By Dean Towers
“Non-blockbuster” tracks are swimming with the sharks, but speaking directly to the sports' gambling “super user” represents a workable way forward.
In part I, published Mar. 8, we examined the Pegasus World Cup in the context of what's happening in the new, connected world. We think The Stronach Group is on the right track. Using a blockbuster event, and harnessing a willing market of highly engaged horse racing fans (super users), is likely the future of live horse racing at storied, strong venues.
This time we'd like to look into the non-blockbuster tracks. What's been happening, and what can they do to increase handle and interest in their product, and by corollary, horse racing?
Since 2008 there's been a sea-change in the sport. Smaller foal crops and a shift in betting preference to the larger venues is palpable. The number of wagering events held (races) has dropped by about 25% and handle has followed, attacking the smaller venues most savagely.
The non-big box stores of the sport are in a very difficult position. Although some try to follow Gulfstream's big event strategy, it hasn't worked very well–and in my view it won't– because (as we noted in part I) they simply aren't built for it. If these tracks can't increase revenue (using the handy chart below) from the live race day portion, and they clearly have little influence over the owner portion, the only thing left is the largest part of the revenue pie–the gambler.
How can the gambler be targeted? I believe through a strategy based on modern deliverables, and extolling their offering as only a gambling product.
Since 2010, something very interesting has been happening in the broadcast world. The share of minutes of TV watched has been falling rapidly, primarily among younger viewers.
The exception on television, thus far, has been live sports, which still command huge pay TV fees. But according to the Chernin Group, that's about to change as well. They believe that the sports leagues will be drawn towards a new direct to consumer system, where they sell their product–not through television deals–but deals with customers themselves. This over-the-web coverage will be highly personalized, because that's what consumers are starting to demand, and it represents the best chance to maximize revenues.
“The days of one feed with two announcers in the booth are numbered. There could be a data-heavy broadcast for one audience, a Barstool Sports stream for the
comedy-inclined, a Bill Simmons broadcast for a pop-culture audience, a Sports Action stream for gamblers, etc,” they wrote.
It's their last line that catches my eye.
Currently smaller handle tracks in the U.S. and Canada lament they make little headway in the market, because, in part, they do not have a great training colony, fast horses, or well-known riders. That's true, but in my view, they're letting the big track paradigm cloud their thinking; they're trying to sell what they want to be, not what they are. They do not fully comprehend their market.
When someone is betting Delta or Turfway on a weeknight they aren't tuning in for pomp and pageantry or for great horses and riders. They are hard-core super users, looking for action and bettable races. These tracks should give that niche market what it wants. Through their deliverable–a simulcast feed–I believe everything should be about the gamble.
Each distinct race is a puzzle, with an outcome, where someone gets paid. The broadcast team should focus on, for example, why this upcoming maiden race with a 3-5 is a great betting affair, because the 3-5 shot got an easy lead in his last, and now there's a 50-1 shot who has a sneaky pace figure. It's irrelevant the favorite is not trained by Todd Pletcher, not a top prospect, or the 50-1 shot ran a zero Beyer figure last time. All that matters is that there will be a gambling result.
A modern feed for the tech-savvy simulcast market (these people are already betting online) could be used to give gamblers statistics on path bias, hot trainers, cold riders and more. Horse racing is probably the most statistically driven sport on Earth. Why do so many feeds seem to ignore that?
Sadly, some simulcast feeds don't even show the horses warming up, and I've seen more than one post parade where the lead pony is blocking the horse we want to wager–or not wager–on. Tracks who allow this to happen might as well be speaking Swahili to the super user.
Gulfstream has the “blockbuster effect” and they can be mass market and speak to everyone. The smaller tracks simply cannot. As the Chernin Group noted in their report, in the future, “every niche will reach its true scale.” Scaling starts with a focused deliverable.
Once smaller tracks have delivered their product through modern mediums with a precise gambling message, then I believe it's time to work on the gamble itself.
First, most –even those with small on-track crowds– continually want to race on weekend afternoons, competing directly with large tracks. If this does not make particular economic sense (or there's a hard and fast reason for it), why not race when others are not? A small track carding their deepest, most-bettable card when others are not racing can be fruitful.
Second, if a track–like so many–has poor on-track handle and higher than average takeout, why not lower it? A signal fee of, for example, 4%, means the venue (and their horsemen) receive 4 cents of each dollar bet whether the top-line juice is 25% or 15%. Is there a huge downside in going with a lower number?
Third, a lot of smaller tracks try to copy the blockbuster track experience with big stakes races and big days. Horsemen usually sign-off on this tactic and have for some time. Instead, why not offer some of this money out in seeded pools? At large tracks, seeded pools–i.e. carryovers–increase handle because they create value via a takeout reduction. At smaller tracks, it's more than that, because even a small carryover can boost pool size, which is very important to gamblers.
To illustrate this power, not long ago at a harness track (Pompano Park), a tiny super high five carryover of $1,556 attracted almost $19,000 in new money (about 500% higher than usual). On a percentage scale, carryovers are most effective at smaller tracks, and even modest seed size–$3,000, $5,000 or $10,000–can draw an immediate return.
The world is changing. Tracks like Gulfstream have leveraged the new landscape by speaking directly to their highly engaged fans, and are in the beginning stages of creating new revenue streams. For the smaller tracks which have lost handle precipitously the last ten years, that simply isn't an option. For these tracks, their super users are probably lying in the weeds, quietly looking for betting options. By seeking them out, speaking directly to them, and offering exactly what they want, I believe it represents their opportunity to grow market share, and in turn, grow the game.
Dean Towers is a board member of the Horseplayers Association of North America and a Toronto-based director of a digital marketing agency