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Nope, Modern Persuasion Ain't My Thing

If there's something I've learned over the years - right or wrong - is that most of life has to do with sales. And to be a good salesman, or saleswoman, you need to have mastered the art of persuasion.

Donald Trump is a good salesman. He's also a very good persuader.

#Fakenews is persuasion, and Trump has mastered its art. He's picked a group of people who have approval ratings below 20% and he's used them to his advantage. Everything they write that he doesn't like is labelled fake, and his minions (which there are many) rally to him, on social media and elsewhere, because, well, with a big enough audience who hates the media, they are plentiful.

It doesn't matter if the news is real and not #fake, or how ridiculous a narrative may be. When persuasion works, facts don't matter.

I won't let the other side off the hook. Barack Obama was a master persuader and good salesman, too. The republican congress's approval ratings were low and they were supported by Fox commentators. The former President used both as targets, almost each day. His minions would jump when the whip was cracked with Trumpian verve on every bit of "Faux" news, or when his opponents didn't pass what he wanted passed.

It doesn't matter that sometimes the Republicans were right, or that the Fox News story you just saw with a Princeton prof talking health care economics was actually pretty good. To the master persuader and his or her followers, they don't care. The persuader's job is done.

Maybe it's just me, but I find that kind of discourse in today's world nauseating; weak; condescending and annoying to no end. But the fact remains -- the tactics work.

In racing the persuaders are there, too. "Takeout hawk" is a pejorative and it works for that side. Calling us, 'people who'd like optimal pricing to grow handle, and subsequently the horse racing business' just doesn't cut it.

Framing works on the other side, of course. Calling everyone that works at a racetrack an idiot serves a purpose, just like labelling Jake Tapper an agent of the Democratic party does. It marginalizes them, and the marginalized aren't worth listening to. Plus, like the media, this business is shrinking, so they're an easy target. If racing was growing there would be no idiots.

I kind of despise this new wave of banality. Which is why you'll find arguments based on what I am reading, or seeing, or what-have-you (in a racing context) regardless of the frequency, as Sid jokingly pointed out today. We talk Amazon.com, McDonald's sauces, Russian pollution, or anything else that pops on the radar.

Framing things persuasively, like a skilled politician might be better, and it would certainly be easier, and more entertaining. But, I can't do that well. 

For example, I argued the Canterbury takeout reduction (a common topic on this blog) like this -

It's good they're moving the other way while prices have been going up, and trying to build their brand

Hopefully handle will be up this meet, and they get some buzz

Because they have gaming money, they can expense the losses of revenue in year one or two or three as "marketing cost", which a lot of slots tracks should do

In year two and three, tweaks could occur, the experiment can move forward, and their brand could further build

Perhaps in year three, or four, their Thursday and Friday night cards will be doing north of $1.5M a night; maybe with some work even $2 million. They will be a track in the marketplace that people look at, and their brand will be improved

In year four, or five, they will be revenue neutral, and beginning to make more money each racenight. This would make both them, and racing, stronger.

I realize that's not a persuasive argument in today's world. It's not remotely sexy. There are no bumper stickers, or quick fixes, or bigly promises. There's no bogeyman; there's no one to yell and curse at; there's no one who's a villain.

I simply believe there are no quick fixes for a business which has fallen so far, so fast. Why sell sizzle when the solutions aren't? It's not like I'm running for office or something.

Modern persuasion ain't my thing and many of you who've read the blog for ten years seem to be pretty bad persuaders, too. I think we should be okay with that. Racing can't be fixed in 140 characters, and we can't all be Donald Trump.

Have a great night folks. And remember -- mandatory super high five payout at Pompano happens in race 8. Good luck!


Comments

CecilJonesSchmitt said…
I'm relatively new to the industry - maybe 5 years or so where I've been deeply involved - and I've listened to the arguments on takeout with quite a bit of interest. This blog (and twitter feed) is among the best at presenting them in coherent, "persuasive" arguments, so a sincere thanks for that.

I'd like to address the larger pool of people who post comments and discussions on this blog, and not specifically this blog or blog post. In the chorus of complaints about takeout, field size, race conditions, dwindling handles and attendance, and so on - many of which are quite valid - it surprises me that so few people who are otherwise informed have misidentified the real villain in the industry:

Advanced deposit wager systems.

The key to understanding racetracks' motivations in attracting handle is listed in HANA's track ratings - the signal distribution grade. Those tracks with cheap signals (the "A's" and many "B's") have no interest in attracting online bettors who are responsible for generating the vast majority of handle in the industry. Meanwhile, those tracks with expensive signals (the "D's" and "F's") should be fighting for every dollar they can generate from online bettors.

I did some consulting work for one of the "A" or "B" tracks whose signal fee was roughly 3% (not the actual number but close). We were analyzing handle and ways to increase it. To do that, one of our goals was to eliminate online handle altogether. Here's why.

In a subset of months we were looking at, handle was up about $250k, but essentially all of it was online. With a 3% fee, the track kept about $7500 of that handle. Of that, roughly half is put into purses, so they keep only, let's say, $3800. Think of that - for a quarter million in new handle, they got less than $4k.

Now, the online bettors are quite good at wagering. The net settlement on that $250k was +$50k, meaning that they bet $250k and got $300k back. It should have been about -$50k if they were like everyone else (assuming an average 20% takeout), so that's a swing of $100k. That's $100k that was taken out of the local system altogether, much of which would have been either bet again as churn or used to buy concessions, and was instead paid out to online bettors. We then looked at online bettors' churn, and it's nonexistent. They pick and choose their bets and it's unrelated to any results in prior local races.

So look at the losers here: all bettors pay an average of roughly 20% in takeout whether they are local or online. The track keeps less than 2%. The horsemen get less than 2%. The difference all goes to the ADW.

The track could not contract the ADWs away because CDI and others have hammers, and they would lose Derby rights or suffer other material consequences. It was a small track so it had little negotiating power to fight back with.

Since we were forced to live with online bettors, we next asked, how do we disincentivize them? Raise the takeout! Local bettors really, really don't care about it. The only elasticities lie within big bettors, and we wanted them OUT.

(continued...)
CecilJonesSchmitt said…
(...continued)

The ADWs are siphoning handle out of the entire system, at least for the cheap signal tracks. If serious bettors really wanted to get some changes fast, start pressuring the ADWs to increase what they return to tracks. And if there's one group of companies that big bettors have big, big sway over, it's ADWs (unless you're stuck in HPI's monopoly). You'll need it in order to convince ADWs to give up the profits they do very little to earn. One viable option is to use DigitalLink instead of your normal ADW, as the tracks get to keep almost all money bet through there.

Until then, though, there will be very few price wars in attempts to attract bettors like Canterbury tried. But if the ADW/track structure changes, tracks will want to get online dollars, and more money will be returned to the overall local industry. At the smaller tracks, horsemen are sensitive to purses (unlike, say, trainers at tracks like NYRA or SoCal, where the major costs are purchase price of horses rather than the variable costs of training), so field sizes will increase at these tracks and give bettors more betting options.

Note that ALL of this is independent of slots welfare. This is managing the track to be self-sustaining.

Of course, for tracks that get to keep most of the online handle, none of this applies. They should be listening very closely to the angry mob. I just hope for the other tracks, the mob knows where to yell.
BitPlayer said…
I'll defer to the expertise of our host, but I think Cecil is missing a key piece of the equation: rebates. My impression is that a large chunk of the difference between the signal fee and the takeout is rebated by the ADW to large bettors. The bigger the takeout, the bigger the rebate. If you want to discourage online bettors, the solution would be to decrease takeout (and thus rebates), not increase it. Of course, if the online bettors are showing a 20% profit on their bets (before rebates), they'll keep betting (and draining money from the locals) as long as they keep winning.