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Tuesday, January 06, 2009

Like it's 2009

Wanted to go back to this post, entitled HANA 2.0 - Like it's 1999, from last week on the HANA (Horseplayers Association of North America) blog. It's an interesting comparison between the plight of the music industry when it was first faced with the onslaught of MP3 and file-sharing services, and the current situation in the racing industry regarding online wagering. I actually and respectfully disagree with much of the premise of the post; I think the situations are dissimilar. The record companies, drunk with the power and dominance they'd achieved over radio and distribution, were unwilling to settle for anything less online, and sought to simply crush the competition through litigation.

Racing is in a far different position today in my view. Yes, there are offshore and exchange outlets that seek to exploit a product created and owned by others without their permission and thus detract from its business. However, a significant segment of the industry has embraced the internet and is actively seeking to take full advantage of its vast potential. On the other hand, the major labels are still tentative and resentful of the medium. And I don't really understand the concept of slashing internet takeout in half as suggested in the post, unless studio racing is part of the model.

However, a couple of comparisons are brought to mind. For one thing, in both industries, a new twist to an old model has spurred disagreements between rights holders and content providers as to who is entitled to how much, and when. We all complain about the disputes that have cut off signals, and which currently deprive most horseplayers of a single wagering platform for all tracks. However, perhaps it's just the case, as we've still seen over the last year in the music industry, that these are matters that just need to be gradually worked out between the parties in this way, and that temporary inconveniences to horseplayers are an unavoidable part of the process. Despite some recent settlements, it's clear that the smoke has not yet completely cleared.

And the other similarity that comes to mind is the tremendous, unbelievable, and mind-boggling technological progress that we've seen on both fronts; quite possibly my two favorite pastimes in the world. Other than a Caribbean beach perhaps. My CD's, which had taken on a life of their own and had practically taken over my basement, seem much less intimidating to me these days. I'm now hooked up to play my iTunes or iPod wirelessly through my stereo, and can even "flip" through the album covers digitally to pick one out, kinda like the old vinyl days (though they're not suitable for weeding out the seeds and stems). I've started to buy my albums in MP3 form, through iTunes or, preferably, directly from labels. I truly believe that my CD's, sensing the shift, are starting to put themselves away (alphabetically too).

It's amazing when I think back to how what were then innovations, such as reel-to-reel tape, cassettes, Walkmen, and compact discs, seemed at the time. However, as I labored through endless hours putting together compilations for my cassettes, I always fantasized that I'd be able to one day walk around hooked up to a little box that could play any song in my collection. And now, that's exactly the case.

Similarly, who would have thought, back just 20-30 years ago, as we were laboring to calculate par times and speed figures, spending half the track day waiting on betting (and cashing) lines, killing time waiting for a suitable race to wager on, driving to Belmont at 9 PM to get the next day's Form, that we would be where we are today. Not too long ago, I could only fantasize about past performances on demand, intricate databases of trainer patterns, ready-made speed figures, being able to bet on any track from any track, or from home, sitting on a train, or lying on a beach. Amazing how far we've come.

I read a lot of complaining about customer service in our sport on HANA and other blogs, and I'm not dismissing their validity. I don't know about you, and what your tracks are like, or how seriously you take your horseplaying. But I can walk into any of my local tracks and enter a wonderland of wagering that I could have only imagined in the past. No betting lines, easy to use machines, no waiting for action, Gulfstream at Aqueduct (the best winter racing at the best winter track); no choking on cigarette and cigar smoke either. Sure, the takeout could be lower and the racing better, safer, and more honest. But if I slap on the headphones and crank up the iPod, I can easily forget about that too.


Pull the Pocket said...

Thanks for this post. Interesting and well thought out.

I do think this part of your premise is correct and bang on - Bob Evans and Woodbine through HPI have sunk piles of dough into internet wagering, and they are believers in the medium. But I think where it falls apart and racing finds itself like music is in two areas 1) Full access and 2) Pricing.

Full access problems: Arizona has made it a felony to bet a race over the internet, at the behest of lobbying from horseman and tracks there. California does not allow anyone to sign up for this type of wagering; especially if a rebater. There are several other states with these protectionist rules. Customers can not take a medium seriously if it is not allowed all over. If Ebay and Amazon were banned in twenty states, and across international borders, they would not have a business.

2) Pricing - The is one thing - high volume and low margin. Racing wants to price a bet like Sony wants to price a song. People will not pay a high price if something is delivered electronically. Companies like Etrade know that when they get more volume, price comes down. We are pricing it like people are going to the track, or like Sotheby's is pricing an auction item. That can never work on the net.

I guess the most prevalent evidence out there is simply handles. If we have done such a good job with internet wagering, as a monopoly like we are, our handles should be up, big. In 96, before any internet wagering we bet $13B. In 2008, with ten years of exploiting this as a monopoly we will bet about $9.6B in real dollars.

In the vernacular, someone F'd this up royally.

Anonymous said...

Nice blog, well done and entertaining too.

One significant difference in the industries is the tax system, which is the root of all of racings problems and may in the end be fatal.

Sony is taxed on its NET, racing on its GROSS handle by the state, and if a "for profit" entity AGAIN on its net.

There is simply no way to justify a significant marketing budget or capital investment when the track retains pennies of every dollar wagered.