Dubai Defined

How can you understand Dubai? From the Financial Times, this photo taken at the Dubai World Cup in 2009 explains much.

This year's Dubai World Cup takes place Saturday, March 26.

Barry Bonds: "...but, the water was sooooo cold!"

The LA Times on Barry Bonds' steroid trial, which starts today:

Kimberly Bell, a former model who had a long affair with Bonds, is the government's star witness.

She is slated to testify that steroids diminished his sexual performance, shriveled his testicles and fired his temper.

How about a plea bargain?

Some Animals are More Equal than Others

Last week I speculated that those, like the Aga Kahn or Sheik Mohammed, who own racing thoroughbreds as a hobby rather than as an investment, would treat their stock better than an operation like IEAH. But what happens to the vast majority of breeding stock that aren't good enough to race or not of sufficient quality to race at the top level? Certainly, the Aga Kahn and Sheik Mohammed cannot keep all the offspring born on their stud farms; only the best are kept to race under their colors. Reading through past performances, one frequently encounters royally bred horses racing for other owners in cheap races. And when their racing careers end, what becomes of them?

We are sentimental about horses. Slaughter is repulsive, so we expect that retired thoroughbreds be treated with dignity. Charities exist for this purpose but tough times mean horses get the shaft. From the NY Times:

One of the largest private organizations in the world dedicated to caring for former racehorses has been so slow or delinquent in paying for the upkeep of the more than 1,000 horses under its care that scores have wound up starved and neglected, some fatally, according to interviews and inspection reports.

The group, the Thoroughbred Retirement Foundation, is based in Saratoga Springs, N.Y., just miles from the famous racetrack that annually hosts one of thoroughbred racing’s premier meets. For years, it has received millions in donations from some pillars of the industry. But over the past two years, according to the foundation’s financial disclosure documents, it has been operating at a deficit, and as a result has not reliably been paying the 25 farms it contracts with to oversee the retired horses.

Further:

The Thoroughbred Retirement Foundation was founded in 1984 to save racehorses no longer able to compete on the racetrack “from possible neglect, abuse and slaughter,” its mission statement says. 

One of the better books I read in 2010 was Four Fish. And one of the best points made by the author, Paul Greenberg, is that we view animals differently depending on whether we consider them wildlife or food. But we also view animals differently depending on whether we view them as food or pets. (or entertainment in the case of thoroughbreds?) From the NY Times Opinonater, Mark Bittman makes this point.

If I keep a pig as a pet, I can’t kick it. If I keep a pig I intend to sell for food, I can pretty much torture it. 

The SPCA tugs at our heart strings with their images of mistreated dogs and cats. Many animal shelters have a no slaughter policy. But what about pigs and cows and chickens raised for food? Apparently slaughter is okay for them because that is the meaning of their existence. But could they not also be treated decently and slaughtered humanely? Why can our conscience not allow for the slaughter of thoroughbreds, yet accept the incredible inhumanity of industrial meat production? Does our desire for inexpensive hamburger short circuit our morality? Paul McCartney produced the graphic video called "If Slaughterhouses Had Glass Walls" in which he says that "if slaughterhouses had glass walls, everybody would be a vegetarian." If you have the stomach, watch it here.

And God said, Let us make man in our image, after our likeness: and let them have dominion over the fish of the sea, and over the fowl of the air, and over the cattle, and over all the earth, and over every creeping thing that creepeth upon the earth.

Caesars Blocks Online Gaming

Two weeks ago, New Jersey Governor Christie vetoed a bill that might have led to the legalization of online gaming. Hartley Henderson, writing at OSGA.com believes that Caesars is partially responsible for his decision.

Caesars has expressed an interest in a federal bill that would legalize online gambling throughout the U.S. and has opposed state bills. In fact it was recently reported in the New York Post that Caesars spent $4.2 million lobbying politicians to vote against intrastate bills. The company clearly believes that an interstate model which would allow them to set up a massive online network that could be accessed anywhere in the U.S. is the only one worth pursuing.

The Nevada legislature has also introduced a bill to legalize and regulate online poker. Caesars opposes this, also.

Caesar’s other big concern likely stems from the wording of the Nevada bill which would not exclude companies that are currently catering to the United States from foreign soil. The bill in California excludes any company that was catering to the U.S. market after the passage of the UIGEA but the Nevada bill practically encourages PokerStars and Full Tilt Poker to apply for a license. The decision makes perfect sense for Nevada. The 2 companies have almost 2/3 of all the online poker market and over 90% of the U.S. player market. If Nevada can set up a system whereby state residents can continue to play at PokerStars or Full Tilt and can deposit and withdraw easily online or at facilities legally run by the 2 companies it could be a boon for Nevada. The state would get taxes from bets made in Nevada to and could charge a licensing fee to the 2 companies for the right to offer its product. In return PokerStars and Full Tilt would legally get their foot on U.S. soil which they would certainly welcome. Naturally, this news, while exciting for existing online poker companies is viewed as a negative by Caesars. While Caesars could introduce a poker product to compete with Full Tilt and PokerStars, their chance of successfully doing so is slim. Moreover, Caesars likely wants a monopoly or at least an oligopoly and won’t be satisfied with being an also ran in the market they believe they should control.

Like many financially strapped states, Nevada has been parsing its budget, yet not a peep has been heard about raising taxes on gambling win. If Caesars is opposed to legalizing online poker, to the detriment of state coffers, then perhaps they may be more amenable to raising the existing gaming tax? (wink, wink). When Pennsylvania and Indiana generate more revenue from gambling tax than Nevada, you would think the idea might find traction. The fact that it doesn't indicates how powerful the Nevada Resorts Association is.

As an aside, if Nevada were to legalize online poker, would this make it easier to fund offshore sports betting accounts? Most off shore books offer poker. Who's to stop funds from commingling?

Dutrow's Day of Reckoning Approaches

One thing I like about Dick Dutrow is that he doesn't mince words. If he says his horse is going to win, his horse is going to win. In 2008, Dutrow guaranteed that his horse, Big Brown, would win the Kentucky Derby. A couple of months earlier he had done the same for Big Brown in the Florida Derby. Minutes before post time at the Belmont, in which Big Brown flopped after having been taken off his steroid regimen, Dutrow mouthed the braggadocio on network television, but you could tell his heart wasn't it it.

At the end of the this month, Dutrow will face the star chamber, New York State's Racing and Wagering Board. From the NY Times:

In a five-point “show cause” notice ordering Dutrow to appear before the board on March 30 and 31, the racing board states that the trainer is a “person whose conduct at racetracks in New York state and elsewhere has been improper, obnoxious, unbecoming and detrimental to the best interests of racing.”

Strong words like "obnoxious" convey gravity; the board means business. Include arrogant. Violating medication rules is common for top trainers, persistent violation, however, demonstrates an arrogant disregard for racing authorities. Frequently the win percentage for trainers who have been disciplined drops, as does the number of violations, but Dutrow is a repeat offender.

Appropriately, he is the primary trainer for IEAH, headed by Michael Iavarone, which became well known as a racing stable thanks to Big Brown. Here's what Megan Barnett at Portfolio.com reported in 2008.

Michael Iavarone, whose firm International Equine Acquisitions Holdings (I.E.A.H.) is the majority owner of the Derby winner, is raising money to launch a $100 million hedge fund to invest in racehorses. On the face of it, it seems like a perfect fit: Iavarone's bio says he was a "high-profile investment banker on Wall Street" before becoming a racing aficionado.

And he certainly must know people in the right places, as evidenced by the fact that Iavarone rang the opening bell yesterday morning at the New York Stock Exchange.

But a report by Bloomberg yesterday just might make his tailwind feel more like a 100-mile per hour headwind.

Iavarone, Bloomberg's David Evans reports, hasn't been fully honest with prospective investors. That high profile investment banking career? Turns out he traded penny stocks for seven years, for four little known brokerages, including Lloyd Wade Securities, Maidstone Financial, Joseph Dillon, and A. R. Baron, where Iavarone worked when the firm pleaded guilty to corruption charges in 1997.

It doesn't end there. Iavarone himself was fined, censured, and suspended from trading by regulators in 1999 for making unauthorized trades in his clients' accounts.

That's certainly information that prospective investors in his hedge fund might want to know. But unfortunately, it doesn't end there, either.

An Atlantic City hotel sued Iavarone for failing to make good on a $20,000 check that bounced. He eventually settled up, and blamed an imposter (sic) for the bounced check.

After switching careers to horseracing, Iavarone was later sued for failing to pay more than $500,000 for five horses bought at auction in 2003.

In 2004, the Internal Revenue Service issued a $130,000 lien against him for failing to pay his 2002 taxes.

IEAH and Dick Dutrow: two peas in a pod. Anyone who thinks a hedge fund can make money buying and racing thoroughbreds is either delusional or corrupt. There has always been cheating in horse racing, but when a hedge fund run by an ethically challenged boss enters the game and hires an ethically challenged trainer, what else could the racing industry be if not skeptical.

Yet, IEAH has done good things. During the summer of Big Brown's triple crown campaign, IEAH announced an agressive anti-drug policy. They also funded the Ruffian Medical Center in New York. So. is IEAH good or bad for racing? Are these just cynical PR moves? Think what you want.

His Highness the Aga Khan in earlier days. From www.luxist.com

I like racing as an expensive hobby for the super-rich which allows me to enjoy the athletic and aesthetic beauty of  high-bred thoroughbreds with the expectation that the beasts will be treated well (luxuriously in some cases ), not raced into the ground for pennies or doped enough to win one race before being slaughtered. Both I and people like the Aga Khan or Sheik Mohammed or the Queen of England (or Jenny Craig or Bobby Flay?), vastly separated by class and background, can share a similar appreciation of the breed for it's inherent beauty and athleticism, not as an investment vehicle for a hedge fund. And while I find Dick Dutrow charming in an outspoken, "obnoxious," sort of manner, I can't imagine him training horses for the Aga Khan.

This is not an argument that some money is dirty; or that monarchs are justified in spending exorbitant amounts on horses. This is strictly an argument from the point of view of the thoroughbred (if thoroughbreds can be said to have a point of view); that they will be treated better by the rich who are in the sport as a hobby rather than by financiers trying to generate return for well-heeled investors.


Linked to the left is the new book: A Racing and Breeding Tradition: The Horses of the Aga Khan. From Amazon's book description:

This lavishly illustrated volume highlights fifty years of the horse racing and breeding activities of His Highness the Aga Khan. In addition to his well-known presence in the areas of world affairs and culture, the Aga Khan is passionate about horse racing. His breeding empire has been built on a legacy handed down through generations, and he now owns and operates one of the largest and most successful racing and breeding operations in France and Ireland. This volume traces the history of the Aga Khan Studs through remarkable photographs, engravings and paintings taken from the archives of the Aga Khan. A lengthy interview of His Highness the Aga Khan, and informative essays on what makes a great racehorse combine to create a unique resource for anyone interested in the 'sport of kings'.

This might look nice on my coffee table.