Saturday, May 25, 2013

How to Help Horse Racing Industry Sustainability in the US and Canada (Part 2)

The first post in this series, which can be found here, provided an introduction to racing's problem with just relying on an influx of cash (subsidy) to keep racing afloat as opposed to measures that have the promise of actually increasing racing's consumer base and pari-mutuel handle.

A key problem with the industry is the declining and aging base of racing enthusiasts, particularly in the US.  The assumption I make here is that Canadian racing is facing a similar problem.  With regard to US racing fans, the following statistics are frightening.  Horse racing fans are declining at 4% per year, with half of those due to death. The average age of horse racing fans is 51, expected to increase to 57 by 2020 (Lamb & Singer, 2011).  This is not new information to the industry.

The industry is trying to market to a younger generation, with dubious results.  With regard to tracks, some have offered low cost beer and hot dogs, entertainment, etc., which can get more people to the venue, but I haven't seen evidence of appreciable increases in pari-mutuel handle and haven't seen evidence of the addition of this younger demographic to the base of horseplayers.  Offer music, cheap beer and hot dogs and you'll attract a bunch of folks that will eat, get drunk and party, but probably won't do much for the pari-mutuel pools.

Advertising has also been attempted, with inconclusive success.  The measure I'm using to determine success is if the secular declines in pari-mutuel handle and horseplayer demographics slow or even reverse.  I don't think that is happening.  Could advertising have some positive impact?  Absolutely.  There is no argument to eliminate advertising.  Could it be improved.  Yes.  There is an earlier post that discussed various racing ads.

Another approach to expand the sport's awareness is the television exposure of racing's biggest events in the US - the Triple Crown races and the Breeders' Cup.  They get decent ratings but there are only a few of those big days per year, with racing not being top of mind for the rest of the year.  Compare the highs and lows of racing TV viewership and interest compared to the NHL, NASCAR, NBA, MLB and of course the NFL.  Enough said.   There is a post discussing the details of viewership of the 2012 Kentucky Derby which can be found at this link.  The post exposes the spin of the racing industry that reports items accurately but doesn't report the whole story.  By omitting information that doesn't fit the "rah rah" template of the racing industry, they avoid inconvenient truths.

Overall, the industry's approach to improving their economics via advertising and exposure of racing isn't successful enough to stem the tide with regard to horse player demographics and resulting pari-mutuel handle.

From Part 1 of this series, for the purposes of this discussion, view subsidy as a separate revenue stream for racing that in of itself does not contain the promise of cultivating new horse players and generating any incremental pari-mutuel wagering.  The desire is for racing to be able to survive without subsidy.  Slot/casino revenues and direct government funding support are subsidies as they are cash infusions that don't have the promise of cultivating new horse players and increasing pari-mutuel handle.

In addition, a solution that produces a great result would accomplish the following:
  1. Get more people of a desirable demographic to the tracks, OTBs and ADWs
  2. Get those people to place pari-mutuel wagers
  3. Get all people to increase their pari-mutuel spend per visit
  4. Have that increased pari-mutuel handle help sustain the racing industry
If you offer cheap hot dogs and beer, will you attract a desirable demographic?  The results speak for themselves.  Do they place pari-mutuel wagers in material amounts?  Probably not.  We won't need to deal with 3 and 4 as it is driven by the results with regard to 1 and 2.  You have television exposure of racing's biggest days, but that increase in awareness lasts only as long as the event.  Why aren't these approaches effective?

Remember this from marketing: Attention, Interest, Desire, Action?

Racing marketers' advertizing and television exposure can get attention, but what about their interest, desire and action (see the 4 items above)?  Not much success.  What typical racing marketing accomplishes is pretty much what Homer Simpson accomplished when he tried to get more customers for a local bowling alley.  Just exchange the words "horse racing" for "bowling:"

Racing might get people's attention for a while, but not their interest, desire or action to come to the tracks and bet.  Also, the marketing efforts are mass market focused, not focused on a desirable demographic.

What would be a good demographic for racing?  One that had the following characteristics:
  1. Younger, naturally...
  2. Cerebral (handicapping is an analytical exercise)
  3. Affluent (you can't bet money you don't have - preferably)
  4. Willing to risk money (that's the ultimate desire - someone has to place a bet)
 What kinds of people would fit this demographic?  I'd look toward the following as a start:
  1. Poker and blackjack players
  2. Sports bettors
  3. Fantasy sports players
The final post in this series will take a look at these with regard to the desired demographic as well as the ability to bring them to the track and convert or increase their pari-mutuel spend.


Lamb, M. & Singer, D. (2011, August). Driving sustainable growth for thoroughbred racing
and breeding. Paper presented at the Fifty-ninth annual Round Table Conference on
Matters Pertaining to Racing, Saratoga Springs, NY. Retrieved from

1 comment:

Greg Conroy said...

Hi David,

I left a detailed comment as you know (all 8K of it!) on Global Thoroughbred Wagering Group on Linkedin.

That reply mentioned a new product that does address the 4 issues mentioned and I've copied the posting to my blog here: