Are racecourses selling their customers?
The world has gone gambling mad, and perhaps it will hit us harder than most people anticipate in coming years. Quite how it hits us, will be crucial to the future of horseracing. Or, perhaps one should say, quite how it does not hit us will be of great importance.
There is fierce competition out there, for the betting pound, the gambling euro and the wagering dollar. Therefore, this is not a good time for horseracing to lose its share of the gambling pot. This is not the time to "sell our customers". This is the time make some shrewd business decisions and draw up some productive long term strategies. These are also days when we are heading into a global recession. Believe it or not, that will not necessarily slow down the betting market. Studies have shown that people are quite likely to bet more when times are hard. Gambling becomes the only way to put a little bit extra in the pocket. So, this is the time for racecourses, racing publications and racing communities to be competitive to promote racing as a betting product. To promote the sport as the best betting product.
Are they taking this opportunity? To a certain extent yes', but unfortunately in many cases no', and seemingly never very well. Many courses are today promoting sports betting, online poker betting and online games. Yes, sponsors and advertisers from these sectors of the betting market plough money into racing, in the short term, but it is my guess that long term, racecourse managements and racing editors will be regretting taking that carrot in the first place. Why are companies taking bets on sports, such as football, golf and tennis, eager to advertise at our racecourses, in racing publications and in our racecards in the first place?
The answer is very simple, they are trying to move gambling money across from horseracing to their own betting products. That is the only reason they promote their products at the racecourses. And, to our astonishment, the racecourses allow it. What is happening is as absurd as it would be if all McDonald's restaurants in this world had huge posters promoting Kentucky Fried Chicken. "No, hang on a bit" you might think. But that is actually quite a good comparison to what is going on in horseracing these days. Let's take a premier European racecourse as an example. Why not look at Newmarket, and their Guineas weekend last year. Stan James Bookmakers sponsored the Guineas meeting, and over the two days this company had 14 full pages of advertisements in the racecards (plus the four cover pages on both days). This is how they decided to make use of the 14 pages: 8 pages promoted online poker and online games. 4 pages promoted Stan James Bookmakers only. 2 pages promoted betting on horseracing (although as free bet competitions). To put this another way, 57% of the sponsor's advertising space was used to promote forms of betting which is in direct competition with horseracing. Only 14% of the space was devoted to horseracing alone. The two most strategically placed advertising pages, immediately preceding the 2,000 Guineas pages and immediately before the 1,000 Guineas pages, were both used to promote online poker. This is a typical example of how bookmakers use a sponsorship deal with a racecourse these days. They are clearly not going into such an agreement solely to get people to bet more on racing. They are not even primarily trying to get people to bet more on racing.
Quite the opposite. The Stan James Guineas meeting is not the only example. On Saturday August 11, the opening day of the Football Premiership season in England, Newmarket's card was sponsored by the bookmaking firm Skybet.com, and their four sponsored races on the day had the following titles: The Skybet.com for all you football betting handicap The Premiership kick off with Skybet.com handicap The Skybet.com Sweet Solera Stakes (g3) The interactive football betting with Skybet live stakes Only the feature event, the Sweet Solera Stakes, was not used to promote betting on football. Again, the bulk of the sponsor's advertising went towards attracting punters to bet on others sports not on horseracing.
There can be no doubt that racecourses need their sponsorship revenue quite badly but this is probably not an ideal way to earn it. When a racecourse with a high profile like Newmarket can be dictated to in such a way by sponsors, what about the smaller tracks? Don't forget that sponsorship deals like those described above are, in effect, a case of horseracing "selling their customers". For every pound or euro bet on other sports, casinos, or poker, there will be one pound or euro less bet on horseracing.
Why does a company sponsoring a classic horserace choose to devote nearly 60% of the advertising space included in the package to promoting non-racing betting products? It is hardly because the company sees a great future in horseracing, is it? Nor is it as a result of their care for the future of horseracing. It is simply a business decision - and it is part of a long term plan. When you go to a big football match, or watch a match on TV, do you see many adverts, banners or boards promoting horseracing and betting on horseracing? If you do, please let me know, as I believe it would be a rare sight indeed. If you decide to try your luck in online games or online poker, you enter a web site offering such products. How many ads or banners promoting horseracing will you see on these sites? Having done a quick test, looking at ten poker sites, my discovery was, to no little surprise, "0-from-10". As touched on in my piece on the Global Superbet in Trainer Issue 20 (Winter 2007), one big danger for horseracing is that these competing products are so, so much cheaper to operate, which puts horseracing at a great disadvantage. Should horseracing break loose altogether from these other forms of gambling, or should racing people work towards making these relationships closer, and hopefully healthier for racing?
The current state of affairs is not a case of horseracing in a mutually beneficial co-operation with other betting markets. It smacks more of a case of other betting markets exploiting horseracing. And the powers to be in horseracing seem to be happy to let this to continue. The installation of slot machines has generated revenue for racecourses in North America; that is a fact. It is also a fact, however, that at many of these courses, the betting turnover on the races has gone down since the slots arrived. The horse is becoming less and less important.
Take a look at this cutting, from an article published on the web site videopokerslots.co.uk last year: "Maryland racing industrialists were curious and apprehensive about the potential impact of their new nemesis: Delaware Park's slot machines. But after several weeks of operation, the apprehension between Marylanders has disappeared - now it has become an all out hysteria. The reason: slots have overtaken horse racing. Delaware's slot machines have become a hit that any business would consider phenomenal. Imagine, they're making $300 per machine, and they have a total of 715 slot machines - that's more than $200,000 a day. As stipulated, slot machines should earn $10 million as additional revenues for the Delaware's racing season, consequently grabbing the thoroughbreds from Maryland. Delaware's minor league harness track has quintupled since the installment of slots in the area and is now a major competitor with other race tracks. If this were any other industry, Maryland's tracks would also install slot machines. But slot machines are a hot political debate, while the racing tracks are so strictly regulated that minor changes needs a state-wide approval. These are troubled times for the thoroughbred industry. If racing tracks continue to lose revenue, they would have to ask for slot machines. If legislators won't approve, they'd ask to at least give them economic relief to help them commercially survive." Betting on slot machines has overtaken' betting on horseracing, but at least this North American course operates their own casino-like betting products.
Many racecourses in the USA do have the opportunity to take a "if we can't beat them, let's join them" stand. Still, while the gamblers are taking an increasing interest in betting on slots and other games, they seem to be losing interest in horseracing. US racecourses do not, unlike courses in England, allow extensive advertising from companies in direct competition with their own betting products.
In England the financial muscle of non-racing betting operators is making an all-round mark on racing, not just by ambushing the racecourses with seemingly lucrative sponsorship deals. The media is another side to this, with TV channels and publications offering advertising opportunities. This is all black and white The Racing Post, Europe's principle horseracing daily, and one of the biggest in the world, has developed in a similar way to the racecourses over the past ten years. This paper has a daily "sports betting section" at the back, typically taking up 20 to 24 pages, including the greyhound racing coverage. On Saturdays, the sports section is a separate paper in the middle, often up to 40 pages thick. Now, that may not seem too bad, as the main paper will have 100 pages. What is interesting though is to take a look at the proportion of editorial pages and advertisements. Taking a randomly chosen Saturday, I discovered that the paper had 11 editorial pages on horseracing (excluding the racecards) yet as many as 10 editorial pages on football and other sports. This balance, or imbalance if you will, is simply driven by market forces. Of course the paper needs advertising revenue, and they therefore need to cover the areas their advertisers are interested in.
This is all so easy to understand, it is all "black and white". To the accountants, that is. Examining the same Saturday issue of The Racing Post reveals the facts about how the advertising space for betting was sold. The chosen day was January 26, with the Festival Preview day at Cheltenham, and racing at six courses in all in England and Ireland: Approximately 10 advertising pages exclusively devoted to betting on horseracing Approximately 11 advertising pages exclusively devoted to betting on other sports When looking at the full-page advertisements on the same day, it is interesting to note that the paper carried four full-page ads promoting betting on racing (including one for a betting system), compared to six full-page ads promoting betting on other sports. When watching horseracing on TV, the situation is very similar. On big days, a large proportion of the commercial breaks are promoting non-racing betting products. We have all seen them, the online games commercials, the commercials promoting betting on football, or playing poker online, nicely positioned before a Group One race is due to go off. This happens also on the TV channels originally devoted to and backed by horseracing. In England, the channel At The Races last year decided for a trial period to end its North American program at 11pm GMT (when the pubs are closing), in order to make room for a poker program lasting three hours. What did this mean? It meant that the racing went off air before many of the big stakes events are run in the USA. So, lower grade racing was being shown, and competing with high profile football matches and other TV programs, before eventually making way for poker. What this also means, and this is the most interesting side effect: that horseracing has lost control over its own product.
It seems bizarre that while horseracing authorities and racecourse managements have been fighting long and hard for their control over the rights of live pictures from the racecourses, they have accepted broadcasting schedules that include loads of commercials promoting betting products that are in direct competition with horseracing. They may believe that they have indeed protected the rights to live pictures, and technically they have, but they have absolutely no control over the end product being offered to the viewer. In the TV world, it is sometimes a bit difficult to say who makes the crucial decisions, but it is fair to say that in many cases it is the sponsors. Perhaps you will now be saying, yes, this article is interesting but there is precious little here that we did not already know'. Well, that may be. But don't forget, sometimes stating the obvious is the best way of saying why is nobody doing something about this?'
The further you drive down a narrow dead end street before realising your mistake, the more troublesome it will be to reverse all the way back out again and the longer it will take. And, in the fierce competition for the betting pound, euro and dollar, time is of the essence. Do not let it run out. If someone is going to instigate serious changes in this muddle, that someone will certainly have to come from within the horseracing industry. It is all in our own hands. For the time being.