The wonderful and cuddly ITP said something on the twitter yesterday about takeout:
Fonner and WRD should lower their takeout to 12% on all bets and reap all the rewards themselves....But that's way too difficult obviously.— Inside The Pylons (@InsideThePylons) April 28, 2020
This is in reference to the Paulick Report article where, to lower the juice strategically for customer engagement, industry-wide 5% daily rebates were proposed.
ITP's tweet can be a bit of a mind-bender for some, so a quick explanation.
These tracks charge somewhere around 4% of takeout to the ADW's which are carrying them (their signal fee). The other, say 15%, of takeout is earned by distributors.
The tracks themselves earn every penny of on-track takeout (and have similar deals with other tracks - earning the bulk of takeout - from what on-track patrons spend on out of state tracks). But, of course there is no on-track betting volume with no fans.
ITP's math rightly says: Lower takeout to 12%, Xpressbet gets 8% instead of 15%, our track gets 4% just like we always do, so we're net equal. And because there are so few tracks going, and higher payouts (lower takeout) increases churn (the churn rate on 12% juice is about 8.3), it increases total handle. Which means more money to WRD.
Because there are so few tracks going, the small tracks do have some pricing power, and Xpressbet would conclude (in a perfect world, in horse racing they might just not take their signal) 8 percent is better than no percent.
It's a simple concept but it's not the way things are done. Nothing is very simple in horse racing, which is why proposing a rebate to reduce takeout is more realistic and effective than an across the board takeout reduction.
The Paulick Report article regarding some statistics on marketing and customer retention was published yesterdy. I thought I'd share a few other thoughts and stats from some research.
First, some stats on why racing should be having a boost in signups, and viewership (without doing anything but racing), via the Acquisio report.
- OTT video streaming was up in March alone, 24%
- 56% spent more time playing online games; Stream saw a record 20 million users on lock down day in the Northeast.
- March saw 35 million downloads of fitness apps; revenue from March was a record from these apps. You're at home, and it appears you want to work out (not me, but you).
- Netflix saw 16 million new account signups.
- The new Call of Duty game had 30 million downloads in ten days, a record.
The nimbleness of some of the companies selling you things in COVID, with lead gen, demand gen, or pure e-commerce is displayed by an increase in "addressable geo-fencing" spend. Normally advertisers try and target you when you are near shops, or downtown (geo-fencing), now they're targeting you in your neighbourhood (this sounds creepy, perhaps it is, but people sign up for things like this).
Horse racing, like these companies have been attacking you in your house too - the TVG/NBCSN coverage comes into your home each weekend.
Via AgilityPR, millennials (not shocking) are the most likely to change spending habits via COVID (54%) while 49% of gen Xers follow closely. The least likely are boomers at 33%. This, sadly or greatly, depending on your perspective, is probably good for horse racing. It's likely younger people will find something to do, while older people fall back on habits. A habit is betting on horse racing again.
I've believed for some time now that wishing for younger demos to play horse racing might be misguided, or at the very least, not optimal. There is serious pent-up demand from players who left racing for other pursuits, and from older demographics who are predisposed to play racing but do not anymore for the multitude of reasons we speak of every day.
I hope you have a great Wednesday everyone.