Wednesday, April 16, 2008

Delivery Mechanisms in the 2000's

From the horseplayer “we knew it” file: The Oregon hub that handles wagering for bigger internet players had wagering grow by 17.4% in 2007. None of our readers here, who are customers and gamblers are surprised, yet I bet racing is. Overall handles declined in 2007, but money did shift to places like Premier Turf Club and others.

A record total of $1,573,680,475 was processed through Oregon hubs in 2007, up from $1,340,375,866 recorded in 2006. Oregon launched its hub platform in 2000, when it processed a seemingly-paltry $19,779,763 in handle.

Handle from eight advance deposit wagering entities licensed in the state during the fourth quarter of 2007 totaled $341,144,875, up 12.5% compared with $303,287,343 during the fourth quarter of 2006, when seven ADWs operated in the state.


This IS the growth segment for racing. This is a part of the future. Yet, many of these companies who want to offer and resell racing get roadblocks put up in front of them at seemingly every turn. Why do we do this? Are we greedy, and think we should be squeezing more money out of our distributors? If so, we live in fantasy land. We have said on the blog many times, and no one seems to dispute it in the news, or empirical evidence: Resellers are our friend and increase handles more than racing can do running it themselves. Walmart is pretty much liked if you are selling a widget. Giving them 20% of your margin is expected, and you are happy to do it. In racing, giving a reseller 8% or 12% of betting volume is somehow taboo and something we “have to stop”. We hear the mantra from track execs and horseman groups over and over speak of places like Oregon, and Premier Turf Club, or Day at the Track as places that “don’t pay their fair share” or they “hurt handles.”

Will Cummings in his report on wagering that racing paid him to do, recommended racing to embrace and work with these places as they provide a valuable service to price-sensitive internet players. Believe it or not folks, this is from a story from the report racing paid for in 2004.

On the subject of high-volume betting shops, the report says there is no evidence they have cannibalized handle at racetracks or other wagering outlets.

"The consumer looking for gambling entertainment has many choices available, and over the past 20 years, he or she has largely been choosing something other than racing," the report says. "If we do not seek to maximize benefits to the consumer, we will not be in business for long."

The report notes how handle at six tracks this year fell when they stopped doing business with high-volume shops. (Track officials have argued rebaters steal their customers and don't contribute new money to wagering pools.)

"What the industry needs most, in my opinion, and has been working on for 20-plus years, is a diversified set of delivery mechanisms to bring our product to the customer, as well as attract more customers to our product," Cummings said in the report.


If you ran a business, paid for a report that told you the kool-aid you’ve been drinking for 40 years is completely out to lunch, what would you do? Would you continue to do the same thing, over and over again?

Just glancing around the web I see another interesting thing along these lines. I think this sums up just how far from reality racing is with their customer base. Check this post on paceadvantage.com. It is a message a bettor and Texas horse owner got when clicking in his favorite deposit wagering company, hoping to make a bet where his horses race, Lone Star Park.

LONE STAR PARK WAGERING

Texas Horsemen have not authorized wagers to be taken on Lone Star Park, whose meet begins today.
We will inform you immediately to any changes in this situation.


It has been said by many in racing: We shoot ourselves in the foot constantly in this business. I don’t see that changing anytime soon.

Note: Along these lines, really glad to see the Harness Horse Association did not disappoint and do something wacky like think of fixing a problem. In Windsor there were three choices offered to combat their revenue difficulties a) Purse pool and maybe get things back on their own two feet to build towards the future b) Decrease race supply by cutting eight dates or c) Do absolutely nothng and cut purses a bit. If you really need to know which one they chose you can read the story here.

1 comment:

Cangamble said...

I don't get what purse pooling is but horsemen shouldn't be able to call any shots in horse racing. They haven't got a clue.
Cutting race dates is the obvious choice. There are plenty of other places to race. Cutting purses is the last option to take. The cost of training and vets will make the game very difficult for owners and especially new owners which the game is in tremendous need of.