The Future of Racing

New multi-leg wagering product - part 2

It has been nearly a year that I have been involved in my project to get a new extended multi-leg wagering product introduced into the global and local racing market.

During this time I have learnt a great deal about the wellbeing of racing around the world and I must be honest that the general impression is not a reassuring one.

Racing revenue is under pressure everywhere and this is hardly surprising when there are so many interesting distractions available to gamblers. The competition for wagering and leisure spending has never been bigger and the slow pace of economic recovery over the last few years has not helped the cause either.

All of these developments are a normal part of life and the challenges will get bigger in coming years, which highlights an important aspect, which is the ability of industries and companies to adapt to an ever changing and more competitive environment.

For years racing worldwide operated as virtual and actual monopolies and in some countries this situation still exists. Things are however changing rapidly and racing are becoming increasingly exposed to multiple challenges to its historic position. This necessitates a serious introspection and racing has to change with the times not only to survive, but to increase and regain its prominence in the gambling arena.

In modern society everything revolves around satisfying customer’s needs, and rightfully so, but all of this has to be done within the constraints of a budget which seldom allows for expansive strategies. This leads to a scenario where all the players scramble to hang on to their existing customers and where any efforts to gain market share is largely negated by the cost of the exercise.

The one economic rule that cannot be ignored, no matter the difficulties, is the ability to grow the customer base over time. Failure to do so will ultimately lead to the demise of the organisation or the industry and if this was to happen to racing it would be a very sad day for all of us. It is possible to delay the inevitable by maximising returns from the existing customer base and by trimming expenditure. Once these avenues are exhausted the only remaining course that will ensure sustainable and profitable growth is a strong and steady increase in customer numbers.

My research has shown that single race wagering is the most popular and best supported format world wide and the biggest contribution to turnover comes from products in this category. On the flip side of the coin these products produce the lowest percentage take out for betting operators even though they produce the biggest outright revenue for them. Competition is also the greatest in this category between bookmakers, internet betting companies and tote operators and it is a source of some controversy in as far as taxes and contributions to the racing industry are concerned.

Extended multi-leg wagers are not that well supported everywhere even though the format has proven popular in a few countries with South Africa being one of them. The most successful of these bets is ATG in Sweden’s V75 bet which attracts a following of nearly a million people out of a population of 9 million each weekend. This is a fantastic achievement which shows what can be accomplished with an exciting multi-leg product if customer’s needs are properly taken care of. Take out for betting operators are generally much higher for this product category and the pay outs for punters are nearly always substantial. This is a good recipe for the industry and these games have the potential to be a successful marketing tool for sustainable growth.

My research has shown that this bet type is performing way below its potential globally but that any successful product line-up needs to include this format of wagering. These products contain two vital elements for growth in the industry. These are the potential for extended fun and entertainment and the lure of large pay outs for a relatively small outlay, which is every punters dream. Racing is not a true spectator sport and outside of owners, punters and the rest of the racing community, has virtually no following. To create an interest in our sport we need wagering products that provide extended exposure to multiple races and race meetings which would aid attempts to attract new support for the game. It is only through increased exposure and products with broad based appeal that we will see the racing industry resume a sustainable growth curve.

Current multi-leg products fall short of their potential in most instances by virtue of the methodology being used to determine winners. The methodology used is best suited to single race products and short multi-leg products like doubles and Pick 3’s. For extended multi-leg wagers traditional elimination based methodology has done very little to promote a format with great potential and this need to be addressed in future.

Over the last decade or two conventional thinking around product development has not managed to change racings ailing fortunes. We need a paradigm shift in thinking from betting operators to include more progressive ideas in their future offerings. I am in no way advocating a move away from current traditional products which has served the game well for many years and will continue to do so in future. It is however crucial to introduce new wagering concepts that has the ability to attract and retain large numbers of new players. This has been the one challenge that betting operators world wide has frankly been very unsuccessful at. Retention has been a relative strength for the majority but acquisitions to the game over the recent decades has just been a trickle.

In South Africa we have a huge opportunity to grow racing revenue and we are nowhere near our industries full potential. If we analyse the current situation a simple calculation suggests that we have at best somewhere between 200 000 and 400 000 active punters that partake in extended multi-leg wagering (Pick 6, Place Accumulator and Jackpot). This estimate is based on numerous assumptions and I would welcome it if someone could provide a more exact figure. My calculation assumes a normal gross pool of around R1.5m for the Pick 6 and the Place Accumulator and a best case scenario of everyone playing the minimum bet of R6. I further assume that a number of punters will be involved in both of these betting products as well as the Jackpot. It is highly unlikely that every punter will only play the minimum bet of R6 and therefore the numbers indicated could even be overstated by a considerable margin. On the other side not every punters plays every day which could increase the overall number of punters in our industry. The point that I am trying to make is that only a few hundred thousand people out of our total population is actively involved in the game.

This is a clear case of bad news also being potentially good news as the existing situation allows for considerable future growth if racing can succeed in its marketing efforts. What are needed are products that can attract and retain the interest of a far broader segment of the market.

My objective is to convince betting operators to introduce more modern concepts to racing that will provide punters with a more enjoyable extended multi-leg wagering experience. By using the most punter friendly methodology ever applied in multi-leg games I aim to provide racing with a gateway to introduce large numbers of new players from different segments of society and often from non-traditional sources.

The theme for growing our game should be punting for pleasure. Punting needs to be fun and entertaining and every person should have the opportunity to be competitive whilst playing within their means. It could be argued that current games are very affordable when playing the minimum bet, but how often do they give the player an enjoyable and realistic run for their money? Large permutations should always give a player an advantage but it should not be a minimum requirement towards having fun and a chance of winning the game. I would like all players to have fun and entertainment for the whole meeting on a budget that they can afford. The name of the game for exponential growth is inclusivity rather than exclusivity. I would much rather see a few million people wagering a few affordable rand than a few sacrificing everything that they have chasing that elusive big pay day. Betting operators would be well advised to seek more sustainable growth in the form of large numbers of new players to the game rather than relying solely on unsustainable growth from only the current customer base.

Everyone in racing would benefit from growing pools and large numbers of new entrants to the game. Race horse ownership, given the costs, will always be an exclusive domain but punting need not be. Big punters are necessary in the game and we should salute their involvement but we should not become too pre-occupied in only chasing this group. This is a limited market, especially in our country, and given our economic realities racing will be far better served by inviting large scale participation from the broadest segment of society. We need to roll out racing to the masses and help to keep more people’s dreams alive. Let’s create more winners more often, and put the fun back into punting.

On a recent trip to the Hong Kong Jockey Club it was obvious that we have a long way to go in terms of promoting racing. Happy Valley race course is a spectacular racing setting and the service and facilities are magnificent. Equally impressive is the size of their betting pools. The average for each race was between 50 and 60 million Hong Kong dollars (roughly $1.10 to a rand) and this was for a normal race day. Hong Kong is admittedly a far more affluent area than SA but the number of people punting is a joy to behold. We could have impressive pools locally too if we provided the right products for our local market. Imagine pools of between R5m and R10m rand on exotic bets on a daily basis and growing all the while. This could be a reality if we applied solid fundamentals to our local marketing efforts and product offering.

Racing will have a great future globally if we can introduce products which truly satisfy customer needs, in a competitive package and with an appealing value proposition to multiple segments of the market. It is vital for racing to adjust to the times by blending trusted traditional products with more modern offerings to ensure the broadest possible appeal. We need younger players and both sexes from diverse segments of society taking part in this wonderful game.
– via email Leon Smuts

“May history guide our values and vision shape our future”

part 1 can be viewed
https://www.sportingpost.co.za/2011/04/18/frontpage/the-future-of-racing/

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