TDN Weekend

Op/Ed: Racing’s Data Dilemma

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By Dean Towers

If you want to take part in an interesting discussion in horse racing, bring up past performance and other general racing data:

“It should be free!”

“It’s like a restaurant charging for us to look at the menu!”

“The NFL doesn’t charge for box scores, do they?”

From a customer perspective these arguments make perfect sense. If a customer is betting $100, racing in some form (tracks, purses, ADWs, taxes) gets back about $21, which is a sky-high margin in just about any business. Why make people pay for something they need to use to wager, when the wagering itself brings in so much revenue?

What is conveniently left out is that data in horse racing is a revenue source, and a pretty big one. Some of this money is used for some good things; just look at some of the work The Jockey Club and other alphabets do for the sport, legislatively and otherwise.

This, like many political discussions we seem to have nowadays, tends to inflame passions. People dig in, and positive discourse takes a back seat. I don’t want to go down that rabbit hole here. What I would like to do is talk a little bit about the way the current business world is moving, with data, open systems, and the like, and offer out an opinion about why I think–in the bigger picture–this is a discussion that racing needs to have.

In the data-rich web world, it all begins with something called an API–Application Programming Interface. APIs are a set of protocols for how to exchange information, or request online services from a company or web-based tool. This allows software to interact with each other easily, enabling developers to enhance third party tools (among other things).

Although difficult for regular people like many of you and me to understand (I’m a marketer, not a programmer), examples of API usage are easy to find. When you use your Facebook ID to log into other sites it’s allowed to happen because Facebook’s API is open, and the website you are trying to log into has built an app using it. When you click a tweet button from an online story you’re reading, it’s because of access to Twitter’s API.

Commercially–and in the bigger picture–this open access is much more than simply a tweet button or login.

From the new book, The Inevitable: Understanding the 12 Technological Forces that will Shape our Future, the author, Kevin Kelly writes:

“When a company opens part of its databases and functionality to users and other startups via a public API, as Amazon, Google, eBay, Facebook and most large platforms have, it is encouraging participation of its users at new levels. People who take advantage of those capabilities are no longer a company’s customers; they’re the company’s developers, vendors, laboratories, and marketers.”

If you’ve ever booked a flight on Expedia from outside Expedia’s website, you’ve used a third party using Expedia’s API, and this is common–90% of Expedia’s revenue comes from third parties. Salesforce.com generates 50% of its revenue from developers who have accessed its API. When you’re on a blog researching iPods and see an iPod ad generated by eBay at the side, you’re not alone–eBay receives 60% of its revenue from such areas.

Sure, having more people sell your product for you is good, because more reach is never a bad thing. But sometimes brand new business models are created from opening up an API. Business finder and ratings website Yelp plots its location “stars” on Google Maps through Google’s API rather than making their own set of maps. Google Maps were something the Mountain View Corporation really didn’t know what to do with for some time, but it is now projected to add $1.5 billion in new revenue to Google’s bottom line in 2017.

What if all horse racing data –from forever, updated frequently–was available like eBay’s back end is?

Well, it could create the same ecosystem we see open access APIs create elsewhere. Third party software creators could be developing new platforms to wager. They’d likely create many new handicapping products to offer to the market. Much of this would be created and offered for free–at first–and these products would be marketed by these creators. By opening up the API, the data itself would improve, and horse racing would become even more data rich, at little cost. Remember, as Kevin Kelly wrote, these people are your “laboratories.”

For existing horseplayers, products like these could keep them engaged, betting more, and doing it more frequently.

Charlie Davis, last year’s third-place finisher in the National Handicapping Championship, runner-up in the Breeders’ Cup Betting Challenge and every day horseplayer, is already exploring some of these limited opportunities. He uses his own data, uploads it into IBM’s Watson (which is open API), and crunches it to uncover new angles.

“I find that a lot of handicappers are stuck in their ways. I like to apply concrete math to angles to find out if they work,” Charlie said via email. “I love seeing what the computer comes up with since it has no preconceived ideas. It takes all emotion and bias out of the picture.”

Charlie’s biggest problem is finding enough raw data, at an affordable price.

“Raw data, a la the big sports leagues would be fantastic. I fully believe that [through using systems like Watson] given enough data for any market I can find new angles, be it horses, greyhounds, or snowmobiles,” he typed.

This is not the way of racing, but it is the way of the sports leagues. With legalized gambling possibly on the horizon, investments into sports data companies (using open APIs or opening their own already) are prevalent. One of the largest was a $44-million influx by Mark Cuban into Sportsradar. Third party Daily Fantasy Sports sites, with their data hungry customer base, are also seeing stout investment.

Make no mistake, sports data is being used and will be used in the realm of gambling more in the future. Type some searches into google, and you will see pages and pages and links and links to reams of data; and a plethora of companies offering out such data, a lot for free.

Conversely, in a few months the Kentucky Derby will take place. Fifteen million people will be watching on television, and perhaps some of them would like to handicap the horses for the finest two minutes in sports; just like others may want to handicap and bet this weekend’s divisional NFL games.

If they type “Kentucky Derby Horses” into google, these are two stories pop up on the first page of the search results:

dean

Perhaps in the future–with more data, a modern data ecosystem, and open APIs–these stories will be not on page one for potential customers, but be bumped to page 50.

I sincerely hope racing has an honest discussion about data and APIs in the coming years.

Dean Towers is a marketer, bettor and Board Member of the Horseplayers Association of North America.

 

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