Are operators missing the point?
I have been studying racing, its wagering products, business models and customer behaviour on a global scale for the past 4 years and it is not surprising that there has been an inability, both locally as well as globally, to grow the sport’s customer base, writes Leon Smuts of Scoreline Wagering Enterprises (Pty) Ltd.
Many reasons for this have been put forward by respected research companies, betting operators, academics and knowledgeable and influential individuals and many of these highlighted issues are indeed contributing to the lack of growth that is evident.
The following are some of the most commonly suggested reasons:
– Quality of racing hurt by excessive quantity
– A tarnished image through corruption and doping scandals
– Facilities are often not up to standard
– Lack of media exposure
– The abuse and neglect of animals
– The length of time between races
– Excessive take out percentages and badly priced odds
– Seedy betting parlours and difficult access to betting facilities for new players
– Confusing terminology even for seasoned players
– Difficulty for new players in analysing and interpreting form
– Lack of care and total disregard for clients
– Not adequately catering for families
When you look at this list, the problems seem almost insurmountable and it looks as though the industry is heading for a very hard landing in future. The actions of betting operators also do little to inspire confidence in their ability to turn the situation around, as it appears that all belief in a racing portfolio has been lost.
Racing models globally are showing an increasing reliance on non-racing and alternative racing income to “subsidise” the sport as can be seen from betting operator diversification into casino’s, sports betting, lottery operations, broadcasting rights and a move into fixed odds from the pure pari-mutuel model. All of these are prudent business decisions by experienced and astute businessmen trying to keep ailing traditional operations afloat. It saddens me though to see that very little effort is going into finding true racing solutions, even though a healthy racing portfolio will make these companies far more profitable from this diversification, and would eliminate or at least alleviate the draining effect that traditional operations are currently placing on operators.
One of the biggest misconceptions standing in the way of renewed customer growth and a return to racing related profitability, is the myth that instant gratification should be promoted at all costs.
If backing horses was purely about money then the stock market would be a far better option for most, albeit that gains and losses are mostly slower than punting, but the reality is that it is also about the excitement of the chase and a love of racing. It is evident that most serious punters prefer single race betting, which is also preferred by betting operators as it supports churn related gains. This has led to an almost exclusive development of these types of bets and speedier (time duration) multi-leg bets to satisfy the needs of the majority of current players.
Although quite successful this reality has perhaps had unintended restrictive consequences on both thinking and product development. For racing to grow again, we definitely need to think more in terms of what non-players would like as we need to ensure that this group becomes interested in joining the game. This brings me to the heading of this article, as the solution to customer growth is actually much closer than it appears from the perceived doom of the excuse list mentioned earlier.
There is one very important element that is being ignored by operators in the constant quest for rapid turnover growth and that is the value of offering an entertaining experience and easily understandable products that novices can relate to more readily. Instant gratification and entertainment are mostly at two opposite ends of the spectrum and racing’s relatively small, yet very loyal global customer base should be a pointer towards where increased attention should be given. I am not suggesting that current customers should be neglected and the 80/20 principle should always be considered, but there is a very attractive opportunity to grow racing’s customer base by complementing current efforts with more entertaining new products.
In modern society’s high pressure environment, entertainment has become a huge need with many options offered and millions of willing participants looking to escape life’s daily grind. This reality offers a wonderful opportunity to the racing industry, as the racing product is already highly entertaining, as can be seen from the turnout at big annual events. What stands in the way of continuity in new interest and growing participation, is a lack of products designed specifically to extend the entertainment into the wagering offering, from which strong marketing traction will be gained.
It is a fatal assumption to believe that instant gratification is preferred to entertainment if your only sample is a handful of current customers rather than a more representative sample from a huge untapped external market.
When entertainment is introduced as a core element in new wagering products, racing will experience a renewed growth cycle that very few would dream to predict at this point in time. It is not all doom and gloom for our industry, but it will take some enlightened individuals, willing to be new concept pioneers, to establish the next boom period for racing that will see company profits soar and race horse ownership becoming fashionable again.
Tomorrow’s racing customer base will look very different from what we have become accustomed to and will be dominated by growing numbers of casual and occasional players that take part in racing primarily for its entertainment value. Think of the possibilities for racing under this scenario in terms of turnover, increased media exposure, new sponsorships, word of mouth gains and most importantly a revitalised image.
Leon Smuts
Scoreline Wagering Enterprises (Pty) Ltd
