by Bob Carson

Editor’s Note: The USTA website is pleased to present freelance writer Bob Carson and his popular “Outside the Box” features. This monthly series is a menu of outlandish proposals presented with a wink — but the purpose behind them is serious. The views contained in this column are that of the author alone, and do not necessarily represent the opinions or views of the United States Trotting Association.

Bob Carson

Can you guess this business?

I have been around for a long time, almost a century; once upon a time I was very popular.

I only work in select territories and have had a difficult time finding footing in new cities.

I am very highly regulated; this regulation cuts into profit margins and stifles innovation.

My roots are in transportation.

I have kinsfolk in other cities, but we are more competitors than compatriots.

My workers toil away in a labor intensive field for low wages.

My customer demographics are aging.

I have a monster at the door, a competitor who allows customers to tap a button and start the transaction.

I have difficulty competing because the interlopers in what was once a monopoly can instantaneously give customers the complete paradigms of a potential deal including payment and logistics.

I am more expensive and less convenient than emerging competitors.

I am not harness racing.

Before revealing the answer, a disclaimer is in order. My portfolio consists of horrors such as a time share in Alaska, Monkybiz (an internet social networking IPO for monks), and a dozen Standardbred yearlings at public auction.

Autumn Ryan graphic

The answer to our little quiz is…the taxi cab business. The stifling monster is Uber. Or it could be Lyft or Sidecar. When they smell money, competitors come from everywhere. These digital startups are basically apps and algorithms with very limited brick and mortar infrastructure. You push a button, a car shows up, you hop in, no cash changes hands and customers feel empowered. Uber has been in existence for less than five years but they are already in 200 cities and their value is soaring to ridiculous heights.

Uber did not reinvent a market where people needed to get from their apartment to their therapist. Uber did not reinvent the automobile. Uber’s role was improving and monetizing in the digital age.

Just as there is an evolving market for transporting people, there are evolving markets for online recreational gambling. Harness racing needs to be in the new marketplace; monsters will be coming for gambling money, and like Uber, they will come from the clouds.

Harness racing understands first over, overlays, second dam, stakes eligibility, take-out and spit boxes. We do not understand convertible debt, click-bait switching, liquidation preferences, pro-rata rights, The Wire Act of 1961, trolling, vertical silos and bootstrapping.

We can put on a show, a potentially valuable show. Nobody needs to reinvent the harness horse, nobody needs to reinvent racing. The world continues to change and we need a road in that complex world.

We need outsiders, ala Uber, who take us into the future in a cloud based gambling environment. The winners in this game (and the billionaire conglomerates are well underway planning their strategies for internet gaming and gambling) will be motivated by money.

So will their customers.

Look down the road. A sport/game in the online gambling world with a return on invested dollar of less than 90 percent will be headed for a cliff. A clunky user experience will place any sport in a no-go zone. New gambling customers will not settle for less.

Imagine a world where you could wager harness races with a take-out percentage in the single digits. Every fool would believe they could print money. I would cash in all 50,000 shares of my Enron stock and place the entire $16 on the next race.

Should an Uber-like business create a harness racing product where the customer can occasionally beat the house and turn a profit, they will make profits.

Obviously, reducing the take-out is a heavy lift. Especially vexing is skirting existing regulations that paralyze harness racing and seem impossible to conquer. But, as companies like Uber demonstrate, combating the status quo and entrenched business models is possible and profitable. It is what businesses in the new world do — streamline and remove excess baggage.

If Uber had taken a look at New York City and other major markets and decided that the unions, politicians, existing legislation, competitors and obstacles that the taxi cab business had in place were insurmountable, they would have stayed in Venture Capital City.

Uber did not flinch. They gathered investors, ran their algorithms, did their research, wrote their codes, lobbied the right people, mined the data and they got to work. When the lawsuits and challenges from entrenched entities fought them, they had lawyers and money to fight back. Every day, they fight and win.

Deep down, Uber investors had a belief that if they offered a great product at a lower price point on a brand new platform the money would tilt their way. Capitalism would win out.

They were correct. Cabs were great. We loved their ripped seats, strange smells, circuitous routes, fare meters spinning like pinwheels, honking horns and occasional driver who appeared to be moonlighting from a pirate ship. Traditional cabs will go the way of phone booths, drive-in movies, cassette tapes, and pocket watches — great products that were swept away by the tides of time.

Would you invest in a cab company or Uber?

Always follow the money. The all-stars in the private equity buyout business (CVC, Blackstone Group, Apollo Global Management) are on the prowl for new industries to financially engineer and roll-up for online gambling. They believe it is inevitable that in the near future placing a wager from your laptop will be as simple as watching a film on Netflix.

Harness racing needs to be part of their planning, we need to get our foot into those meetings and say “In the emerging IG (Internet Gambling) world, harness racing could be a valuable product line. Consider us.”

We need to latch onto a team and show them harness racing has attractive assets. We are a gambling entity where players have control of their wager and access to unlimited research. We have magnificent animals. We are real time. We are a real sport with dramatic little explosions of winning and losing. We have a history. We have pools of money waiting to be mined. And in legislative battles, wagering on horse racing has some immunity.

A task force representing our sport with the simple goal of placing harness racing on the table of people who are in the business of making money out of ideas would be a good idea. Give them the assignment of making quick pitches to the serious players who are formulating interactive online gambling strategies.

As an existing gambling sport we should get an audience. A simple presentation of the money involved and the potential harness racing can offer in a digital gambling world should be placed at the feet of commerce royalty.

The risk to harness racing would be a few plane tickets. The rewards would be beyond calculation. If a cyber-startup or titan in the internet world grabs the idea that our sport can make them money, the future is bright.

If they pass us by, we better call a cab.