HORSE racing operators have to form other kinds of strategic partnership besides commingling to cope effectively with the strong competitive challenges now being posed by other gaming and leisure entertainment businesses, Chief Executive Officer of The Hong Kong Jockey Club Winfried Engelbrecht-Bresges has told an international racing conference in London.
In his keynote speech at the inaugural Leaders in Racing conference, Engelbrecht-Bresges noted that turnover in the global gaming market had seen growth of seven per cent between 2007 and 2010, and projections suggested it would see 14 per cent growth from 2010 to 2013.
In contrast, global racing turnover had stayed flat over the same period, and was expected to remain at similar levels for the next few years, compounded by a shrinking and ageing customer base. He warned that global racing operators must take action to respond to this challenge.
“There is no doubt that the global racing business is not on an upward trend, and the industry needs structural changes to reposition itself,” Engelbrecht-Bresges told more than 200 delegates from over 20 countries at the conference.
Studies suggested horse racing now held only a 20 per cent share of the global gambling market, similar to the shares attributable to lotteries, casinos and gaming machines last year. These figures reflected the significant competition horse racing faced both as a sporting and leisure entertainment option, and as a product within the global gambling market.
The online gaming market was a major potential growth area, but this presented even greater challenge, Engelbrecht-Bresges noted. Horse race betting had so far captured only five per cent of this market, far less than the 40 per cent achieved by general sports betting.
Horse racing was perceived as a game for more mature customers, he observed, and traditionally racing products used to be too "product-driven". This has led to the design of product offerings, e.g. field size and quality of fixtures, not from the customer perspective, hence not maximising their potential.
Now was the time for racing jurisdictions and racing operators to make changes by undertaking a real customer segmentation exercise to address needs and create a value proposition for current and new customers.
Engelbrecht-Bresges highlighted the importance of taking action to enhance customers’ on-track and off-track racing experience by upgrading on-track facilities and making racing accessible and comprehended by new customers, as well as embracing technology in presenting racing products and information.
He noted that most racing jurisdictions had to address the problem that they were not vertically integrated, with notable exceptions like Japan and Hong Kong. Elsewhere, elements such as race production, race planning, prize money setting, racecourse experience, wagering experience, video and sponsorship rights were all basically operated under different ownerships.
“Without this integration, the task of agreeing a growth strategy becomes difficult, as the interests of various stakeholders are not necessarily aligned,” he conceded. “But it is not Mission Impossible.”
Engelbrecht-Bresges shared the Club’s experience of adopting a more customer-centric strategy in its racing business development, noting that this had proved in successful not only in halting Hong Kong's spiralling downward trend in turnover, but in reviving it from HK$60 billion in 2005/06 to HK$80.4 billion last season.
Within the organisation, clear objectives and performance indicators were set, aiming to revitalise and rebrand horse racing. He briefed the audience on extensive customer segmentation exercises conducted by the Club over the past few years, which had helped it offer designated services and racing experiences to different customer groups, ranging from racing and lifestyle seekers, to racing hobbyists and money-driven regulars.
To strengthen the impact of domestic changes, Mr Engelbrecht-Bresges concluded, racing operators with the necessary resources should take the lead in forming strategic partnerships to address the industry's global issues and challenges. This meant setting their sights further than the successful commingling partnerships now established between many jurisdictions.
“Commingling is currently a value proposition for global partnerships, but Customer Programmes cannot be focused on improving wagering experience only; they have to focus on holistic customer needs to grow the customer base,” he said. “Rebranding of Racing is an imperative global exercise, especially to position Racing as a global sport.”
HONG KONG JOCKEY CLUB MEDIA RELEASE