This is Part 7 of the Thoroughbred Idea Foundation's (TIF) series “Wagering Insecurity.”
Faced with remarkable competitive pressure from the rise of legal sports betting, horse racing is at a crossroads.
Confidence amongst horseplayers and horse owners is essential to the future sustainability of the sport. Efforts to improve the greater North American Thoroughbred industry will fall flat if its stakeholders fail to secure a foundation of integrity, along with increased transparency of the wagering business and its participants over time. Achieving this is growing increasingly difficult after the sport has neglected its core base – horseplayers – for decades.
“Wagering Insecurity” details some of that neglect, and the need to embrace serious reform. Fortunately, there are examples across the racing world to follow.
PART 7 – Z
Transparent oversight of racing has been defunded over decades and customer protection remains weak. North American Thoroughbred racing in the 2020s is saddled with a regulatory infrastructure designed for a sport in the 1970s.
Racing has to change.
Ten years ago, Jockey Club research conducted by McKinsey showed that a minority of racing fans, just 46% of those surveyed, said that they would recommend the sport to others.
“Thoroughbred fans are almost twice as likely to recommend baseball (81%), football (73%), or basketball (77%) to others as they are to recommend Thoroughbred racing.”
There are many reasons for racing's waning appeal among its own fans but the gambling experience is certainly a key one. Simply getting more eyes on racing is not going to be enough to sustain interest amongst future generations.
While many of racing's existing American customers have long been accustomed to a sport with substandard, haphazard and insufficient oversight, the next generation might not be as forgiving. A 2019 piece by Julie Arbit, Global Senior Vice President, Insights at VICE Media Group, highlighted this burgeoning need among Generation Z, whose oldest members are now in their mid-20s.
“Gen Z is coming of age in a world of infinite choice, and this affects everything from how they define themselves to how they love and how they buy…
“If brands want consumers to be committed to them, brands need to be committed to consumers. What brands say and do should demonstrate this dedication — showing that the satisfaction and happiness of their customers is of utmost importance. Trust is also paramount in relationships, and brand relationships are no exception. Authenticity, transparency and two-way dialogue with consumers are essential.”
The topic has been raised in racing too.
Dr. Jennifer Durenberger, Jockey Club Steward at the New York Racing Association, has served as both a regulator and regulatory veterinarian, among many other roles across racing. In a 2019 presentation at the University of Arizona's Global Symposium on Racing, she highlighted the growing interest consumers are showing in the values of companies they patronize.
“Ethical consumerism is when a consumer consciously chooses or avoids a product, or an experience based on the perceived ethics of the processes that are used to produce them.
“…this is not just a Millennial or a Gen-X phenomenon…this is consumers who actively consider company values when making a purchase and remember these are purchases of inanimate objects.”
How can American racing hope to compete in the future for market share if newer potential customers are turned-off by the sport's poor standards of oversight? Sports betting customers in America generally have confidence in the betting systems and oversight of major sports for which wagering is accepted.
At the time of this publication, 26 states and the District of Columbia, accounting for more than 45% of America's population, reside in a state where sports betting is legal. Nearly all of those states are currently accepting bets at present while others will launch soon.
While American horse racing is a laggard, others in the racing world are staying relevant and accomplishing this far better.
COMPREHENSIVE REVIEWS LED TO UPGRADES
North America is an outlier when it comes to monitoring wagering and uncovering malfeasance.
Two other major racing jurisdictions – Australia and Great Britain – have aggressively promoted racing and wagering integrity during the same two decades (2002-present) while America has floundered on such issues.
The British Horseracing Authority (BHA) has been a leader in monitoring wagering as a key component of its integrity services. Australia, which operates a state-by-state regulatory system similar in basic structure to America, has created independent statutory authorities to enhance integrity across all facets of racing.
The British racing industry studied the matter across 2002-2003, published the Neville Review in 2008 which, among other things, “assessed the role and procedures racing and sports governing bodies should adopt when dealing with matters that may involve breaches of the criminal law as well as its own rules in relation to corruption connected to betting.” In 2016, it followed-up with the Brickell Review.
In the foreword of the Brickell Review, then BHA chief executive Nick Rust outlined quite clearly the importance of the topic to the sport's regulators.
“It should come as no surprise that one of my priorities is to continually improve our integrity work to make sure we have the confidence of participants and the racing and betting public.”
Confidence is good for business.
Australia's focus is similar, but approaches it differently.
Victoria is Australia's second largest state and its capital, Melbourne, is home to one of the great racing festivals, headlined by the Melbourne Cup.
In 2007, Victoria's Minister for Racing commissioned Judge G.D. Lewis to:
“…lead a process of consultation with racing industry Controlling Bodies and stakeholders, with the objective of identifying options to ensure that integrity assurance within the industry is of the highest standard.”
“For the purposes of this Review, “integrity services and systems” were deemed to include: overall stewardship and associated investigations, race-day operations, betting compliance and regulation, veterinary services, drug control, licensing and registration.”
The finished product, known as the Lewis Report, can be read in its entirety here.
American racing has not seen anything similar to the Neville Review, the Brickell Review the Lewis Report, or a 2018 Australian update, the Wood Review.
That is part of the problem, according to global sport and racing integrity expert, Professor Jack Anderson:
“Thoroughbred racing in the U.S. urgently needs the equivalent of a Lewis Report and one that would follow a similar methodology to the integrity reviews undertaken [by both the BHA and Victoria].”
Anderson says that such reviews offer an opportunity to reset expectations and prepare the industry for a major boost to integrity that is most needed. For him, two key principles emerged from these reports:
“The greatest threat to the integrity of racing in the U.S. and elsewhere (be it race rigging for gambling purposes, doping, animal welfare) often comes from poor but engrained practices and culture within the sport itself and not external threats.
“The first, and most prominent recommendation in the Brickell Report, is related to engagement with participants in the industry and the need to consult continuously with the sport's stakeholders to better ensure 'buy-in' from the sport for integrity initiatives.
“Rewarding good behavior in the industry, consulting them on education initiatives and better communication between regulators and the industry's participants perpetuates long term trust and confidence in the integrity of the industry as a whole.”
“Second, and similar to the Lewis report's recommendations in Australia, it is unlikely that any review of the thoroughbred industry in the United States would recommend either that the status quo in, or piecemeal reform to, current integrity services in the sport nationwide would be the way forward.
“Radical, comprehensive and, likely, federally mandated statutory reform is needed to better promote the integrity of thoroughbred racing in the U.S.”
While it is unlikely that the Horseracing Integrity and Safety Authority (HISA) will take-up wagering systems integrity, bet monitoring and understanding wagering's role in rules violations and potential criminal infractions is a basic practice around the world. Communication around such incidents is routine.
Measures of transparency from international racing regulators far exceed America's standards at present.
Coming Thursday, May 5: Part 8 – Damage
Miss a previous installment? Click on the links to read more.
Part 1 – Expectations
Part 2 – Intertwined
Part 3 – Volponi
Part 4 – Confidence
Part 5 – Bingo
Part 6 – Proof
Want to share your insights with TIF? Email us here.
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