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What if I told you that there was a person who had in hand in the creation of the two biggest handicapping contests (betting competitions) in the United States?
Ken Kirchner is that man. He was involved creation of both the National Horseplayers Championship and the Breeders’ Cup Betting Challenge. For my money, contests are still one of the most exciting growth areas in horse racing as they offer players a chance to compete themselves in a fun an exciting way. And then there are the benefits to the industry in both marketing and – when it comes to live bankroll play – through wildly increased betting handle.
Kirchner’s work on contests went back before either of the aforementioned “major” events. “I was involved with the World Series at Penn National, and of course you had other large tournaments in Reno and Vegas that put an emphasis on handicapping and prizes paid out to those involved in the contest,” he said.
The NHC represented a sea change in contests. What started out as a relatively small event has blossomed in its two decades of existence to where it now has a purse of over $3 million. But that was only the beginning. Kirchner described his time working at the Breeders’ Cup
“I was in charge of the player initiatives, international television, and simulcasting. One of my primary goals was in finding ways to increase parimutuel handle which of course would increase total revenues.”
One of the projects he worked on was the de-coupling of entries at the Breeders’ Cup. “There would be races with four D, Wayne Lucas horses in the juvenile races or Godolphin with three horses in a turf race,” he said. “All of this lessened the betting interests of races and reduced the parimutuel handle. What we did and which required us going in front of gaming boards was uncoupling these horses and it took a lot of effort.”
One key Breeders’ Cup initiative was to get more players involved. “We formulated the idea for a live money, high bankroll handicapping championship, which was modeled in a lot of ways on the World Series of Poker.”
The rules were simple. It cost $10,000 to play, with $2,500 funding a prize pool that would be paid back to players with money added to the pot. The remaining $7,500 would be wagered on the Cup races in certain pools with certain minimum requirements.
“I don’t think the sole motivation was to drive revenues, but it certainly was a factor in trying to bolster overall parimutuel handle while at the same time giving players a chance to participate in a competition directly associated with the Breeders Cup,” Kirchner explained. “It has turned into a monster in terms of its overall ability of turning handle when you look at over 400 entries upwards of $15,000 per entry. That can generate upwards of six million dollars to the event.”
As big as the BCBC is overall, I can’t help but feel that there are even bigger opportunities in the contest space that the industry has yet to seize on. I shared this idea and asked Kirchner what’s coming next for contests.
“It’s the 64 million dollar question that racing has struggled with for so long. How do we create avenues for the players to be interested? Part of it is not really the lack of innovation, but more so that unwillingness to take chances. To put ideas out there and risk failure in order to succeed, and I think in so many ways its easier for tracks to just do what they have done as opposed to trying to come up with new things.”
I would have thought contests proven record of success would break through this barrier and to some degree that is true.
“Handicapping contests have now become an accepted means to engage players and drive handle where most tracks have at least one contest,” Kirchner said, before pointing to the elephant in the room.
“More recently, in the last decade or so, you have more and more tracks being owned and operated by non-wagering people which hurts the innovation on the wagering side, and I think you’re going to see that problem become more exaggerated as more and more tracks come into direct competition with sports betting which is now legal in 24 states.”
I’ve contended that sports betting is as much an opportunity as it is a threat, and I shared that notion.
“I’d like to be optimistic and say that sports betting will push horse racing to be more creative,” he said. “The reality is that I think there will be pockets of innovators that will capitalize when sports betting becomes available, particularly at the track level either as a retail establishment or the tracks themselves being able to offer it. Whether it’s fixed odds or contests, I think we can utilize what sports betting will offer to give us to present to a new audience which may be the biggest opportunity we get to find products that appeal to that audience.”
One related area where Kirchner thinks racing needs to innovate right now is with data.
“There is going to have to be an awakening on data,” Kirchner explained. “Of course, there will be room to sell premium data, there is a space for Beyer figures or some proprietary thing that allows players to have an additional edge should they want it. However, there needs to be a baseline of general information that anybody can pick up and look at to make a decision. It may not be the most informed decision, but enough to make a wager.”
This mirrors sports betting, which is sure to become the “new normal” across all forms of gambling. “When you’re betting anything else you get baseline data,” he continued. “This is an impediment to entry which has bogged us down the industry for 50-60 years. It’s held us back from reaching a wider audience.”
Technology is another area where racing needs to improve to compete. “The tote issues go deeper than just the state regulation issues where you have so many different governing bodies in racing. You also have antiquated technology you have systems that have been patched numerous times and it’s not a robust system that is 21st century, it’s more like 1950s technology.”
Emerging markets have become a big thing in sports betting and even in racing across the world. Kirchner cited “flex wagers,” where you can bet on many more combinations but at smaller denominations, and in-game bets, as examples of wagering innovation in the wider world.
“Currently 70 percent of bets are placed pregame and 30 in game and I predict within ten years that number is flipped. If racing can keep up is going to be a deciding factor if we can keep up viability going forward,” he said.
We closed our chat bringing it back specifically to horse racing contests.
“I think the next step in the evolution will be more tie-ins amongst contests,” he predicted. “Not a league structure exactly, but maybe a structure that would allow for increased competition, maybe even teams. Tracks will likely look at more tournaments and opening it up nationwide through various ADWs. The formats will change and cater to different bet types.”
As one example, he cited a plan he’s involved with. Last year’s Kentucky Downs contests were wildly successful, and this year they’re going to interconnect them, crowning a Turf champion at the end through three two-day contests that span the entirety of their six-day meet.
“We’re looking to build upon last year and giving players what they get at Breeders’ Cup – large fields and good racing.”
Based on his previous track record of success, I wouldn’t bet against Kirchner being part of the next big innovation in contests
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