(This opinion piece was submitted to HANA, where I am a charter member, and first posted on their site.)
Oh, you wonâ€™t see it billed as having anything to do with the horseplayer, but make no mistake; it is all about the player. And by â€œhorseplayerâ€ I mean YOU!
The ultimate result of this battle in California will affect players everywhere, not just Santa Anita, Golden Gate and other California ovals.
For those of you who have not been following closely, California racing is in trouble. Track management and horsemen said they needed more revenue in order to increase purses, the end result being to improve the â€œentertainment valueâ€ of the product. That product definitely needs improvement because short, uncompetitive fields just cannot be called a â€œqualityâ€ product.
So, when the track decided that they needed more money for purses where did they turn?
They turned to the horse player, of course. As they always do. They raised the takeout!
Before the days of simulcasting, life was simpler. Back then the local track was the only option. Players had only the one track and eight or nine races to consider each day. Tracks were making money hand over fist because they had a captive audience.
Those of you who are old enough to remember the days before simulcasting can recall how different it was back then. Remember how you looked forward to a trip to Las Vegas? It meant for a week or so you could play any track you wanted. It was total immersion; heaven for a horseplayer.
Then simulcasting came along and every race track was like a Las Vegas race book: just about every track was available.
Then the world changed again and you could bet from home via the internet. Now weâ€™re talking! We were really in heaven! No more parking or admission costs and you always had a reserved seat at home. Wherever your computer is situated at home was way nicer than the turf club. A great hot dog and beer was now at grocery store prices instead of $8 or more.
Internet wagering was both good and bad news for the track. The good news was that the trackâ€™s effective market was now national or even international. The even better news was that without leaving home or office, one could make a few bets during the lunch hour or just after dinner without disrupting the activities of the day.
The bad news was that the track no longer had a captive audience; the player was free, no longer trapped in his local circuit. This is when the world began to change for the race tracks.
Let us concentrate for a moment on the â€œbad news for the tracksâ€ part for a moment.
When the player was no longer held captive by the local track, the tracks should have begun courting the player. They didnâ€™t. I believe that the player was considered a â€œconstantâ€ in the financial equations employed by the tracks.
I believe it was assumed that the playersâ€™ money would always be there, no matter what choices were made by track management, horsemen, etc. It was seen as a permanent and perpetually renewable resource to be drawn from no matter what changes were made to the game.
So, if the track needed more money â€“ no problem! I can imagine a track executive saying, â€œWeâ€™ll just raise the take a little. After all, weâ€™re the only game in town.â€
What they seem to have missed is that they are no longer the only game in town. Heck, with internet betting going as strong as it is theyâ€™re not even the only track in town.
Read the above paragraph again. Understand that they got to thinking this way because it used to be true, but has not been true for almost 2 decades.
California’s history has always been to protect its race tracks before it protects the patrons of racing. While California was quick to allow its signal to be broadcast out of state, residents of California were not permitted to bet on out-of-state tracks except at the track. In other words, if you lived in another state you could bet any track from home, but if you lived in California you could only bet California.
Even now, California residents are typically excluded from receiving rebates through ADW’s.
My point in this that California racing has always bent over backwards to protect the interests of the tracks and horsemen at the direct expense of the horse player.
California horsemen have again and again referred to their product as an “entertainment product.” We have heard that horse players are simply supposed to accept the fact that racing is entertainment, just like going to the movies, and paying for entertainment is just how it’s done.
I suggest that the drop in handle at Santa Anita and Golden Gate is a result of catering to “entertainment” players. When you go to a movie you bring $20-$40, not multi-hundreds or thousands. The entertainment players will, by their very nature, be small players.
It is not that Santa Anita (or the state of California, for that matter) is really very different than any other track. But for a few recently converted, customer-friendly tracks, the underlying attitude of stakeholders (TOC, CHRB, Tracks) is really not much different from the prevailing attitude at tracks all across the country. Need to build a new grandstand? Raise the take. The horsemen are complaining that they aren’t making enough money? No problem. Just take a little more from the bettor; he won’t miss it. Need to raise purses? Well, the horseplayer just has to understand that it is his responsibility to pay for the needs of racing.
In my opinion, Santa Anita is the “Bunker Hill” of horse racing. That is, it is the first battle to be waged in the â€œWar of the Take.â€ Ironically, the battle is truly being waged between stakeholders and simple business reality. You cannot overcharge, abuse and ignore the customer indefinitely without paying a price. The price paid is usually bankruptcy.
I am sure that the rest of the nationâ€™s track managers are watching The Battle of Santa Anita closely. What happens at Santa Anita in the coming months should be an eye opening wake-up call for the rest of the country.
I truly do not wish ill to racing in California nor to Santa Anita. I am a big fan! I spent many wonderful days at Santa Anita, enjoying the Clydesdales, Trevor Denman, and of course top-quality racing. I hope to do so again, but doubt that I will find more than memories and a few new condominiums there in a few years.
Carl Shapiro and Hal Varian, in their book, Information Rules: A Strategic Guide to the Network Economy, speak of businesses spiraling upwards quickly when in growth mode and spiraling downwards just as quickly when in decline. They build the case for the spiraling process going ever faster once it begins.
To me this conjures an image of a whirlpool. Someone caught in the whirlpool can extricate themselves relatively easily as long as they begin their escape before moving too close to the center.