Saturday, March 15, 2008

Horse Racing fans are old? So what else is new?


It is fairly well accepted that horse racing followers are getting older. There is a rumor, albeit unsubstantiated, that a valid AARP card is required for admission to racetracks. A couple of students at the University of Arizona did a survey of account wagering (ADW) providers back in 2005 that does put some academic rigor to the age distribution of horseplayers.

According to the survey, almost 60% of ADW customers are 46 and older, 30% are 56 and older. For a gaming industry that is facing increased competition from land-based casinos, internet casinos and lotteries, having an aging customer demographic isn't a good sign.

So it is not surprising that a couple of major horse racing companies, Churchill Downs and Magna Entertainment, have stock prices near 52 week lows. Churchill Downs (Nasdaq: CHDN) closed yesterday (3/14/08) at $42.64. Magna Entertainment (Nasdaq: MECA) closed yesterday at 35 cents (that's right, cents).

The industry has been working on measures to keep up, such as installing slot machines and becoming racinos. Depending on the venue, this has resulted in additional revenue. Some efforts, such as upgrading facilities and increasing purses, may have less correlation to increased revenue. ADW remains the key driver of any increased pari-mutuel handle.

Some tracks have made efforts to attract a younger demographic with lower admission, $1 hot dogs and beer, etc., but that appears only to have an impact on attendance for particular days, and not generating customer stickiness. On the ADW side, some have partnered with mainstream media websites to enhance the sport's visibility. Again, the improvement in the horseplayer demographic is debateable.

What is needed is something that can draw a younger and economically valuable demographic to the sport. This demographic shoudn't be just a spectator, but a wagerer as well.

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