Friday, December 16, 2016

The Law of the Vital Few; the Wants of the Many

I scanned a UK study (pdf) commissioned by the gambling industry a couple of years ago. I didn't learn a whole lot (other than what I already did - modelling modern gambling demand and supply, etc, is hard), but once again this little gem popped up:

This is racing, of course.

The first group is betting a lot of money, contributing to pools, and frequent rebate sites. They take advantage of every carryover, every promotion, buy workout reports, subscribe to all the services; everything that can give them even a tiny edge. They abhor Twinspires and TVG, bet peanuts at Santa Anita in 5 horse fields, and couldn't care less about a jockey or trainer colony, or what on-track promotions there are today.  Outside of racing, these are the 'line shoppers' who search for -210 versus a -200 line, because it can mean the difference between winning and losing over 500 plays.

The second group is the target for Twinspires and TVG. They respond to free PP's if they make a bet. They want good video, for free, and want to bet races with higher quality horses, jockeys and trainers. They like to visit the track when they can, as much as they can.

Racing's (like online gambling's) goal is often about capturing new customers (customer B). This is done with promotions (bet $100 get $100) and advertising. The second part of the goal is to keep a customer (free PP's, ongoing promotions).

That's where I feel racing does fairly well (infinitely better from a dozen years ago, when offering promotions was considered killing "our profits").  Twinspires, TVG, BetAmerica are all doing great work in this regard, in my opinion. (note -- this retention and investment spend is a reason ADW's need at least decent margins, no matter what the braintrust in California tells you).

Where racing does very, very poorly, in my view, is funneling the second customer to the first. This is a function of two things: not understanding the gambler and specious industry regulation with regards to pricing - e.g. the in-state retention cap in California.

If racing works harder and invests in understanding how to move players from point B to point A, it would be in much better shape. The ADW's know more than anyone in this regard, yet oftentimes they're handcuffed by an industry devoid of such knowledge.


3 comments:

BitPlayer said...

What is an in-state retention cap? Thanks.

Anonymous said...

The baited hook is hard to find for new customers amid the myriad of other choices, gambling or not. Even in the days of “Go, Baby, Go”, the industry has spent most of its efforts and promo money in preaching to the choir instead of somehow reaching out to new blood. Since then, horse racing remains invisible to most people. Yeah, so there’s a channel or two of it on TV; there’s nothing to compel anyone to check them out buried in an array of dozens if not hundreds of other existing channels.

But these promos can lead new customers to being nickel-and-dimed to death. New customers just love that, right? One of the sites mentioned charges for streaming video unless $200 or more is bet per month. The brand new bettor won’t want to sit in the dark and bet, but will know it’s a chicken**** fee to have to pay. Another has minimums for getting any kind of live race view or replay. Exploring new tracks leading to more play is certainly discouraged. Didn't we nearly all start as $2 bettors?; it's clear that's not the type of new customer the industry wants.

The first site also charges for inactive accounts. Don’t bet for 6 months, perhaps waiting for, say, Saratoga, the Derby preps or just accumulating a respectable bankroll, and you will find a reduced bankroll upon your return.

That’s not the case with all providers, thankfully. The onus is then on the new player to do some serious and well-informed shopping before choosing a provider. That assumes there is a choice available in his/her locale.

Pull the Pocket said...

Great comment. Thanks.

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