the individual. As the old tagline goes, past performance is no guarantee of future results. This includes the track record of prognosticators who litter the pages of the freely distributed race programs.
The problem lies with the general public's execution at point of contract. Rather than engaging the fundamentals of the race and the true probabilities of its contestants, the public, spurred on by the media, voted with the popular sentiment. Unfortunately, sentiment is not necessarily aligned with the historical facts, and the data at the time suggested a higher propensity for California Chrome to regress to the mean.
On surface level, the regression indicated a very likely win. The fact that Chrome was racing for the Triple Crown logically meant that he was on a major winning streak. One more would complete the regression and no doubt line the pockets of the easy money crowd. However, the contextual reality was that this mathematical trend was contingent upon the distance of the track. The Belmont representing the longest and final race of the series meant that Chrome could not justify being the odds on favorite.
The incontrovertible fact that the odds jumped in relation to sentiment volume meant that there was an inconspicuous arbitrage that significantly favored the bookie. The other side of the transaction was silently laughing all the way to the bank as the media (most pointedly NBC) talked up Chrome ahead of better judgment, thus reducing the risk exposure of the bookie by artificially inflating the true probabilities.
The firestorm of criticism that was quickly dispatched against Mr. Coburn in the end had to do with the money. As with FINRA, the regulatory body that governs the financial advisory industry, the powers that control horse-racing have allowed the duplicitous legalization of conflict of interest. So long as the media pumps a desired storyline, race organizers can systematically and sometimes silently introduce barriers to prevent its culmination, allowing contrarians an unethical (and perhaps illegal) advantage over the general public.
This is the same reason that I have personally harped against the mainstream financial press for quite some time. It's not that their information is never useful nor profitable : in many cases, the media gets things right. But don't let positive results under a narrowly defined framework confuse the greater issue. The media, like horse-racing, is a sponsored entity, one that dispenses information of financial leverage. What the media reports, and more importantly, what it doesn't report, has significant repercussions regarding investment capital. Too often, what is broadcast to the public and the manner in which this is achieved parallels an underlying conspiracy against the common man and his wallet.
This may be legal, but it isn't right. And the mentioning of such does not impugn a lack of class but rather, its personification.
With a 36-year drought now consigned to the inevitability of adding yet another year to one of the longest losing streaks in professional sports, attention has now shifted towards the post-race interview of Steve Coburn, co-owner of racing horse California Chrome, who had just failed in the bid to secure the vaunted Triple Crown. Mr. Coburn, who must have simultaneously felt the pressure of national expectation and the alluring seduction of precontrived destiny, was obviously in a overly heightened state of emotion. That the ever-intrusive media pounces upon such opportunities of human vulnerability will inexorably raise the odds of capturing an anomalous or an otherwise unacceptable behavior.
As much as the mainstream media would like to impugn poor sportsmanship upon Mr. Coburn, he did have an extremely valid point during his salty denunciation of the team associated with Tonalist, the winning horse at the Belmont. Tonalist had the luxury and the clear performance advantage of not having raced the Derby nor the Preakness before being allowed to play the role of spoiler at the penultimate track. There is something wholly dissonant about the previous controversy surrounding California Chrome's much ballyhooed nasal strip, yet very little, if any, commotion about allowing rested horses to compete against tired ones.
That is until Mr. Coburn's so-called post-race diatribe. Casual observers, such as myself, and I suspect, millions of other bandwagon "Chromies," had suddenly found a rational explanation for the collective disappointment. Injustice is one of the few intangibles that immediately catalyzes a primordial response and it has a tendency of taking on magmatic proportions when it comes to sports. Perhaps the now embattled owner incorporated this guttural instinct into his calculus or maybe he was just plain pissed : regardless of the possible motivations, he enlightened a viewership that prior to the fanfare was ignorant of the woeful flaws within the horse-racing system.
The declining prestige and relevance of the equine sport was made no secret during NBC's coverage of the Belmont Stakes. In a crowded industry that features its own triple crown of the NFL, NBA, and the MLB, along with the upcoming FIFA World Cup that is to be broadcast via ABC and its ESPN conglomerate, California Chrome's captivating rags to riches story in a sport notorious for its high-brow antics was a God-send for NBC, unexpectedly driving millions of viewers and advertising dollars on the basis of the rarest sporting event, a moment that can only materialize contingent upon the consecutive performance of one specific contestant. That it was revealed that the field was legally rigged against California Chrome was most certainly not in the anticipated script for NBC's producers, considering the potential damage the revelation incurs upon future revenue.
But this detracts from an even greater truth : the lost millions from the consumer retail base. Caught up in the media-endorsed marketing blitz, the volume of gamblers increased exponentially simply on the basis that those who were not prone to gambling were convinced otherwise. In and of itself, this is good old fashioned American capitalism, unashamedly maximizing the profit potential of what may literally turn out to be a once-in-a-lifetime occurrence. More importantly to the general horse racing industry, there is no liability here. No one forced anyone to gamble : all decisions ultimately were handed down by the individual. As the old tagline goes, past performance is no guarantee of future results. This includes the track record of prognosticators who litter the pages of the freely distributed race programs.
The problem lies with the general public's execution at point of contract. Rather than engaging the fundamentals of the race and the true probabilities of its contestants, the public, spurred on by the media, voted with the popular sentiment. Unfortunately, sentiment is not necessarily aligned with the historical facts, and the data at the time suggested a higher propensity for California Chrome to regress to the mean.
On surface level, the regression indicated a very likely win. The fact that Chrome was racing for the Triple Crown logically meant that he was on a major winning streak. One more would complete the regression and no doubt line the pockets of the easy money crowd. However, the contextual reality was that this mathematical trend was contingent upon the distance of the track. The Belmont representing the longest and final race of the series meant that Chrome could not justify being the odds on favorite.
The incontrovertible fact that the odds jumped in relation to sentiment volume meant that there was an inconspicuous arbitrage that significantly favored the bookie. The other side of the transaction was silently laughing all the way to the bank as the media (most pointedly NBC) talked up Chrome ahead of better judgment, thus reducing the risk exposure of the bookie by artificially inflating the true probabilities.
The firestorm of criticism that was quickly dispatched against Mr. Coburn in the end had to do with the money. As with FINRA, the regulatory body that governs the financial advisory industry, the powers that control horse-racing have allowed the duplicitous legalization of conflict of interest. So long as the media pumps a desired storyline, race organizers can systematically and sometimes silently introduce barriers to prevent its culmination, allowing contrarians an unethical (and perhaps illegal) advantage over the general public.
This is the same reason that I have personally harped against the mainstream financial press for quite some time. It's not that their information is never useful nor profitable : in many cases, the media gets things right. But don't let positive results under a narrowly defined framework confuse the greater issue. The media, like horse-racing, is a sponsored entity, one that dispenses information of financial leverage. What the media reports, and more importantly, what it doesn't report, has significant repercussions regarding investment capital. Too often, what is broadcast to the public and the manner in which this is achieved parallels an underlying conspiracy against the common man and his wallet.
This may be legal, but it isn't right. And the mentioning of such does not impugn a lack of class but rather, its personification.
