Sharp Comments on Positioning Racing

We had some excellent comments on our “Positioning” article this week. In the article we put forth a premise that racing should position itself as a thinking person’s lottery, and not to stray from that, no matter how hard it may be.

I thought it would be good to address a couple of the comments in a new post. Thank you to everyone who commented.

First up, John Pricci of Horse Race Insider says:  “I have been trying to sell to friends in the business a new handicapping paradigm that dovetails nicely into your message.”

Me: John, we are certainly interested in hearing more. I was on a panel awhile back where there was a former engineer who developed a really neat system that could be automated for horse racing – in effect a neat way to bet that would bring in a new trader-type bettor, concerned with beating the game in a different way. I was impressed with that and thought it was something we should be doing more of.

We have spoken at times here on the tools that betfair has offered customers (eg API’s and apps) which have brought a new player to that platform. E*Trade and other online trading companies offer a lot in the way of bells and whistles for the market too.

Second, “Cavonnier” offered an excellent comment with a way to split the markets – we keep the higher takeout exotics, for life-changing scores, but we open up fixed odds betting at a low take.

“Racing currently cannot compete with what I believe to be its closest competitors–poker and sports betting–on price. All things equal, wouldn’t a rational consumer rather bet into a pot with a 5-10% rake, or bet with a bookie with a 10% vig?” he/she wrote.

He/she continued: “What I’d like to see:  Most money wagered on horse races in North America is bet into exotics pools. For price sensitive customers, how about fixed-odds win wagering with a 10-12% takeout? (It CAN be done, according to this column. Those who would rather aim for a windfall score could continue to bet into the exotic pools, and tracks could keep those takeout rates higher. I think this would be a good compromise between the price-sensitive horseplayers and track management/horsemen who are worried that drastic takeout cuts would negatively effect their bottom lines.”

Me: That is an awesome comment. One part of the lure of horse betting to the thinking person’s lotto player is the life-changing score, and the players who play for these pick 6 type scores are puzzle players, but probably not as price sensitive as others (although 25% in my opinion is leaving money on the table – some lotteries are offering low takeout because it makes more profit) . This splits the market into two, not unlike betfair did with their exchange. Not to mention a huge customer complaint is late odds drops and this virtually fixes that problem. If we really wanted to juice the WPS pools I would argue that a less than 12% take would be preferred (people would churn more and perhaps last a long time) but it would be an excellent start.

Third, Josh Potts believes that the NTRA is not the best organization to serve each track’s market, but does believe they have a vital role: “Now, in addition to some industry-wide promotion, the NTRA can help with some market research. After all, we need to know a great deal of information about these puzzlemasters: what do they read, how do they spend their free time, what products do they buy, what causes them to buy a product or service, what makes them spend/invest money, what do they watch on TV, what types of radio do they listen to, what do they do on the internet, etc. etc. etc.”

Me: Nice stuff Josh. I had not really thought of the role of the NTRA in this too much. I know they are looking at polling customers, and have for some time, but they are polling the mass market, or existing market it seems. In my premise, focus groups are pretty useless – we are after subsets of all markets, some of whom are not interested in racing and would never answer that survey/poll.  Your point on metrics is solid, in my opinion. I am a big believer in data and using that data to point us in the right direction (Supercrunchers is a fabulous read on that).

Fourcats wrote: “However, a major stumbling block is that horse racing, unlike the successful companies that you cite, is controlled by multiple entities with different agendas (state governments, racetrack owners, horse owners, horse trainers, etc.) It is extremely difficult (though perhaps not impossible) to define a consistent message about horse racing when there is not just one “management team” in charge.”

Me: The elephant in the room. Racing has more acronyms and more opinions than the UN. As I spoke about in the original post, getting people on the same page and speaking with one voice is probably a wish that is tantamount to Santa and the Tooth Fairy being in my office as I type this.  However, I think back to about 1999 where, when looking for business ideas, a friend and I thought of devising and selling a “Web Traffic in a box” idea, along with a “PR in a box” system for public companies. When I look back, many of the same principles then (with modifications, and innovations of course) apply today.  What if we had this general direction set by an NTRA type group, and this “Racing PR in a box” was filtered throughout the system as a marketing go-to guide?

Second last, Maury and Titletown say that without a drop in takeout, people will not play the game in huge numbers. I cannot argue too much with that.

Lastly, Michael says: “While it is true that the puzzle aspect of the racetrack experience is compelling and motivating, other factors do drive some folks to visit and return. Some people enjoy a day in the fresh air, at a beautiful place, seeing people they know and like, all the while trying to solve the puzzle. I wonder if the game (the puzzle) can long endure without people who are attracted to the look of the horse, the green of the grass, the electricity in the air. Of course, not much of that exists at Aqueduct in December, but some of us persist.”

Michael, thanks for the comment. I do have to say that I disagree with that for the most part, in terms of promoting the game. I believe that the game itself breeds a following of the sport, and the people who  want to play the game will come out to the track, but I do not believe it is the other way around. I think society has changed, forever. Five hours at a racetrack is 1970, not 2010.  Does that mean we should not promote what we all love about it (I am a cold-hard bettor, but absolutely love everything about the racetrack, just like yourself), and throw in the towel? No, in my opinion; we can still do that, as it does attack a subset of the market. But I do believe that the game trumps all if we are thinking big, not incrementally.

A couple of quick examples, which I have noticed. One, here is a young fella who was a computer science major who discovered racing on betfair. He had never been to a race in his life, but he learned to play racing. He now goes to the meets in the UK and is a fan – as well he brings his friends.  He seems to enjoy himself. A fan for life? I would submit yes, as long as the game keeps him coming back. He bets millions a year and blogs about it; we can’t buy that type of promotion, in my opinion.

Second, I look at the NFL. Almost $2B is spent on fantasy football. Playing the “game” of fantasy has bred a new fan, one who watches the game religiously, spends money, but rarely goes to games.  At one time in the early 1960′s the NFL was perplexed about television. Many owners did not want to embrace TV because they were worried about the live gate.  Television bred a new fan, and the game exploded. It was obviously the right decision (the vast majority of NFL revenue comes from off site activity), and today there are many fans who have only seen a game on television that pay hundreds and sometimes thousands of dollars for a hot ticket. Tailgating is fun and a part of football, but not something to build a mainstream business on, in my opinion.

I believe that if we take care of the game, the game will take care of us.

Thanks again for these excellent comments.  Whether you agree or disagree with the piece is not important – in fact as I think the comments showed, those who disagreed had some great things to say. That is a good thing, not a bad thing. We need a lot of thinking to help racing grow, and I doubt there are any easy answers.