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Tuesday, January 12, 2010

The Future of Racing - No Race Tracks?

Years ago, an investor group attempted to open a new race track in Pennsylvania. This track would have been different from the typical race track. There would have been no grandstand as the race track would be used for studio racing. The horses would race, with betting being conducted off track. The Pennsylvania Racing Commission turned this plan down. I imagine people thought whoever came up with this idea was a little bit nuts. Turns out this investor group may have been visionaries ahead of their time.

Now, look at Quebec. In an effort to resume racing in the province, an investor group of owners wants to race at a former training center, racing fifty days this year. No grandstand. People will be welcome to watch the races festival-style out of the back of their vehicles but betting would occur in teletheatres in the province and via ADW wagering (I imagine there may be a few tote machines on site). Purses will be generated by wagering on their races as well as wagers made at their teletheatres and through account wagering in the province. There will be no VLT revenue for horse racing in Quebec.

Not only do I think this plan may work, it may be the future of racing, especially if VLT revenue disappears. It also may be what is needed to reduce the takeout punters are required to pay. Why is the takeout on racing so high? Sure, some of it is greed but even if you eliminated greed, the takeout on horse racing will always be higher than other gaming options due to the expense involved with running a race track. There is the cost involved with having a grandstand (mortgage, taxes, insurance, utilities, maintenance, etc.) as well as the employee expenses required. If these expenses were eliminated, the operators of the race meets can afford to take a cut in the take out and still be profitable.

Can't work? The amount of betting being done on-track is continuing to shrink with more handle coming from off track wagering facilities, the Internet and ADWs; this shift will continue as technology improves. Why can't we have race meets at training facilities? Build towers for the patrol judges, a judges’ stand, convert some barns to ship-in and detention barns as well as a paddock. Have a building which will house all the necessary equipment and a few amenities (perhaps some temporary mutuel windows, concession stand, restrooms) as well as adding lighting, if racing at night. Fans are welcome to come to the track and experience racing in a festival setting. Optionally, a harness track can be built inside a thoroughbred track. The facility can be used for training one breed with the other breed coming in just to race.

Let's say a state had a consortium which ran the pari-mutuels within the state. They would operate off-track wagering facilities and they may optionally have their own ADW system. They would 'lease' the training center(s) and run meet(s) there. Purses would come from wagers made through the consortium's facilities (in state and out of state races) as well as wagers made on the consortium's races coming from remote locations and ADWs. Meets can occur at more than one training facility within the state with different size tracks to make the racing more challenging.

Horsemen may not like the idea initially, but considering racing under the current business model is failing in non-racino states, and being propped up by VLTs in the other states, when the VLT revenue is gone, they may have no choice.

Assuming all the approvals are received for the 2010 or 2011 season, all eyes should be focused on what will be happening in Quebec. We may be seeing the future of racing.


6 comments:

Ryan said...

I think if the focus on is purely simulcast then they can present a better tv product. HDTV cameras, different angles, more handicapping commentary, more statistics...etc Plus if they don't worry about attracting a live audience then the land wouldn't be important and they can build a high class facility in the woods somewhere!

Cangamble said...

I never buy the hard cost argument when it comes to track takeout. The fact is that more money will be bet, players will last, but still lose the same amount of money if not more over a longer period of time except for the few winners created which can be used to market the game and grow it further.
It cost a lot of money to pay for a casino too. And they are open 24/7, yet slot operators know they make more money bottom line at 8% than at 16%.
Players last longer, con themselves into thinking the game is beatable so they go more often, and at least a few times bring others who might get hooked eventually too.

Pacingguy said...

Cangamble,

I understand your doubts about the takeout coming out. I am saying this may happen because when this happens, the industry in some ways will be 'broken'; and the people doing this will not be from the 'old guard', but innovative people.

Yes, it costs a lot of money to have a casino but there is a difference, a casino is full; there is a use. Why pay for a grandstand if it is going to be 3/4s empty? The cost is also cheaper when you consider the turnover of the game. How many 'games' can be played at a slot machine in an hour or black jack table versus a race at a track?

Cangamble said...

Pacingguy, there would be more people in the stands with a takeout reduction, just like there would be less people in a casino if the takeout was 16%.
As for how much can one bet? I think when you take simulcasts into consideration the average player can bet as much if not more in 5 hours of horse racing over 5 hours in a casino.
In theory, if someone brings $200 to play with, if the takeout is 10%, they get $2000 in action whether it is at a casino or a race track.
The key is that a person is more likely to come back if they win, or if they go home with half of the $200.

And when they come back, they might even bring someone with them.

JLB said...

With live attendance at the racetrack section of some racinos literally in the hundreds, there is no doubt that the model described above is a vital one, if the industry is to survive.

On a separate note, I was wondering if you would explore why there is little to no program information concerning the use of staggered starting gates, and the amount of "slant" at each track. There seems to be a wide variation in the number of feet the gate is slanted at such tracks as the Meadowlands, Dover, Pocono, the Meadows, etc., and I would think this would be extremely useful information for the handicapper.

Pacingguy said...

JLB, While I can see how it would be helpful to have the amount of slant listd for each track, I don't really think it is that important; it is part of the variant of racing on a different oval, the same way each track is banked differently.

Not everything can be put in a program and there are things more important which should be listed such as a race comment on each line (kudos to the Chi-town tracks for doing this) and an improved condition line which will show a differentiation of nw3 or $10,000 vs nw3 or 20,000 lt.