Tuesday, November 29, 2011

Henderson: Churchill Downs Inc, TOC & Others are Making a Big Mistake

Industry watcher and gambling expert Hartley Henderson wrote a hard-hitting article this week about (primarily) horse racing. In the article he examines what companies are doing to grow in the tough economy and compares it to racing.

"[Other] businesses are doing whatever they need to in order to attract new customers and keep existing customers happy. In order to achieve this, many businesses have introduced enticements that may prove to be unprofitable in the short run but will prove worthwhile in the long run."

Racing however, is doing the exact opposite he says, and he singles out Churchill Downs for their new policy:

"Churchill Downs Inc. announced that it was cutting incentives for all but the largest players who wager at their Twin Spires website. Under the system players will be given rewards cards and only those who wager $25,000 or more at the 4 Churchill Downs tracks (Churchill Downs, Arlington Park, Calder Race Course and Fair Grounds) or on the TwinSpire’s website in a year will be entitled to “elite rewards” which include free parking, programs, etc.  The rest will be given tokens like free Brisnet credits. The company has argued that the current rewards structure hasn’t been enough to increase wagering and therefore the new structure will prove better for all bettors, but others in the industry say it’s just a cost cutting measure and the message is clear “unless you’re a big better your business is irrelevant to us.”

The TOC and CHRB do not escape unscathed:

"Yet California decided that the 20% takeout on exotics requiring 2 or more horses and 21% takeout on exotics requiring 3 or more horses wasn’t enough so they have decided to increase both by 2%. This is a blatant stab at the smaller bettors since exotics are far more popular with novice bettors than are win, place and show wagers."

This is mind boggling in a day where customers are looking for the best value for their betting dollar and younger bettors have turned away from horse racing because they believe the takeout makes it an unwinnable proposition."

Further, tracks like Woodbine in Canada, and the state of Virginia have enacted similar, that are looked at by Mr. Henderson.

Why does this happen?

 “the industry is controlled by new executives that don’t understand the business or the patrons or older executives who still think it’s the 1960s or 70s.” 

We hope every track executive and industry stakeholder reads Mr. Henderson's comprehensive article. You might not like what he says, but from a horseplayer group with more than 2000 members, we can honestly tell you:  A lot of what he speaks is the truth.

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