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Saturday, November 14, 2009

Harness Bettors Getting the Message Through

At HANA we have upwards of 150 harness players, some large some small, and their passion for the sport is huge. Racing is racing, and racing has problems; the largest component of which according to many is the price of the product.

Over the last few years there has been a sea-change in thinking. Mention takeout in 2006 and you might be met with "how will we pay for purses with a lower takeout?". In 2009 this discussion is met with "we do not know our optimal price to maximize revenue, so we should be looking into it." This is no small change.

From time to time we see this discussion on industry sites for the most part. Almost always comments on these articles are from insiders. This is not surprising as industry trade websites are frequented by insiders - trainers, grooms, track executives and so on. Bettors, as we all know are on chat boards, gambling boards and betting blogs.

But a funny thing has happened of late. More and more we are seeing insiders themselves speak out about takeout and other issues that are important to the customer. One such example is on Standardbred Canada. That website is the record keeping one for harness racing - you can get entries, condition sheets, fines and suspensions, industry notices and more. It is the central destination for insiders.

Jack Darling, a stakes trainer who has had huge success over the years recently spoke out in an article - talking directly to his brothers and sisters in arms:

I have read some great ideas on this site and others. One is with regard to reducing the percentage of the take substantially from each bet to return more of the winnings back to the gamblers. I think this would be worth a try. Most of our purse money comes from the slots so I don't think it would cost us that much out of the purse account. If this was widely advertised to the gamblers and the betting public and they did respond by betting substantially more on the races we might even be dollars ahead as we attract new customers.

This piece spawned over 52 comments; and not your usual ones.

Jeff Gural, the New York real estate mogul responded directl to Jack's writing. As did Jason Settlemoir from Tioga - all in support of change.

Bettors in kind came to play - asking for price changes and more. They spoke with respect for this great game and with an eloquence that this is not about us, it is about the sport they love.

We need more dialogue like this on trade websites. We need to stoke the fires that change is not an option we should look at, change is vital to the survival of the game.

Give the article and the comments a read. You do not have to be a harness fan, you can be a racing fan of any type. The issues are all the same, and change is needed everywhere. By reading that piece, maybe harness racing will be the leader in this change.

Here is a comment on the piece from a management rep from two New York tracks. This is very good to see from management and we need more of it.
:

Hello Everyone,
I hope you will take some time to read this. Over the last month it has really started to sink into me that harness racing is dying and will never be the same within the next few years.

Those of you that know me personally know that I am an eternal optimist. My glass is always half full rather than half empty. I have devoted my life to harness racing since the age of thirteen when I called my first harness race. Today I find myself doing what I love best, promoting our sport at Tioga Downs and Vernon Downs and I can't think of doing anything other than working in this industry. Our sport of harness racing has so many great aspects from the great horses to the wonderful people involved in our business, it is hard for me to sit idly and watch our great sport crumble and do nothing.

I hope you read the October 15th “Michigan governor vetoes funding for racing” article on Harnessracing.com. Fortunately the Michigan Governor stepped in at the eleventh hour and saved the day, for the time being. “Harness racing in Quebec at a seeming end” appeared on the USTA website on October 20th and the recent article “Slots Revenue to Purses Reduced in Pennsylvania” on page thirteen of The Horseman and Fair World from the October 14th edition. I have to believe that other states will be reducing money to the horsemen in the very near future, like Pennsylvania has done.

Many of the recent yearling sales have seen declines. An exception is Ohio, which in my estimation, was up only because the number of horses being offered was down from previous years. The Morrisville Sale was down, the Lexington Select Sale was down (Wednesday down 13%, Thursday down 14%, Friday down 16.8%, Saturday down 11.2% and Sunday was down 24.6%). One bright spot was the Harrisburg Sale that saw an increase this year after falling last year.

One of the greatest racetracks to ever exist (in my opinion), The Meadowlands, is on the balls of their feet and is losing money each year. I can’t see the taxpayers of New Jersey footing the bill much longer, I could be wrong though. Have you seen the handle results from the Breeders Crown at Woodbine? In 2008 the Meadowlands $ 5,020,659 on 13 races, and in 2009 Woodbine on 12 races $ 2,686,982, over $ 2.3 million dollars down, and in 2006 when Woodbine hosted the Breeders Crown the handle was $ 3,813,910, down over $ 1.1 million dollars when comparing the event at the same place.

I think our customers have begun to speak loud and clear and they are telling us to change. Do we really believe that this sport would exist as it does now without expanded gaming in these jurisdictions? Is there a future in harness racing? Does anyone even care anymore? I have started to hear some chatter recently about moving forward and doing “something”, but actions speak louder than words. The time is now. I read somewhere once that the definition of insanity is “doing the same thing over and over again and expecting a different result”.

These are the issues I believe we need to work on; first and foremost we need to fix the problems within our industry. First, we need to quit arguing amongst ourselves. Who is correct and who is incorrect will not amount to a hill of beans if we don’t have an industry to work in or on. We need to work on and with our number one people, the “customer”.

There is a newly formed group you may have heard of known as “Horseplayers Association of North America (HANA). We need to sit down with them as I believe our customer must come first. This group, in my opinion, has a realistic view on how to solve some of our problems in the industry. They identify one of the biggest problems as being the “takeout rate” at each track and "rebating". We must embrace the concept of the “takeout rate” being too much and we must also embrace “rebating”. Both of these topics come up numerous times on the HANA website www.horseplayersassociation.org . Please take a look at their website with a keen eye focused on what they are saying about the “takeout rates” and “rebating”.

We also need to address racing dates. Why should Pocono Downs and Chester Downs go at the same time of the year and why should Chester race right along with the Meadowlands and Yonkers, Are we not defeating our purpose? The Meadowlands pools are the only ones large enough to accommodate a “big bettor” in the United States, as far as harness racing is concerned. This issue needs to be addressed. We race way too much and to add insult to injury everyone races at virtually the same time. We are diluting our wagering pools to small amounts, offering the high players nowhere to bet the big money. The glut of racing results in horse shortages that cause small fields and produce an inferior product for the gambler, which in turn they don’t want to bet.

Next, I believe we need a marketing plan, but only after we fix our “inside the industry problems” like takeout rates, rebating, race dates, our integrity situations, cleanliness of racetracks, small wagering pools and programs being too complicated for beginners. Speaking of programs for beginners, I found it hard to believe (not really) that Tioga and Vernon were the only two regular users of the “beginners program” that the Marketing Committee at the USTA came up with.

Dr. Joan Zilinksi has again been commissioned by the United States Trotting Association (USTA) to report on the problems in harness racing. Her first report was released on August 19th, 1991, now it is almost 2010 and I bet when this next report comes out it will say many of the same things it said back then. It may very well report that the state of harness racing is much worse than in 1991.

From her report in 1991 I took this part about marketing “in fact, the best way to kill a poor product is through a lot of good advertising”. I simply think what she is saying we must fix our internal problems before marketing to the masses and I could not agree more. After we fix our “woes” we will need to address having a marketing campaign and I believe it needs to be not only grassroots but also nationally done through mass media, social networks and so forth.

We also need to keep our stars (horses) on the track. It’s no secret I am a big fan of the drivers in our sport and the work they do, but let’s face it, people love the horses and that’s why they come to the track. We often retire our great horses far too early, just as fans get to watching them and giving the fan no chance to get involved and watch them race year after year to create a following. Look at horses like Somebeachsomewhere, Deweycheatumnhowe, Muscle Hill, Explosive Matter, Well Said, and Vintage Master. Would it not be awesome to see Well Said, Vintage Master, Somebeachsomewhere, Mister Big, Art Official, Shadow Play, Won the West, and Shark Gesture battling it out against each other, at least for one year? If I had those horses at Tioga Downs or Vernon Downs we would pack the place with anxious customers who love the racing game.

Do you know what the sad part about this is? Casino operators don’t care one thing about horse racing and that seems ridiculous to me. At Tioga Downs we promoted the last night of racing in 2009 on Saturday, September 12th and we packed the place, and you know something, it was the biggest night we ever had on our gaming floor as well. The one thing casino operators don’t get or don’t understand is that 50% of the racing customers will play on their gaming floor.

There are so many things I would like to address to everyone but these are only a few of my observations and thoughts on the future of harness racing. I am certainly not trying to upset anyone and be negative as I said my glass is always half full and it will continue to be but sometimes I think it is just about to get knocked over. What I am trying to do is get the industry to wake up and encourage change. Seems like we have been in a deep coma for quite sometime and we need to encourage everyone and encourage change in our sport that we all know and care about. If you have any comments or suggestions or if you have ideas you would like me to explore I would be more than willing to at least try them if nothing more than at Tioga Downs and Vernon Downs. I am fortunate enough to work for a guy like Jeff Gural who has essentially taken the gloves off me and allows me to market and promote the racing side of our business. We welcome new ideas and thoughts at anytime.

I certainly do have to say that the recent Blog written by Jack Darling “We Must Act Now”; Jack Darling certainly does get it. I am ready to step forward and encourage change. Who else is ready? Hope to see everyone in the winners circle!

Best regards,
Jason

9 comments:

Gerald W Cohail said...

When Ellis Park reduced the takeout on Pick-4 wagers from 25% to 4% in 2007 they saw little benefit. The "increase in handle on the Pick-4 did not negate the loss in takeout, showing that horseplayers prefer action over a edge."

All wagering in Japan is subject to a 25% takeout, yet they draw huge crowds.

Reducing takeout is not the answer. Fan base is the answer. If you don't have a fan base, you don't have wagering.

The age of the average horse player gets older every year. Attendance is declining every year. If the sport does not attract younger players, the sport will die.

HANA said...

Hi Gerald,

Just a note: gambling is illegal in Japan, and in the criminal code.

The ELP pick 4 increased wagering by over 100% (a double). On one day the pick 4's which averaged $17000 the previous year hit close to $100,000. This was despite the fact that due to low takeout almost all ADW's and offtracks would not accept the bet.

HANA

Anonymous said...

HANA didn't respond to the older/younger comment, which is almost correct -- except is doesn't specifically have to be as a fan base, since fans don't pay for the show -- the ideal is actually younger bettors, not younger fans.

You should search here on the blog for the demographics of betfair, as compared to US racing. It turns out young people really really like having a whole lot of wagering options on a technologically advanced platform at very low takeout. That shouldn't surprise anyone.

If we want young people to get involved (and we all do), there is our model. It works.

Gerald W Cohail said...

First, in response to your "Just a note: gambling is illegal in Japan, and in the criminal code," please vist http://japanracing.jp/_statistics-local/2008/local01.html to see the handle on Japan horse racing from the years 2003-2008.

Then visit http://japanracing.jp/japan/rules-j.html#c11 to read "The Japan Racing Association Rules of Racing", specifically "CHAPTER 11 - PARI-MUTUEL BETTING."

Then a trip to http://www.horseracingintfed.com/resources/Global-Turkish-JCSeminar.pdf will show you that the horse racing takeout in Japan in 2006 was 25.6% compared to an average 21% in the United States.

HANA said...

Hi Gerald,

Apologies for not being clear - horse racing has a virtual monopoly on legal wagering as casino's and many other forms of gambling competition are illegal in the criminal code. There is no slot, poker, roulette etc competition there. As you know, virtual monopolies generally do well and can charge pretty much what they takeout they like.

Thanks for the response, and apologies once again for not being clear on that.

HANA

Cangamble said...

Gerald, do you know how and where the extra money made by those who hit the pick 4's at Ellis Park went?
Did it go to buy new suits, cars, down payments on houses? I doubt it.
What it did was enable bettors to play longer than they would have without the takeout reduction.
The fact is that much of the excess money won was bet at other tracks as well, which makes such a reduction very difficult to figure true results from.

I know one thing, that since I started betting with a rebate (which is like a takeout reduction at every track at the same time) my betting has gone up 3-4 fold.

Gerald W Cohail said...

I guess I haven't made myself clear. I don't have a problem with reducing takeouts if it makes sense from an economic standpoint. But reducing takeouts is not the sole answer to increasing handle.

Several years ago Laurel Park held a 10-day meet with a "blended takeout of 11.34% across the board" designed to generate handle. According to Maryland Jockey Club president and chief operating officer Lou Raffetto Jr., “It was a public relations bonanza and a financial bust.”

Reducing takeout is great for those of us who wager on horse races, but if tracks can't stay in business, we won't have races to handicap and bet on.

In order for handle to increase (and have reduced takeouts) you have to increase the number of people betting on horse races. Since the number of people wagering on horse races has been declining for years, it seems logical to me that we have to do something to increase the number of people betting on races.

The recent two-day Breeders' Cup event at Santa Anita drew 96,496 people total for both days. In the 1970s and 1980s Santa Anita drew large crowds every weekend. In 1985 the track set an attendance record, as 85,527 people showed up for the Santa Anita Handicap.

When I visit my local off-track betting establishment, the one thing that stands out quickly is the fact that there are no people in attendance who are in their twenties or thirties. The youngest person in the room is often the guy who carves the roast beef for my sandwich. He appears to be in his late forties or early fifties.

I started handicapping races roughly 50 years ago, when I was still in Junior High school. For the most part, today's youth are not exposed to horse racing. Yet they are exposed to other forms of gambling. They see their parents buying lottery tickets and they take vacations with their families to Las Vegas and Atlantic City. What is the horse racing industry doing to attrack young people to the sport?

Cangamble said...

Gerald, youth is being exposed to gambling at Betfair and online poker.
What draws them is the fact they know they can last on a shorter bankroll, and the fact that they know that actual winners exist.

In other words, you need lower takeouts first, and that is what is needed to draw new players and keep new players.

Anonymous said...

Your phrase is brilliant