Thursday, December 3, 2015

Saving Racing, by Eliminating Customers One at a Time

Well, the big news today is that racing is saved.

"Stronach" tracks have sued contest site Derby Wars.
The suit alleges DerbyWars contests are a violation of the Interstate Horseracing Act (IHA), the Racketeering Influence and Corruption Act (RICO) and California Business and Professions Code and inflict “intentional interference with prospective economic advantage.”
Shutting down this scourge will hopefully increase handles back to where they were, inflation adjusted, a decade ago. I'm sure of it. Horse racing is saved.

This is on the heels of other big entity decisions to save horse racing, like takeout hikes at Churchill Downs, signal fee hikes in various jurisdictions, and ADW taxes in some states.

Tongue in cheek? Of course.

Takeout hikes are anti-customer. So are signal fee hikes and ADW taxes. Add to the list the suing of a contest site that patrons (particularly new ones who are scared of the pari-mutuel system) enjoy, and use to qualify for NHC events and Breeders' Cup betting challenges.

Horse racing is the only business in the history of mankind who thinks it can grow by eliminating customers.

Derby Wars and other sites represent the contest space and do it well. The Breeders' Cup Betting challenge this year realized over $3M in live handle at Keeneland (at about 18% boat). The NHC is well-attended and keeps players engaged. It offers some free press for the sport. This is all part of a customer ecosystem.  It appears Stronach believes this customer base needs to be shut down.

Maybe it's legally right, I have no idea. The US legal system could probably sue a catholic priest for assault by holy water and win. But it's, in my view, fundamentally wrong.

Horse racing needs partners, its customers need choice, it needs advertising and resellers, just like any other business does. Eliminating such entities and partnerships angers customers and encourages them to do something else. That's the opposite of what this sport - and for that matter any sport - needs.

Disclaimer: I know and like Mike and Mark, at Derby Wars. However, I would feel the same way if Derby Wars was run by anyone.


Ron said...

Nearly every hoseplayer friendly move gets shot down. There has to be a method to the madness.

That Blog Guy said...

Well let's face it, you can't tell me fantasy sites are games of skill. Like horse racing, skill is involved, but ultimately, luck factors in so it is gambling.

Should these sites be shut down? As you said, legally they probably should. However, it is the lack of regulation, primarily to ensure everything is Kosher. Yes, the government will probably tax it. However, it shouldn't be shut down because it competes with racing. Racing should try to get closer to fantasy sports in pricing and innovation, like exchange wagering (coming to NJ in the spring!). It is called innovation, something racing doesn't like to do.

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