Modern Wagering Systems attended the 2015 Australian Racing Conference held at the Sofitel Brisbane from May 20th to the 23rd. Here are my personal views of the conference and a "discussion of the discussion". Let's start with the light stuff before moving on to the speakers which, all-in-all, were excellent. The guest speakers from outside the industry were very good and from within racing, there were a good deal of stats and breakdowns of their businesses well beyond what you'll get in a end of year report. I took a lot of notes which I'm going to present below. Let's start with the fluff.
Sofitel always has the best beds in my opinion and the Brisbane didn't disappoint. The grand ballroom was well set up with changes of seating arrangements each day, round tables then rows, which I thought was a nice touch. So was drinks being changed between breaks outside, biscuits and mints etc. The lifts did suck somewhat with it taking 10 minutes at times to get from the 11th floor to the 2nd. I'm sure that was just a glitch for the week and not a usual occurrence. The hotel itself is well placed and only a short stroll to Queen St. mall. Only real nitpick is the bar downstairs is way, way too dear guys for what it is. For $10 a beer in Queensland I need staff to have forgotten their clothing that day. And, quite frankly, $17 bucks for a glass of cheap Shiraz is highway robbery. Fortunately the Grand Central Hotel is only a moment away and pub prices prevail.
Food and Booze
Excellent and plenty of it. As an ex-academic I know my way around a conference nosh up and this was pretty damn good. Finger food was good quality, quantity and variety and there was plenty of booze being trotted out to the point I didn't want any more of it! I think they might have been somewhat startled at first by at least 20 or so guys positioning themselves nearer and nearer the kitchen doors so they can get to the drinks sooner. I think they figured out this was a racing industry conference after the first few ambushes and then sent the bar waiters in rapid fire sorties after that. Good stuff.
Not bad but pretty standard fare. A few lapel pins for the included Doomben races which was nice (which I subsequently forgot to wear). A pretty good executive folder thingy which was alright, stubby holder (racing industry remember), then some local produce in the form of ginger bears, brownies, honey etc. Again, all very nice but not particularly memorable. Some UBet merch went in there as well which was a set of earphones - presumably a left over of their New Farm concept betting shop and a keyring torch - which is presumably for people still hanging on to their Nokia 3210s for Snake and be damned the practical features like torches on smart phones. Seriously guys, don't just chuck it in there because it's cheap from China.
I was surprised that they had a conference app for the affair. It gave you a program, reminders in the form of notifications that was handy, a delegate list and so on. One of the nifty features of it which was good for interaction was the ability to propose questions to the speakers on the app for the MC to the ask - albeit with pretty heavy redaction - but I guess I can't blame the app for that. All in all not bad with one exception - the delegate list. At a conference like this, being able to stalk other delegates is a primary motivation for attendance and it was just too damn hard to make your profile public on it. This difficult can be independently proven by two things. One, I have a PhD in computer science and I still had to get the 19 year old with us show me how to navigate through it. And two, that of a conference of 350+ only 16 delegates managed to publish their profiles on the app. I'm gathering they had their own millennials available to show them too. In any case, a minor point but one that should be improved on for next time for a conference with a heavy networking angle.
So who went?
Lots from wagering and gaming, plenty of trainers and breeders, lots of racing clubs and a sprinkling of associated service providers to the greater industry.
About time we got to something beyond the superficial. The main thing that I took away from this conference is that they recognise that they are smack bang in the middle of major change occurring in their industry. Remember a large chunk of racing's funding comes from wagering and that itself is experiencing a huge amount of change and growth in area beyond racing. They also know, and they needed to only look around the conference if they weren't sure, that racing is predominately the vocation of old white men - which are not in the ascendancy anymore in Australia whether they like it or not. Whoever booked the speakers did a good job of picking people from outside racing, in sports in particular where all the wagering growth is and from younger technical guys who at least gave an introduction into what else is going on beyond their backyards.
And a disclaimer, I thought day one was going to be as boring as the proverbial big-eared bat shit as I think I've only ever been to thoroughly average and spivvy marketing seminars in the past. I went in with a pillow and low expectations and was very pleasantly surprised to say the least.
Day One - Gillion McLachlan - CEO of AFL
Gillion is a very charismatic and polished speaker who is known to have continued the work of Andrew Demetriou in modernising and establishing AFL as an entertainment experience beyond Australia Rules Football. Gillion's talk was around explaining how the AFL attracts and retains their fans and the use of information technology, particularly information gathering, to achieve this. This talk particularly struck a chord with me as the approach recommended was around measurement and control. Find out who your customers are, find out who you want your next customers to be and how can you attract them and then take concrete measurements and make decisions based on the data and not what you think people might want. HIs other major point, which I think applies 100% to the racing industry, is that he can only control 20% of the overall offering yet is held responsible for the other 80 percent. This was given in a story about attendance going down at games because of things like the food and beverage was too expensive, parking and venue access, transport and fan access to the field. So he was in essence saying, he sucked it up and worked hard to form a partnership with his stadiums and convince them to improve the overall experience by coming to the party. An obvious example he gave was getting chip prices down from $6.50 (!) to $4.00. Unsurprisingly they sold a lot more, made more money overall, fans were happier and now they're expanding the kitchens to deal the demand.
Major points he made
- Data, data, data
- Consistency of online and mobile offering particularly with a single sign on and point of contact
- 100% of your problems might only fall under 20% of your control. Build partnerships not just relationships and work to solve the problems
- Have exclusive content. Make it work having. Get feedback
- Case studies. Who are you fans and how are you addressing their needs
- Sports betting is 40% and growing
Day one - Bernie Mullin - Chairman and CEO of The Aspire Group
Dr Bernard J Mullin wrote the book on Sports Marketing. A charismatic speaker and serial name dropper, Bernie started by explaining his bizarre accent. A Liverpudlian (think Ringo Starr) originally his voice has been modulated by early elocution lessons then 30 odd years in the States. It takes a few minutes of listening to him to not be distracted by the constant change of vowel pronunciations. Hence his giving a few minutes of intro around it I guess to get you used to it.
I took three A4 pages of notes on Bernie's talk. A whole blog post (on a marketing blog) would be needed to do it justice but there are the main ideas he presented.
Like Gillion presenting before him he's all about collecting data so much so that he advocates that you personally collect the data as well. He means that you're selling the experience and not the sport. So, you should experience what your punters experience from driveway to driveway. Borrow a car from someone else, drive in, buy a ticket, buy some beer, watch the game, drive home again and then ask yourself: would you do it again. Bernie was full of anecdotes from his time in NBA and said that he said this to all the team owners and apparently Mark Cuban was the only one who actually did it.
- Data, data, data
- THE MOBILE DEVICE IS NOT THE SECOND SCREEN. IT IS THE ONLY SCREEN
- Sell the experience and not the sport
- Empty seats are a cancer. First hide them then fill them
- Be a mystery shopper. Collect your own data on the experience
- Its cheaper to turn existing occasional punters that might attend 1 or 2 times a year into punters that attend 3 or 4 times a year. Then 7 or 8 times a year
- 80% of new sales come from targeted sales. Especially through phone calls
- Group sales are the cheapest way of attracting new individual customers
- Have a BHAG
Bernie also made a point of that everyone is in sales and marketing and should be 100% of the time. I followed up with an email asking for a copy of his presentation later that evening, he cheerfully obliged and then spent three paragraphs selling me the services of The Aspire Group. Bless him.
Day one - Panel - The future of the wagering landscape
This was a big reason that I came along. The panel of Gerard Daffy, Cormac Barry, Craig Nugent and Dayle Brown represent a mix of future and present collaborators, customers and competitors for us so I was taking a lot of notes. It was a wide ranging conversation with a lot of interesting statistics. As such I'm going to present it in point form as there's a bit much in there to convert into prose for a blog. Three quarters of these guys are wagering operators so when they are giving numbers these are not usually publicly available.
There was a lot of really valuable stats on their businesses to start:
- Overseas operators and coming in now in a big way on sports
- Racing wagering itself is moving towards sports
- Fixed odds growing in a big way as customers are gravitating towards wanting certainty in price
- Just about every bet these days is coming through on mobile phones. 80% of new customers are signing up on mobile (SportsBet)
- Strong growth in sports betting. Average punter age is 33 (SportsBet)
- Younger bettor is likely to be a sports bettor than racing (SportsBet)
- Tabcorp has 2M customers. 400k of those are account bettors (Tabcorp)
- Sports betting is the new entry point (Tabcorp agreeing with Cormac at Sportsbet)
- Tabcorp says roughly half of their $29Bn in Racing turnover is in thoroughbreds ($16Bn). 15 years ago 75% of their Racing turnover was in thoroughbreds (Tabcorp)
- Sports betting has brought young people in to be (UBet)
- Ubet expects to see sports bettors convert into being also racing bettors in 4 to 5 years (Ubet)
- Sports punters go to racing but not the other way around (UBet)
- 52% of new accounts during spring racing carnival last year were women (Tabcorp)
- Tabcorp is spending the majority of its money on people going forward. Especially on analytics on their customer (Tabcorp)
- Everyone agreed that tailored betting experience is going to be the next big thing
- Of the split in Tabcorps 16Bn of thoroughbred racing below. The growth is in the last two items:
- 25% Parimutuel exotics
- 25% Parimutuel win / place
- 25% Fixed odds
- 25% tote derived products
- UBet confirms that it is seeing the same sort of stats in breakdown as presented by Tabcorp (Ubet)
- In racing betting the growth is going from thoroughbred and more towards greyhounds (Tabcorp)
- Tabcorp presented their individual growth figures:
- Thoroughbred 3 - 4%
- Harness 5%
- Greyhounds 15 - 20%
- Sports 25%
- 8 years time they predict that sports betting will be the same size as racing betting
- TAB numbers are dwindling (Ubet)
- UBet retails stores are 50 / 50 race betting and sports betting (UBet)
- Tabcorp has 3000 outlets, 2700 licensed venues with 5M attendees each year in NSW/VIC
- Still big spending in venues (Tabcorp)
- Tabcorp is looking to have 300 niche venues where they have "plans" (Tabcorp)
- 12 sites will be experimental (Tabcorp)
- Sportsbet thinks that the overall punter mix is 25% retail only, 50% retail and online, 25% online only (Sportsbet)
They took a break from comparing the size of each others stats (and only that surprisingly) and then moved on to some of the challenges and opportunities:
- Legislative restrictions around the incentivisation of new accounts is a difficulty (SportsBet)
- Betting in the run only in bricks and mortar is a challenge (SportsBet)
- They all agree that wagering is still a good growth business
- Tabcorp said it was difficult running in 3 jurisdictions (NSW/VIC/NT) at the same time. UBet suggested that they harden up and try 4 like they do :-)
- Tabcorp has accepted the competition from corporate bookmakers and said it has improved their business (BCG: there was some giggling in the crowd at this)
- Tabcorp sees discounted tote betting as their main competition not the corporates themselves. This is why they entered fixed odds in order to mitigate it (BCG: My old horse, Luxbet)
- Tabcorp are more concerned about the regulatory restrictions preventing them from matching their products with competitors more than anything else (Tabcorp)
- Tabcorp mentioned that their Parimutuel takeout ran at around 15.5% - 15.3% overall while their fixed odds takeout was around 17%. Overall takeouts were both around $4Bn
- Tabcorp admitted that every time a punter shifts from Tote to FO they are better off
- Tabcorp sees difficulties with exotics. They are incentivising where they can to get people there (BCG: for the 25% takeouts one presumes)
- Tabcorp sees that flexibility in takeouts per meeting is required. They see that the takeouts being legislatively the same on provincial meetings and group 1 events is unsustainable (BCG: I'd like to see Bravo try and do that :-) )
- UBet is behind on self serve terminals and hopes to have them through regulation soon
- All participants in the panel saw the industry as being in good health
- Tabcorp is now insourcing digital. They have 70 staff here and want to grow to 200 in the next year
- 25% of Tabcorp's customers now use finger print technology
The conversation then turned to some of the business practices around fixed odds, in particular customer limits:
- Bet restriction models of corporate operators questioned. Sportsbet responded by saying that is only a small number of very vocal punters (SportsBet)
- $5000 minimum bet in NSW has made little difference to their bottom line (SportsBet)
- Cormac reckons many operators avoid the $5000 minimum in different ways (SportsBet)
- 99.5% of bets are under $500 (Tabcorp)
- Tabcorp actively monitors 4000 fixed odds customers. Claims that 99.9% are therefore unmonitored (Tabcorp)
- Tabcorp's fixed odds business is running at 5 Bn a year (Tabcorp)
- Craig asserted that the issue with the limits is that back in the day a punter will see a few punters get on a bet when the limits are coming before being knocked back themselves. He asserted that this visibility removed the complains that you get now when you can't see that people did get on and you just missed out as you were further down the line (Tabcorp) (BCG: Interesting itch that might need scratching. This has in it the seeds of a product I think)
They then moved on to what they all can agree on, offshore betting:
- They asserted that Hong Hong showed stats for 103.9Bn in turnover where the illegal market was bigger than the legal one
- The operators Betjack, SPO and citybet were mentioned (BCG: a few days earlier the Melbourne offices of BetJack were raided)
- They all discussed why people use offshore / illegal accounts:
- Being able to have multiple accounts
- Hiding cash transactions
- Products that aren't generally available locally such as lay
- They don't know how much money is going overseas but curiously the regular gets most of their information here from people complaining to them where they have been stiffed!
- UBet estimated that 20 - 30Bn is bet on AFL inside the country yet 100Bn worth of betting was available outside Australia. They again asserted here it was the products that they can't compete with (BCG: In run presumably) that prevents them from competing (UBet)
- They were asked about BetFair and Lay and supposed that it was their transparency that kept the regulator at bay here compared to the illegals
- Punters to be given access to the stewards tracking data for integrity (BCG: rumours suggest that this data may not be as valuable as VIC proposes. Only rumour.)
- TABS in pubs are loss leading. They treat them as a cost for customer information acquisition (Tabcorp)
- Continued investment in in-run sports for those who are allowed to
And finally they were asked about tote derivative products:
- The TABs reckon that tote derivative products is the only thing stopping a national tote pool
- SportsBet cheekily retorted that tote derivatives is a declining product for them and that it's now all about the quality of the offering. Especially from the mobile app.
So in summary it was a really involved discussion with a lot of really good numbers and their owners talking fairly candidly in the company of their competitors. Hence me furiously taking notes like a madman as you rarely get to know the split of everyone's books and where their growth is down to the product level.
Stay tuned for Part Two which will include more panel discussion and numbers for the data wonks...