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Monday, 27 April 2015

OHRIA Statement Is Missing Something Big

The Ontario Horse Racing Industry Association released an industry update statement today. If you want to read it, click here.

     I read it, and I noticed something big.

     Read this.
  • Senior representatives from the provincial government, the Ontario Lottery and Gaming Corporation (OLG), racing and gaming regulators and the Ontario Horse Racing Industry Association (OHRIA) on behalf of horse people, racetrack operators, breeders and owners, continue working in earnest to design a roadmap for success.  This group is tackling a number of complex and time-consuming challenges including:
  • 1.             Optimizing the OLG’s evolving approach to the modernization of its facilities and products with its obligations to meet government revenue demands as well accommodate a fully integrated partnership with the provincial racing industry.
  • 2.             Looking for opportunities to create and grow new revenues for both the racing industry and OLG.
  • 3.             Equipping government ministries such as finance and agriculture and food with the proper resources to assist in the growth and sustainability of racing.
  • 4.              Tasking regulatory bodies such as the Ontario Racing Commission (ORC) and the Alcohol and Gaming Commission of Ontario (AGCO) to reorganize in order to meet the demands of racing and gaming integration, including the potential revision of significant legal and regulatory barriers to new programs.
  • 5.             Effecting day-to-day racing industry self-governance to ensure the smoothest possible path to industry sustainability, the most effective relationship with the OLG and regulators and the most effective reporting relationship with the provincial government.
  • 6.             Broadening public interest in horse racing through planning for an integrated, province-wide marketing campaign designed to impact current and future generations of potential new racing and gaming enthusiasts.
  • 7.             Coordinating and cooperating on market initiatives and interactive communications.
  • 8.             Planning for the implementation of the best and most relevant ideas presented by members of the public to racing’s transition panel as part of the long term plan to sustain racing.
In those eight points discussing the Industry's goals moving forward, the words "wagering"and "handle" aren't mentioned once.

      The racing industry in the province understands they need new revenue, and they've admitted the the Slots at Racetracks Program isn't coming back, but the mentality is still wrong in my opinion. Racing seems to think their new revenue should come from the OLG, and while a partnership with the OLG is worth having to target a new market, this should not be the focus. The focus should be improving racing's existing product and making it more appealing to bettors.

      Racing has moved in the right direction when it comes to growing wagering, but it hasn't gone nearly far enough. No matter how much marketing we do with the OLG, racing will never be self sustainable if we have tracks charging 24.6% takeout on Win wagers. Unless we make an appealing wagering product, we're not going to get new people to become regular horseplayers.

     The mentality in Ontario needs to change. We can't keep worrying about finding a new handout to fund purses. OHRIA, and everyone else in Ontario, needs to change the way they approach growing the industry.



Thursday, 23 April 2015

Who Wants Another Jackpot Wager?

The entries for opening day at Churchill are up, and there have been some changes to the wagering menu.

      Starting in Race 5, there will be a $.10 Jackpot Pick 7.

      Who wants this? Who was asking for this? Who sat down and said "This is what we need!" This baffles me to no end.

      Now, thankfully, they've converted the Pick 6 from being a Jackpot wager to a standard $2 bet, having two multi-race Jackpot bets going simultaneously is something I'm just not prepared for, but my questions still stand.

     The wagering menu has just gotten stupid. Race 4 starts a Pick 4, Race 5 starts the Lucky 7, Race 6 starts the Pick 6, Race 7 starts the Pick 5, and Race 8 starts another Pick 4. Throw rolling P3s and Doubles on top of that and you've got simply TOO MANY MULTI RACE BETS. There's only so much you can do with what is seemingly a bajillion high rake, low churn wagers.

     Handle is going down, and the number of high-rake wagers is going up. This is like running a buffet with bad food, seeing less people eating, and deciding the solution is to put out more food, even if it's just as bad as the food you were already serving. Racing isn't lacking in wagering options. At all.

     If racing thinks more Jackpot wagers with 50%+ effective takeouts are the way to go, then so be it. I just hope they aren't surprised when handle keeps dropping.

   

Wednesday, 8 April 2015

A Lesson for Horse Racing: Sometimes Less is More

If there is one thing people in the horse racing industry want, it's more. More what? More money, more race dates, more integrity, more fans, more promotion. More is good.

    Unfortunately, the racing industry doesn't seem to understand the idea that sometimes, less is more.

    The racing industry is looking for ways to grow wagering and increase revenue, as they should be. Horseplayers have been demanding lower takeout wagers, and there have been quite a few tracks who have responded. However, the response always seems to be adding a new wager with a lower takeout rate.

     Don't get me wrong, I support any track that wants to offer lower takeout wagers, but I think racing needs to step back and reconsider the approach. Instead of adding a new wager to the menu, I think it would be smarter to work on growing the existing wagers.

     By adding a new wager to the menu, you are taking money out of other pools, especially in the case of overlapping multi-race wagers. You shouldn't be trying to create growth at the expense of another one of your wagers.

    Of course, racing still needs to understand the idea that lower takeout will lead to more revenue. We should be working to get down to 12-15%, not 20-25%. There are some tracks who have started moving themselves in that direction (we love you, Kentucky Downs.)

    I'm also a believer that we have too many vertical wagers in races with shorter fields, which hinders long term growth. It's rarely worth betting a triactor in a field of six, so what does the industry do? Offers $.10 superfectas. In my opinion, triactors should be offered in seven horse fields, minimum, and superfectas should be offered in eight horse fields, minimum. If we want to grow the game, we can't soak horseplayers with terrible wagers.

    If horse racing wants to become a better gamble, more wagers aren't the key. Better wagers are.

Sunday, 5 April 2015

Keeneland, I Told Ya So & Hi-Handle-5

A few months back, Keeneland announced some changes they were making to the Blue Grass. They pushed the race a week back, putting it four weeks out from the Derby instead of three, and they bumped the purse from $750,000 to $1,000,000. The idea behind this was that it would keep a full field and get some high quality Derby contenders.

     I immediately came out and said this was a bad idea. The notion that an extra $250,000 was going to attract a 14 horse field on dirt was silly. The Wood, the Santa Anita Derby & the Florida Derby are all worth $1,000,000 and since 2012 there have been three 10 horse fields in those three races combined. Furthermore, on it's original date, the Blue Grass competed only with the Arkansas Derby. This year, it competed with the Wood Memorial and the Santa Anita Derby.

    "Oh no," they told me. "People like betting dirt, it will be huge."
    "Making the purse a million will get a full field," they said.

     Well, let's see how they did.

     2015: $15,237,651*,  $1,385,241/race
     2014: $19,532,055. $1,627,671/race

     Total handle dropped 22% and handle/race dropped 15%.

     Horse racing is a complex game, but some things are pretty simple: regardless of surface, people will always bet less money on shorter fields, and you're looking for trouble by competing against other major events.

     I hate to say I told you so, but...



     Up in my home province, on the other hand, Woodbine had a mandatory payout on the Super Hi-5. 15% takeout, $847k carryover = big money.


    Amazing what you can do with a huge value wager. Let's take a quick look at another implication of this.

     A standard Saturday night card of harness racing at Woodbine handles about $1,500,000. Subtract the Hi-5 pool, and tonight's total handle was $2,114,704, 41% more than a standard Saturday. Giving people a reason to look at your product (low takeout wager)  will likely lead to some more handle on your other pools, too.

    Have a good Easter Sunday, everyone.


*Unofficial handle #. Will be updated when the official # is on the Equibase charts

Thursday, 2 April 2015

A Keeneland Pick 6. Why?

Keeneland kicks off the spring meet tomorrow, and a new wager is being added to the menu: a $1 Pick 6.

      Why?

      I don't get this at all. It doesn't make a lot of sense to me.

      Last meet, the initial dirt meet, the average field size was 8.42. I'm expecting it to be lower this meet. Not "small" fields, but not large fields as we had gotten used to in the synthetic era. The Pick 6's success as a wager depends on carryovers. With a $1 minimum, average sized fields, and likely decent sized pools, I find it tough to picture large carryovers being generated.

     Furthermore, Keeneland's wagering menu is already loaded with multirace bets, two Pick 4s, a Pick 5, rolling Pick 3s and Doubles. The Pick 5 has proven to be a successful wager, and having an overlapping Pick 6 is likely going to hurt the Pick 5 handle.

     In my opinion, this is another step in a negative pattern in Keeneland's product. During the synthetic era, Keeneland had a big appeal, having the lowest tri and super takeout rates, and large fields, leading to very large payouts on churn-creating wagers. In turn, Keeneland ended up with record handles. Now, we've got shorter fields and a focus on larger multi-race wagers, which do not create churn the same way vertical wagers do.

     

     Al is probably right, but that doesn't make this Pick 6 a long-term good thing. I worry about the future of Keeneland. We'll see how things go this month.