Thursday, September 25, 2008

NTRA Task Force - New Fans

Kudos to the NTRA task force for getting bloggers on board with their ideas. Kevin from Aspiring Horseplayer, Jessica and Dana, two other influential bloggers all played a part. Here is the story.

There is much to go through in the report and much of it is interesting. Most of it new. New ideas from passionate fans. It's a good thing.

The main difference with other groups, like The Horseplayers Association of North America, is that the NTRA task force works on newer fans, or the entertainment part of the game, while HANA tries to grow the gambling side. They do not focus on takeouts and such. I guess a simple way to put it is: They try and get fans to walk through the door and takeout groups like HANA try and keep them here when they do.

"New" fans generate about $30 of daily handle (if you look at casual fans on big days and track handles). Maybe they come twice a month. If the NTRA task force gets 1000 new fans with some new ideas (a good thing) it might result in $700k of handle.

Then what do we do with them? If 99% of them lose, a fair share will not come back. We know this to be true. Our game is hard, and it is not entertainment. If watching brown horses go around in a circle when you are on a 37 race losing streak is entertainment, then a root canal is a Sunday picnic.

I think the NYRA spent something like $25M marketing to these types of fans with the Go Baby Go campaign. It's tough to keep them as fans if they don't bring home some scratch.

That is where groups like HANA come in. In making the game more winnable, allowing for open access for all ADW and moving the game into the 21st century with both pricing and delivery, we have a chance to grow rapidly. For example there is one HANA member that has gone on record saying that he bet $30,000 per year before getting a lower price. After the lower price was given (through rebates) he then bet $1.3M a year. That is a $1,270,000 handle increase by one person.

Thankfully more progressive racing cultures have gone in this direction, so we don't even have to guess about this.

Australia, as we all know have 16% takeouts mandated by government, which is about 25% lower than North America's takeout. The per capita handle there is $430. In the USA it is $48, almost ten times smaller. If we could somehow get to a meager half of what Australia is, we could up handles by a huge amount.

In Hong Kong, getting new people out was important, but when push came to shove the braintrust there moved to lower prices to curb losses in handles. Rebates of 10% were given when the HKJC lobbied the government to take their tax off pools. Handle was up precipitously and the bleeding stopped. That one move of lowering takeout could result in 100's of billions of handle over the next decade for the Hong Kong Jockey Club.

It is clear that new fans are important, but lest we forget our old ones, and our current ones. They are already prequalified to love racing. We don't have to teach em a thing, don't have to give them a cap, don't have to start a handicapping contest, run thousands or millions of TV ads, or get a mini-horse to come and make an appearance. We don't have to go find them because they are right under our noses. We just have to give them a chance to win. If we do, they will be back and spending money not on a ball on a roulette wheel; they'll spend it on the super at the Red Mile.


Anonymous said...

Try describing racing fans. Are they loners or social animals? Years ago I worked with a Chinese engineer. At poker games he was outgoing but at the track I'd see him usually standing alone near the rail, eyes on the form and approach him and you'd only get a hello and I knew he didn't want any casual conversation. With myself there are not to many people I want to share a table with at the track. Do not want any distractions. Beginning gamblers in my estimation can have a better time at a casino. No brain strain and if they aren't gambling they can watch others that might get on a hot streak. I guess this is a pretty negative post to people who are trying to boost participation in racing. I do have some ideas that I'm trying to think thru but it will take more time.
Please try and answer a question for me. These gamblers that churn money and depend on a rebate to come out ahead, what would a bankroll of $50k produce in handle over a year?

Pull the Pocket said...

Hi RG,

Good thoughts.

As to your question, I could get to it and do some math, but off the top of my head a $50K bankroll is huge. it would produce many millions. But it depends on your ROI. It is why helping players win and keep that bankroll churning is key. That is why slot machines have dropped rakes from 30% to less than 10%, or why state lotteries have dropped takeout.

If you are a terrible player and hitting at 0.79ROI (betting chalk every race say) you will bet much less than if you are 0.94 ROI, so there is no hard and fast answer.

In our takeout post at the side of the page we showed (simplistically) that a player with a 1.01 ROI and a $1000 bankroll can bet $330,000 per year, so simplistically with a 50k bankroll one could theoretically bet about $15M a year with that bankroll. That number is high, simply because of pool size and we do not bet a whole bankroll every day. Conservatively you should (if you are 1.01 ROI bet around $8-$10M a year I imagine.

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