Hail the Week-end..by Leon Setaro

Hail the week-end!

Last weekend I made my first foray into podcasting for Interbet, and after a shaky start marred by technical problems and the inevitable learning curve, it looks like we may just be rolling. The 2nd poddy (podcast) on Wednesday saw me off to the hire shop for some gear and the opportunity to add in video clips from the training tracks, music and a few photographs over the audio stream.. getting there, bit by bit.

For a preview of this week-end’s racing at Clairwood, I’ll be off to the Goodman stables to setup shop on Saturday and find out once again what James has to say about the meeting. Download the preview from the Interbet Facebook site on Sunday morning, or email leon@interbetsa.co.za with the subject line –subscribe podcast- to get a link and notification into your mailbox when the preview becomes available.

Lately I’ve been giving thought to approaching Gold Circle with the idea of setting up a media centre at Summerveld, and this week it came to my attention that there is unused office space collecting dust at the clubhouse. What I have in mind is an audio/video media room, setup for the purpose of collecting and disseminating racing news & info from training tracks direct to the public.. a news/blog centre of sorts, available for use by myself (for Interbet) and for other media outlets such as Tellytrack etc.

The problem is that last time (Nov-08) I went to Gold Circle for the opportunity to deliver a presentation (see copy at the end of this article), I was treated with disdain like a school-boy-fool, and this by someone so clearly inept I shudder to think how he managed to crawl up the Gold Circle ladder. Sheltered employment at its finest! so I won’t be holding my breath for a positive response this time around either.

The cost of predictability

So what exactly are we up against as horse racing punters, and how does the challenge of producing a profit compare to that of ‘absolute random-chance’ casino games and other leisure rand competition?

With horse racing, we have the element of predictability, the notion that past events have a measurable effect on future outcomes. Clearly this is a momentous punting advantage, but horse racing also incurs spectacularly high fixed asset and infrastructure maintenance costs which are ultimately passed on to punters in the form of additional percentage takeouts from betting pools.

To weight it all up, we can look at profit/house margins across the various gambling options and ultimately decide whether we as horse racing punters, do enjoy a King’s advantage through predictability.



Betting operator Phumelela - breakdown of SA horse racing betting pools



Betting operator Phumelela - breakdown of gross income (13.2% of betting pools)




Tote betting

The racing operator carries no risk in terms of race outcomes and simply takes a 24% bite out the betting pool and then distributes the balance as winning payouts. For punters, this equates to a 24% house margin, beat this and you’re in profit. Included in this 24% is a 6% allocation towards horse racing stakes (see table above) along with various other percentage takeouts to cover industry operating costs. Undoubtedly the main drawcard of the Tote is the variety of bets available incl. the big pay exotics.

Bookmakers fixed odds

Bookmakers contribute less towards racing industry costs than the racing operators themselves, but the playing field is significantly different because bookies lay fixed odds bets and therefore face the very real possibility of taking a loss if their books are not carefully ‘balanced’. This element of risk incurs an extra load-on to profit margins, but in return the punter gets the all important ‘fixed price’ and therefore immunity to subsequent market moves.

As more and more punters become familiar with internet and the benefits of online betting for superior prices on SA’s betting exchange (Interbet), traditional street corner bookmaking faces a bleak future in the face of this hi-tech competition. The major remaining benefit of these retail bookmakers is that they offer ‘betting credit’ to their preferred customers, a convenience many punters still cling to.

With the advent of the betting exchange, a new breed of bookmaker is emerging; the back+lay opportunist who is licensed to trade as a virtual bookie online and by phone, and he uses the Interbet exchange to buy and sell odds at a profit in-between market moves. Because the ‘house margins’ are so low and prices fluctuate almost continuously in the final run up to race time, many opportunities exist for this type of trader.

Betting exchanges

Interbet is the only legal online betting exchange in South Africa but in addition to offering fixed odds trading with up to one hundred of SA’s bookmakers, full Tote betting facilities are also available direct with Phumelela TAB.

On the fixed odds exchange, licensed bookmakers trade amongst each other (and the public) online at wholesale prices where odds are anything from 30% to 100% better than disseminated retail. Profit margins/book percentages on the exchange are extremely low because (i) turnover is proportionately high, and (ii) there are multiple bookmakers offering price stretches across different horses to suit their own specific book requirements per event. Eg. One bookmaker lays a large bet on the favourite, so he offers a stretch on the 2nd favourite looking to draw in turnover and cover with profit. Another bookmaker may have earlier laid a large bet on another horse and he’s looking to counter and balance by laying a stretch on the favourite and so on and so forth.. in the end price meets chance and it all adds up to unbeatable fixed odds value on wins bets.

In the old days Bookmakers laid-off and traded with each other using telephones, a secret society behind the scenes. When Interbet started it was open only to Bookies in true ‘old school style, but times have changed and this is the age of information so the exchange was opened to the public and so ushered in a new era in horse racing betting. Since then Interbet has become the choice of backers and traders alike looking for the best prices and access to real time trading volumes with automatic built-in betting calculators, all from the comfort of an internet connection.

Profit/house margins



* Interbet and other TAB/Tote agencies receive a standard agency commission (4% of contributed turnover) from the racing operator (see ‘betting operations’ in the Phumelela breakdown of gross income
table)

** Gold Circle quotes the ‘return to punters’ split as follows - 20% win/place pools, 25% exotics and all other bets







Down in flames but doing it anyway..

Below is my proposal that was shot down by Gold Circle in November last year, but thanks to Interbet who stepped in to take up a similar sort of offer, I am now able to feed my wife and two young kids by promoting horse racing courtesy of Interbet funding and sponsorship.

20th November 2008

Proposal Brief

To : Gold Circle
Horse racing - Marketing and Publicity

Overview

Four areas have been identified for proposed development, they are to -

1. Utilize the present day trend (and popularity) of celebrity lifestyle publicity coverage, for the purpose of promoting a greater public awareness of horse racing, and to attract new customers

2. Improve and expand horse racing information and dissemination channels

3. Promote the Pick6 as an alternative ‘big-win’ bet to the lotto and casinos

4. Increase competitions, prizes & giveaways, incentives, promotions, and implement a loyalty rewards program



1. Horse racing – Lifestyle publicity

Horse racing has a fundamental advantage over the Lotto and Casino, the outcome of each betting event is not based on the bleep and fizzle of mechanically generated random chance. Behind each saddlecloth number there exists a story; trainer, jockey, owner, bloodlines, glamour, power, fame and fortune all mesh together in a soap opera-esque blend of news and publicity fodder.

By regularly publicizing the human element of racing via print and broadcast media, an interest and association is created between (horse racing) characters and target market. An ongoing celebrity style horse racing ‘saga’ maintained via media will serve to :

- create a greater awareness of horse racing within the general (non-horse racing) public
- further enhance the betting experience for existing customers



2. Information Dissemination

Information from trainers

The formbook offers a wealth of information but lacks an important element, that being information from the trainers regarding their horse/s. This is of particular value when a horse –

- is unraced
- returns from a rest
- is working well and/or has improved significantly since last run
- has had an interrupted training program and/or other problems
- has excuses for previous performance/s
- has a preference for specific underfoot conditions and/or other factors pertaining to performance etc.

Real-time access to information via mobile handset

Mobile handsets and the GPRS network hold the key to the future of effective information dissemination direct to betting customer. The majority of cellular phones in use today can access basic information (text & images) from the internet via wapsite (cellphone website). Recent models are capable of video playback/live-streaming and can display even advanced websites as effectively as a computer. Cell phone users have been slow to warm to the concept of browsing internet via handset but the technology is in full swing and it’s just a matter of promotion and education to increase awareness.

A punter with all the racing information at his fingertips is a punter who feels more involved and connected to the game.

Via wapsite information can be accessed -

• in real-time, as it becomes available without restrictive print deadlines
• in multimedia rich content; text, pictures, video & audio
• by everyone (with a cell phone)
• cost effectively

In addition to information currently disseminated (through traditional channels) ie. card changes, track conditions, news editorials, race cards, results and payouts etc. the following services can be added :

- Trainers’ race day comments and fitness reports
- Race by race overview and analyses
- Trainer, Jockey and Horse profiles/biographies (with news & current affairs content)
- Video downloads
- Race video replays accessible from online database with race locator
- Under starter’s orders interviews, panel discussions, new and existing TV offerings etc.
- Facilities
A profile of race course facilities using multimedia, advertorial style reports to promote/detail restaurants, food and booking info, general racing facilities and programs, specials offers, entertainment etc.


3. The Pick 6

The Pick6 can be categorized as a ‘big-win’ bet and offers punters an alternative to the Lotto and Casino style gaming.

Key promotional pointers

- Pools in excess of R1million daily (major centers)
- Place bets by telephone, internet or in person
- Knowledge of horse racing not essential, play lucky numbers or ‘quick pick’ style bet, or
- Enhance your chances with form study and/or stats based permutation reduction software

Media Coverage

An article/column focusing exclusively on the day’s Pick6 qualifying races :

- Preamble – about the Pick6 (permanent inclusion – see ‘key promotional pointers’ above)
- Editorial overview covering the day’s (Pick6 related) racing and including trainer interview feature/s with pictures
- Race by race form analysis and notes for each runner with trainers’ comments and/or fitness reports
- Suggested bets and selections with/without perm reduction software



4. Competing for the Leisure Rand

Casinos compete fiercely for the leisure rand; customers are lured and secured through competitions, prizes, promotions and loyalty rewards. The horse racing environment should offer similar incentives for punters.

Another superb contribution Leon

thank you

"The problem is that last time (Nov-08) I went to Gold Circle for the opportunity to deliver a presentation (see copy at the end of this article), I was treated with disdain like a school-boy-fool, and this by someone so clearly inept I shudder to think how he managed to crawl up the Gold Circle ladder. Sheltered employment at its finest! so I won’t be holding my breath for a positive response this time around either."

good luck Leon, others have tried over the last 15years with almost identical plans/proposals to yours and have had the same rebuttals, and continue to have. Keep going at chipping away at the ol' block.

Very interesting read. Well appreciated

Based on the figures shown above, Phumelela is taking twice what racing associations get in North America. Horsemen and taxing authorities get about the same.

In my opinion,taxing on betting by ANY governmental entity is not only unwarranted but counter productive, because the large takeout is simply killing punters.

Stakes and Phumelela should get 5 or 6 percent each, with nothing else taken out. This way the punters will have a chance to beat the game.

As it is played right now, with the large percentage taken it, punters have absolutely no chance.

great read Leon

An article of true substance.

The 25% deduction from tote pools is the problem here. How can operators expect to beat the fizz pop casino machines if they offer less value?

The solution, as Leon says, is to promote the human element of racing.

Leon's "solutions" are all standard stuff and are needed.

But until the takeout is cut in half, no real punters are going to get large sums of money.

I am a champion in the U. S. for promoting the sport, but without punters, there is no sport.

I suppose the reality of the situation is that the deductions will not change and only the informed will know about it anyway.

Therefore the operators should take aim at the Lotto punters, these individuals are happy to bet into pools with a 50% takeout. These are the naive folk that racing needs !!

Time to start promoting the straight line Pick 6, taken 10 times, which in all probability offers better value than the lotto.

thks for the compliments and comments everyone.

Just to bring you back to earth Leon, is that your lips or Mick Jaggers in the add?
Sure its not Matthews Lips.