A Bird in the Hand is Worth Two in the Bush - Unknown
The big push for racing of late is trying to get you - the horseplayer - to play into their track owned internet betting systems. Like racing has done over the last century, when they can't compete properly, they look to change legislation. In New York and Pennsylvania for example, there are new "laws" being pushed which help siphon off competition, in hopes the lack of competition helps their bottom line.
Racing customers need to be cultivated, and marketing efforts for internet wagering have kept a lot of players around through cultivation. There are ADW's right now at this very minute that will take a $100 a month player and give him or her a few dollars back as a rake reduction. These ADW's large and small, provide a service to those actively looking for a better deal and they have helped (this is not an opinion, it's math) handle.
But they are starting to look more and more like a thing of the past.
If you are not a whale, you're in serious trouble.
Already in California you need to (apparently) "establish" a high wagering level to get a decent deal. I am unsure if you get put in a room, deprived of all your senses and get force fed McNuggets or not to come clean with your wagering, or if there is another way, but it has to be done.
In New York, with this new legislation "Applicants must assure that the rebates are determined "solely'' by how much a bettor wagers."
Sorry to be a curmudgeon (my new favorite word), but what a load of crap. This misses the point entirely.
A fellow who bets $20,000 a month did not get there by playing into 22.4% blended takeout, he or she got there by getting a better price and and using it to bet more and more over time. The small ADW's - the ones that are being shut out - were the ones providing this cultivation.
New players, smaller players who are getting better and want to get even better aren't going to join you, show a million dollars in handle and say "yes, please take me". They are not at a million a year yet, they are at $50,000 or $100,000 or $150,000 a year. They are there because they have gotten a better deal and when they don't get one any longer, they are going to take their ball and go home.
This to me, represents the biggest marketing paradox I have seen in any business I have studied.
A casino cultivates their existing customers. So does a restaurant and a health club. So do countless others. Racing does not cultivate them. They don't have the same mechanisms in place.
The paradox lies with racing's marketing spending, and the constant will to get brand new customers.
America's Best Racing, food truck events, billboards and Wang Chung concerts at Hollywood Park cost a ton of money. They're there to get new customers. They are fishing in an unstocked pond, obviously, because there is no prequalification for liking Wang Chung and betting the sixth with a TimeformUS speed figure and your favorite Brisnet software package. For branding, and getting people out to a horse racing event this spend is fine, but it's folly to think it is going to cultivate betting customers. The cost per acquisition of actually turning this demographic into a once a week or more bettor probably runs into the tens of thousands of dollars per capita. But, that spend is happily approved at all meetings.
Meanwhile, Linda from Des Moines plays a few races each week and she's getting better. She has a 0.93 ROI and as her ROI goes up so does her enjoyment. She is close to getting hooked. She sees an ad for an ADW that gives her a break on price, upping her ROI to 0.98, and she enjoys racing even more. She's betting more and winning a little more often.
Then the horsemen groups, governments and whomever else tell her its their way or the highway. She's not betting "one million or more" so she is back to playing at lower volumes. She's back to where she was.
You have Linda. She's sold. She's doesn't have to be prequalified to be a customer, she already is your customer and will likely be one for a long time with a little bit of investment. You just chased her away by not giving her a few dollars back on her wagers because she is not a whale, while at the same time you as an industry pay millions of dollars with the hopes of getting a Linda; by renting a giant bus, or sending her to a felafel truck on food truck day.
For racing, a bird in the hand (Linda) is not worth two in the bush (two drunk kids watching an English Beat concert). What's even worse, when you squeeze the bird for more, she flies away. And the two drunk kids in the bush head to the nearest casino.
That's today's paradox and I think it's a huge reason why racing can never seem to compete as a gambling business. They spend so much money attracting customers to attend and brand live events, while not spending nary a dime to help existing customers bet more. How can racing possibly grow with that formula? It can't.
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