The Results are in: Rebranding TV Coverage Works

The results are in from the recent Bet Night Live experiment on The Score Television network, and they are solid (see below).

 For those who have not followed the story, here is some background,  from a post on the blog a couple of years ago:

For those that read the blog, a hot topic for us in local racing has been the use of television to show things the old fashioned way, versus targeting bettors in a targeted way. As most who watch Race Night on the Score know, the human interest stories, while the great puzzle of handicapping the races is going on are maddening.

As I have said before, and you have agreed , "if we have to watch another story on a feed man from north of Guelph who owns four pet ponies during a telecast I think I am going to have a seizure". In my view, not using a show like this in promoting what you are selling (i.e. gambling on the product from home) is wasted airtime.

Well it appears this might be changing. Race Night will be rebranded to 'Bet Night Live' at the end of the month. The new show will "centre around a four-race wagering contest through WEG’s online platform HorsePlayer Interactive."

At the Standardbred Wagering Conference in 2008 I spoke to several people involved about rebranding the show, and they relayed to me that talking about betting on the air ran somewhat afoul of government rules (yes it was true. The government can spend millions on TV talking about casino's but lil' old racetracks can not talk too specifically about betting). However, it appears they can at least broach the subject and have devised a plan. Long ago on this topic we spoke of creating a special Monday bet, like a "Score Pick 4" at a 14.99% takeout (making it promotable as the lowest takeout pick 4 in North America) where the bet is promoted each Monday on TV. I think an idea like that has a chance. After all, Monday's this past month all Woodbine did was highlight a pick 4 pool by guaranteeing it. Guess what, it grew. By highlighting and promoting - virtually nothing quite honestly - they got people to play it. When was the last time you saw a $58k pick 4 pool at Woodbine harness? Probably a North America Cup night. Well that is what they got bet into it last Monday.

For too long racing has had the attitude that if you show something, or offer a race, people will come just like they did long ago. It is not the way it works today, you have to offer something and promote it. You have to experiment. You have to work at it. You have to give people a reason to bet your product. And most of all, you can not bean count. It matters what your business is in five years, not five weeks; that's why many businesses write five year business plans. From a bean counting perspective, raising the pick 4 take five years ago was just fine. I would ask Woodbine how their overall nightly handles are five years hence with decreased churn from the hike.

It's not your grandfather's racing and it is not a monopoly product any longer. The Kentucky Derby can promote itself as an event with side shows galore. Work week betting at Woodbine or Mohawk is a game, not an event. If Woodbine uses this in the right way, Monday's could be their highest handle night, in my opinion, without question, and I would have this as a corporate goal.

Today some statistics were released:

• In the two-year lifespan of the network program, the total number of new sign-ups has reached 2,086, with over $5.7 million wagered.
• The new format is proving to be successful as Bet Night Live’s audience is growing. This season there has been a 30 percent hike in viewers compared to the 2009 season of Race Night on The Score.

I am unsure they are tracking TV signups from regular ones, but if 20% of those sign ups and 20% of the handle from them are due to the brand change, this has supplied the Return on Ad Spend expected. In addition, if you can retain 5-15% of your new accounts with incentives and good business, the life time value of the new customers is a gift that keeps on giving.

As we noted this week in this post, I hope the Jockey Club is listening, and devising a plan to win customers, not just show racing.

In addition we can only hope Woodbine keeps trying new things, looking at offering not only the betting product, but betting value, has a plan to cultivate the new signups, and incisively track newbie bettor behavior.

Juice the Handle, Up the Eyeballs, Grow the Sport

In the 1970's share purchases were generally for rich folk. The Dow did very little volume, and a trade could cost me and you 3% or more (hundreds of dollars a trade). It was very difficult, and not cost effective to buy and sell stocks. Later on, much to the chagrin of seatholders, commissions were slashed. In the 1990's you could trade a stock for as low as $6. This (along with many other factors) allowed share volume to explode.

The commission revenue from investors, even at a $6 price instead of a $400 or $500 one, also exploded.

Not only that, it drove eyeballs. Books, DVD's, channels like CNBC and much more are more than a cottage industry, investing has become wholly mainstream, and a multiple billion dollar one.

In this day and age, racing has its own push/pull with commissions. Today on the Paulick Report Peter Berube of Tampa was interviewed. He has been lowering takeout since the early 2000's and Tampa has seen an increase in revenue.

• “I am convinced reducing takeout does increase handle,” Berube said. Furthermore, he said he is convinced the increase in handle makes up for the lower commissions from each dollar wagered when takeout is lowered.

Ray Paulick metioned another fact in the comments, the growth of purses:

• The aspect that concerns me is that while handle has increased significantly for Tampa Bay, purses have been flat [they are up 3% the past few years]. It's the antithesis of handle down/purses up....

That is an argument we do hear from horsemen regarding purses. If handle goes up 10%, purses better go up close to 10% too. Tampa's 3% purse increase and 15% handle increase is not doing the dollar for dollar job over the last couple of years.

Since we have competition and we must put more into customer retention to compete with other gambling games, we have not seen 6% to 8% of all handle going to purses like it had been (although Scott Daruty and Monarch are trying to go after market forces by doing that). In other parts of the world, where they have lived with competition for decades, like the UK and Australia, they have lower margins. About 2% of handle goes to purses in Australia and about 0.95% in the UK. We're simply catching up due to disruptive market forces.

Tampa, back in the 1990's, raised their takeout rates to 20% in straight pools and 28% in all others. Handle fell and they were only processing about $500,000 per day. Purses, I guess we can assume, would have been around $50,000 per day (that's a guess, I do not have the figures). Fifteen or so years later, in an industry that has lost upwards of half its business during that time, Tampa is doing $161,000 per day in purses (some of it from alternate revenue), or about a 300% increase. And they are doing over $4.2M in handle at the lower rates, instead of $500k at the higher rates, about an 850% increase. Tampa is not putting the same margin into purses now, but it still looks damn good.

One can only imagine what purses would have been today if they stayed at the old business model. Maybe they would do $40k per day, or they might have run a super-short boutique meet, doing nothing for local horsepeople. It's probably more likely they would've shut their doors, and we would not even be speaking about them today.

Regardless, the argument that an 850% increase in handle with only a 300% increase in purses resonates with a lot of people in racing as a bad thing for the business of horse racing. The phrase "our fair share" comes to mind. But I do not think it's a bad thing, for another reason other than the one above (i.e. if Tampa hadn't competed, it might not be racing today).

It focuses on eyeballs.

Let me ask. What would you rather have as a horse racing fan, exec, or trainer?:

20% of handle for purses with a $4M daily handle, or 5% of handle for purses with a $16M per day handle (e.g. what Tampa has done)?

I'd choose the latter.

If this was done industry-wide and we as a business did $40 billion in handle a year instead of $10 billion by taking less, many more people would be watching racing, and we have any more people interested in the sport.

• We'd have more people visiting racetracks
• We'd have more people buying horses
• We'd have more people buying data
• We'd have more people watching racing on television (maybe so that one day we don't have to pay networks to show us)
• We'd have more people extolling its virtues on social media
• We'd have more money going to horse retirement (those who get a share of handle)
• We'd have more money going to jockey and driver insurance and charities
• We'd have more people telling their friends about racing
• We'd have more money going to state houses and legislatures (some of them get a share of wagering dollars too) giving us tremendous lobbying power and political pull

And much more.

It's easy to be upset about the changing landscape and its perfectly natural. It's easy to fight over slices of the pie and worry about what went where ten years ago instead of where it goes today. However, when we grow the pie there are spin-offs and machinations that can grow the sport of horse racing because volume and eyeballs matter. Just like the stock exchange.

Sometimes taking less today, means more for tomorrow.

There's One Spot Left to Grab an Edge: At the Track

This morning we've got a huge surge in the stock markets. But it did not look that way early on.

As Keith McCullough writes today in his market update, the use of twitter has changed the way we think and act. As a result, the markets are extremely fast, and efficient with short-term, knee-jerk moves.

• Watching the US Equity futures trade this morning captures the essence of how short-term the group-thinking associated with the Type 2 Player in this game has become:
  
• At 4AM EST, I jot down in my trusty notebook “China down -3.3% to down -16.9% YTD, testing October lows”
• At 6AM EST, headline hits “China cuts reserve requirements, 50 basis points”
• The S&P futures went from down 8 points to up 8 in a nanosecond of what could be best described as media panting about point #2 on Twitter.
• Twitter, you see, is replacing what Old Wall Street calls “the tape.” On Wall Street 2.0, tweeters with analytical competence not only capture the China like headline “news” in real-time but have it synthesized within seconds.

In racing we have our very own Racing 2.0, and some of it is on twitter as well. You cannot go a week without hearing how a horse looks off in the post parade or in the paddock from someone at the track, or seeing real time market action on betfair, reflecting something that you and I at home can't see.

Just this weekend a horse at (if my memory serves) Mountaineer was trading as the favorite at betfair at around 5-2. In several flashes (just like the S&P this morning), he was 6-1. What's up? Three minutes later he was scratched by the track vet. Someone (probably at the track, or with a keen eye to the simo screen) knew, someone acted, and someone wanted to profit, all within a few minutes.

The funny thing? On the tote, pari-mutuelly, while this was happening, he was still the chalk. 

Sometimes it works the other way. A horse in the gate acts up, the price surges, and he wins.

Not only do you need 2.0 information, you need a 2.0 way to expose it, and profit from it. Regardless, quick price changes are happening and will continue to, due to conduits like twitter and betfair.

At the track it is not like that - yet. I was at Woodbine not long ago and a 4-5 shot warmed up terrible. Bettors were not watching; they were looking at TV screens. One person, a long time friend, was, and he alerted me to it. We both faded the horse in pick 3's and 4's and in exotics, making a little bit of scratch. The horse was 4-5, got everything his own way and came 7th. In simulcast land people were perplexed. If the race was on betfair he probably would've been 5-2 or even higher, but it wasn't.

As most serious players know, chucking out a 4-5 shot who will not hit the top three and taking a huge swing, can make your entire year.

Long, long ago, Pittsburgh Phil would profit from being at the track and charting the horses. It was easy to make a buck from the unsuspecting public if you were there, and if you were betting something that no one else is looking at. In 2011 - with virtually everyone paying attention to speed figs, four screens, or constructing tickets on copious exotics - almost the exact same thing is being done on track, only in a slightly different way. Just make sure the tweeters and the betfair users don't get hold of the information first.