Managing a dual market
Managing a dual market
Racinos must market to and educate racetrack novices so that slot revenue and patrons invigorate the racing operation
By Ray Hanania
A racino must be a "convergence" of two popular gambling enterprises-racetracks and casinos-while still recognizing the distinctions that exist between the primary audiences of racetracks versus casinos. Racetracks that have made the convergence said that the key to success is not only redirecting some of the larger revenues to sweeten pari-mutuel wagering, but to also make horse racing appealing to a larger audience-a crucial necessity, as horse and harness racing industries have seen significant drops in attendance and revenues while customers migrate to the more popular casino gaming.
"There is no question that horse racing has experienced a significant downfall due to the prominence of the lottery, cruises to nowhere and the Indian casinos," said Steve Wolf, senior director of racing operations at Isle of Capri Casinos' Pompano Park Harness Racing in Pompano Beach, Fla. "We see this both as an opportunity to expand our operations and also to reintroduce the public to the excitement of horse racing."
His harness racetrack was given the green light, along with three other pari-mutuel tracks last year, when voters in Broward County approved expansion into casino gaming, allowing the addition of gaming tables and 1,500 slot machines each.
Pompano Park, which encompasses 223 acres of ground, is located near two popular casinos: the Seminole Hard Rock in Hollywood and its sister operation the Seminole Coconut Creek Casino. "For the first time, with the addition of the gaming slots and tables, we will be able to compete with them," Wolf said.
But you can't just add slot machines, gaming tables and video terminals to a racetrack and expect it to compete with the fast-growing field of riverboat and land-based casinos, Wolf said.
"This isn't about changing from a racetrack to a casino," he explained. "Just adding the slots, VLTs and gaming tables to the racetrack doesn't guarantee success by itself. One necessity-if racetracks are to survive-is to use the convergence of gaming to reinvigorate public interest in pari-mutuel gaming," he said.
One way to do that, he explained, is by redistributing slot win. "A percentage of the slot revenues will go into the horse and harness race purses," Wolf said. "The increased purses will bring us better quality horses. All of this will draw more people to horse racing. It's dominos in reverse."
The Pompano strategy reflects new thinking that is still in its infancy as racetracks evolve into racinos.
Dealing with differences
Lonny Powell, a veteran horse racing industry executive and vice president of public affairs for Youbet.com, said that while the money has helped, a key necessity is to implement a strategy to drive casino gamers to horse racing.
"And that's not easy. I haven't seen it done successfully anywhere so far," Powell said. Part of the reason, he said, is that horse racing fans and casino fans are breeds apart.
"On the pari-mutuel side of the facility, the majority of the day-in and day-out audience is primarily male, Caucasian and 50 plus," Powell explained. "The slot side of a racino is generally more involving women and other races. Slots are pure luck. Pari-mutuel wagering requires more knowledge of the horses. And pari-mutuel wagering has been around a lot longer than casinos, and there is a depth of knowledge among the wagering. It has much more of a sporting element."
In contrast, "slot gaming is almost a pure entertainment, fast-action event and doesn't require a lot of knowledge about the games being played," Powell said. "But horseracing is still a game of skill and knowledge of the horses, track, weather and more factors."
Jack Breslin, senior vice president of marketing of gaming for G.A. Wright Marketing, similarly said that recognizing the differences in the demographics of typical pari-mutuel wagering versus casino customers is a must in driving racino success.
"Generally, the demographic profile for these operations would differ because racetracks without slots would have a higher percentage of older male players than casinos, usually 60 years or older," Breslin said.
"The casino player tends to be predominately female, more affluent and seeks more diverse entertainment experiences in terms of shows, shopping and dining. It also seems the casino player is more outgoing and interested in recognition and rewards."
To be successful, operators must recognize those differences, Powell said. "With the concept of a racino, the facility has to take care of both audiences and also seek to create a synergy between the two," he said.
Bringing the market together
One of the better ways to do that is to create an entire entertainment and dining environment that encompasses both wagering activities.
Pompano Park, Wolf said, is building a new 157,000-square-foot racino next to the existing Grandstand Club House, which will feature 1,500 Class III slot machines. They will also add four signature Isle of Capri restaurants including Myrons, a trendy New York style deli.
The racetrack already offers a main dining room, Top of the Park, which seats 600, a Player's Room Buffet, Patten's Lounge and numerous concession stands throughout the building.
"We will have a poker room with 34 poker tables, sports and race bars that will accommodate 200 to 300 people, plus simulcast wagering areas. There will be an outdoor grandstand area attached to the building that will seat 500 people," Wolf said.
The plan is to eventually move the entire operation into the new area and then rebuild the old racetrack, he added.
Breslin noted that Pompano's strategy converges the racino into one large entertainment center offering a wide range of gaming, racing and entertainment at one location. And using casino gaming to reinvigorate racing is a strategy worth pursuing.
"Tracks that offer slots reflect a demographic profile that tends to be younger," Breslin said, citing the Portrait of American Gamblers study compiled by The Innovation Group and YPBR.
"That study found 'Echo Boomers,' those born after 1979, are more likely to have visited a racino in the last 12 months than (older generations like) 'Xers', 'Boomers' or 'Matures' (those born before 1946)."
A key objective must be to re-introduce the thrill of live horse racing to players initially drawn to racinos by the slot or table play.
"The approach would be to promote the dual/diverse nature of the experience and opportunity to win in both racing and casino play," Breslin said.
"Incentives would be provided to drive play, such as free bets made on specified days and or times with special prizes, in addition to the cash winnings. The player could also earn bonus points towards their for track play."
Track play can also be an improvement at racinos, which can elevate the amount of prize money the horses race for. Bigger purses mean higher drama, which improves the quality of the racing and the interest in the game.
As with casinos, Breslin emphasized, racinos must monitor and analyze the data collected through their tracking systems to identify the most valuable players and provide appropriate incentives to build loyalty.
"Ideally, they should integrate the data collected from the racing side to develop a sharper profile of the player and their overall value," Breslin said.
Teaching at the track
One of racing's most appealing qualities-the skill required for gamblers to understand how to wager-also serves as one of the greatest hurdles in terms of attracting new customers. Novices can't just dive in as they can with slots. Anyone can win, but horse racing requires more knowledge about the horses, the track and past performance, especially when serious money is at stake.
"The racing industry needs to do more to educate the consumer about pari-mutuel wagering," Powell said. "That's what we try to do with Youbet.com."
Youbet.com is the largest online wagering company for pari-mutuel horse racing in North America. A vast majority of its wagering, Powell explained, is done online using state-of-the-art technology that allows users to educate themselves about the racing industry.
"By making the information available online, we allow gamers to get the information they need on the horses and races instantly," Powell said. "Being able to come online allows them to come in with minimal risk and without feeling intimidated and also to get information immediately."
Most of Youbet.com's wagering stems from people under 50. The largest growth has been the 21 to 40 year old segment, which is a new audience for horse players, Powell said.
"Race tracks are going in the direction of understanding that racing as a product is very well suited to an online platform, but they also have to give new players a fast understanding of the game," Powell said. "That's the challenge."
SIDEBAR:
Ten necessities for racino success
Design a total racino environment so the property becomes more than merely a racetrack with slot machines
1. Integrate themes of horse or greyhound racing on the gaming side of the facility.
Use visuals like video, portable wagering terminals, kiosks, artwork and memorabilia. Add some racing-themed games to the slots floor. Use audio for live race calls where practical.
2. Offer a player rewards program that offers points for both slots and pari-mutuel play on one integrated system. Offer special point offerings to each group that encourages some crossover play.
3. Design promos and contests that encourage participation on both sides of the
gaming house.
4. Integrate shared entertainment and dining features throughout the facility, encouraging property-wide flow and experience.
5. Live racing days usually lead to top slots play days. Embrace and promote the live racing experience via big race days and related special events.
6. Have some family-friendly areas incorporated on the racing side with special access, as most slot floors cannot accommodate.
7. Maintain the same standards of service, comfort, appearance and attention to detail and player needs throughout the entire racino structure. Provide ample signage and info centers.
8. Eliminate any traditional racing charges for parking admissions or programs, excepting premium seating and valet.
9. Embrace the Internet as a prominent means of generating racing wagering, interest, info and awareness as well as a means to promote the entire racino.
10. Incorporate hotel facilities to create a total destination. Offer self-serve Internet access in each room for pari-mutuel play and provide info as well as tutorials on other forms of gaming offered. Situate rooms to have views of the track and race floor show whenever possible.
-Developed by racing veteran and Youbet.com vice president of public affairs Lonny Powell
