As a lifelong horse racing fan, horseplayer and financial professional, I have had the pleasure to combine my passions and work with several gambling companies, including a couple very large ADWs (Advanced Deposit Wagering providers).
After these experiences, it becomes clear that the horse racing industry treats its patrons with an almost blatant disregard for their gambling dollar. The absolute FACT is that horse racing is such a great product that it can survive under a level of mismanagement that has no equal. The product is so compelling that it has overcome its abusive relationship with the people that are responsible for its existence.
Here are a few facts about horseracing:
- They charge admission to gamble
- The average house takeout of 20% is at best usury, at worst, predatory
- The cost of Information (“the form”) can be prohibitive
- Scheduled race times are merely suggestions
- Rounding down of every payout, aka “breakage” goes to the house
Here are a few easy fixes:
Stop charging admission!
There is no need to charge admission because of the churn. “Churn” in gambling means how many times each dollar is played by a gambler. In horse racing, the average churn is between 4x and 5x. For every dollar that is played and payed out to winners, the process repeats itself 4-5 times.
If patrons are charged $10 at the door, that is $10 less than will be wagered. However, if they pay $10 and receive a $10 wager in return, the house takes, on average, 20% from each bet, with a churn of 5x, so the end result is…the house still gets $10! ($10 x 20% = $2, then $2 x 5 (the churn) = $10!).
Lower the house take to a competitive level
There is only one casino game with a house edge anywhere near that of horseracing and that is Keno. Keno’s edge is about 25%. Even some of the worst penny-slot machines only take a 10% edge. When I googled “worst house edges” I found “bad” house edges as low as 2.9% (casino war). Horse racing thinks they should take 15% at the lowest and near 30% at the highest out of your wagers?
One of the institutionalized problems with horse racing is that the people in the business think horse racing is an industry. It is NOT. Horse racing is a niche within the industry of gambling. If horse racing cannot survive by taking an equitable and reasonable edge, then maybe it should go away. Just ask the folks at Churchill Downs Inc. as they shutter another horse racing property and move their investment dollars to casinos.
Give away the data
I have studied and written about this in the past. The younger demographic is very data friendly. Given the opportunity they would embrace the ability to do their own research and analysis. No gambling venture has as much data to share as horse racing. Why is this information siloed and protected like an emperor’s daughter?
ADW customers who use handicapping data are at least 10% more successful than their pick-and-pray counterparts. But getting people comfortable with the data can take years. When people are continuously charged for the data during the learning phase, it gives them every opportunity to quit before finding angles to play. If a newbie has a $50 bankroll, $9.95 is way too much to pay for a racing form.
Let’s follow the lead of other gambling products and see where the younger generation can take it. Daily Fantasy Sports is a brand new industry and the “whales” of the industry are youngsters. These youngsters build their own algorithms, then build their own API’s, then churn their bankrolls for an investment-like rate of return. Horse racing needs to entice these folks to play our game too.
Stick to the schedule!
Have a national collaboration to run races every “X” number of minutes and reward/penalize tracks that do not comply. Since the inception of simulcasting, concurrently run races hurt everybody. For fans playing online there is nothing worse than 4 big-time tracks all going to post within a minute or 2 from each other. Then all being 25 minutes away from the next race where the simultaneous starts happen again.
The time between races is dead time for rans at the track. You can only drink so many beers and stare at the racing form for so long.
As a father of daughters, I have been to dance/cheer competitions where 50+ teams enter, perform, and exit in time windows that are so tight they would make the military jealous. When the schedule says team #32 will perform at 2:34pm, then guess what….don’t show up at 2:35 cuz you will be too late!
If 1,000+ 16yr old girls from 50+ different teams can operate with this level of precision, then surely the people in horse racing can get 8 horses to the gate on time.
Eliminate breakage for digital wagers
When horseplayers are at the track, the time at the betting windows cannot be avoided. The lines at the window need to move quickly for everyone involved. The track and the customers want to get their business done ASAP. The need for rounding/”breakage” to eliminate pennies is a necessary evil. I would even listen if it were proposed to increase breakage from nickels back to dimes…or even $0.125 (for quarters only). But for online customers, there is no need for the rounding.
For the most part, all fans really want is for racing to enter the 21st century and to be fair. We need rules to be the same all over. We need to feel like we are getting value for our gambling and entertainment dollar even if we end the day at the races with empty pockets. Make racing competitive with other forms of gambling before another big time race track closes its doors.
