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Thursday, April 14, 2011

The Loss of the Meadowlands Presents An Opportunity.

Editor's Note:  This entry has been posted without a formal statement being released by Jeff Gural or the Governor.  The article is posted in anticipation of a statement indicating the efforts to save the Meadowlands have concluded without success.

Jeff Gural's deal to acquire the Meadowlands has failed as he was unable to secure the concessions necessary from the Tellers' Union as they refused to even vote on the proposal.  All which remains is for Mr. Gural and/or Governor Christie to formally declare the attempt to rescue the Meadowlands over. 

Now, make no mistake, the closing of the Meadowlands will be a big blow to harness racing.  What remains of the New Jersey Breeding Industry will probably return to the pre-NJSS days, but before other track owners close their tracks due to the loss of your customer's wagering on the Meadowlands and horse owners sell their racing stock because the bottom is falling out of the market; take a deep breath.    Harness racing is not dead yet and there is the potential of some tracks to prosper in light of the Meadowlands apparent closure.

While the results are preliminary, as the survey is still open for more respondents, HANA Harness' latest survey includes questions specifically related to the Meadowlands to see what will happen if the Meadowlands closed.  While not good, the results are not as bad as many would think.  Let's go over the results from the survey as of today which is based on 147 respondents.

The first question dealt with asking how many gamblers wagered on the Meadowlands over the past three months.  57.8% of the respondents indicated they did wager on the Meadowlands, but 42.2% of the respondents haven't even looked at the Meadowlands.

Of those people who wagered on the Meadowlands, we asked what percentage of their harness racing gambling was wagered on the Meadowlands.  The chart below shows that 15.3% of the gamblers wager between 90-100% of their harness dollars on the Meadowlands; 7.1% wager 75-89% of their harness action on the Meadowlands; 14.1% wager 50-74% on the Meadowlands; 29.4% wager 25-49% of their harness action on the Meadowlands; 34.1% wager less than 25% of their harness dollars on the Meadowlands.
Percentage of wagering on the Meadowlands
That's right, as much as the Meadowlands is known as the number one harness track in North America, 63.5% of harness gamblers bet less than half of their harness gambling dollars on the Meadowlands.

When asked if the Meadowlands were to close permanently, how would their gambling on harness racing be impacted, 40% of the individuals said it would have no impact on the amount of money they would wager on harness racing; 12.9% said they would bet the same amount if they could find pools big enough;
 35.3% indicated they would reduce the amount of money the wager on harness racing; 5.9% indicated they would give up harness racing and 5.9% were unsure what they would do.

So if a track could get a big enough handle, 52.9% of the people wagering would continue to wager the same amount.  As of the 35.3% of the people who said they would cut back on what they wager on harness racing, many of those people probably chose that answer because they don't think a track can replace the Meadowlands, but even then they would not be lost to harness racing and their wagering could return if the conditions are right.

As to where these individuals would shift their wagering to, the majority chose the WEG tracks (20.3% chose Woodbine and 15.3% chose Mohawk).  After WEG tracks, the next popular track is Balmoral Park. which has 15.3% of the people making it their first choice to replace the Meadowlands, meaning 50.9% of the people know where they would play but there is 49.1% of the people who have indicated various other tracks.  This suggests that the wagering public hasn't firmly decided on the tracks they would wager on if not the Meadowlands.

But don't assume the money will be wagered on the 'home' tracks of the gamblers.  When asked if they would wager more money on their home track, only 19% answered to the affirmative with 81% indicating they would increase wagering on other tracks.

But What About the High Value Bettors?

When I told someone about these statistics, they said the figures were skewed as I was including all gamblers, what about the High Value Bettors (those that wager more than $50,000 a year on harness racing)?  They were correct, the figures do get worse, but I dare say they were not the doomsday results they expected?  Out of the survey, we know are looking at only twenty-two gamblers.  Let's take a look at the results.

In this population, 81.8% of the respondents played the Meadowlands over the last three months, meaning only 18.2% avoided the Meadowlands.  Make no mistake, the high value players prefer the Meadowlands.

But before you get ready to jump off the bridge, let's see what percentage of their harness racing plays are made at the Meadowlands.  11.1%  wager almost exclusively at the Meadowlands (90-100% of wagers) and 11.1% wager 75-89% of their harness plays at the Meadowlands.  Certainly not looking good.  22.2% of the respondents are wagering more than half of their wagers (50-74%) at the Meadowlands; meaning still a decent amount of money is being wagered at other harness tracks. 16.7% of the High Value gamblers are betting between 25-49% of their wagers at the Meadowlands.  Surprisingly, 38.9% of the players are betting less than 25% of their wagers on the Meadowlands so a little more than half of the people (55.6%) bet less than half of their harness dollars on the Meadowlands. 

Percentage of Harness Racing Bets at Meadowlands by High Value Bettors
So yes, a lot of money from high valued players was wagered at the Meadowlands, but there is still a lot of money being played at other harness tracks. 

Now with regards to how would their wagering in the future be impacted by the closing of the Meadowlands? The raw figures here are more disturbing.  Only 16.7% of the respondents indicated they would wager the same amount of money on harness racing regardless and another 27.8% of the people would continue wagering the same amount if they could find pools large enough.  38.9% indicated they would reduced the amount of money they wager on harness racing while 'only' 16.7% of the players indicated they would stop playing harness racing all together.

Impact of the Meadowlands Closing on High Value Players
So, with pools big enough, 44.5% of the gamblers would wager the same amount of money and it remains to be seen how much the wagering the 38.9% of people would cut back.  Now, 40% of the respondents indicated their wagering would switch over to the WEG tracks, meaning the money leaves the United States and gives little benefit to American tracks as the odds are the money will be wagered through ADWs.  Harness tracks may wish  to consider offering their own ADWs to compete against others, though expect to offer rebates.

But there is an interesting trend noticed.  Remember when Yonkers and Roosevelt was king until the Meadowlands opened and everyone wanted to wager on the mile track?  The conviction of wagering on the mile track is reduced with these players.  When we looked at all gamblers, the mile track was the track of preference for replacing the Meadowlands and with WEG being the first choice, the larger oval is still favored, but when looking at the high value bettors, if you eliminate WEG, the Meadows and Hoosier Park get more support than Balmoral which suggests these high value players are more concerned with quality of the horses than the size of track.  While I don't expect a mass exodus back to the half mile ovals, if these gamblers see quality racing and can get the pools, the 5/8 tracks may be accepted as the new norm by high value players.

As before, there is no home track loyalty with these gamblers.  93.8% said they would not be wagering on their home tracks. 

So what does this mean? The majority of the money handled at the Meadowlands is not lost to harness racing, but is in play to be shifted. Let's remember the weekend after the Meadowlands closed, many tracks had very strong handles. Hence, opportunity exists for tracks willing to lower their takeout to attract new gamblers; and not just on the exotics. The harness player is looking for a track to wager on with sufficient handle and the only way handle can be built up is through lowering the takeout.

For those who say it can't be done, remember who ever thought that Yonkers and Roosevely would no longer be king of harness racing when they were building the Meadowlands?  If we succumb to doom and gloom, then it will be a self-fulfilling prophecy.  There will be tracks who will take advantage of the Meadowlands apparent demise and will take the steps to move into the vacuum and become the next big track(s).  It won't happen over night, but it can happen.  Also note, only twenty two gamblers fit the definition of high value meaning over a hundred twenty regular gamblers responded.  Not all of the larger group are $2 bettors so winning over a majority of the regular bettors may equate a decent fraction of these high value players. 

And yes, perhaps I am being overly optimistic.  Pessimism means failure.  You can look into the statistics and say we are doomed or you can look at them and see some hope and potential.  The Meadowlands' closing is no doubt a blow, but it also is an opportunity.  The question is what track(s) are going to take advantage of the opportunity?  That is the million dollar question.

1 comment:

Adlai said...

I think you're underestimating the shift that will occur. One less track means one less competitor in a saturated harness racing market. Gamblers will remain gamblers. As an economist whose research is primarily involved in gambling related activities I can tell you that for the most part, wagers of similar value will still be placed. It will no doubt involve more ADWs, but the harness racing industry should wise-up and create their own shared network... look at the success of twinspires and Churchill Downs Inc. This would seem like an obvious next step for the remaining harness racing tracks.
By the way, great site Pacingguy. You do some excellent work here.
Adlai M. Groves