Monday, February 18, 2013

The Future of Derby Futures

Steve Crist wrote about Derby Futures the other day and a lot of what he offers - deeper fields, lower takeout etc - are worthy. But, what about going outside the parimutuel pools? With Churchill looking at Exchange wagering, this might not be that far off. That's where, in my opinion, Derby Futures can really take off.

Futures wagers, as we all know, are interesting for fans, because they are pre-qualified already to play futures. Your average sports fan makes a trip to Vegas and can bet the winner of the NCAA's, or the Stanley Cup. It is a part of our culture as sports bettors. And it surely ups viewership of these events.

Right now I commend Churchill with their Derby pool. They have promoted it and made it something fun. Technically it should be treated as a loss leader, because it markets your event for you.

Is this good enough? I think in ten years, this wager will be much different than today, and I think it will help racing because big events drive casual fans, and giving casual fans more ways and better ways to participate and share their experiences, is what we're after.

There are a few problems with the Future Pool. All horses are not represented, the odds lack a true real time feel, and you can not change your bets after they are made. This is something that the "World Sports Exchange" tackled as far back as 1997, and it changed the market forever.

What can a "Derby Exchange" for betting do? Quite a bit.

First, it can allow you to trade your position. If you have an eye for horses, or pedigree, and you find a nice horse off of a bad line, the sky is the limit. Let's look at the Grand National at Betfair for an example:



There is about $700k traded already in this market and it is a tight one. Let's look at the trading on the current chalk.



You could have bet this horse at over 45-1 earlier in the season. You could be trading the horse out right now at a profit. This ups volume as a rule. If you could bet a horse like this, knowing you could trade him out later, you might bet $20 instead of $2, or $500 instead of $50. There is less risk when you can trade positions and with less risk, you bet more money. The goal each year for many, would be to have a "green book" where you walk into the Derby card knowing you are a winner before the race starts, and after the race is finished.

The second thing it might do is glue the casual observer to the news. If you owned Uncle Mo a couple of years ago at 10-1 and he was 4-1 a month before the Derby, would you not be paying attention to what the news is? If you heard a good work report on a longshot would you not pay attention? With a huge market and a chance to make some money and have some fun, people will pay attention. There is a 45 year old mom in Ohio who has a real time ticker on her iPhone for $AAPL news, because she is wondering if she should sell her position, or buy another share or two. It is not a stretch to imagine a sports bettor having real-time Derby news on her iPhone.

The third thing it clearly does is attract a new participant in our sport. Peter Webb never played a horse race in his life before wanting to "trade" such positions. There are people writing naked puts, buying corn futures, or using Black-Scholes like we use Formulator who may be interested.

Fourth, forget cannibalization, and think growth. If thousands of people are paying attention and trading positions, think of what Derby Day can do. If you are that in tune with the horses, you better believe you are going to take a poke at an ex, super, or pick three.

Last but not least we have the existing fan base. Twitter and Facebook and Grandstand chatter about "who is going to win" is infectious. If we have more people talking about the Derby betting market, rather than "I put $5 on whomever" it's buzzworthy.

The Grand National will have well over $15 million bet on it via this trading medium. I think in ten years, if legal in the US, run by whomever, $15M can be chump change. The Derby, the social media explosion and the ability to attract tons of new folks to trade this market is a match made perfectly for horse racing.

1 comment:

Cangamble said...

This is a great idea. Exposure to new customers while testing the exchange market at the same time.

Forget it though, horse racing only kicks the can at great ideas.