6 January 2016

Same Old Same Old

Horse racing was up a mere 1% in 2015. Did American Pharoah even matter? Lets hope not.

Applauding contraction as the direction to go is pure willful ignorance. Sure, intuitively contraction seems the only way to go as long as racing feels it can't compete with other forms of gambling, but nothing good can come out of it. It is only a band-aid for those who have the most invested in the game today but it will definitely not grow the game, it will have the opposite effect long term. When you cut dates, you cut exposure, you cut participants as well. Participants have families and friends who are potential customers and potential participants. This is simple stuff.

Owners who have 20-40 horses seem to forget how and why they got started, and that they probably started with 1 horse, two tops.

Race tracks cutting dates severely in Suffolk, for example, or altogether in Virginia only will cause those living in those areas to stop even thinking about horse racing, which included betting on it.
Less participants means governments will care less about horse racing and the economies created by horse racing, which will lead to less monies from alternative gambling in the future.

Another example, Texas cutting online betting on horse racing. Texas is a very large state, and asking Horseplayers to drive 50-100 miles in many cases just so they can bet into an average 21% takeout is ridiculous. Most of those who used to play horse racing online will forget it exists. They'll play offshore or play something else (see DFS).

In 2015, we had American Pharoah (which brought many new eyes to the game) and millions of gambling hungry (see DFS) millennials, a slightly improving economy (much much better than 2009 for sure) and handle only went up 1%...and forget about factoring in inflation, of course. Also, handle has been dwindling the past decade+ as well, and the industry can't even get a dead cat bounce:


Gamblers are out (see DFS) there, but the masses want two things: Their gambling fix to be satisfied, and a game that is perceived to be beatable. Simply put, a game with no visible winners that has a 21% average takeout makes both impossible.

DFS can teach horse racing a few things. First, it is palatable to have 1-2% consistent visible winners. Second, a 9-10% takeout is also permissible as a maximum. Third, if the first two things are happening, quality doesn't mean much, games loaded with teams below 500 are just as like as games with that include elite teams. The gamblers horse racing needs want the action, want to think they have a chance long term, and hate to reload their account every day or two.

So what is racing doing to improve the gambling aspect?

More jackpot bets! Really? Yes. Have jackpots bets created more Horseplayers? Doubt it. Do jackpot bets take more churn out of the game? 100% for sure. When gamblers want to fulfill their fix of staying in the game financially, the worst thing you can do is hold back money or take money out of circulation and even worse, distribute it rarely to one gambler who will be subject to massive withholding and is highly unlikely to bet the money back quickly enough to help churn.

More Hi 5's! Jackpot or not, these wagers do for growth, again, the opposite. An industry leader or two has brain farted the idea that putting them in every race is a good business move. The only time anyone should consider betting a Hi 5 is when the Jackpot is over 200k and one can justify throwing a few bucks at it as a lottery play, but to those who built up the Jackpot, how about more cold showers? Two things, people silly enough to play a Hi 5 with less than 10k in the pool aren't attracted to low takeouts, and because there are so few winners, if a track is going to lower takeout, this is the worst wager to lower it on. Second, why not try this, lower takeout on a few exotics instead and see how it goes.

20 cent exotics? Great, if the takeout isn't over 20% for those wagers. But when a 25% tri or super (where the average bet is over $4 to get it) pays the same on average for twenty cents that a 20% takeout ex or dd pays for a deuce, you end up with a disingenuous way of killing churn (the gambler's fix), and you are end up helping the Horseplayer to gradually disappear from the game.

Back 3 years ago, I wrote a piece: Shh! I Know How To Grow Racing I didn't mean for the industry to take the Shh! literally, but so far, it has. See also Location Location Location

Funny thing is that three years ago I also wrote a piece on how the four major league sports could improve: Horse Racing Isn't The Only Game That Can Improve. Guess what, the NHL and NFL make me look like some kind of savant.




2 comments:

Ed said...

Welcome back. Have missed your comments.
Hope all is well & all the best in 2016.

Jerome Kingstone said...

Interesting seeing the latest changes to horse race betting. My mate David was looking at placing some bets on horse racing so i'll send this over to him, thanks for posting :)