I found an excellent email in my inbox this morning from someone I have not heard of for a long while - Cub Reporter. Cub, as he is known to his friends, got his hands on a piece of audio tape. This tape is a long, rather drawn-out meeting of racetrack braintrust, trying to come up with ways to increase horse racing handles. He transcribed a few parts via Wordperfect (yes, Cub still uses that), and told me to not release it to anyone; that it was just for my eyes only. So, I post it for you here.
Exec1: Hi Everyone. It's time for our monthly meeting. Before we start I'd like to introduce [redacted]. He's here to add some new blood. Tell us a little bit about yourself [redacted]
Redacted: Hello and thanks for inviting me. I have little background in horse racing, but I like gambling a lot. I have studied statistics and gambling economics at Wharton, and play all sorts of skill-based gambling games as a hobby and vocation. I hope that maybe I might help you along, giving my opinion on what bettors may want so we can improve horse racing handles for the long term.
Exec2: Who do your parents train for? What tracks have you worked at? What year did you get your Racetrack Industry Program degree?
Redacted: Oh no, I don't have a background in the business at all. My dad is a plumber, my mom is a law clerk. I have never worked in horse racing, but did work consulting for some gambling websites.
Exec3: OK, thank you.
Exec1: Let's discuss some new bets and what we can do to steal them, or piggyback them, if you will. I see Grand River and Georgian announced a new jackpot bet today, at the behest of Woodbine. Woodbine announced a new jackpot too, a month ago, at the standardbred Mohawk track. What should we be doing.
Exec2: Those are good ideas. Woodbine had some big pools with their jackpot bets. They also created a 25% pick 5 bet, and they don't tell customers the takeout. I bet people think they're at 15% like everyone else and bet happily, not knowing they're getting a raw deal.
Exec2: Yes, surely. Some publicize takeouts, like the HANA magazine and twitter feed, but they don't even have as many followers as people like Sid Fernando. Not many know.
Redacted: People might not know, but they know when they are paid $400 instead of $450, because they have $50 less to rebet, so it is a big problem in horse racing when we look at the long term.
Exec3: I'd be happy with $400. I never win. Horse racing betting is hard.
Exec2: Yes, $400 is fine. It is hard.
Exec1: Well back to it. Following Woodbine's lead on jackpots, how about a win pool jackpot bet? If no one has the winner, the whole win pool carrys over.
Exec3: I like it. If we get some longshots we can have a carryover a lot. More than Woodbine does.
Redacted: I don't think there would be a win pool carryover. Plus, the win pool is this sports' main advertiser to bettors, and number one bet for churn, I don't think we'd want to mess with it with a high takeout jackpot bet to take money out of circulation. Longer term our customers will lose money quicker, and slowly leave. We might want to look at lowering win takeouts instead, or dynamically pricing. Other gamblers see a tote board with two 4-5 shots in a 10 horse field and know there's no value for them.
Exec2: I'm not sure about that [redacted].
Exec3. Sounds mathy. Let's form a committee and look into it. Win pool jackpots could help handles.
Exec3: Now, what about Frank Stronach's idea of a quadrefecta twin superfecta tri super quad. As he detailed it, it might be hard to hit, but what if we add a jackpot component?
Exec1: Jackpot it? Interesting.
Exec2: People love the jackpots.
Redacted: If a bet is too difficult and with too high a takeout, people would not play it in big numbers, so there is an opportunity cost, and a problem with churn. Handle and customer utility is a function of bankroll health and the inflection point is real. New money can't come in any gambling game if the marginal utility is not there.
Exec3: So you're saying the twin superfecta component is okay, but we should probably ditch the tri super quad?
Exec2: ... but keep the jackpot.
Exec3: We need to keep the jackpot component.
Redacted: No.... we should look at these bets as churn killers, and only use them sparingly, as an introduction to new bettors, or bettors out for a good time who like lotteries. They can't be a staple. As Andy Beyer said these bets are like crack cocaine, they can feel good short term, but long term they can be deadly.
Exec1: Beyer is still around? He must be getting old.
Exec3: He is, I read his columns and to this day I don't have the slightest what he is going on about.
Exec2: OK, Let's make this happen.
Exec1: Now, last but not least, big days. Big days are the rage. Churchill Downs upped the takeout good on the Derby and handle was up. Belmont had great handle on their Belmont Stakes day last year. We can charge a high signal fee on big days too, which can earn us a few extra dollars.
Exec2: Did they have jackpots those days?
Exec3: Probably, people love jackpots. But they had big days. Big days are good. They're the future.
Exec1: I propose we make every Saturday a big day. People will bet a lot of money. Because it's a big day.
Exec2: We'd need a jackpot bet. Use both of them, in tandem. Captain is better with Tenille.
Exec3: Maybe this is where we unveil our new win pool jackpot bet. Do it on a big day because a lot of people show up for big days.
Exec1: Hear hear.
Exec3: OK, so, we'll create a win pool jackpot bet, push the new super quadrefecta super high six jackpot, and promote our other jackpot bets, we'll create a new 30% pick 5, don't tell anyone the takeout and hope no one notices it's a rip. And we'll do it all once a week on a big day.
Exec2: That should help handles. What sports bettor or Daily Fantasy Sports player could resist?
Exec1: If it doesn't add to handles it's probably because of small foal crops.
Exec2: Solid point.
Exec3: So what did you think of your first betting strategy meeting [redacted]?
Redacted: It was interesting. I'll say that.
There's your glimpse inside the betting war room courtesy Cub Reporter, folks. Expect more big days, more jackpot bets and a whole lot of handle. Racing is in good hands.
Enjoy your Monday everyone.
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