Changing the Business Model

We all hear the doom and gloom regarding horse racing in general and harness racing in particular, but I have always been a firm believer that harness racing will still be with us twenty-five years from now. Will it look the way it does now? Absolutely not. There will be contraction; the long meets will be a thing of the past; horsemen are going to have to travel like they did in the old days, but racing will continue.

Proof of this? Look at Quebec. Just this year, what was considered to be the final nail in the grave of Quebec harness racing happened when the provincial government killed off the reorganization plan that Attractions Hippiques had which would have allowed for racing at one of the tracks in Quebec. The tracks will be sold off and the provincial government is going to provide subsidies to breeders in order for them to transition to another form of agriculture. Certainly, as far as the government is concerned, horse racing has gone the way of the dodo bird.

Not so fast. Ten Quebec businessmen each put up $100,000 in an effort to bring back harness racing to the province. Their goal is modest to begin. First get account wagering going along with off track betting (in partnership with WEG) to be followed up by racing on Saturdays at a training center in 2010 temporarily and then build a new 'green' race track which will have a country fair setting. Forget the grandstand; tailgating and 'fun' is in. VLTs? No thanks. They want no favors from the province of Quebec; just allow the horsemen the opportunity to do what they are proposing.

The Quebec Ten recognize the current business model horse racing uses is flawed and needs to be discarded. They are correct. Sure the expansion of casino gambling has hurt but ignoring the casinos for a moment, the old business model still became outdated. Pre-Internet, there was a need for local race tracks and with wagering localized; these tracks could race at the same time without conflicting with each other. The Internet has changed the equation. Wagering is now nationwide, and to some degree global. The person in New York can now wager on a race in California. The need for simultaneous horse races no longer exists.

Now, let's consider casinos and lotteries. With the continued expansion of casino gambling and lotteries, there is more competition for wagering dollars. Horse racing is not the only one suffering. Atlantic City, with the expansion of casino gambling in Delaware, Pennsylvania and New York, is suffering. With casinos coming to Ohio, how do you think the slot parlors in Western Pennsylvania and Indiana are going to be doing? They will be losing business as well. The pressure on horse racing as it exists now is going to get even worse. What do we do?

We need to recognize that horse racing (all breeds), the way it is currently being conducted, can't compete with casino gambling. We have an over supply of horse racing competing against the endless supply of casino gambling and lotteries. Couple this with the fact we can't match the pricing of other forms of gambling, is there any wonder we can't compete? If we adopt seasonal meets where tracks race for a shorter period of time with much smaller physical plants, we can lower our pricing somewhat and compete better. The seasonal meets will satisfy the local fan base, as horse racing will stand out as something special to do; differentiating racing from casino gambling. By having tracks race on different days of the week at different times of the year, we will be able to meet the demand of the gamblers who want to bet on horses without having race tracks carving the wagering dollar up into miniscule portions.

The Quebec Ten's approach is the first step towards developing the new business model. We wish them well and suggest other racing jurisdictions watch with interest.