by Dean Towers
At today’s USTA Annual Meeting, a number of items will be tabled and voted on. There will be an up or down vote about Converseon’s social media and outreach program, extending the time between races when a horse needs a qualifying line, and other issues for the sport.
Next year I hope one more item is added to the mix. An industry betting carryover program.
You’ve probably heard about carryovers, even if you don’t bet the races each day. The phenomenon occurs when no one hits a bet – say a pick 4 – and money is added to the next pick 4 pool. The injection in capital helps alleviate the effects of high takeout on a bettor, making the pool a more attractive wager. This is especially embraced by every day players, with big bankrolls, because they are extremely price sensitive. This is the main reason you see such a jump in handles for these bets on the last flash.
Along with a takeout reduction – something we see far too few of nowadays – a carryover also attacks a major issue in harness racing, pool size. Again, this is mainly a math problem. Let’s say you like a pick 3 with three longshots and the pool size is $4,000, or $3,000 after takeout. The parlay for three 20-1 shots for a $1 bet is $9,261, or 300 per cent higher than your expected win (if you’re the only person to have it). Low pool sizes are deadly for exotic wagering and carryovers help.
Maybe the above explanations don’t resonate with you, but they do with your customers. Carryovers work.
A $50,000 carryover last week resulted in $572,000 in wagers at off time for a bet that averages under $10,000 in a non-carryover pool.
There’s also something very interesting about carryovers that are under-reported and highly misunderstood. For players who concentrate on them, no matter where they are, or what size they are, how they’re promoted, they will find them. Case in point, Pompano Park’s small carryover, where bettors only had a few minutes to i) find out there was a carryover and ii) lay down some bets.
Pompano is a track that we’d expect $460,000 on an entire card (they have done better than that the past year or two). With no notice and a small carryover, $46,000, or about 10 per cent of an entire evening’s handle was bet with virtually no notice.
There have been a lot of inventions that changed the world that were created by serendipity. For example, a scientist who was working on radar during World War II accidently left a candy bar in a magnetron tube and saw his snack melted quickly. That was the world’s first microwave oven and the rest is history. Carryover’s were no one’s idea, they just happened, and today’s customers are hitting you right over the head with a stick; they’re telling you this is a huge opportunity for the sport.
It’s easy to hope for carryovers to happen, or sometimes create bets like jackpots so they are guaranteed to happen (a short-sighted idea, for another column) but this industry needs more than hit and hope. It needs more than jackpot hoodwink. It needs a proper business plan.
In that vein I propose the industry creates and funds a carryover department. The team will be headed by a manager with strong betting and gambling experience (think Michael Antoniades or Gabe Prewitt). He or she will be in charge of a few main items:
• Manage the distribution, betting materials and marketing of all carryovers.
• Run the content for a carryover website and assorted push notification mediums. Work in tandem with member track, ADW, USTA properties and the Converseon social media and email marketing pipeline.
• Study the carryover concept – what works, what doesn’t, what bets are more effective, what marketing works, etc. Develop SOP’s, best practices, reporting, relay results to tracks.
• Work hand in hand with member tracks to continuously improve the concept in a “Good to Great” way.
Let’s say 25 member tracks fund the initiative with the amount of the average purse for one race. This way – in homage to Bernie Sanders – tracks with bigger purses (likely with slots) who will get the most benefit, foot a little more of the bill. If the average purse is $15,000, about $300,000 is raised per year. That should take care of salaries and advertising, and support from the existing USTA staff. Done, easy; one race, one purse, Bob’s your uncle, you’re funded.
This big benefit of this initiative, however, is that it pays you back. This can bring in hard revenue from day one.
If, say, Yonkers has a carryover like they had last week of $9,000, and $20,000 of new money is added, but in year one of this initiative that number pops to $40,000, that’s $20,000 in new handle. Some of this money will be bet on-track, but the bulk at the Big M and other venues, as well as ADW. This is problematic in estimating margin, but for arguments sake let’s say 10 per cent of the additional $20,000 — $2,000 — is added Yonkers revenue. If a carryover happens once a month and we see those same results, that’s $24,000 in revenue per year, or $4,000 more than Yonkers invested.
In the broader sense, if you multiply that performance by 20 or 25 racetracks, it can result in millions and millions in additional handle and incremental betting revenue. In a year, this concept could be close to self-funding. How many initiatives in this sport are self-funded by handle?
Obvious spin-off effects can occur, as well. Because this department is promoting harness betting to other audiences – thoroughbred bettors, other gamblers who are looking for value – it promotes the sport as a whole. More eyeballs mean more potential longer term bettors, fans and potential horse owners. A recent study into California racing, done by Jeff Platt of the Horseplayer Association of North America, showed handle on the races in all pools during a heavily promoted bet (in this case the 14 per cent pick 5), rose, too; another added benefit.
Harness racing invests in the sport, with slot money or other revenue. People buy horses, and trucks and hay. Vets, farriers, tack shops all benefit and are a part of the supply-based ecosystem. The people inside the sport have done their job from that end, and that’s all the sport can ask of them. What the sport needs is similar investment on the demand side. Your customers are telling you what they want, and it’s up to racing’s brain trust to deliver it to them. The above is one way how, and I hope it, and concepts like it, are discussed at industry meetings as deeply as you’ll see with other issues today. They can bring in new revenue and new markets that this sport sorely needs.