Tuesday, May 6, 2014

North America's Racing Disarray

There were some interesting points made in Jennifer Owen's presentation to the Asian racing summit yesterday. Her power point was posted, and I'll share a couple of snippets here.

Here's handle. It has fallen in the USA more than anywhere else in the world.

We've often heard that racing must contract in the US to grow. I agree with that, despite how Buckley's medicine tasting that may be. Reality is reality. The parade of 5 horse fields at major racetracks is not a function of too little purse money, it's completely structural. Here's Jennifer's world field size graph.

France, Australia and Hong Kong have focused on field size as a rule. Japan has new issues regarding competition they are dealing with, however they seem to card bettable affairs. Hong Kong went through a small lull and concentrated on bettable races. The UK has carded more and more poor betting races, but no country has a worse betting product than here in North America.

As horse owners we all know the only thing we like better than a five horse field is a four horse field, but as data from places like the Horseplayers Association racetrack ratings show, it's killing the game.

The past year when handle numbers are/were published in North America, showing handle down and racedates down, you'll hear or read that with dates down X% and handle down an equal X%, things really aren't that bad. It's the 2013 and 14 version of "it's the economy." As the above results show, it's also incorrect.

Australia went through a lull in dates in 2008 and gross handle was up, as per race handle skied. Similar occurred in France. If you concentrate on pricing and products, the pie can grow with fewer dates.

Ah, the betting exchange. In 2002, when betfair came to racing here, looking to partner and forward this new way of betting, it was like an ogre showed up to date your daughter. "They're pirates". Even in 2014 here in North America we still hear they don't pay enough and they forward corruption whenever they're brought up. What they offered racing 12 years ago was a path to the future.

The bubble to the left (above) are the people that racing has lost since the year 2000 in large numbers; the every day bettor. This new form of fixed odds betting was a conduit to help keep them interested in the sport of horse racing. It plugged a hole that low rake poker, or online sports betting was filling. Exchanges now have 60-70% of the sophisticated betting market, while racing in the US twiddles its thumbs, or in worst cases, like with Magna or CDI, have taken their tracks off the exchange.

In the end, Ms. Owen's presentation said that racing needs to do a few things for the demand for wagering side of the ledger.

She says racing needs to offer value >>>>> Choice, higher field size/better product, and lower prices while competition comes forward

What does the US offer of late?

Higher field size? No, it's lower.

Betting Choice? No, unless you consider a 52% takeout Rainbow Six a choice.

Lower prices? Who are we kidding. ADW's - the only growth segment in North America - have been taxed by horsemen led initiatives in Pennsylvania and New York (two slots states) just the past six months, which raises takeouts on customers. Meanwhile, as we all know, Churchill Downs just increased prices about 12% by raising takeout (while putting out a short-field product).

In other words, the graphs above should be no surprise to anyone in racing in North America. When you do the opposite of what needs to be done to grow handle, handle will fall. Racing needs to put out a better product that customers can enjoy through improved systems, at more competitive prices.

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