It looks like horse racing very soon will have to face the inevitable, and compete with sports betting. Horse racing already had to deal with slots. Luckily, in most jurisdictions, the horse racing industry was deemed important enough to get a piece of slots revenues.
It might be a tougher sell in many jurisdictions when it comes to sports betting though.
Lots of questions are still unanswered, like who is going to be the risk taker since betting on sports in its purest and most popular form is not parimutuel? Will tracks and ADWs
be the major hub for sports betting or will Daily Fantasy Sports sites be the biggest player? What cut, if any, will the horse racing industry receive?
The sports leagues are the ones putting on the show, and they are asking for 0.5% of the total handle. Vegas publishes their win numbers every month on all forms of betting. For sports betting, it is usually around 5% of the total handle and it includes single game bets and parlays (which have a larger" juice" rate than the estimated 4.5% for individual games). That means the leagues will most likely be getting around 10% of gross profits. When you add in the states cut and the operator/risk taker cut, there probably won't be much left for horse racing even if they do get a cut.
So let's look at a few bets that horse racing can put out there to directly compete with sports betting. The advantage horse racing has is that a race is over in 2 minutes, while a game is over in 2-3 hours. Even if a parlay is experimented with, it can be over in less than an hour.
The Odds Even Bet
This is not a new idea. It has been tried, unsuccessfully, in the past. A parimutuel wager with a low takeout where one has the option to take all the even numbered horses or all the odd numbered horses in a race. Making this kind of bet anything but
a parimutuel wager would be suicide for a racetrack, but this kind of bet, if promoted nationally, could become successful, and it could be a major stepping stone to exchange wagering. This bet can also be a parlay bet using multiple races with a higher takeout to put it on an equal footing with sports betting.
The Jockey Team Bet
This is a variation of the jockey head to head bet which again has been tried before. Again, this needs to be parimutuel. This idea has quite a few variations that can be used. For example, a computer can figure out which jockeys have the most mounts in North America for race cards that begin between 12 and 2 EDT. Using a formula that incorporates morning line odds, two close to equal teams of 3 jockeys can then compete head to head for total wins.
The Winning Payout Bet
This is a variation of the Odds Even Bet. This has to be another low takeout parimutuel bet. For example, lets assume it is 10 horse field, horseplayers can bet over or under a win payout of $12.55. Of course, tracks can use their historical mean payout price for races of X number of horses as the target price so that there is a good chance that there will be equal action which means a $1.90+ payoff for both sides of the bet, which is equal to sports betting. This too can be a parlay bet as well, using multiple races.
The above piece was recently published in HANA's Horseplayer Monthly. Check out April's Edition, there is a lot of good info and it is free.
Showing posts with label sports betting. Show all posts
Showing posts with label sports betting. Show all posts
2 July 2012
Statistics Point To A Dying Game That Needs To Change
NYRA's Oversight Board Member Richard Aurelio recently stated "The sport is dying. Every time you look at the obituary page you’re losing a racing fan.” This made DRF's Mike Watchmaker very mad.
Though Watchmaker brings up good points, like the stands have always been full of older people, which, because of the lack of younger people in the crowd, leads to the false conclusion that when the older players die, it is over for horse racing. The reason this wasn't true in the past is that 45 year olds and up have more disposable cash and more time to finally embrace the game that hooked them when they were younger.
Watchmaker doesn't address why things might be different this time around: A much smaller amount of the new 45 year olds today were bitten by the race track bug at an earlier age, and going forward the percentages will even be smaller.
A brief history is needed to explain this. Back in the 60's, horse racing was mainstream, many sitcoms on TV had at least one episode devoted to a racetrack theme. Outside of Vegas, it was the only game in town. You had to go to the track, or by the early 70's an OTB, to place a bet (except for those who played with bookies, but even these players went to the track often). The stands were packed, not only with 45 plusers who were regulars but their kids as well. The Horseplayers were limited to WPS bets most races, as there was maybe one double and a couple of exactors tops for a typical card of racing.
The fact that WPS wagers were predominant meant that collective takeout back then was in the 15-16% range, which meant more churn, and more gambling satisfaction as a limited 8 race card ensured that most patron would leave the track with at least some money, which for a gambler lead to one thing: Looking forward to the next day that the track was open and/or the next day they can make it to the track....and who needs to pay for a babysitter when you could bring your kid in for free.
The game was beatable by a few too back then. Those who made their own track variants had a huge edge (this was taken away gradually, as the DRF provided some archaic variants culminating in 1990 when Beyer figs were in every Form). There were visible winners, thanks in part to a lot of dummy money, as there was pretty much no other gambling competition, which meant that there was a lot of money in the pool that came from guessers (only 1 in 4 or 1 in 5 players actually bought the Form).
The 70's came along and so did lotteries and also a lot of sports franchises began to pop up. The Toronto Blue Jays had a noticeable negative affect on the attendance numbers at Woodbine, especially on weekends. Dummy money was still out there, but exotics started to become available in every race, and this drove up the collective track takeout and it reduced churn as well. Players were going home with less money, and they also needed a bigger bankroll to enjoy the card. This weeded out a few more, and stands started to see a drop off in kids (today's 45 year olds).
The 80's saw even more exotic wagers, collective takeout continued to creep upwards, and intertrack wagering came into play. You didn't have to go to the live venue to place a bet. It is very tough for a regular to bring a kid to an intertrack without looking like a complete degenerate. Kids could not have any fun in that setting, it is light years away from the live racing experience. Still, kids became scarce at racetracks, as gamblers were starting to go broke much faster, as they now had a lot more races and betting types to play on any giving day. Horse racing had more plays an hour, the takeout should have dropped in the direction of blackjack and slots, but went the other way instead.
With the 90's came Charity and Indian Casinos. More bang for the buck for gamblers, as casino games have much lower holds. Handicappers were starting to get discouraged as dummy money started disappearing quickly, it was good handicappers versus good and great handicappers. The playing field was equalized too with the track variant adjusted speed figure. Horseplayers were losing more quickly, many didn't realize why, but enjoyment started to drop, however, the fact that more tracks were available meant that those who did play, played with a bigger bankroll. Lets not forget that those who were playing in the 90's, were mostly got the needle in their arm as a kid in the 50's to early 70's. However, there were less and less visible winners as the Century turned.
In the early 2000's, there was still a nice spike up as the majority of people in Canada and the USA could now play at local restaurants, intertrack locations, and finally from home. Except for those who reside in States like Arizona and Texas, a Horseplayer can now pretty much play a race from anywhere anytime. If Watchmaker's 45 year old theory is true, handle should be soaring today. It is not.
Lets look at some cold hard facts:
Between 2000-2010 the population of 45-64 year olds grew 31.5% in the USA
Total North American handle dropped 25% from 2000-2010.
Is it the economy or increased competition? Vegas should be a good barometer as competition from all other locations and a bad economy should mean that Vegas would have experienced a drop off as well. Wrong.
Vegas total handle increased by 11.7%.
In real money terms though, Vegas is off, as inflation rose 26% from 2000-2010. But again, with more and more casinos popping up across American, they still fared quite well.
So lets look at horse racing one more time from the angle of 45 year olds or greater. Handle in 2000 was 15 Billion, multiply that by the Vegas increase which takes into account inflation minus competition and the bad economy (11%), and multiply that by the increase in population for those demographics (31.5%). Horse racing handle should be hovering around $21.9 Billion instead of $11.5 Billion.
The game is dying. Increased takeout caused by actual hikes to a shift in higher takeout wagers available is a main cause. Another cause is the increase in signal fees that ADWs have been seeing of late, cutting into rebates available to every day players, which creates less churn. Also, protectionism from signal hogs, to States not allowing internet wagering, to States that have implemented home market fees, have all added to less churn and have turned many existing Horseplayers to give up on horse racing.
But the main reason is a diminishing amount of today's 45 year old, as they were not weaned on horse racing. And because of that, it is hard to convince them to play a game that nobody beats long term, and that has a very big learning curve. Why learn a game that is perceived to be unbeatable?, when there are games like poker that are perceived to be beatable by a few, the same is true of sports wagering, and to a lesser extent, blackjack which has a very low house edge.
Drugs aren't the problem either. They've been associated with horse racing even prior to the inception of parimutuel wagering. Sure, a movement to integrity will help, but only if there is a growing customer base.
It isn't over for horse racing, but there needs to be visible winners created.
Takeout needs to reduced to the 15-16% percent range by all tracks, and if this is successful, further drops need to be made. Until that happens, rebates for all needs to be embraced by the industry.
Low takeout Pick 5's don't work. It doesn't create churn, it doesn't attract new bettors. The same is true about Jackpot bets. If a Jackpot bet can't get new people right from the start, all it does is take a lot of churn money out of the bettor's hands.
Exchange wagering needs to be a reality. Getting families to go to the track as regulars is a dead deal. Horse racing needs to get with the times. The only way to cultivate the 20-35 year old crowd is to give them a high churn fix, one that some can actually win at, which will create a buzz.
In the meantime, a nation wide lottery type bet (a Pick 9) similar to the V75, that is available to be bet at lottery kiosks and every track and ADW, will certainly help get more horse racing exposure from 45 year old plusers.
The time has come to let the market decide the price of the bet, not the Horsemen or self serving Racetrack owners, if racing is to grow.
Though Watchmaker brings up good points, like the stands have always been full of older people, which, because of the lack of younger people in the crowd, leads to the false conclusion that when the older players die, it is over for horse racing. The reason this wasn't true in the past is that 45 year olds and up have more disposable cash and more time to finally embrace the game that hooked them when they were younger.
Watchmaker doesn't address why things might be different this time around: A much smaller amount of the new 45 year olds today were bitten by the race track bug at an earlier age, and going forward the percentages will even be smaller.
A brief history is needed to explain this. Back in the 60's, horse racing was mainstream, many sitcoms on TV had at least one episode devoted to a racetrack theme. Outside of Vegas, it was the only game in town. You had to go to the track, or by the early 70's an OTB, to place a bet (except for those who played with bookies, but even these players went to the track often). The stands were packed, not only with 45 plusers who were regulars but their kids as well. The Horseplayers were limited to WPS bets most races, as there was maybe one double and a couple of exactors tops for a typical card of racing.
The fact that WPS wagers were predominant meant that collective takeout back then was in the 15-16% range, which meant more churn, and more gambling satisfaction as a limited 8 race card ensured that most patron would leave the track with at least some money, which for a gambler lead to one thing: Looking forward to the next day that the track was open and/or the next day they can make it to the track....and who needs to pay for a babysitter when you could bring your kid in for free.
The game was beatable by a few too back then. Those who made their own track variants had a huge edge (this was taken away gradually, as the DRF provided some archaic variants culminating in 1990 when Beyer figs were in every Form). There were visible winners, thanks in part to a lot of dummy money, as there was pretty much no other gambling competition, which meant that there was a lot of money in the pool that came from guessers (only 1 in 4 or 1 in 5 players actually bought the Form).
The 70's came along and so did lotteries and also a lot of sports franchises began to pop up. The Toronto Blue Jays had a noticeable negative affect on the attendance numbers at Woodbine, especially on weekends. Dummy money was still out there, but exotics started to become available in every race, and this drove up the collective track takeout and it reduced churn as well. Players were going home with less money, and they also needed a bigger bankroll to enjoy the card. This weeded out a few more, and stands started to see a drop off in kids (today's 45 year olds).
The 80's saw even more exotic wagers, collective takeout continued to creep upwards, and intertrack wagering came into play. You didn't have to go to the live venue to place a bet. It is very tough for a regular to bring a kid to an intertrack without looking like a complete degenerate. Kids could not have any fun in that setting, it is light years away from the live racing experience. Still, kids became scarce at racetracks, as gamblers were starting to go broke much faster, as they now had a lot more races and betting types to play on any giving day. Horse racing had more plays an hour, the takeout should have dropped in the direction of blackjack and slots, but went the other way instead.
With the 90's came Charity and Indian Casinos. More bang for the buck for gamblers, as casino games have much lower holds. Handicappers were starting to get discouraged as dummy money started disappearing quickly, it was good handicappers versus good and great handicappers. The playing field was equalized too with the track variant adjusted speed figure. Horseplayers were losing more quickly, many didn't realize why, but enjoyment started to drop, however, the fact that more tracks were available meant that those who did play, played with a bigger bankroll. Lets not forget that those who were playing in the 90's, were mostly got the needle in their arm as a kid in the 50's to early 70's. However, there were less and less visible winners as the Century turned.
In the early 2000's, there was still a nice spike up as the majority of people in Canada and the USA could now play at local restaurants, intertrack locations, and finally from home. Except for those who reside in States like Arizona and Texas, a Horseplayer can now pretty much play a race from anywhere anytime. If Watchmaker's 45 year old theory is true, handle should be soaring today. It is not.
Lets look at some cold hard facts:
Between 2000-2010 the population of 45-64 year olds grew 31.5% in the USA
Total North American handle dropped 25% from 2000-2010.
Is it the economy or increased competition? Vegas should be a good barometer as competition from all other locations and a bad economy should mean that Vegas would have experienced a drop off as well. Wrong.
Vegas total handle increased by 11.7%.
In real money terms though, Vegas is off, as inflation rose 26% from 2000-2010. But again, with more and more casinos popping up across American, they still fared quite well.
So lets look at horse racing one more time from the angle of 45 year olds or greater. Handle in 2000 was 15 Billion, multiply that by the Vegas increase which takes into account inflation minus competition and the bad economy (11%), and multiply that by the increase in population for those demographics (31.5%). Horse racing handle should be hovering around $21.9 Billion instead of $11.5 Billion.
The game is dying. Increased takeout caused by actual hikes to a shift in higher takeout wagers available is a main cause. Another cause is the increase in signal fees that ADWs have been seeing of late, cutting into rebates available to every day players, which creates less churn. Also, protectionism from signal hogs, to States not allowing internet wagering, to States that have implemented home market fees, have all added to less churn and have turned many existing Horseplayers to give up on horse racing.
But the main reason is a diminishing amount of today's 45 year old, as they were not weaned on horse racing. And because of that, it is hard to convince them to play a game that nobody beats long term, and that has a very big learning curve. Why learn a game that is perceived to be unbeatable?, when there are games like poker that are perceived to be beatable by a few, the same is true of sports wagering, and to a lesser extent, blackjack which has a very low house edge.
Drugs aren't the problem either. They've been associated with horse racing even prior to the inception of parimutuel wagering. Sure, a movement to integrity will help, but only if there is a growing customer base.
It isn't over for horse racing, but there needs to be visible winners created.
Takeout needs to reduced to the 15-16% percent range by all tracks, and if this is successful, further drops need to be made. Until that happens, rebates for all needs to be embraced by the industry.
Low takeout Pick 5's don't work. It doesn't create churn, it doesn't attract new bettors. The same is true about Jackpot bets. If a Jackpot bet can't get new people right from the start, all it does is take a lot of churn money out of the bettor's hands.
Exchange wagering needs to be a reality. Getting families to go to the track as regulars is a dead deal. Horse racing needs to get with the times. The only way to cultivate the 20-35 year old crowd is to give them a high churn fix, one that some can actually win at, which will create a buzz.
In the meantime, a nation wide lottery type bet (a Pick 9) similar to the V75, that is available to be bet at lottery kiosks and every track and ADW, will certainly help get more horse racing exposure from 45 year old plusers.
The time has come to let the market decide the price of the bet, not the Horsemen or self serving Racetrack owners, if racing is to grow.
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