27 January 2008

Parimutuel Wagering Under Siege

An excellent article by Beverly Smith from the Globe and Mail can be found here: Parimutuel Wagering Under Siege.
Hugh Mitchell, the chairman of the Ontario Horse Racing Industry Association, makes many realistic observations. Betting on harness racing is on a drastic decline in Canada, while thoroughbred betting growth is stagnant.

Mitchell says the decreases in parimutuel wagering have occurred for many reasons: competitive issues (from offshore online betting accounts), internal issues within the industry and the nature of the wagering product.

"It's an intellectual product," Mitchell said. "It's not a game of chance, not a quick-play product. There are no life-changing wins like there are in slots and lotteries. …"

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I think Mitchell hit the nail on the head by calling horse race betting "an intellectual product." Yes, picking horses even moderately successfully (losing money but beating the track takeout) requires lots of insight and handicapping prowess. But it isn't like the old days, when there was one track and no slots. Back when "sucker money" could be found in the pools. Now it is intellectual versus intellectual, who compete at high track takeouts. There are also a lot more than 9 races a day to play. And add the huge amount of money being played by rebate bettors, many who have very sophisticated computer programs who cut into the potential profit of players, and you get a recipe that makes it impossible for anyone to even come close to beating the game if they play without rebates.
Handicappers are usually smart enough to look for alternatives. And who can blame them. There is Betfair, where you pay 4% of your winnings to the house on a bet by bet basis (you pay no juice when you lose). This is way more realistic when one takes into account the churn factor in betting.
And that type of low takeout mentality is already prevalent in Hold Em Poker, a game like horse racing that requires thought to be successful. It is no wonder that money that should be in racing pools have been lost to Betfair and online poker.
Horse race betting should be growing. It is available on the internet and by phone to the masses. In the old days you had to literally be at the track to bet. But things have changed....well, except for the mentality of racetrack execs when it comes to outrageous track takeouts.
Personally, I only will bet on horses if I get a generous rebate. I'm tired of burning money with no chance of victory. I'm not sure WEG even has a clue how much money they losing out on. And all they seem to do is whine and bitch about Betfair, online poker, and offshore betting houses. They are sure their problems would be solved if such betting was made illegal. I have news for WEG, I'd rather read a book than place a bet into a pool that has a takeout of over 25% on triactors for example.

"It's the evolution of a fairly mature product, which has been around for decades. Every product has its life cycle."
These trends should concern everybody in the industry, albeit not enough to quit, Mitchell said. "But enough concern to retrench and re-evaluate ourselves and begin to try to make ourselves a better industry."

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Technology has made horse racing available to the masses like it has never been before. Collectively, racing execs should hang their heads in shame. The racing industry needs to wake up and realize who their clientele is and what makes us tick.
I think there is light at the end of the tunnel. Hugh Mitchell is preaching change. Maybe the racing execs will drop their dinosaur attitudes and get with the times.

I started a thread at Pace Advantage, take a look at it.

Also, Pull The Pocket comments on the article at his blog.

1 comment:

Pull the Pocket said...

Very good angle you took on it being an intellectual product. Very true. It's like golf. You can never perfect it, it's really hard, and you are always getting better.

There is a really good article on that I stumbled upon somewhere. I will check and post it up.