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

Imagine you were at a gathering of horsemen in Canada in 2002. Slots are spinning. Nice purses are being paid. Everyone is happy. Suddenly, in the back of the room, a person stands up and shouts this preposterous proposal.

“We should take ten percent of every purse dollar for investment and new initiatives in harness racing. Yes, I realize we are talking hundreds of millions and some of the money may prove unproductive.”

The roar of disapproval would have been deafening. The speaker would have been viewed as a fool. The idea of recycling ten percent of your income for such a nebulous purpose would have been as popular as a scorpion in a sleeping bag.

Next March, it appears that Canadian harness racing will face a separation from slot machine funding. The divorce was swift and will be painful. Here are a few paragraphs from one government transitional panel report that rationalizes the decision.

“The panel has concluded the government made the right decision to end the Slots at Racetracks program — a program that cost taxpayers $345 million a year. The panel said it would be a mistake to reinstate the program — going so far as to call it ‘poor public policy.’ The easy availability of slots revenue has enabled the industry to evade the serious challenges it faces in today’s hyper-competitive gaming and entertainment marketplace. In exchange for new public support, the panel recommends that the government demand reform of the industry. In 1995, the Ontario Horse Racing Industry Association published a strategic plan that called for innovation, observing that the industry has not changed the way it presents and packages its core product — the race.”

Autumn Ryan graphic

What would the Canadian harness racing scenario be today if for the past decade they had listened to the lone voice from the back of the room? What if for the past decade harness racing had massively funded initiatives in technology and promotion? What if they had a treasure trove of rainy day funding?

Consider this a similar suggestion from the back of the room asking for a mere one percent investment in the future of harness racing.

In America, the harness racing relationships with casino gambling are going to end badly. Hopefully, the relationships will last for a few more years, but wagering our future on casinos is like booking a cruise with Somali Pirates. Casinos are not pirates; they are businesses, solid businesses. Casinos are not the villains in this piece. Quite the opposite; they have given us time and money. But in the end, casinos are businesses and businesses love profits. Unless harness racing brings profits, why should they love us? This is a troubling conundrum.

Stating the obvious is no solution and does not pay the rent. But the future will come, and it would be nice to have the sport of harness racing in it. Closing our eyes and hoping events mysteriously turn out favorably is not a plan. We need to take some concrete action to avoid the fate of our friends up North. If horse racing is to have a future, changes must be made.

What changes? How do you remodel a century-old sport? Do we wildly start firing out radical new initiatives? Lower the takeout to two percent? Increase it to 50 percent? Become a private sport? Harness giraffes? Spend our money encouraging attendance on site? We know we must do something but nobody is quite sure what. We need some structure for innovation, a semblance of national unity of purpose, and we need it immediately.

Here is one plan; maybe a bad plan, but a bad plan is an upgrade from no plan. We could start tomorrow by converting a struggling California racetrack into what every decent business needs — a research and development facility. Not a vague, vacuous money pit of pipe dreams but a testing ground for pilot projects. There are two basic tracks in R & D; one is to develop new products, the other is to uncover and develop value in the services and processes of existing products. We could use both in our sport.

Why California?

California has a dense population, they have gambling, the time zone offers intriguing internet opportunities, the weather is pleasant, and horse racing has a glorious past. The hard times in California would find a racing community willing to participate. In addition, California has a reservoir of minds in the entertainment, marketing and computer industries. The strategic betting proposal came out of California; it was terrific and we need more initiatives like this one.

Our California incubator would not reinvent the wheel. For the most part, harness racing as we know it will not look much different. The goals will be to reposition and monetize harness racing. The teams could work on wagering platforms that we cannot imagine, marketing programs that boggle the mind, and the Shangri-la of horse racing — international wagering on trotters and pacers.

So what would these smart nerds who do not know a sulky from a Suzuki do in the offices of a California racetrack? Many things, all based on behavioral and motivational principles. Among them, study how to attract new customers, reignite interest, create entirely new markets, and look for efficiencies. They could create production paradigms that make our sport pop off the screen. For my money, the vast majority of the work should be based on digital platforms, since the internet is our most promising frontier.

The mission statement should be simple; we have a nice product, modernize and monetize harness racing.

A large portion of the work would be studying people, gambling people. We need to move horse racing up the menu of gambling choices and to do so we must ratchet up our presentation. And here is our true ray of hope — we can offer an excellent gambling option with our sporting tentacles.

Most good R & D departments do a blend of technological and psychological research. Casinos know their customers have chosen to sit mesmerized behind a machine or at a blackjack table because it fills a need. Casino players are on those stools because of convenience, comfort, safety, conditioning, sights, smells, sounds, and a hundred other reasons. We need to know what motivates our customers, where they are, and what will attract them to the grandstand or I-pad.

Now let’s turn to where most initiatives stop in harness racing; funding and cooperation. Asking people to give up a sliver of any harness racing pie is like asking Charlie Sheen to give up socializing; it’s painful but in the long run it is good for the body.

The funding for a compact R & D program at a California racetrack could be miniscule. Actually, the operation could produce a net gain in a very short time. Nothing changes; the racetrack tries to eke out a small profit, however, they will receive some additional revenue for agreeing to be our laboratory. The main difference between this California track and every other struggling track is that they must be flexible and constantly willing to test projects that flow from the R & D people.

To begin, we need a few computers and salaries for a dozen R & D hires that have been selected by a screening committee. We need applicants who, in their application and interviews, have demonstrated they have some new marketing ideas or technological skills. In hiring these people we could look for some individuals with shovel ready projects and look for others willing to test proposals that are suggested by members of our racing clan.

A racetrack/research facility opens more doors than just a gambling venue. A segment of our new staff would seek grants and funding, because state governments (even national governments) have shown a willingness to fund R & D in areas that hold the potential for jobs and future revenue. Research projects often make cutting through bureaucracy less cumbersome. Workers in R & D are often highly motivated because the carrot of a big breakthrough (and payday) is ever-present.

Nobody can force anybody to do anything in our sport. Voluntary cooperation is unlikely. Racetracks have the power of the purse; they can decide how much purse money to pay. Why can’t we ask them to take a sliver, a tiny, tiny sliver, of the purse money to set up our laboratory? The percentage should be based on annual purses. For once, every single racetrack, those with slots purses and those racing for blankets, would have some skin in the BIG game — the game of staying alive. Ask yourself, as an individual or racetrack, would you cede .009 percent of your income for the future? If the answer is no, the future is bleak.

Having all hands aboard would be terrific, but if cooperation proves too complex, if some players will not go along voluntarily, we should not give up. Perhaps a benefactor or consortium of benefactors could finance shortfalls in the R & D initiative.

As to administration, perhaps the Harness Tracks of America, one of Stan Bergstein’s legacies, could take the reins and responsibility for staffing and supervision of our R & D division.

If you want to find reasons why we can’t do this, it will be easy. But we must take some proactive actions while we still have slot machine money. The few states with slots will have to foot most of the bill because — well, they have the money, and the research is for their benefit. When the legislative reaper calls (and he will), at the very least, harness racing can point west and say, “We have some very interesting models under consideration in California; take a look at this data and these projections.” This response will be an improvement over shrugging our shoulders.

Successful businesses always look ahead. They do not offer the same (and in our case parasitic) model year after year in hopes that the customers will magically wake up and storm the doors with fists full of money. To succeed you need to study and work. The winners are in front of the curve and to get ahead of the curve in this rapidly changing world we need a semblance of research and development.