Virtual Hot Topics At RB Forum

Paris, FRANCE–eSports and virtual racing, as well as customer loyalty and ePayment in the ever-evolving digital age, were the key topics discussed at the ninth Racing and Betting Forum presented by the EPMA, PMU and IFHA in Paris on Friday and attended by 170 delegates from 24 countries.

Global eSports is a rapidly growing entertainment and wagering outlet that generated about $325-million in 2015, a figure that is expected to grow to around $500-million this year with a predicted audience of 150-million. Major brands like Coca Cola and Red Bull have ramped up their sponsorships of eSports, with their sponsorship dollars for eSport events expected to match their contributions to live sports in 2016. Thus, the eSports market is not one that can be ignored by racing.

Keynote speaker Theophile Monnier, managing director of eSport web TV service Eclypsia, began the forum with an overview of eSports, which started about 10 years ago and has a core audience of young people in the 16 to 22 age bracket. Monnier described eSports as a “gaming subculture where most of the components are free.”

“Young people want to feel connected to their friends, so young people play from home and feel connected to their friends through integrated tools,” Monnier said. “They have their own culture, and it is quite far away from the horse racing universe.”

League of Legends is the most popular eSports platform, representing about 60% of the eSports scene with 100-million players and a peak of 7.5-million simultaneous players.

Just as live sporting event advertisers are crossing over into the eSports world, so too are athletes. Former professional basketball player Magic Johnson last week bought a famous eSport team, and he is just one of many sportspeople now investing in eSports.

One difference between racing bettors and eSport players is that eSport players are more reluctant to use “real money.” “eSports fans are gamers, not gamblers,” Monnier explained.

How can racing become involved in the world of eSports? It will take some innovation, Monnier predicted.

“If you want to develop an eSport offer, you have to learn about the culture,” he said. “You cannot simply take the old recipes from your racing and betting culture and put them on the eSport culture. This will not work. You have to develop new offers for people who are attracted to gambling in a completely different way, and you have to be strongly linked to the gaming community.”

Monnier said the lack of organized real money betting in eSports has created an opportunity.

“It's time for the big federations of gambling, with structure, to get into this business,” he said. “But this has to be done step-by-step, and a good way could be to sponsor a team or organise a championship and interact with the audience; to progressively bring your brand and culture into the eSport universe.”

“Traditional forms of betting won't work in eSports: you have to set up an attractive betting offer for digital-minded people,” he added. “You have to find ways that they can expect to win a lot of money. Real betting on eSports is not attractive because there aren't ways to win big money, so they'd rather bet virtual money.”

Virtual Racing: A Help Or A Hindrance?

While racing has yet to break into the realm of eSports, it has witnessed the rise of virtual racing, where customers bet on fictitious races. The Racing and Betting Forum included a debate entitled, 'is virtual racing an opportunity or a threat to racing,' featuring panelists from four countries: Paul Cross of Tabcorp in Australia; Lorenzo Stoppini of Italy's SNAI; Mikael Lagberg of ATG in Sweden, and Witek Wacinski of the UK's Inspired Gaming. While the panelists presented varying views on how virtual racing is perceived and used in their countries, they agreed that virtual racing is a complimentary betting product to live racing.

Wacinski explained that virtual racing was first born in the UK as a response to the 2001 foot and mouth outbreak that saw a number of live meetings cancelled, leaving betting shops with nothing to display.

“The betting shops realized it's a good product to have on its own terms,” Wacinski said. “[Greyhound racing] and numbers games have since been released.”

Virtual racing was rolled out in Australia in 1999, and Cross explained it has created a platform for new bettors to become familiar with racing before crossing over to bet on the live product.

“Racing's a bit like relationships: it's complicated,” Cross said. “The reaction to betting on racing has always been, it's way too complicated. So we've seen a lot of new customers that want to experiment with a virtual game that mirrors what's on live racing. It gives the customer a chance to experiment with betting, and they often then come over to live racing.”

Cross also said virtual racing is popular among women in Australia, and he noted the agreements between virtual racing and live racing have allowed the two wagering platforms to live in harmony. He added, “There are two elements to it: it brings new customers into the betting shop. The elephant in the room is in fact, how does racing get a share of the revenue? In Australia we're lucky because we have a joint venture with racing, and share the revenue that comes from the virtual product. A lot of arguments were negated when it first started because racing got a cut of the revenue. It's more difficult in a market like the UK where, as far as I know, there's no flow back into racing from virtual racing.”

Nigel Roddis of the British Horseracing Authority was an audience member on Friday, and he reflected on Britain's lack of revenue sharing with virtual racing, saying, “it's interesting to hear Paul talk about using virtual racing as a feeder-in, and they get the revenue and it goes back to the industry. We don't get that, but we also have to face, on a daily basis, competition from other sports and fixed-odds betting terminals. It's just competition, really, and I suppose one of the interesting things is hearing about how you migrate that customer even when you're getting revenue from it. And whilst we may not be getting revenue, what we can learn, I suppose, is some of those lessons about how the data is shared, how the results are shown, such that we can make [betting on] the sport of racing less complex.”

Lagberg noted that in Sweden, where racing also gets a share of the virtual racing revenue, there is far less racing than in Australia, and virtual racing has become a popular way to fill the gaps for bettors between races. Thus, unlike in Australia, where bettors generally flow from virtual racing to live racing, it is the other way around in Sweden.

“Virtual racing helps us to fill the program out and give our customers more entertainment,” Lagberg explained. “We don't have races every three minutes in Sweden, like in Australia, so virtual racing has been very important.”

“We're very positive about virtual racing,” he added, “It's a small product in our portfolio, but an important one.”

Virtual racing is a much newer phenomenon in Italy, having only been introduced in 2013, but Stoppini, like Lagberg, noted it is a product that keeps bettors in the shops, especially during uncertain times in Italian racing.

“My opinion is this might be an advantage, because we're keeping people inside the shops,” he said. “Our offers of racing might go away, but the people stay. We're moving to virtual sports to try to offer something simple and easy to understand.

Loyalty in the Digital Age…

The rapidly evolving digital age also means that organisations must constantly re-evaluate their relationships with their customers and make their product accessible in innovative ways, and a handful of delegates were on hand to discuss how they have redeveloped the customer loyalty programs of their companies.

The Hong Kong Jockey Club has traditionally put a concerted effort into connecting with its customers, but an improvement in the Club's data-mining capabilities two years ago resulted in the Club's loyalty program members more than doubling from 2011 figures, said Joice Lam, the Club's executive manager of customer management. Lam explained that the HKJC switched from a model where it analysed customer behaviour to one where it predicts behaviour patterns. This has resulted in the Club developing a four-tier rewards program whereby race goers and avid bettors receive rewards based on the frequency of their usage. These rewards range from free racing newspapers to visits with jockeys and trainers and overseas tours for international races.

“We're trying to reinforce the feeling of exclusivity,” Lam explained. “The future challenge of our loyalty program is to go mobile to serve the younger generation in our database. Their wallets have already gone mobile, so who would bother to carry a loyalty card? They have said if our card was on their mobile, they would be more likely to use it.”

One program that has already gone cardless is the Jockey Club Racecourses' Rewards4 Racing program. Jockey Club Racecourses Group Managing Director Paul Fisher explained that going cardless was key for him in developing the organisation's loyalty rewards program.

“Like yourselves, I have a lot of loyalty cards in my wallet, and I get tired of people asking if I'm a member of this or a member of that,” he said. “I was very keen that this would be an online cardless solution, and that's what we did.”

Rewards4 Racing, which allows its customers to redeem points from purchases at the 15 Jockey Club racecourses, has been deemed a success by Fisher, and has further scope to put more money back into racing after partnering with racing media including Racing Post and Racing UK and a handful of high street retailers and betting shops. The program is currently being expanded to incorporate racecourses outside the Jockey Club realm, beginning with York Racecourse, and will branch out into other sports with the upcoming cricket season.

Fisher quantified the success of Rewards4 Racing by pointing out that “during 2015, over 135,000 racegoers went to the races using tickets they had purchased using member points.

“I'd like to get that number higher; our challenge is to get people to spend their points rather than keeping them in their accounts,” he said.

Last year saw 104,000 Rewards4 Racing members spend £12-million with the program's retails partners, having accrued a total of 539-million points.

The topic of virtual payment for real betting was also examined. Francois Lecomte, chief executive officer of digital payment platform Lobary, pointed out that of the PMU's €10-billion annual turnover, €8-billion is still paid in cash, highlighting the scope for improvement in this area.

“People want to see the money,” Lecomte pointed out. “There is some emotion in it. There are 100,000 people that have the PMU card but about 6-million bettors in France, so there is room for improvement.”

Sam Nati, chief operating officer of independent totalisator business Premier Gateway International, spoke about how PGI is working with the company Digital Design Lab to create bespoke versions of the product Tote Ninja, which allows users to purchase a wagering voucher (from a variety of places, including the racecourse entrance, Tote windows or mobile couriers) in any amount desired, bet from their mobile device upon entering a code and cash out whenever they wish, for instance upon leaving the racecourse at the end of the meeting. The technology uses minimal data and can therefore be transmitted easily. The objectives of this product include supplying a simple solution for non-expert bettors, reducing sale resources needed by racecourses, and increasing turnover on races.

The forum concluded with the introduction and presentation of the first Racing and Betting Innovation Awards, which were developed to reward innovation of organisations in racing. There were 22 innovations selected by a four-person jury prior to the forum and four finalists selected. Each finalist was given two minutes to present his innovation to the audience, which then voted on the public prize before the jury presented its prize. Taking both categories was ATG's Mikael Lagberg for his idea of online syndicates for wagering teams.