While the gambling industry is booming, the racing product has stalled, according to a new study by Queensland and Western Australian researchers.
'The racing industry stands in stark contrast to the rest of the gambling industry,' Rohan Miller said.
'Racing's market share as a percentage of the entertainment business and against other forms of gambling is decreasing.'
Mr Miller, of the UQ Business School at UQ Ipswich, Professor Dick Mizerski of the University of Western Australia and Dr Katherine Mizerski of Edith Cowen University recently completed an exploratory study of customer orientation and product attributes in the racing industry.
The Australian racing industry is estimated to be among Australia's top five industries with a turnover of $20 billion, direct and indirect employment of 250,000 people, and contributes 0.5 percent or $2,400 million to Australia's Gross Domestic Product.
Gambling income from all forms of racing, on and offtrack for 1997-98 is estimated at $1,600 million. Australia has some 120,000 registered Thoroughbred horses, of which an estimated 36,000 horses make over 200,000 starts, racing for nearly $200 million in prize money.
Mr Miller said the racing industry stood in stark contrast to the rest of the gambling industry - it was stalling in a time of boom.
'Racing's market share as a percentage of the entertainment business and against other forms of gambling is decreasing,' he said.
He said U.S. trends indicated that the average daily wagering on all types of horse racing declined by 61 percent in real dollars between 1960 and 1994. Similar trends were apparent in Australia.
The proportion of household disposable income spent on gambling in Australia nearly doubled from 1.7 percent in 1982-83 to 3.2 percent in 1997-98, resulting in overall gambling industry growth of 41.5 percent.
Despite these growth rates, racing increased by only 6 percent from 1994-95 to 1997-98, roughly the same as CPI increases during that period. In one state, Queensland, the racing industry's market share as part of the gambling marketplace dropped from 30 percent in 1991-92 to 16 percent in 1997-98.
'Clearly, the racing product is under performing,' Mr Miller said.
'While more research is needed, we believe racing is not customer focused at any level (clubs, control boards and TABQ). Government may be to blame as it sets the legislation under which the industry operates.
'Further, from a new or potential consumer's viewpoint, racing is an exceptionally complicated product.
'Selecting the winning horses or combinations requires a high level of involvement and a willingness to become involved in the product over a long period of time to gain detailed knowledge of the sport, the handicapping scheme, the tracks, horses and jockeys.
'This combination of factors is likely to leave new consumers feeling as though they lack the appropriate information to have any real chance of winning.
'While racing is yet to find ways to turn two-dollar bettors into millionaires, the high level of involvement required for racing stands in contrast to lotteries and casinos that make major payoffs to small bettors on a regular basis and publicise these occurrences.
'An interest characteristics of betting on races that is in contrast to most forms of gambling is that totalisator consumers do not know the real odds they will receive.'
The researchers developed tools to identify racing product attributes considered most important by existing racing consumers. This information may provide a focus for marketing and promotional campaigns, including product development.
They said the racing product could be better defined to appeal to new and light users.
Last year Mr Miller presented several papers at the World Gaming conference in Las Vegas and made a submission to the Queensland Government on national competition policy issues for the Queensland racing industry. Mr Miller, Professor Mizerski and Dr Katherine Mizerski also presented a paper suggesting structural change in the Queensland racing industry at the National Association for Gambling Studies 10th national conference in Victoria. This year, these researchers have made a submission to Western Australia's Racing Commission.
Media: Further information: Rohan Miller, telephone 07 3395 7792 or mobile 0411 123455, email: r.miller@gsm.uq.edu.au
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