Is Growing This Business Really a Priority?

The following situation, though hardly new to the pari-mutuel racing business, struck a nerve.

The dispute between Monarch Content Management and Nevada race books that led to a brief blackout of Monarch-controlled simulcast signals is predicated on a monthly $120 video fee, not the host fees the race books pay to tracks in the consortium.

It's nothing new; the pari-mutuel system has long been a fee hell. But it's a reminder of a symptom of a far greater problem: How much money can be extracted from a shrinking pot at the expense of a shrinking customer base?

Monarch is involved in another fight with a cooperative of 23 racetracks that has created almost three months of signal blackouts in good betting markets such as New Jersey, Pennsylvania, and Ohio. The goal is simple and hard to argue with: increase the amount of revenue that goes to Monarch-represented racetracks from receiving outlets.

This wouldn't be necessary had the simulcast revenue model been properly structured 30 years ago, and the advance deposit wagering revenue model properly structured 15 years ago. But can this problem—it is way bigger than many care to acknowledge—be solved with a piecemeal approach?

Not really. There are two questions: Does the receiving outlet, if it offers live racing, get a higher host fee for its live signal in return? And what does the horseplayer get out of it?

It seems the answer to the first question is "no," and the answer to the second question is "nothing." And if that is the case, the problem won't go away.

Clearly the mission of Monarch and others to get more revenue for the live racing product is a good one. But the fear here is that the increases are based on existing pari-mutuel takeout rates.

This contradicts calls for lower takeout—I believe many of them are half-hearted because too many people make money from the rebate system and want that financial edge—because there will be no room for lower takeout, at least comprehensively.

I would argue the only way to long-term growth in pari-mutuel wagering is lower pricing for every bettor and a related marketing scheme that sells horse racing as the great betting game it is. The industry needs to gamble and sacrifice short-term losses for long-term gains; this is a gambling business, right?

However, I just don't see it happening until the brighter minds in the business get together and start asking real questions: Do we want to grow our customer base or simply shift diminishing handle online to further foster the appearance of an insiders' game? Do we give a crap if smaller tracks go away and take with them local fan bases and gamblers? Can we make this work on a 10%-15% maximum rake, and how do we do it? Are we willing to take ourselves out of the equation for the betterment of the business?

In the past three to four years, there has been serious equine medication reform, though you won't hear that often because it's not fashionable to say so in light of other related agendas. It's far from perfect and nowhere near done, but given that medication regulation is far more complicated and drives far more emotion than pari-mutuel takeout, it's borderline amazing any progress has been made.

Both are fundamental issues for horse racing. Why is one continually ignored by those with the power to take action? Or are we just kidding ourselves?

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