Friday, March 21, 2008
Racing Must Hear its Customers
HALLANDALE BEACH, Fla., Mar. 20, 2008
We interrupt our Road to the Kentucky Derby coverage to bring you this important message. It’s about wagering, without which there would be no money for purses, and hence, no game.
You know that, of course. But it seems this fact goes unrecognized for long durations in this business if, indeed, it ever did receive the attention it truly deserves.
In case you missed it, there is an opinion essay addressed to the industry by Alex Waldrop, CEO of the National Thoroughbred Racing Association, in the March/April issue of Horseplayer magazine.
I've never met the man so I could be off base here. But my impression from the piece is that we’re not talking about an empty suit here. He addresses the concerns of horseplayers as if he gets it, as hard as that might be to believe.
But consider some of Waldrop’s text and judge for yourself...
"The fundamental economic engine that drives virtually all sectors of the racing industry...is pari-mutuel wagering. To accomplish positive change...it stands to reason that we must engage and connect with those who wager, namely horseplayers…"
"The one 'league' that has always existed within horse racing, albeit slightly under the surface, is the sport’s legion of horseplayers...."
"[We must] provide our customers with the information or even the software they need to create what they want for themselves, like designing their own bets...Why not formally enlist [horseplayers] in the process?"
I know what you’re thinking: The industry can't even come up with a program for betting in real time; we still get those pesky after-the-bell odds machinations. They've been betting from their seats on hand-held computers for years in Hong Kong, why not here?
And my personal pet peeve: You ask a mutuel clerk for a printout of the late scratches and there’s no delineation between the 1 and 1A in a stable coupling, so there's no knowing if one or both halves of an entry are scratched unless you hear the announcement. That’s never a given in simulcast situations.
Does it get more basic than that? Thank God people don’t bet their money on these things, right?
The impetus for Waldrop's commentary was the conclusion of the successful National Handicapping Championship last winter in Las Vegas. The popularity of contests such as the NHC and Horseplayer World Series, two of the largest and most prestigious, is one of the few positive industry trends going forward and expansion is on the horizon.
There may be people who love the game more than Vinnie Ralph, but they wouldn't be easy to find. A resident of Woodbridge, New Jersey, Ralph would be considered a regular at a dozen different venues.
A few years ago, discussions between Ralph and Bill Nader, then of the New York Racing Association, led to moving the Pick 6 from races 3 through 8 to the final six races on the card. Ralph thought that repositioning the Pick 6 would dove-tail nicely with the Pick Four, already the last four races of the day.
Given this menu, the $1 Pick 4 would provide opportunities for hedging or optimization in the $2 Pick 6 pool. Since sizable wagers are usually involved, common sense prevailed and the wagering menu was altered. Listening to knowledgeable customers is the hallmark of a good executive. Hopefully, that’s what Waldrop’s attempting here.
In his comments, Waldrop addressed the utility of a Horseplayers’ Coalition. Its mission is to use a portion of NHC Tour fees to fund NTRA's legislative initiatives, principally bringing about change in the current withholding statutes that apply to windfall payoffs generated by exotic wagering. Waldrop got Ralph to thinking.
Ralph spoke with a colleague capable of investing serious money into multi-race pools regarding the Magna 5. Ralph asked whether he had any interest in the wager. Like Ralph, the player was intrigued by the idea of five races conducted within an hour from good tracks featuring big fields replete with good horses. That is until they learned it cost $2.
Magna had envisioned carryovers which always boost handle but Ralph's research showed that since its inception in 2004, the Magna 5 carried over only twice. The $500,000 guaranteed pool fell short with more frequency.
Ralph has an idea for a new bet. He approached about a dozen big players and asked whether a new Pick Six bet should be $1 or 50 cents. A half a buck won in a landslide.
Ralph calls this new wager the "Quick 6." To prove the logistics work, he chose six races from May 12, 2007. Coincidentally, the tracks were all part of Churchill Downs Inc.
The 7th and 8th from Arlington Park; the 10th and 11th from Calder Race Course; and the 9th and 10th from Churchill Downs, were run between 5:01 p.m. and 5:52 p.m. It was do-able. But Ralph especially loves the Derby and he's looking for a way to fill the agonizing wait between the Woodford Reserve and Kentucky Derby.
The Derby day play took longer, 80 minutes, but still do-able. The half-dollar Quick 6 is a bet the average player or novice could afford, even with a 20-horse Derby field rounding out the sequence. Of greater import, it keeps money in circulation longer by often avoiding average withholding of 30 percent on large payoffs.
Ralph points out there would be 30 percent withholding on a $1 payoff of $5,100 but on two 50-cent tickets of $2,550, there would be none, zero, zip, nada. The Quick 6 would be offered every Saturday. In the event of a carryover, a Sunday sequence would complete the play.
While Waldrop likes the idea because it accomplishes three goals at once--creating something new; catering to average fans and addressing the withholding issue--there is some sentiment within the company to revive the NTRA Pick 4.
In the essay, Waldrop referred to an eight-year study focusing on young "Millenials," age 20 to 29. Research found that they were serious sports fans, were more likely wager on line, and would seek out games and sports that require thinking--counter-intuitive to what the industry’s marketers have believed for years. Things change.
Waldrop wrote: "This is the greatest potential for growth our business has seen since the appearance of televised sports." As everyone knows, the window closed on that opportunity. But it had better not allow a myopic view of the future to compromise racing’s growth going forward in the name of corporate branding. This time, the stakes are too high.
Accompanying Photo Gallery to "Racing to the Kentucky Derby".