Wednesday Notes - Those Dreaded Customer Conversions, Free Publicity and Hogtown

Jarod Dinkin has a really good article up on the HANA Blog about Summer Meets and the barriers to entry. Racing has tremendous issues converting customers and I believe it's a systemic issue caused by a moribund industry that was raised on not having to ever convert customers. There is no easy fix and it will take some time, and very much effort to shake this mindset.

The bottom line is, if you spend $10,000 to get 1,000 people in your door, 90% of them don't bet, 98% don't repeat and only 10% of the remainder open up a betting account you just paid $5,000 to land one customer. With a cost per acquisition that high, you better be able to have them play for years to break even, and at 22% takeout, good luck with that.

Speaking of shaking a mindset, there is much talk in Jersey about sports betting. Mention sports betting or poker in racing and the powers that be perk up. I have no idea why. Would the only car lot in town be happy when three other car lots move beside them? Racing seeks carve outs on new competition, when new competition should never be embraced, ever. As JD notes in the above piece, the infrastructure is not in place to compete with them. In the long run, unless racing completely changes their thinking, sports betting and poker will hurt, not help racing.

Roxy noted on twitter today that sports betting will be taxed 2% on betting volume. This is another snafu when governments get involved in taxing betting. In gambling jurisdictions - like the UK where its had hundreds of years to perfect systems - taxes are on gross profits. This way the bookmaker, or what have you, has incentive to increase handle. A 2% tax on a football bet makes an 11/10 odds game 44% more expensive. That will be passed on to customers and is not profit maximizing for anyone.

Note that racing does the same thing: Everything is taken out of handle, not profit. This decreases customer margins, and horse racing is back to the state house begging for purse money.

Some free publicity happened at an Ohio casino recently. Everyone was winning jackpots! I bet the free press they get, along with the word of mouth that the casino was giving away money, help it as much or more than the glitch hurt it.

This weekend's Canadian Trotting Classic at Mohawk only attracted 7 entrants. That's weak, but it's what might be expected when one barn - Takters - controls the three strong favorites.

Kentucky Downs goes again today. Best takeout in racing, and deep, full fields that adds value. There are races there that are giving away money like a casino. It's the closest thing you are going to find to a positive expectation racetrack in North America, and its a strong reason handle has gone up from less than $900,000 a day a few years ago.

Scott Jagow of the Paulick Report checked out Toronto and documented this via video today. He's at Woodbine and I think the grand pooh bah (Paulick, not Cummings) might be heading up here as well. When I speak with my American friends who have not been to Woodbine, the often used reason is that it's "too far", but that's not really true. It's within an eight hour or so drive of tens of millions of people south of the border, including those in NY or Chicago.

Woodbine is a lovely track with the nicest turf course you will ever see. Toronto is crazy busy, especially the highways and downtown, but it's a lot of fun. If a small town kid like me could come down here to University at 17 and live downtown for 20 years, it's not a stretch to visit.

If you have not downloaded and saved the Horseplayer Monthly yet, you can here. 25 pages of handicapping and commentary from some neat folks (I even have an article in there, but don't hold that agin em.)

Enjoy your day everyone. Happy Wednesday.