Now, I am not here to defend a rather strange and sub-optimal betting delivery system, but I will continue to defend one simple point: Squeezing them won't grow horse racing.
Today at TechCrunch, Zack Kanter, the founder of Sedi (a company in the really tough ERP space) wrote a fantastic article about retail, and the various machinations of it. The article is really good, and if you're interested it's worth a read. One part of it, about backward (or forward) linkages caught my eye:
- "the increased margins typically evaporate over time. There are great examples of this in the automotive industry, where automakers have gone through alternating periods of supplier acquisitions and subsequent divestitures as component costs skyrocketed. Divisions get fat and inefficient without external competition. Attempts to mitigate this through competitive/external bid comparison, detailed cost accountings and quotas usually just lead to increased bureaucracy with little effect on actual cost structure."
As that happens, what you're left with are divisions that "get fat and inefficient without external competition."
The industry will never grow by trying to increase margins on the backs of the end user. It's completely short-sighted and untenable.
3 comments:
According to the Oregon commissions website. The quarterly handle of ebet,Amwest and Premier turf were down compared to the same quarter from the previous year. While the handle from Tvg, Twinspires and Xpress bet were up.
Thanks for the link to the interesting read. A few comments:
Don’t tracks already have a bloated, inefficient department: the one providing on-track wagering services? The reason they want geo-location is the failure of that department to provide competitive services to customers who have already opted to come to the track. Might not the merging of that department with an ADW shake things up a bit?
Are ADWs really struggling? I’m seeing new entrants, like DRF and NYRA.
If tracks continue to surrender their distribution to ADWs, aren’t they in the position of retailers in the linked article? The big risk I see with ADWs is that they are really online gaming companies at heart, poised to redirect horse racing customers and the churn into other forms of online gambling, as they become legal.
Good points Bit.
Don’t tracks already have a bloated, inefficient department: the one providing on-track wagering services? The reason they want geo-location is the failure of that department to provide competitive services to customers who have already opted to come to the track.
> Agree, they're a mess and don't understand customers (for the most part)
Might not the merging of that department with an ADW shake things up a bit?
> Oh I hope not. They're a mess and no need to export the mess to something that is more successful, imo.
Are ADWs really struggling? I’m seeing new entrants, like DRF and NYRA.
One's a track ADW, and the other is not doing too great.
If tracks continue to surrender their distribution to ADWs, aren’t they in the position of retailers in the linked article?
Is a bookseller smart to get 10% of revenues after paying a publisher, reseller and mareketing firm? Or smarter to self publish? AS the article states, most companies can't do what AMZN does so they are happy to give up margin. The tracks are probably wise to do the same.
The big risk I see with ADWs is that they are really online gaming companies at heart, poised to redirect horse racing customers and the churn into other forms of online gambling, as they become legal.
I think that's where things are ending up. But it's best to have a slice of it by being a part of it, imo.
Thanks for the comment!
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