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For those of you who’ve missed it.
http://www.guardian.co.uk/sport/blog/20 … o-machines
The Elephant in the Room.
Interesting.
I had a Tweet exchange with Mr Wood some time ago expressing my belief that racing will at some stage become so irrelevant to bookmakers’ High St operations that they will eventually drop it.
He dismissed that saying that legislation would come along to restrict the amount/stake of machines in shops.
Wonder how that’s going…
Mike
I think it is naive of racing to expect legislation of that type. If legislation was brought in it’d surely be on the potential of machines to create problem gambling rather than to protect racing’s interest. I don’t know if there is any empirical evidence that the dreaded things do create more problems than other types of gambling and/or whether racing would indeed find itself in a better position if they were banned.
More disturbing reading on this subject from Mail Online published 5th August Cormack:-
http://www.dailymail.co.uk/news/article … ction.html
Seems to be taking it’s time..plod plod
Things turn out best for those who make the best of how things turn out...Its a bit late , the damage is done , the machines are in control
I believe Mike is right , the time will come when roulette is the best game in town , racing will be parting company with the bookies
Then again …a certain Zorro predicted this in the year 2004/5 , so its not entirely unexpected
Racing will eventually have to find a way to self fund , until then its the politics of the begging bowl ….dont expect any government to bail out racing with legislation to protect it against FOBT’s , quite simply that will not happen
Ricky
Ricky
Its a bit late , the damage is done , the machines are in control
I believe Mike is right , the time will come when roulette is the best game in town , racing will be parting company with the bookies
Then again …a certain Zorro predicted this in the year 2004/5 , so its not entirely unexpected
Racing will eventually have to find a way to self fund , until then its the politics of the begging bowl ….dont expect any government to bail out racing with legislation to protect it against FOBT’s , quite simply that will not happen
Ricky
Ricky
Spot on Ricky – racing seems to be happily moribund with an non-fit for purpose funding mechanism and the only "constructive" solution they are looking for is the Government to frame legislation to give them special treatment.
You couldn’t make it up.
I think Greg Wood is one of the best racing journos we’ve ever had. But I think he is miles out on this.
Restricting the supply of oranges is not going to turn orange-addicts into apple buyers.
Like it or not, profits from FOBTs are subsidising racing.
Yes, they attract people with addictive personalities, just as McDonalds et al do with those addicted to junk food. Are burgers to be legislated/restricted?
"Can I take your order please?"
"A Big Mac and a coke please."
"Sorry, we’re not allowed to sell big Macs. We do a nice Micro Mac with a toothpick to help you eat it."
"Er, OK, I’ll have a hundred of them please."I thought there was little crossover between machines and racing also. Then I went to read todays RP online and…
"It also showed that around 43 per cent of customers who bet on machines also bet on horseracing, while roughly 57 per cent also bet on football."
I dont know who the authors GamblingData are or who funds them and nothing is said about how much machine players bet on racing, but 43% was a surprise to me.
http://www.racingpost.com/news/horse-racing/gamblingdata-counter-trade-vital-to-shops-despite-rise-of-machines/1151909/racingbusiness/#newsArchiveTabs=last7DaysNews
Joe,
Economists often get a bad press with regard to their understanding of the way the world works, but on basic microeconomic subjects they’re usually pretty solid. The workings of things like substitute goods are pretty well understood.
In fact, on a really basic economics GCSE paper you might see something like this at the start of the paper to give everyone an easy to begin with.
If greengrocers only stocked apples and then introduced oranges as well, what would happen to apple demand?
A) It would go down
B) There would be no effect
c) The net effect would be for it would go up as it would make greengrocers more viableIt’s the sort of thing that you might see on one of those premium rate phone-ins. This is not a trick question. How on earth can you and the BHA flunk it?
Joe,
Economists often get a bad press with regard to their understanding of the way the world works, but on basic microeconomic subjects they’re usually pretty solid. The workings of things like substitute goods are pretty well understood.
In fact, on a really basic economics GCSE paper you might see something like this at the start of the paper to give everyone an easy to begin with.
If greengrocers only stocked apples and then introduced oranges as well, what would happen to apple demand?
A) It would go down
B) There would be no effect
c) The net effect would be for it would go up as it would make greengrocers more viableIt’s the sort of thing that you might see on one of those premium rate phone-ins. This is not a trick question. How on earth can you and the BHA flunk it?
Glenn, I guess there’s a word or two missing in option C. I wouldn’t argue for a minute that betting on horse racing is not an essential attraction for regular betting shop punters. But its market share has been slipping for years.
In the 1980s, horse racing made up more than 80% of turnover; I suspect it’s now closer to half that figure. The belief that dulling the attraction of FOBTs will boost horse racing turnover to any noticeable degree is laughable, and you don’t need any economists to confirm that.
Why would serious players move from a product that returns 98% of stakes to one that returns 84%? And, that second figure is only achievable, realistically, if you take the time to learn about racing.
Betting shops are netting close to £1,000 a week per machine. The costs to bring racing into shops is onerous. FOBT profits are subsidising that cost very heavily. If FOBT business collapses, we will lose a minimum of half our betting shops meaning racing will lose at least half its media rights money.
On the stats front (from the earlier post), no doubt the 43% and 57% are correct but what do they mean in hard cash? A machine punter who also bets on horses might have one £5 bet a month. A horse player who also bets on machines might put just £5 a month into a machine – the figures are useless without further data.
As for cross-over, I’d bet an awful lot of money that the Pareto principle applies very strongly to FOBT play: 20% of players will provide 80% of profit.
If supporters of Greg Wood’s suggestion believe that smashing the FOBT market will re-direct most of the turnover to horse racing, or that it will encourage bookmakers to sell racing (a product with the tiniest of margins and in a number of cases, negative margins) they are living in a dream world.
We can debate this all we want, unfortunately the proof of the pudding will only be found in the eating. It could turn out to be the most expensive dessert racing has ever sought.
Why would serious players move from a product that returns 98% of stakes to one that returns 84%?
The point about FOBT’s are that they return 98% on paper but in reality for an awful lot of players (the majority?) they realistically return 0%.
Mike
Bookmakers had in racing what was for decades the only accepted product to bet on; hence racing’s shady, dissolute image. And hard work it was beating the bettor, as the game was essentially ‘my opinion versus yours’: a battle of honour with the ascendant, thrusting side being the bookmakers thanks to their bush telegraph and superior odds-compilers…perhaps…with pehaps being the operative word. That’s the way it was, and that was the intellectual stimulus that drove on even the muggiest of punters: this isn’t chance this is opinion
Time moves on and thanks to some lax, some may say wholly naiive legislation from HMG, the bookmakers – hardly the epitome of civil altruism – are suckling the juicy udders of a particularly milky cow, and who can really blame them after a 40 year battle of opinionated ‘yours or mine’
Does racing in 2012 need this ugly FOBT FPGT* duckling spawn of fine swan antecedants?
Or is it time to forget what was the accepted/expected status quo and move on to a less comforting, rather less certain little world that fends for and feeds itself?
Blah blah, shake rattle and roll, too florid Drone
*FPGT – fixed profit guaranteed
Or is it time to forget what was the accepted/expected status quo and move on to a less comforting, rather less certain little world that fends for and feeds itself?
Drone good post as always
in short yes is the answer , racing needs to move on , the bookies will , the markets will , and Governments certainly will
The Bha and Bittar could well be doing something totally different in 20 years time
For now we can remember racing as it was , and somehow hope it can come back to some sport that makes a modicum of sense , presently it is ambling along the same slope as the Titanic
cheers
Ricky
imo
Why would serious players move from a product that returns 98% of stakes to one that returns 84%?
The point about FOBT’s are that they return 98% on paper but in reality for an awful lot of players (the majority?) they realistically return 0%.
Mike
Spot on Mike, almost all ‘play to extinction’ as the euphemism goes. But it doesn’t alter their perception of value within the ‘playing time’, even though they lose in the end.
Before FOBTs, I remember some experiments being done on the in-shop fruit machines. The returns were reduced by 1.5%. Within a week, turnover had taken a serious dip. The dedicated players took just a few days to sense that the value factor had been altered and they just went elsewhere. Transfer that sense of value to the 14% difference in horses/FOBTs and you see what racing is up against.
Greg Wood calls for racing to ‘fight back’; as someone on Twitter asked him ‘what with?’
Soundbites and high ideals are worthless in this ‘war’.
I wish racing was the most popular sport on earth and that FOBTs didn’t exist. But we need to deal with reality, not fantasy.
Racing’s the classic fantasy sport. Which trainer/owner/jockey/punter is not an optimist? Who does not believe that ‘something will come up’?
When that mindset is in place among campaigners and those running the sport, failure is the only possible outcome.
End of rant!
The apple seller in Glenn’s GCSE question faces some options –
1. To counteract the drop in sales volume, increase the price to his customer (risk – the customer stops stocking or highlighting the apples and concentrates on the oranges)
2. Aggressively market his apples to the customer’s customers, thus developing the apple market generally (risk – potentially costly exercise with no guaranteed return, especially as the customers seem to really like the oranges, which some think have an addictive quality.)
3. Develop other markets for his apples to augment his current business (again, costly)
4. Open their own ‘apples-only’ stores to sell their apples, and develop an ‘apple-selling monopoly’ (the apple guy has had several opportunities at this but has failed to grasp them so this seems an unlikely option)
5. Reduce the price to the customer, in the hope that the customer will stop selling oranges, or at least continue to focus on apples (risk – oranges are lucrative business for the customer, he’s unlikely to agree to this)
6. Try to find a way to ban/limit the sale of oranges as they may be addictive and their sale may spell the end of the traditional apple business model (risk – there is no concrete evidence that oranges are more harmful than apples (which some also believe to be addictive and harmful) and the people with the power to ban the oranges are champions of a free market)
Any more options for the apple guy?
Why would serious players move from a product that returns 98% of stakes to one that returns 84%?
The point about FOBT’s are that they return 98% on paper but in reality for an awful lot of players (the majority?) they realistically return 0%.
Mike
Spot on Mike, almost all ‘play to extinction’ as the euphemism goes. But it doesn’t alter their perception of value within the ‘playing time’, even though they lose in the end.
Before FOBTs, I remember some experiments being done on the in-shop fruit machines. The returns were reduced by 1.5%. Within a week, turnover had taken a serious dip. The dedicated players took just a few days to sense that the value factor had been altered and they just went elsewhere. Transfer that sense of value to the 14% difference in horses/FOBTs and you see what racing is up against.
You accept that playing to extinction is the typical style. Therefore I don’t see why you’re reading so much into experiments adjusting rake.
If the rake is increased from 3% to 4.5% and players play until they’re broke then by definition turnover will fall by a third, as it takes them less turnover to go broke. This is tautologous and conveys absolutely no information about players’ ‘sense of value’ vis-a-vis horse racing.
The apple seller in Glenn’s GCSE question faces some options –
1. To counteract the drop in sales volume, increase the price to his customer (risk – the customer stops stocking or highlighting the apples and concentrates on the oranges)
2. Aggressively market his apples to the customer’s customers, thus developing the apple market generally (risk – potentially costly exercise with no guaranteed return, especially as the customers seem to really like the oranges, which some think have an addictive quality.)
3. Develop other markets for his apples to augment his current business (again, costly)
4. Open their own ‘apples-only’ stores to sell their apples, and develop an ‘apple-selling monopoly’ (the apple guy has had several opportunities at this but has failed to grasp them so this seems an unlikely option)
5. Reduce the price to the customer, in the hope that the customer will stop selling oranges, or at least continue to focus on apples (risk – oranges are lucrative business for the customer, he’s unlikely to agree to this)
6. Try to find a way to ban/limit the sale of oranges as they may be addictive and their sale may spell the end of the traditional apple business model (risk – there is no concrete evidence that oranges are more harmful than apples (which some also believe to be addictive and harmful) and the people with the power to ban the oranges are champions of a free market)
Any more options for the apple guy?
Yes, don’t pay any Corporation Tax. Seems to work well for the current
Apple
guys.
Mike
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