There was a spirited (yet respectful) conversation on twitter today, primarily pitting Caroline Betts - economics geek - against Gary Mandella from HRTV. The debate centered around Santa Anita's new CEO trying to get more party types to the track, as a turnaround mechanism.
Gary found it a decent strategy (probably in the "let's try anything" at this stage school), Caroline found it pure hokey. She believes that short fields and 20% rakes will never make any of these new people a new fan, or bettor.
Clearly (shocker alert), I side with Caroline. The best way to illustrate why I do, is with a little hypothetical test with 200 new fans.
The first hundred will be brought to the track by the advertising of Flo-rida, (or I-o-wa, or whatever his name is) playing, and $1 beers. The second hundred will be brought there by a new betting mechanism, say an exchange, with 2.5% takeout. The first is advertised to on the radio, the second is advertised on online poker sites, and on sports betting blogs and podcasts.
The first hundred go to the track, and are schooled on betting superfectas, and pick 3's at 25% rake, by really good handicappers. Then they go bet, meet Mark Verge and start boozing, to get warmed up for Al-ask-a.
The second hundred are given nothing more than a fig (say a BRIS Prime Power number with 0.90 ROI), a piece of software like Bet Angel, and are taught by a bettor how to bet the low takeout exchange.
At the end of an eight week period, who do you think won the battle? How many of the bands and booze 100 return to play the races, and how many of the skill set 100 come back to play racing?
I think it's no comparison. The bands and booze folks are likely broke. Who can beat 25% takeout, short fields, and chalk tris, as a newbie? What's worse, you'll hear a word of mouth of something like this:
"The band was okay, but I lost all my money betting. It's too hard"
The low takeout folks at least have a possibility of grinding, just like low rake online poker did, where players could play, no matter what the skill level for months on an initial $100 deposit. You'd likely hear from at least some of them, the exact same thing we heard from newbie online poker players:
"I think this horse racing game might be beatable if I work at it."
The thing that racing has never tried is a low rake concept for newbies. They want bands, and advertising, and people like a snowboarder to tell everyone how great it is. They try Go Baby Go commercials. Some in the industry still think racings target audience are lottery players. All of that is what I like to call "let's throw it against a wall and hope it sticks" marketing. It makes us feel good, but if it worked, we'd be Kings of the Gambling world, because Lord knows we've done enough of it.
Unfortunately though, it's even worse, in my opinion: We have a low rake, conceptual exchange - which has brought people like Peter Webb into our sport as a newbie, as well as a younger demo - and we either don't want to approve it, or kill it by making takeout 15%.
Low rake can be used to bring new people in, as a loss leader, just like $1 beers, or rock bands. It's a marketing tool, because the people who are prequalified to like it, are racings potential market. And the best part? In ten years the 'beers and bands people' are off having kids and watching little league baseball - having been to the track only once or twice, or at best a couple of times a year. In contrast, some of the low rake newbies will still be watching, betting, and funding racing - because they came to the track to try and play the game to make money, not to drink cheap beer.
Related: "$500M is Hard For Racing to Fathom, From a Newbie"
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