The customer matters.
Wow, what a concept.
The way it is supposed to work is the racing industry puts on a product
which gamblers find attractive which results in horseplayers wagering
money. The more money wagered means
higher purses which makes existing owners and new owners wanting to buy more
horses which increases the prices of yearlings, which results in a market for
the breeders; not the current model where the racing industry basically is
handed money (or given a percentage of the profits from slots) from the
province/state to replace the need for the customer. Would anyone accept a NASCAR industry where
the state gives NASCAR money to race for in front of empty grandstands and no
television? No, they have to put on a
product which the public wants in order for them to prosper.
After talking to horseplayers, the report calls for an
investment in developing a customer base by “…putting on competitive races featuring
larger fields, full cards (at least 10 race per day) and sizable pari-mutuel
pools (deep enough to prevent a single last –minute bet from dramatically
changing the odds)”. How do they
suggest doing this? Establishing a race
calendar with dates, times, and conditions to maximize uptake (otherwise, don’t
compete against yourself); full fields; enhanced wagering opportunities ; reduced
takeouts for some racing to ensure paybacks to horseplayers; consider the needs
of the horseplayer when deciding on race dates, conditions and other issues.
In the past, the schedule was set up to maximize racing
dates for horsemen, which meant too many racing dates. When a track complained about the lack of
interest in their product at a certain time of year in an effort to reduce date
allocations, the ORC typically denied the request. Many gamblers complain that Ontario has some
of the worst takeout rates around and the province has multiple tracks racing
against each other at the same time. If
the new policy is successful, there may be more interest in the product and
develop a handle which can sustain racing.
How does this get accomplished? Basically the report calls for the creation
of a Horse Racing Ontario provincial secretariat which will basically run the
industry by assigning race dates and the like, not unlike Harness Racing
Australia. This will allow for racing to
be set up so competition within the Ontario brand is minimized. If there is one track racing, more money is
wagered at the track which means deeper pools which attracts gamblers instead
of divvying the available amount of money to be wagered into little pieces.
The report calls for purse pooling which means purses levels will be set for each level of
racing and any excess purse money generated at a race meeting will be put into
a pot to help pay for the purses at a track which doesn’t produce the wagering
revenue needed to support the purse levels designated for the track.
For the horsemen, things are understandably gloomy. Under these concepts with the goal that
racing be sustained by gambling, race dates and purses get cut. How does this happen? I concentrate on standardbred racing.
The committee eliminates purse subsidies for overnight
racing. It eliminates any assistance for
horsemen, with the subsidy going to the racetracks to cover the expense of operating
the racetrack and race meet. So when you
see the total amount of purse money being suggested, it looks at what would
have been available from wagering in 2011 while the total amount in 2011
includes slot revenue. With the
reduction of race dates, they figure purses can be 80% of the 2011 level.
·
‘A’ tracks (i.e., Woodbine/Mohawk) – Average
race purse reduced 20% with only 140 days of racing (versus 243 days in
2011). Total purses of $37 million
($264,000 a day) down from $81 million in 2011.
·
‘B’ tracks (i.e. Signature tracks) – Average
race purse reduced 20% with only 300 days (versus 700 days in 2011). Total purses of $22 million ($73,000 a day)
down from $60 million in 2011.
·
‘C’ tracks (i.e. Grassroot tracks) – Average
race purse reduced 20% with 140 days of racing (versus 308 days in 2011). Total purses of $4.2 million ($30,000 a day)
down from $18 million in 2011. The
grassroot tracks are the exception to the rule with regards to race dates and
purse levels. If using the 80% rule,
only $3.5 million days of racing would occur with 76 days of racing. The committee decided for the province to
maximize the return on their investment it needed to increase the amount of
purse money available and the number of days of racing at the grassroot
level. No doubt, this is where purse
pooling comes into play.
The committee does provide for additional sources of income for
racing and the racetracks through several sources. One option is a horse racing lottery (such as
the V75), the other is wagering on past races.
The non-racing revenue would come from single game sports wagering. These are options that will not be available
through non-racing outlets.
Overall, the number of race days is reduced 54% while total purses
are reduced 54% for the WEG circuit, 64% for the Signature tracks, and 77% for
the Grassroot tracks. The Ontario Sires
Stakes and other breeder awards will remain at their current levels.
So where would racing take place? The report talks about a core of six tracks
which includes thoroughbred and quarter horse interests. It appears obvious that Woodbine and Mohawk
are part of the core as is quarter horse track Ajax Downs. From who was consulted for this report, I
would assume The Raceway at Western Fair District is a member of the core of
six. As for thoroughbred track Fort
Erie, things are a bit cloudy. They talk
about a 30 day season for ‘B’ track thoroughbred racing, but being the report
talks about previous conversations concerning moving the thoroughbred meet to Ajax
Downs and the removal of the slots from Fort Erie so not to compete with the
existing casinos in the Niagra area, I would speculate Fort Erie Racetrack is
not part of the core of six. So,
assuming it is Mohawk, Woodbine, Western Fair District, and Ajax Downs, it
leaves two other tracks to be listed.
However, the report did say if other tracks agreed with the principles
outlined in the report and it made sense, this number could be expanded.
The report goes into details of a three year transitional
subsidy that is for the racetracks only, to cover the expense of putting on
horse racing on a break even basis. By
the end of the three years, it is assumed the tracks will be able to absorb
this expense through the new sources of gaming income.
The report also states it is the breeders and owners who are
responsible for race horses after their career is over and it calls for the
development of a horse lifecycle plan to deal with developing second careers
for horses and their welfare. You are
encouraged to read the
report yourself.
Even though racing interests were consulted and agreed with
the report findings, I am sure horsemen are not pleased. After all, when you go from the gravy train
to living within your means, no one is happy.
Racing is now faced with living within its means and if it wishes to
race for higher purses, it must actually care about the customer once again and
compete for them.
How do you compete for the gambler? You compete against the casino industry. It can be done by lowering the takeout and
updating the game by speeding things up, offering variety such as monté,
distance racing and second tiers. In
other words, lose the constant reply of “This is the way things have always
been done” and adopt the attitude of “Why not give it a try?”. This is what ever other business must do.
Horsemen in other jurisdictions must not like this report
either because it is only a matter of time until this report gets read in
statehouses in the United States and when that happens, the gravy train may
come to an end in the United States. Update; The OHHA suggests the study merely delays the death of horse racing. Read it here.
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