Seldom in business does an industry have an opportunity at a second chance. That is exactly the position that the harness racing industry finds itself in, but this time they better get it right.
When slot machines and video lottery terminals were introduced at racetracks, it seemed as though the industry simply put blinders on and accepted the fact that the best thing that can be done is use their portion of that revenue to fuel purses. Surely, purse increases would lead to more horses being bred, more owners and more members for the United States Trotting Association. Unfortunately, as we all know, the exact opposite happened.
With the announcement last week that the federal ban on sports wagering has been deemed unconstitutional by the United States Supreme Court, a new pathway to revenue for the harness racing industry has appeared. While it remains to be seen how much revenue legalized sports wagering produces, there is one fact that I strongly believe to be true. Horse players have a lot more in common with sports bettors than they do with slot-players.
Why is that important? It provides an avenue for cross-promotion. I don’t think there is much that can be done to attract a slot-player to suddenly become a horse bettor. A racetrack can throw free betting vouchers at them until they are blue in the face. Playing a slot machine is a mindless activity that requires little to no skill, while horse racing is an intellectual game that requires research and plenty of analytical thinking. Sports bettors have similar traits as horse players. They too must do research, look up statistics and make intelligent determinations as to how to risk their money. It is far different than deciding if you want to play the “Wheel of Fortune,” or “Sex and the City” slot machine.
Further proof of the similarities between the sports bettor and the horse bettor exists in almost every casino in Las Vegas. Horse racing and sports share a location where people wager on both. The racebook and sportsbook are in fact united into one location. This is because Las Vegas has recognized the parallels between the horse and sports player and they have used those similarities to their advantage.
Given these similarities, what does harness racing have to do? First and foremost, they have to embrace sports betting when it comes to their facility. They can’t be concerned about cannibalization of gambling dollars to the extent where “this section of the building is for horse racing, while this section all the way on the other side of the building is for sports betting.” This needs to be a marriage between the two, where they are allowed to not just coexist but feed off one another in a positive way.
Clearly I am not the only one to feel this way as we are already seeing the merging of gaming super powers who believe that sports betting and horse racing go together quite well. It was announced on Wednesday that Paddy Power Betfair has acquired FanDuel for purposes of acquiring a brand and 1.3 million active users and combining that with their online horse racing platform in the United States, TVG. In addition, Churchill Downs Inc. is teaming with Golden Nugget in New Jersey for purposes of entering the sports betting and online gaming markets.
Admittedly, I am far from a marketing expert, but I am certain that there are people around the country right now brainstorming on the best way for the marriage of horse racing and sports betting to work. I do know that there are some very basic things revolving around wagering that can be done. Just the simple idea that if you “bet on one, you get a free bet on the other.” Of course this concept can be expanded to accommodate players of all different levels of volume. Again, this will work far better between horse racing and sports betting than it will a slot player and a horse player.
There will be plenty of time for discussion on how to best achieve a synergy between the two and I don’t want this column to turn into a list of ways to make this marriage work. However, the point I want to get across is simple: This is a second chance for the racing industry. It is an opportunity to take a new revenue stream and apply it to the racing industry in a more effective and efficient way than the slot machine subsidies were applied. We know what doesn’t work, because quite honestly, we have been doing it for nearly two decades. The harness racing industry cannot just take all the revenue from sports betting and dump it into their purse accounts. This is a chance to figure out the right way to do things and I am hopeful, based on the news we have been seeing regarding the merging of some monster companies, this time it will be done correctly.