A Bird in the Hand is Worth Two in the Bush - Unknown
The big push for racing of late is trying to get you - the horseplayer - to play into their track owned internet betting systems. Like racing has done over the last century, when they can't compete properly, they look to change legislation. In New York and Pennsylvania for example, there are new "laws" being pushed which help siphon off competition, in hopes the lack of competition helps their bottom line.
Racing customers need to be cultivated, and marketing efforts for internet wagering have kept a lot of players around through cultivation. There are ADW's right now at this very minute that will take a $100 a month player and give him or her a few dollars back as a rake reduction. These ADW's large and small, provide a service to those actively looking for a better deal and they have helped (this is not an opinion, it's math) handle.
But they are starting to look more and more like a thing of the past.
If you are not a whale, you're in serious trouble.
Already in California you need to (apparently) "establish" a high wagering level to get a decent deal. I am unsure if you get put in a room, deprived of all your senses and get force fed McNuggets or not to come clean with your wagering, or if there is another way, but it has to be done.
In New York, with this new legislation "Applicants must assure that the rebates are determined "solely'' by how much a bettor wagers."
Sorry to be a curmudgeon (my new favorite word), but what a load of crap. This misses the point entirely.
A fellow who bets $20,000 a month did not get there by playing into 22.4% blended takeout, he or she got there by getting a better price and and using it to bet more and more over time. The small ADW's - the ones that are being shut out - were the ones providing this cultivation.
New players, smaller players who are getting better and want to get even better aren't going to join you, show a million dollars in handle and say "yes, please take me". They are not at a million a year yet, they are at $50,000 or $100,000 or $150,000 a year. They are there because they have gotten a better deal and when they don't get one any longer, they are going to take their ball and go home.
This to me, represents the biggest marketing paradox I have seen in any business I have studied.
A casino cultivates their existing customers. So does a restaurant and a health club. So do countless others. Racing does not cultivate them. They don't have the same mechanisms in place.
The paradox lies with racing's marketing spending, and the constant will to get brand new customers.
America's Best Racing, food truck events, billboards and Wang Chung concerts at Hollywood Park cost a ton of money. They're there to get new customers. They are fishing in an unstocked pond, obviously, because there is no prequalification for liking Wang Chung and betting the sixth with a TimeformUS speed figure and your favorite Brisnet software package. For branding, and getting people out to a horse racing event this spend is fine, but it's folly to think it is going to cultivate betting customers. The cost per acquisition of actually turning this demographic into a once a week or more bettor probably runs into the tens of thousands of dollars per capita. But, that spend is happily approved at all meetings.
Meanwhile, Linda from Des Moines plays a few races each week and she's getting better. She has a 0.93 ROI and as her ROI goes up so does her enjoyment. She is close to getting hooked. She sees an ad for an ADW that gives her a break on price, upping her ROI to 0.98, and she enjoys racing even more. She's betting more and winning a little more often.
Then the horsemen groups, governments and whomever else tell her its their way or the highway. She's not betting "one million or more" so she is back to playing at lower volumes. She's back to where she was.
You have Linda. She's sold. She's doesn't have to be prequalified to be a customer, she already is your customer and will likely be one for a long time with a little bit of investment. You just chased her away by not giving her a few dollars back on her wagers because she is not a whale, while at the same time you as an industry pay millions of dollars with the hopes of getting a Linda; by renting a giant bus, or sending her to a felafel truck on food truck day.
For racing, a bird in the hand (Linda) is not worth two in the bush (two drunk kids watching an English Beat concert). What's even worse, when you squeeze the bird for more, she flies away. And the two drunk kids in the bush head to the nearest casino.
That's today's paradox and I think it's a huge reason why racing can never seem to compete as a gambling business. They spend so much money attracting customers to attend and brand live events, while not spending nary a dime to help existing customers bet more. How can racing possibly grow with that formula? It can't.
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16 comments:
I'm waiting for the time the track has to hand over $50,000 in their Mystery Tote Ticket promotion to a person who will next show up when there is a free t-shirt giveaway.
Okay, I understand why tracks want the money to be wagered through them and I have no problem with it IF they offer rebates like these other ADWs offer to encourage wagering. They still will come out ahead by making more money with the money wagered through them but will get the player to churn instead of them tapping out quicker.
Since rebates have started, the handle in horseracing has dropped substantially. Am I missing something here? It's not like this was not predicted by many.
I can understand the idea of casinos marketing right back to their players. But the difference is the players there play mostly against the house, not each other. Giving one player a discount in racing potentially takes away from another player.
I have said it before and will say it again: parimutuel pools are too complicated to be toyed with.
But giving rebates to the whales just makes it worse.
The problem is that "Racing" is a blanket term that covers various, disparate moving and sometimes competing parts: The Jockey Club (behind the ABR marketing initiative, for example) is not the the "Racing" behind AWD or racetrack operators...and so on. We on the outside try to hold "Racing" accountable, we try to put "Racing" on the spot, we try to exhort "Racing" to reduce takeout, take care of its aged geldings, fight for medication reform, etc..etc...but in each case there isn't a one "Racing" that can be held accountable, and that's a problem. No one is claiming ownership of "Racing."
Sid,
Very true. But what's worse, is that when the disparate parts of racing you mention do something - say something protectionist or anti-top line growth, others respond by doing the same thing.
Would you spend money - big money - to brand racing to new gamblers or customers, when if they live in Texas they cant bet. Then a month later they cant bet in New York, or Pennsylvania? If a state flips a switch your marketing money goes poof.
Amazon.com would not even have a national strategy if similar happened to them.
We already saw that with Betfair recently. They were spending marketing spend in several countries, but after governments (through lobbying) changed the rules, all their marketing spend was worthless. What they did was pull out of about six or seven countries so they dont waste their time again.
Racing is a mess, yes, but "racing" follows a leader (a disparate one). That's a recipe for disaster.
PTP
You are missing the most important reality - and of course you would, because it suits your best interests to gloss right over it.
You yourself and all of those clowns crowing about "takeout reduction" are the very reason why "Linda from Des Moines" is still choking along faced with a monumentally steep and expensive .93 ROI.
Doing something for Linda IS the right idea, but it needs to be direct assistance and not this idiocy that is some tiny "rebate" dependent upon how much business she brings to racing.
What say we create a world where how much assistance we offer to Linda from Des Moines dictates how much business she in turn will bring to racing??
Racing, unlike just about all other forms of gambling, comes hand in hand with pari-mutuel wagering, and that is the underlying and untapped source of heightened revenue when these clowns pull their heads out and start doing it correctly.
Your very last comment (visible here as I write) offers the word "disparate":
It is precisely the disparity between you and "Linda from Des Moines" which has eroded racing so thoroughly over the past 30 years.
Every stupid-*ssed marketing move racing makes toward new people is wasted as the result of this disparity, once Linda discovers she can't compete only to bow out completely.
Racing now represents an absurd picture where policy-makers have not and will not address this simple reality while at the same time they have as their main customer feedback the will and whim of the very people who ARE the problem!!!!
Every KENO game in America has the parity you seem to endorse, and racing can't even come close to that...
This is the new racetrack exec argument from some quarters (they do anything to protect high takeout).
Linda cant compete in the game because dynamic pricing causes their takeout to be raised by less than one full point.
That's bad.
But California can raise takeout by 2% and that's okay because it raises purses and PA and NY can shut out Linda from getting a better price and that's just fine!
You can't suck and blow at the same time.
R
McKinsie identified the fan base as declining by 5% annually. Customer acquisition is therefore important to address that attrition because even if something is done to move the casual better to frequent bettor the set of all bettors is diminishing. However, Customer retention is as important as customer acquisition in order to make sure that 5% doesn't go to 10%. Both issues need to be addressed simultaneously and by squeezing out the casual player it becomes all the more difficult to address one of the two issues.
Anon,
No need for name calling.
If you read my post, much of what you say is advocated.
PTP
I've never understood the focus on how much a customer bets versus how much that customer loses. If Linda's handle does not multiply by 3.5 when her ROI rises from .93 to .98, then she is actually paying less to play the game. That reduction has to come from somewhere: purse reduction, lower ADW or racetrack profits, or another customer losing more money. If Linda manages to get her ROI above 1, then she becomes just another mouth for the game to feed. What the game really needs is more people losing more money, so that Linda's gain doesn't come out of the pocket of the horsemen, the ADW, or the track. That should be the (best unspoken) focus of marketing efforts.
Wish I had seen this earlier as there is much misapprehension expressed in various comments. Let's first take the idea that rebates skew the playing field. Not so. They are extra pari-mutuel. Rebates benefit those who receive them but do not dis-advantage those who do not, provided in their absence the industry still would not cut takeout. If you doubt that imagine Thurston Howell Jr. at his computer betting with the understanding that any money he loses his father will reimburse to him. Are you at a disadvantage pari-mutuelly to him? Of course not, it may even be that his guaranteed soft landing weakens his play and helps you.
Second, the idea that what we need is more losers and that winners are a drag on the game is quite specious. Yes, we need more players. And yes, because there is takeout many if not most will lose. However, gambling, especially in games of skill, REQUIRES the possibility of winning. The greater that possibility the greater the participation. Lower takeout can mean MORE winners, percentage wise, and MORE revenue. That, of course, should be the goal. Any suggestion to the contrary is completely misplaced.
First of all, handle has not gone down since rebates started. The handle boom in the late 90s and early 00s was all because of rebates. If rebates hadn't started then, the handles would have been drastically reduced over the last 15 years. What happened since then, and what i believe is the core of this PTP article, is that major companies and race tracks have been trying to lower the rebate percentages and setting thresholds in order to receive rebates. That's what caused the declines! In simplest terms, rebate percentages have dropped which in theory, has raised the takeout and when that happens, handle drops. Just like you've read on PTP a million times.
My handle has dropped 300%, 400% in that time frame, and I'm easily still considered a whale. For the record, I've always considered that regular players (3-7 days/week) regardless of handle are deserving of rebates, and I have always been against unequal rates to anybody, but especially to the CAW (computer players), which the parties who want to raise your takeout have no problem giving a break to (but that's another problem, entirely.)
In my eyes, the rebate system for regular players is better than lower takeouts (for many reasons too long to list here.) And in recent years, if you looked hard enough and truly were a regular player, you could find rebates. There have been a few exceptions like Churchill(and old Tracknet tracks) and if you unfortunately lived in certain states/provinces. Like PTP is inferring, it's going to be worse, now, because of these legislations in major states like NY, Cali, and Penn and there are more coming. The every day horse player is under siege, again, regardless of where you live. We're on the verge of huge handle drops and the racetracks/ADW's (like Churchill/Twinspires, NY OTBs and others) who have campaigned for this legislation are to blame. The whole thing is a shame. Sid is right that the major problem in horse racing is that it is such a great game/business, that you can go about it from truly distinct directions, but there's no arguing at the center of all these different industries and subcultures within horse racing is the REGULAR PLAYER, and there is no industry in the world that treats it's regular players worse than horse racing.
This column and many of the 'comments' are filled with absurdity.
To begin, it made no sense in the column to reference a "whale" in one example, and then some random woman who miraculously beats the takeout by a mile despite her role as a pure novice. This greatly misrepresents the true novice, and those whose track experiences we need to enhance to extremes. The ROI data would be more apt if using a $2.00 ROI measurement for the numbers assigned to Linda.
Then there is somebody who (won't) understand the focus on how much the customer bets. How much the customer bets is precisely the revenue source!!
How much the customer wins or loses is a major variable not directly tethered to the revenue source, and that is the single largest oversight about all things horse racing that is completely lost on the people running the shows.
In brief: Because you have this unique pari-mutuel wagering, you should be doing nothing each day before assisting each and every one of your customers to do better at the windows so that they in turn can and will bet more in order to drive your revenue higher and higher.
Kyle's perception is so far out in left field that it barely makes sense:
If Kyle and his family are playing monopoly, starting with $1500 each, his reasoning would suggest that other players are not at an disadvantage if "rebates" slip only his 9yo niece an extra $200 or $300 early in the game. That is pure cluelessness.
The part about Thurston Howell Jr. doesn't make any sense either, unless there were several episodes of Gilligan's Island that I missed. Did they ever say anything about Thurston Howell's dad? What is the rest of the world supposed to know about Mrs. Howell's father in law, that nobody here in the reading audience understands or perceives?
Forgetting that it was 50+ years ago, why would Thurston Howell Jr. be betting horses at his computer when his son is lost at sea? Finally, as the Thurston Howell on the island was likely in his 60's or 70's, the chances of his grandfather being alive weren't too great.
(and Kyle thinks we are "completely misplaced" ???)
Kyle is also lost in wrong thinking when unable to understand that in pari-mutuel wagering games consistent winners are a drag on the game, and on everybody else.
Horse racing has plunged in popularity since the 1970's not because of the takeout numbers (which have been largely the same since then), but because of the grandly increased disparity amid the collective crowd.
This reality has been the effect of exotics wagering, enhanced racing information databases, internet wagering, and just about every crazy "innovation" championed by track management during the period since the 1970's.
Youuuuuu (track management) caused this whole mess, now stop the trend toward the absurd in all you're doing, and take the first-ever steps toward reversing what you've gotten yourself into by utilizing the one unique thing that horse racing still has (potentially) working in its favor:
Pari-mutuel wagering... where because your revenue (unlike that of a casino) is derived NOT from how much your customers lose, but instead from how much they bet, how about you get your *sses in there and help "Linda from Des Moines" (who is really getting back 93 cents from every $2 she wagers, because of the grand disparity which YOU created) before she falls off the face of the racing earth??
Casinos can't do same in their environs, but because you have both a game of relative skill, and a game with pari-mutuel wagering, it is absolutely imperative that each individual wagering outlet begin to doooooooooooo something for any and all fans in attendance each day!!! (for the first time ever!)
$2 return on investment numbers are for DRF readers and some handicapping books. A gamblers' checks and balance are based on dollar ROI.
If Linda's ROI was $0.93 on $2, she's so bad she's good. The gamblers on this thread will understand what I am alluding to.
I must apologize. Never imagined my allusion to the iconic Thurston Howell could so disturb a fellow poster. Anon, he was simply a stand in for any deep pocketed bettor. His father simply represented a source of additional cash outside the pari-mutuel pools. Is your argument that rebates aren't extra pari-mutuel? And you avoided my question - would you consider yourself unfairly disadvantaged against someone getting the equivalent of a rebate from a source other than the bet taker? Your monopoly example seems to suggest you think it unfair that certain individuals have bigger than average bankrolls. That isn't what you intended is it?As for your take on the need for losers,this is really a matter of semantics and perspective. Is racing healthier when there are a million losers to the one winner of a pick six? I think we agree. No. Or is it better when more bettors share the pool? And isn't it better when the many split pools ravaged less by high takeout? You know, your "consistent" winner doesn't actually exist. The set of people taking money from the pools is in constant flux. You do touch on a problem. The growing emphasis on super exotic wagering does leach money from circulation. But not by creating consistent winners but by allowing some to beat the races in one fell swoop. The question is whether the possibility draws enough money into the game to offset what's taken out. Personally, I think not.
That's just IT, Kyle, you never made any allusion to the iconic Thurston Howell. You wrote only of his father and grandfather (who could have been anybody).
Your entire position is that of a (rather rotund individual) sitting on a teeter-totter which is balanced on a certain point (in this case, .80 or there about) while trying to suggest that the gross imbalance would be any better were it balanced on, say, .88 or the like).
The whole thing is still woefully out of balance, because of you.
As horse racing is today, the pari-mutuel pools are comprised of the equivalent to your "one winner of a pick-six" floating around amid thousands and thousands of others who lost everything. Trying to suggest that to be at all healthy is ridiculous!
The "set of people taking money from the pools" (meaning 'beating the takeout') has become far too vast a percentage OF those pools for a reasonable expectation that the novices would want anything to do with the equation. (ergo, and with pari-mutuel wagering's unique elements being utilized to full potential for the first time ever - you have to do something for the novices to bring it nearer to balanced again - as an imperative first step toward reversing the complete idiocy of the last 20-30 years)
The reason "takeout" has become such a buzzword in recent times, is only a product of the huge piece of the pari-mutuel pie having no where else to turn, when the novices dried up and went away. It was their doing (choreographed ever so inefficiently by track management) in the first place that said novices went away.
You could move the teeter-totter to the moon, or 'rig' all of the scales, and you'd still have a bunch of ("rotund individuals") causing the teeter-totter (which has always listed 'balance' as its only necessity) to be grossly out of balance!!!
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