Tuesday, July 2, 2013

ADW Problems & Throwing the Boat in Reverse

Racing is forever interesting. Faction upon faction tends to have differing objectives and in the end appeasing each of their wants tends to hurt the good ship racing.

You probably can't go a week without someone saying "we need more young people betting horse racing", yet what do those same factions advocate when it comes to attracting them? We have Arizona banning online wagering. We have Texas asking out of state ADW's to stop taking customers. We have Illinois banning ADW signals during a dispute, ditto with Thisteldown in Ohio. We have Michigan doing similar and there are rumblings that New York wants to institue an "ADW Tax" on out of state ADW's.

Papal visit mash up, 2005 vs 2013
"Hey young person with your fancy smartphone, we'll make it harder than ever for you to enjoy the nations racing via an ADW account, we'll make it more costly and we'll add even more rules and regulations. Please visit your local track, sit there for four and a half hours and bet. Make sure you come back."

The goal of this policy, of course, is a goal that has been racings paramount policy for a long time: "If you can't grow a pie, try and grab a bigger slice for your alphabet".

From a bumper sticker perspective I guess it goes over well. If you call someone a "leech" and have that branded in the cockles of the sport, it can resonate. After all, who likes leeches? The problem with that narrative is that not only is it wrong, it's dangerous.

If you watched the racing last week where Tampa Bay Downs, which usually garners upwards of $4M in handle in one day but only received a fraction of that, ran a special card with no ADW wagering, you see where this path leads.  Trying to get them to change to your ADW, restricting them, or offering them a higher price on the bet with worse service only maddens customers and potential customers.

In addition, as the above picture shows, it's 2013, not 1913. Innovation via your ADW platform costs money - lots of money. If you are changing from one platform that invests in customers through innovation and player rewards, to another where more money goes to an alphabet or for purses only, the betting pie shrinks.

Seth Godin this week wrote about a path for struggling businesses:

..... there are three options [for a boat that is slowly sinking]:
  • Work on keeping the boat going straight
  • Bail water ever faster
  • Find a new boat before it's too late
Racing barely does the first two - in fact, by banning signals to people who want to be your customers you are throwing the boat in reverse, or not bailing water, but adding it - and the last one is simply unattainable, although it is the absolute 100% true and proper course of action. 

Racing has needed a new paradigm since lotteries and others forms of gambling have made their way into the landscape in the 1970's. Instead of working on one, we've seen what we've seen. If you have 20% of $16B of handle, why not take 22% of that $16B and make more money. If we don't like ADW's taking our business, try and put them out of business and take more money for us. Both of those policies fail. Instead of 20% of $16B, you find yourself with our current 22% of $11B. Instead of an open, free internet, where people who use Ebay and ETrade and everything else, we have a fractured, costly, stuck in cement system, where fiefdoms can outnumber customers.

Racing probably needs to "find a new boat before it's too late" when it comes to ADW's. But with the boats being filled with alphabet-led water, I expect things will have to get a whole lot worse before the boat can ever move forward again.

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