When You Can't Find New Customers, Go After Someone Else's

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This seems to be the crux of the entire sport of horse racing right now - not expanding the tent but inviting people from other tents into theirs as a measure of success.

Each day, you and I as regular players see examples of it.

Why do tracks post drag? Is it because focus groups discovered that sports bettors have a deep attraction to watching a flashing zero for eight minutes? Maybe it's because new fans love watching horses walk around in a circle behind the gate; it brings them back to their whimsical youth when they liked the merry go round at the county fair.  In this delirious state, high-level racing researchers discovered that endorphins in the brain are released which makes them want to wager.

The jackpot bet arms race sure doesn't appear to be something that is attracting new players. What it does is park a customers money in a single track's betting account, and if these bettors want it back they better keep playing my track, not that other track. Then one day we'll let all this parked money go and a whale from the Oregon hub will take down a big score.

Where it gets really weird is when we truly examine the above two items.

Post drags anger existing customers for a hundred reasons you've read here, and on social media or chatboards. Jackpot bets are horrible for customers; customers the game needs whole, or at least interested and playing. Parking their money at 60% takeout is torture.

Racing is in such shape that a strategy that i) annoys core customers and ii) takes 60% of their money (so they have nothing left to bet with) is considered a viable one. And it's such a great business strategy that when one track does it, so does another. Really.

I don't think McDonald's is formulating a pro-growth plan that makes customers wait longer for their food, and when their food finally arrives, they keep 60% of it.  Wendy's isn't reading about it in Barrons and saying "hey, great idea, we should do that too."

In racing, somehow, someway, in some form, this is considered a way forward. 

ADW's (many track run), racetracks (minus a few like Kentucky Downs), and the industry as a whole has appeared to given up on outside growth. They've centered on getting their customers from other racetracks. Maybe it's a lack of imagination, the wrong people in the wrong jobs, or the right people in the wrong jobs. Maybe there's just no hope for growth and this is a proper strategy.  For whatever reason, racing's entire being is focused on the parts of its sum. That, in my view, can't ever end up in a good place.


Strangest argument I've seen for not lowering takeout rates - "when [track A] did it, revenue did not go up for the meet." Since takeout changes are long term that's obvious. If the sport wants to increase revenue tomorrow by billions of dollars for 2017 they should raise takeout to 80%. I'm serious. They will make lots more money..... this year.

The Queen's Plate handle was over $13M on Sunday. Woodbine does some great work with the event and should be commended. However, Queen's Plates up until about 2009 had minor-league betting distribution and rebate shops were exempt. As well, the dollar has moved down about 30%. With 70% of the handle from the US, that represents a 21% handle increase on its own. Again, they've done good work and I don't want to be a Darrin Downer and gloss over that, but some perspective is in order.

Owner (whose horse wasn't even paid into the race) criticizes Jeff Gural for his track rules. This really made me, as the kids say, smh.

Enjoy your Wednesday everyone.

1 comment:

Sal Carcia said...

I have said this more than once. The game needs to understand the reasons behind the popularity of the jackpot wager. I have claimed that small- to mid- size players think it is a shelter from the rebate and computer players. I have noticed lately that there have been huge drops (and jumps) in win and exacta plays coming in after the race has started. I mean huge. Whether this is an illusion or not, it does not change the perception that high end players and bots are skimming the pools. It is frustrating.


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