Thursday, October 16, 2008

Joe's Words Could Not Be More True

Joe Riddell, a long time race watcher and insider, was recently interviewed for a piece on racing. In it he explores mainly what we have been speaking about at HANA for some time.

On racings business model:

You're absolutely right, not only does it not have the right business model, it doesn't have the right management team in place. As a whole you have to understand where our customers are, where they've gone, what they're demanding and recognize that we need to bring them back into the game and certainly back into the revenue stream

Finally, someone in racing speaking exactly who the great lost customer is, and doing so accurately. Notice he does not want to give us a hat or a balloon:

RH: Who are the customers?

JR: Customers are the gamblers who are demanding a certain rate, a certain convenience and customer service that the industry has failed to provide. They're usually pretty high end, very intellectual gamblers who have now had their need satisfied by their bookmakers, who don't pay anything into the pool, into our race tracks and horsemen's purses.

On where the customer is gone, and how we get them back:

RH: So what does the horse industry do?

JR: Recognize why we lost them and understand how we need get them back. … It's as simple as understanding they are very price sensitive. We're trying to tell them that we want to charge them 20 percent for our product, and they're saying, 'Well, we'll pay you 10,' and we say, 'Okay, go away

On how to fix this mess:

RH: What would you suggest when you mentioned that the wagers are looking for players or looking for a uniform vehicle in which to wager, how do you think that could be brought about?

JR: Frank Stronach, who's the founder of Magna Entertainment, about five or six years ago mentioned what he called the Central Betting Exchange. … The Central Betting Exchange idea was to have all the signals go through one hub and then individual brokerages like my company, Premier Turf, can then get a brokerage license attached to that hub, and it would therefore be able to be a stock trade. ... So you could choose to get a volume, a company that would give you the lowest rate, or a higher rate with more customer service, more perks involved.

The Central Betting Exchange idea is one that I've spent a long time thinking about, working on and it is a truer model, where all the race tracks can agree to sell their signal ... for whatever rate they think their tracks can handle.

So … you've got all the signals coming to one central exchange, where different entities like Premier Turf, like Twins Spires at Churchill Downs, like Express Bet of Magna, can hook onto that central exchange and be able to handle to take bets on every horse running in North America today at a price that is appropriate, that is low enough to attract all the clientele.

On why racing can not fix this, and why there is no movement to fix this:

R: It's very simple: they have the wrong managers. They've gone out of their way to hire accountants and attorneys to do it, and these accountants and attorneys, especially more attorneys than anything, are very smart people, but if they've ever gone to the races and handicapped a race and placed a bet, they are disqualified from management at these race tracks. And I'm not being facetious, I'm not exaggerating. That is exactly what they've done. They've gone out and got these very smart people who don't understand the game, who don't understand the mind of our customer. ... If Vegas had the same model, it would have been shut down a long time ago, it would be a ghost town now.

The article is not an eye-opener here, of course. But it sure will be in racing execs and horseman group offices. I hope they read and heed it.

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