Evans: Internet and ADW Key to Growth
Churchill Downs Inc. has invested $100 million in advance deposit wagering for a reason: The company believes it’s the major growth channel for pari-mutuel wagering, as well as a means to drive traffic to the racetrack, CDI president and chief executive officer Bob Evans said.
Evans, the luncheon speaker during the first day of the Kentucky International Equine Summit in Lexington April 28, outlined plans by CDI to use the Internet and ADW, also known as account wagering, to increase handle and public interest in Thoroughbred racing. His comments came as CDI is in a dispute with horsemen over how much revenue ADW should contribute to purses.
The Thoroughbred Horsemen’s Group, in an attempt to generate more purse money from ADW, advocates that racetracks, purses, and ADW operators each get one-third of the revenue.
“We’re involved in a pretty significant battle with horsemen,” Evans said. “I’m not going to try to explain it, but I do know it makes our business unprofitable.”
Evans called it “wasted time” trying to cut up the share of revenue from wagering that isn’t growing.
“The only solution is to look for ways to share the upside,” Evans said. “The $15 billion (a year in wagering on Thoroughbred races) needs to be $45 billion for everyone to make an adequate return on capital. Everything else is just rearranging the deck chairs. There’s just not enough money to go around.”
Evans took a page from television talk show host David Letterman in outlining why ADW is so important to CDI. He offered a top-10 list:
10. ADW is the most convenient form of wagering on horse races.
9. ADW offers the lowest cost to wagering providers.
8. ADW is the best means to build a fan base.
7. The online wagering experience can rekindle interest in the on-track experience.
6. ADW is the least expensive means of delivering the product.
5. ADW is the most practical way to enter markets outside the United States.
4. ADW provides the most cost-effective way to market horse racing.
3. The Internet allows racetracks to better understand their customers.
2. The Internet facilitates new customer-geared features.
1. The Internet “nationalizes” the relationship between investment and financial return.
In explaining the cost factor, Evans noted it costs $18 million to $23 million a year to distribute HRTV and TVG, the industry’s two racing networks. (CDI owns HRTV with Magna Entertainment Corp.) Internet delivery is much cheaper, he said.
CDI plans to upgrade its Internet presence and its TwinSpires.com wagering platform by introducing a video interface that will provide four video screens, chat lines, one-to-one promotions, and video replays of races, Evans said. Further down the road, there could be “multi-media” handicapping capabilities that could allow customers to put together digital races based on past performances.
Evans said the online experience can be used to drive on-track attendance. He said, for instance, the Internet and all its resources did little to damage the viability of libraries.
“I’ve been told not to use non-racing events to attract fans,” Evans said. “The whole idea is to chase customers with the idea of entertaining them first.”
One racing-related promotion Evans said is a success is online Kentucky Derby parties. Fans can register online and use the Internet to manage the parties, as well as wager through TwinSpires.com. Thus far, there have been about 6,000 sign-ups for a total of 36,000 attendees, Evans said.
Evans also said he believes the Internet promotions can lead to sponsorships and media-rights packages, which in turn can generate on-track business.
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