by Molly D. Sandberg

Racinos are a major area of opportunity for the racing industry overall. Greyhound, thoroughbred and harness racetracks that add slots have a whole new source of revenue along with a whole new category of player with which to expand their customer base. And while racinos need to take a close look at how the casinos operate and market their product offerings, these racino operations are first, venues providing live racing meets, and second, providers of casino-style gaming. While any business enterprise puts profitability at the top of its list of objectives, the methods and priorities set by a local racino do indeed differ from those set by the local casino.

Today’s racinos (and racetracks, as well) have at their disposal state-of-the-art technology to both enhance their product offerings and better manage their operations. Rarely, however, is a product available “off-the-shelf” that can meet the unique needs of a racino. The companies developing products for live racing meets know that both the racing industry as a whole and each individual facility have very specific operational needs. Software providers, in particular, have developed many racing-specific products that streamline racing’s processes like simulcasting, pari-mutuel wagering functions, accounting and settlement functions and player tracking programs.

Racinos Provide Live Entertainment And Sport
Unlike a casino, a racino puts on a live sporting event, day in and day out, in addition to its casino gaming. Jim Altrichter, the president of Smart Button Associates, notes the importance of this factor. “The empty seat is a universal problem for anyone in the entertainment industry. We have a fixed supply. The one thing that guarantees value is having someone in a seat,” says Altrichter. “With an empty seat on Monday, for instance, you have no way to discount Monday’s seat on Tuesday. You will only get value from the person in the seat on that particular day.” Altrichter also points out that racino attendance can be driven by big external events like the Kentucky Derby or Breeders’ Cup Day.

Altrichter’s company, Smart Button Associates, provides loyalty marketing software systems that help racinos collect and segment a player database and execute encompassing marketing programs. Having served the racing industry for decades, the company understands the extensive costs involved in hosting a live racing meet and how that compares with running a slot operation. “In terms of racinos, we focus on the underserved business areas within the racino. Our whole concept is to provide very complete solution within the cost limitations of the market,” says Altrichter. “A racing meet is expensive to run. It’s not as cost-efficient as running 500 slot machines in terms of the revenue generation. We offer a solution within that space.”

Pari-mutuel Wagering And Settlement

Another unique process in racing is the settlement function. As racinos simulcast different races, their pari-mutuel pools and fees to the host tracks are impacted by the monies wagered. A complicated process typically developed and managed by individual mutuel managers and accounting personnel at different tracks can now be run through a variety of software systems. Perfecta Systems is a provider of pari-mutuel accounting software.

“Our product provides a very user-friendly and accurate way of capturing and managing pari-mutuel data,” says Bob Barden, president of Perfecta Systems, Inc. “Our software deals with the monies associated with the race results particularly the wagers, handle, commissions, payouts, host fees that simulcasting tracks pay to one another and money room settlement. It captures the information from the tote system which handles the bets.”

The process can be complicated with special fees for stakes races like those in the Triple Crown. “This is one of the many processes we have streamlined with our software,” says Barden. The Perfecta Systems software allows for settlement among multiple tracks and OTB locations and consolidates everything into a single statement. Barden notes that the software can be customized to meet the specific needs of any venue.

One racino customer, a greyhound track with hundreds of VLTs, uses the Perfecta Systems software to calculate its state and local taxes in addition to managing its pari-mutuel accounting function. “We can totally customize our software for the customer. It’s easier for us to change the software rather than asking the track to change their operation,” says Barden. “When doing the research for this product, we learned that every track does things a little bit differently so we made this product totally customizable to each track’s needs.”

Wager And Watch For Outcome

Those who bet the races watch the finish line for the payoff. In a live racing environment, a player can’t miss the action. With simulcasts, the number of races, horses and betting pools increases exponentially. The management of the simulcast information can be challenging for the racino operation and player alike. Scientific Games helps both.

“We provide all the hardware, software, systems and service that a pari-mutuel wagering facility will need when it comes to managing wagering at the facility,” says David Schorr, director of product development for Scientific Games Racing Division. “We provide an extended reach into the specifics of the racino patrons which extends from back office to player tracking to the fine tuned management of the pari-mutuel wagering at a facility.” One of the company’s products is the Interactive Player Terminal (IPT), a “one-stop-shop” where players can watch live and replayed races, view handicapping information and wager. Mutuel managers will also utilize the units.

Player Crossover?

Scientific Games’ IPT devices can be placed anywhere in a racino property. “We describe the IPT as a good bridge between pari-mutuel horseplayers and casino players in the racino environment,” says Schorr. “The look and feel of this terminal is different from what was typically seen on the racing floor. Its colors, graphics, and interactivity all provide a depth of information that allows players to have more information when they place their bets.”

The product has been a good choice for their racino client in West Virginia. Having placed the units on their floor more than a year ago, the racino has seen an increased interest in the terminals and believes the IPTs offer some of the same appeal as the slots.
Altrichter of Smart Button points out the difference from handicapper to slot player. “When you take a fundamental look at the market, the folks who play pari-mutuels are a very different psychological breed of player versus those who play the slots,” says Altrichter. “It’s almost a playing versus watching phenomenon. Handicappers have to be mentally engaged, look at a racing program, make an assessment and pick a horse versus pulling a slot arm. The two are very different types of games.”

Static Vs. Fluid Environments

What is even more important for the racino operator is the management of these two different environments. “Once a property has installed its slot system, with very few exceptions, that system will sit in a steady state,” says Altrichter. “If you look at the racing environment, that’s something that changes hour by hour throughout the day depending on the race types and simulcast signals. Our system is set up to deal with that change.”

Scientific Games also provides its customers with its DAS and APT software systems to help manage the dynamic racino environment. The DAS is a system providing a comprehensive suite of services with APT being the module on that system that manages player tracking. The system is unique according to Schorr. “We are the only system provider that does real-time transactional database processing for both the pari-mutuel system and video lottery system.” He notes that Scientific Games’ player tracking network acts as the backbone for the player tracking system for both slots and racing at the West Virginia venue.


Loyalty Programs

All types of gaming venues have player tracking systems. It’s one of the “must haves” for any successful gaming operation. Racinos must determine how to integrate the tracking of the pari-mutuel players with the slot players. “One of the key questions you face as a racino operator is how to integrate the loyalty program for race players and slot players providing value to both knowing that each type of player has a different experience,” says Altrichter of Smart Button.

When it comes to integration, Altrichter sees three basic schools of thought. “First, you have the racino who uses the slot vendor for the player tracking. This slot operation does not care to market to the racing patrons.

“Second, when you get to know what you want to do with racing and you really understand the value proposition that racing brings to an operation, you can make the decision to integrate the slot and racing systems. We can actually help a racino provide a consistent brand across the property with their player tracking program,” says Altrichter.
“The third category is a ‘separate but equal’ solution where the two systems run concurrently,” he says. “Race players have to redeem racing points in the racing area and slot points are redeemed in the slot area.” Smart Button’s player redemption solutions include customer service booth terminals, self-service kiosks, handheld wireless devices and Internet options.

Schorr of Scientific Games notes their player tracking product offerings can help racinos segment their player base in a multitude of ways. “We offer the full suite of ‘slice and dice’ options. You can segment lists by player level, zip code, average bets, wagering tendencies and much more. When a player swipes a card, we can tell you if he’s at a live teller or an IPT terminal; all in real time.” The Scientific Games system is also web-based and offers racino managers option for real time comparisons of, for instance, handle performance from year to year or day to day with screen refreshes throughout the day.

Software Offers Efficient Solutions

Whatever the challenge faced by a racino, a software or systems provider can suggest a solution. These same providers have an in-depth knowledge of racing and have developed products that are customizable and adaptable to meet the many idiosyncrasies of today’s racinos.

Molly Sandberg, principal of MDS Marketing, is a freelance writer and marketing communications consultant. She has worked in advertising, promotions and public relations for more than 15 years across a variety of industries. She has spent more than a decade in the gaming industry working for a thoroughbred racetrack, riverboat casino operation and slot manufacturer. You may contact her via email at molly.s@comcast.net.

Sources For This Article

Sources are provided in alphabetical order.

Perfecta Systems Incorporated has been developing accounting software for the pari-mutuel industry for over 18 years and has an intimate knowledge of virtually all aspects of horse and greyhound track operations and accounting functions. Their Pari-mutuel Accounting Software is automated settlements software featuring tote file importing, netting of host/guest track settlements, supports variable host fees calculations, maintains balances and settlement history, and supports settlement hubs/agents. Visit them at www.perfectasystems.com or call (207) 797-6198.

Scientific Games Racing, previously known as Autotote Systems, has been providing totalisator systems – the complex hardware and software systems that accept wagers, calculate odds and payouts, and process wagering pools – for over fifty years. Scientific Games Racing has a reach broader and a product line deeper than any other provider. Product offerings have expanded over the years to include simulcasting services, high-speed data communications systems, Internet-based wagering systems, player tracking, combination racing/video lottery gaming terminals, and data management tools. The company interacts with virtually every race wagering operation in North America and with customers in Asia, South and Central America, Europe and the Middle East. Visit them at www.scientificgames.com or call 1-770-664-3700.

Smart Button Associates is a leader in the development of affordable loyalty marketing systems for the horseracing, casino, sports, entertainment and retail industries. The company is recognized as an innovator in providing high-value, quality loyalty marketing software to customers. Smart Button builds comprehensive marketing-driven fan loyalty and rewards programs that produce measurable results and improve business performance. With its origination in the horse racing industry, the company has already proven its effectiveness and positioned itself as a leading provider of comprehensive software solutions. Smart Button's loyalty software is currently utilized in over 500 facilities throughout the United States and Canada including over 60% of the North American pari-mutuel venues and several Las Vegas casinos. Visit them at www.smartbutton.com or call at 1-800-611-2265.