HANA Member Survey 2009 Results and Racing's Three Critical Issues

by: Jeff Platt 01/27/2011

Introduction
If you are actively involved in any aspect of racing at all these days, unless you live under a rock, you can't help but notice racing is in trouble. Handle numbers are in serious decline almost everywhere. As a result, horsemen are facing purse cuts almost everywhere too. Yet the cost of owning and training horses continues to go up.

It's a self fulfilling prophecy. Shrinking handle and purse cuts translate to a smaller horse population, which translates to smaller fields, which in turn translates to even smaller handle. It's a vicious cycle... one the industry faces an extremely hard time breaking out of.

The HANA Survey
In September, 2009 we commissioned statistician Dan Needham to create the HANA Survey. The survey itself was 50 questions long and took on average almost 30 minutes to complete. We asked for your thoughts on a wide variety of issues. Dan designed the questions so they could be cross referenced against each other and provide statistical relevance.

Our goal was to let you tell us what you see as racing's core critical issues.

Dan told us up front that in these types of surveys, anything over a 35% response rate is considered "strong." We invited more than 1,300 of you to take the survey and about 500 of you took the time to complete the survey in full. That's a response rate of about 38 percent. In Dan's own words: "Strong."

We believe this survey is extremely relevant to racing because it represents market research targeted at racing's core customers. Keep in mind that HANA members wager on average about $43,000 a year each.

Racing's Three Critical Issues
The tabulated results were eye opening even to us. You very clearly told us the following three things in order of importance are what you see as the most important issues racing faces today:

1. High Takeout... It's already too high and you want us working to get it reduced.

2. Pool Integrity... Odds that change after the gate opens is simply not acceptable in this day and age.

3. Drug Integrity... Racing needs to be regulated in a way that there are no questions whatsoever about the integrity of the game.

Complete Survey Results
The complete survey results can be seen here:
http://www.horseplayersassociation.org/fall2009surveyresults.htm
Note: .HTM page For ALL Browsers including Firefox and Google Chrome

Or here:
http://www.horseplayersassociation.org/surveyresults.mht
Note: .MHT Page for Internet Exporer only

A Simple Observation
Every successful Fortune 500 company that you can name is successful for the following reasons:

They identify their target customer. They perform market research to identify the needs and wants of their target customer. And then they make it their mission to satisfy the needs and wants of their target customer.

If you study the case histories of every failed company, you will discover that every failed company failed to do this at some point along the way.

Recent events in California
On January 15, 2010 I attended the CHRB meeting held at at Santa Anita in Arcadia, CA. At that meeting I listened to hours of debate about Golden Gate and Santa Anita in bankruptcy, California OTB locations that can't meet payroll, California OTB locations facing hard decisions such as downsizing to smaller facilities or closing the doors, and the owner of Los Alamitos who said "These are desparate times and I'm asking for a takeout increase because I don't know what else to do."

When my turn came I stood up and spoke out in opposition to the Takeout Increase at Los Al.

I cited the things that successful companies do that make them successful in the first place. I also pointed out that racing's wounds are self inflicted because racing does not do ANY of the things successful companies do.

I cited Dan Needham's market research suggesting that racing's core customers have become acutely aware that takeout is already too high.

I told the Commissioners of the CHRB they were using flawed revenue projections that said handle would be unaffected by the takeout increase.

I told the Commissioners of the CHRB that handle at Los Al would be adversely impacted by a takeout increase.

So what happened?

During the 6 month period immediately following the Los Al takeout increase, year over year on track handle at Los Al was down more than 27%. Concrete evidence to substantiate that fact was presented to the CHRB and was made part of the CHRB's July, 2010 meeting package. Yet the CHRB voted unanimously to EXTEND the Los Al takeout increase.

Shortly after that, California's track operators, leadership from the TOC, and the head of the CHRB lobbied the California legislature for a thoroughbred takeout increase. They did this over player objections.

The Legislature voted to approve this takeout increase - largely because of revenue projections that were flawed - based on the idea that handle would be unaffected by a takeout increase.

Here we are, a few weeks into California's thoroughbred takeout increase.

Handle at both Santa Anita and Golden Gate is down.

Yet, at the same time - handle at other tracks is up.

Summary
Takeout increases do not solve racing's problems. Takeout increases only make racing's problems worse.

Look. Racing has its share of problems. And high takeout certainly isn't the only thing that needs to be addressed. But keeping to the status quo isn't working.

If you take all sources handle from 2010, and adjust it for inflation, and then compare it to all sources handle in 2003, you will notice that handle from 2010 came in at approximately 60 percent of what it was just seven years ago in 2003.

Racing is no different than any other business. It is customer driven. When your customer is telling you he has lost interest because you are charging too much for the price of a bet, have an obsolete tote system, and need to clean up the game from a corruption/integrity standpoint...

And when keeping to the status quo has resulted in your business being cut almost in half in just 7 years...

Hasn't the time come to start listening to your customer?

Jeff Platt
President, H.A.N.A.