There are essentially four significant events of the fall racing season: this past Saturday (TVG Super Saturday), FallStars weekend at Keeneland, the Thanksgiving weekend card at Aqueduct (Cigar Mile, etc.) and, of course, the Breeders’ Cup. Each of these days give racing an opportunity to make an impact in a fall sporting landscape otherwise dominated by football, baseball pennant chases, the Ryder Cup and even whatever is going on in NASCAR. In light of the precious few opportunities available this time of year, as well as the fact that the races this weekend and next build the sport’s World Championships, we think it’s fair to ask whether the sport in general is making the most of its opportunities.
On Saturday, the cards at Belmont and Santa Anita attracted combined total pari-mutuel pools of $35,462,145 ($19,999,770 at Belmont, $15,462,375 at Santa Anita). They got 2.5 hours of television coverage on NBC Sports Network. Santa Anita reported an attendance of 17,023. NYRA has not been reporting Belmont attendance figures for the Belmont fall meeting this year, and as far as we can tell NYRA has not provided an explanation for why it is not doing so. NYRA’s position on that is a bit ridiculous, especially after it went out of its way to publish Saratoga attendance figures that were, to put it nicely, suspect. For the purposes of this post, however, let’s assume that the attendance at Belmont yesterday was roughly the same as Santa Anita (we think this is fair, since on racing days of comparable magnitude, Belmont usually attracts a bigger on-track crowd than SA). Using this assumption, the tracks combined to put 35,000 people through the turnstiles on a late-September Saturday. So you start with $35 million, 35,000 people on-track, and hundreds of thousands or millions of eyeballs watching on national television. We want to consider what the Breeders’ Cup, NYRA, Keeneland and the Stronach Group (Santa Anita’s management) can do to make sure that they: (i) retain as many of these fans as possible to follow the sport through the fall calendar and into next season; (ii) encourage the fans that attended in person to return; and (iii) foster knowledge and competency among the people who paid attention to the races yesterday, in order to start them on the path toward becoming diligent and continuous followers of the sport.
Everything starts with the bettor. We all love horse racing, and the majesty and athleticism of the equine athletes, but thoroughbred racing simply wouldn’t exist as anything resembling what it is today if it weren’t for gambling. So how do the relevant entities in the industry encourage people who attend the races for the first time (and bet a few dollars) to become repeat customers? We see the answer to this question as the first step in a virtuous cycle: if you can hook people on the sport the first time they visit the track, the result, over time, will be an increase the total handle, increase the amount of money that tracks realize from racing operations, increase in purses, decrease (theoretically) the tracks reliance on casino gaming, and an increase in the demand for national coverage of the sport, whether that is on tv, the internet, or any other medium. Theoretically, it could also lead tracks down the path of progressively decreasing takeout rates as more money flowed in, since tracks would be making enough money to sustain themselves and could legitimately begin competing for a bigger share of the bigger wagering pie.
While this problem is fairly intractable – the gambling dollar is already stretched in 2014, and the gambling marketplace is becoming more, not less, saturated – we think there is one simple step the industry could take to encourage repeat customers. We start with an assumption, however: that attending a day at the races is more enjoyable than going to a brick and mortar casino. We think that the assumption is justifiable – watching a horse race is a more active gambling experience, it requires an intellectual component to handicap the races, it is visually both exciting and impressive, and at many of the bigger days at least, there is an element of glamour and excitement in the atmosphere. I know in my personal experience bringing people to the races, the only complaint I have ever heard was regarding people trying to get back to NYC on the LIRR after this year’s Belmont Stakes – and that had nothing to do with the actual gambling or racing product.
So we think racing has a real edge, at least in the experiential area, over casino gaming (again, we are talking primarily about weekend days here – we are not certain if anything is going to save Wednesday racing at tracks like Penn National or Charles Town or Laurel or Calder in the long run). It’s a problem that gambling on a horse race is very difficult to understand. First of all, pari-mutuel wagering itself is fairly unique in the American sports wagering landscape. Almost every time I go to the track with someone new, I have to answer questions about why you don’t get the odds that are available when you place your wager, as you would when you are betting on football with a sports book. Second, the wagers themselves are incomprehensible to the average person. Other than a bet to “win,” which everyone can understand, the wagers are named “place,” “show,” “exacta,” “trifecta,” “quinella,” etc. People in this country love to gamble. But if they don’t understand how to effectively bet, and there is no readily available avenue to teach them, they will simply gamble their money elsewhere. Finally, I believe that the gamblers that the tracks really want, the “whales” as they are called in Las Vegas, really do consider value. Value in gaming can be understood in myriad ways (certainly if you play craps, you are never going to have the odds in your favor as the player; the same is true, but worse, with roulette, slots and other games). Value could be the amount of action that you are getting – horse racing does not offer the continuous action of a blackjack table, instead it is a 5 hour or longer day punctuated by periods of great excitement. It could be simply the odds – sports gamblers and poker players are obsessed with value from an odds perspective. The racing industry could make strides to improve on all of these fronts. Below are two relatively modest proposals.
Explaining The Wagering: In my view, it is a utter failure when you get tens of thousands of people out to the racetrack on one of the “big days” and you have most of the non-regulars leave knowing little, if anything, more about betting on horses than when they showed up. Horse racing commentators often focus on the decline of the sport, but its important to note that this is a sport that still gets more than 50,000 people into a given venue on at least 5-7 days a year, and gets more than 15,000 people into a given venue many, many times a year. These are people that are coming to your track and are a captive audience. So here is our proposal. First, there is no excuse for people who come to the track in this day and age to get shut out from placing a bet because of a long line at a window. How about having people who come to the fans and take their bets on a handheld device? Gulfstream Park has this system, and I liked it a lot. How about making it easier for patrons to sign up for an ADW platform as they make their way into the track that day, and then make sure there are sufficient machines where they can place their wagers without having to use a teller. Casinos do a great job of this, and many times I have visited a casino and signed up for their rewards program even though I had no plans to go back to the casino. Also, why not actually go to your audience and actually teach them how gambling on horse racing works? Right now, the industry essentially puts the onus on the person to come to the racetrack and learn how to wager correctly, whether that is from a friend, family member, YouTube video, website, whatever. Many tracks also put on seminars before the races, but again that requires people to go out of their way to attend. What about having people who are at the track only for days when the track expects to get a significant number of first time or infrequent attendees, and have teams of people (we are talking maybe 15-20 people in 5-7 teams of 3) go around and actually engage the people who come to the track? Explain pari-mutuel betting, explain exactas and trifectas, educate people on how to bet and different betting strategies, show people how to handicap. To the extent this encourages people to come back to the track, or bet from home, it would be a huge windfall for a sport that is always cited as having a dwindling fan base. Finally, we would also propose making past performances available, for free, to people who attend the races. And we don’t mean the standard DRF past performances, which are just a vast jumble of numbers and jargon to the new bettor. Why not create a simplified past performance, similar to DRF’s “Easy Form,” but even simpler, that gives people the key facts – a horses prior races, its preferred running style, its finish in each race, a speed figure, and the level of each race (simplified – like maiden claiming, maiden, claiming, allowance, or stake (making note of graded stakes)). This would serve as a beginner’s guide to the races, and people who started with this information could gradually learn more and work up to the more complicated handicapping tools that are available.
Attracting Players by Creating Value: ADW platforms attempt to create value for horseplayers by offering rebates. Now that tracks are tied in with ADW websites (for instance, CDI and Twinspires, NYRA and NYRA Rewards, etc.), tracks should continue to market and popularize their rebate programs for people who attend the races in person. At NYRA, it is very easy to bet with your NYRA Rewards card on track. Tracks could also lower takeout rates. The economics of this point are very much in dispute. Undoubtedly, if the amount wagered on a given track remains the same (or decreases) tracks must raise takeout rates to maintain the same levels of revenue. If, however, there are enough knowledgeable fans who will direct more money to the track with the lowest takeout rates, lower takeout rates could actually improve track revenue, if the additional money wagered, with the lower takeout, outpaces what the track would have earned from the higher takeout on the prior, lower amount of money wagered. Kentucky Downs just concluded a very successful meet which featured very low takeout rates, and some have pointed to that example as a paragon for the industry. Kentucky Downs runs the ultimate boutique meet, however, with only a handful of races on turf only. The jury is still out as to whether a track with a longer meet would experience the same success with lower takeout rates. It seems like the tracks running larger meets are moving in the opposite direction, and have calculated that they can withstand the initial negative publicity and some redirection of the gambling dollar. Churchill Downs, for instance, has been steadfast in maintaining high takeout rates, though all indications are that a horseplayers’ boycott has negatively impacted its business. Finally, it seems like all of the creative energy at the racetracks in terms of creating new wagers has gone to dreaming up super-high reward, extremely difficult to hit jackpot style wagers like the Rainbow 6. These may garner some interest when someone hits a monster jackpot, but most people I talk to who play the races do not have much use for these wagers. What if tracks worked together to create parlays and other types of multi-race wagers that would provide players with more continuous and fast paced action? What if you could play pick threes across tracks? Or even a show parlay where you had 3 or 4 or 5 races going off in the span of half an hour across multiple tracks? I know that getting these wagers into place with the existing (and absurdly complex) regulatory scheme would be difficult, but this type of idea is certainly doable, as we have seen in prior years with the Sunshine Millions multi-track wagers, as well as the old Arlington Park-Saratoga all-stakes pick four on Million/Sword Dancer day. Also, as tracks like Monmouth potentially work sports gaming into their menu of wagering options (there are significant legal hurdles to overcome here, but Chris Christie and his administration seem intent on pushing forward), one could envision parlays that include results of other sporting events which would be really fun, and potentially very enticing to fans.