Case Study: Virtual Racing

Sport Business News

MEI takes a closer look at the growing trend in virtual horse and dog racing in an extract from the new iGaming Business report, "Online Sports Betting: A Market Assessment and Outlook'.

Overview/HistoryThe concept of racing horses first became popular in Europe among the ruling classes of countries such as the UK, France, and Ireland. The immense popularity of horseracing in the 1800s led to it catching on in the US, particularly after the American Civil War. Many of the major countries of the world are competitive in thoroughbred racing, but a few stand out more than others. Horseracing is prevalent and popular in the US, UK, Ireland, France, Australia, Hong Kong, and Dubai. Virtual racing is a relatively recent offering from the larger bookmakers in the UK, along with some smaller firms. They offer punters the opportunity to place a wager on racing even after the day's race coverage, then watch the race on a TV screen. The races include virtual dog racing and virtual horseracing. Many betting shop punters have described these races as 'animal roulette' since the bookmaker knows exactly what the chance of each dog or horse winning is. Most races have an over–round (bookmakers margin) of at least 10% and there can be as little as three minutes between races. Virtual Racing is effectively a visual representation of a computerised random number draw. The odds of the different horses (or dogs) are created by making the horses with the lower odds have more numbers in the draw than horses with higher odds. However, each number can only be drawn once and therefore the same selection cannot come first and second. Nearly one in five bets on horseracing in the UKs 8, 700 betting shops in 2007 were on horses that did not exist, according to IVG (part of Inspired Gaming Group plc), the hi–tech gaming and fruit machine group behind much of the growth in virtual racing in that market by supplying around 90% of the UK market for virtual racing. IVG products have generated in excess of £3. 5bn in betting turnover since their introduction in 2002 equating to circa £525m in gross win. DigitalSome bookmakers have been capitalising on the lucrative market in betting on horseracing by introducing virtual races that may also appeal to the younger, non–core horseracing punter. Virtual Racing is therefore increasingly being offered online in the 'games' section of an online casino. Providers such as SkyBet, William Hill and Betfair let punters watch it as an event. SkyBet makes the most of its parent companys platform and often uses virtual racing to fill time slots on its Sky Vegas channel (Channel 845). A new category of virtual racing games has also emerged since 2006 with ZErace. com, Horseracingpark. com and DogRacer. com. These are online multiplayer strategy games where people can breed, train, buy, sell and race virtual horses or dogs against each other with real money involved. These games involve the management of a virtual stable or kennel based on pure logical mathematical equations (skill games). Each online horse or greyhound has unique genetic information, which has a direct influence on its physical and mental potential. Paddy Power Virtual Racing Irish bookmaker Paddy Powers Paddy Park offers a virtual racetrack to its customers. Players can play for fun or with real money. List of Features:•All the excitement of the track. •Available to play 24x7, 7 days a week. •No waiting for races to starts. •Forecast bets available. •No special sign up required. •Players can use their regular Paddy Power accounts. Customers can view information on the all the runners on the left hand side of the screen by clicking on the info button next to the horse they wish to check on. Information on its previous races, jockeys and form as well as pundits tips will appear. In order to place a bet, customers need to do the following:•Choose to bet on Win Only or Forecast. •Select a stake by clicking into the Bet box next to the horse then choosing and entering the amount they wish to bet. •Place a bet by clicking on the Add to Slip button to submit their bets. They can then view their bet slip. If they are happy with their wager, customers can then click on Submit Bets & View Race. •After submitting and confirming bets, customers are able to watch the race take place in their browser window, simulating all the thrill and exhilaration of the genuine race track experience according to Paddy Power. •In real play mode, customers can also view their bet historyWilliam Hill Virtual WorldVirtual World is the new home for William Hills Virtual Horse Racing from Hilltop Gardens and Virtual Greyhound Racing from Long Hare Hill, plus action from two new Virtual Motor Racing events – Virtual Speedway from Broadside Alley and Virtual Motor Racing from Devilgate Drive. Customers can find these by clicking on the 'Virtual World' link in the menu at the top of sports. williamhill. com. They can then use the tabs above the race viewer to choose between Horses, Greyhounds and Motor Racing. Betting coupons for forthcoming races are displayed underneath the race viewer, so customers can add selections straight to their betslips without missing any of the action. RaceclubsAt Raceclubs, players are in charge of their own virtual horseracing stable. They can own just one virtual racehorse, or they can buy hundreds. Players design their own racing silks, which the jockey will wear whenever one of the customers horses race. Each virtual horse has its own unique pedigree. Players use time trials to get their horse fit and, assess its ability. They can find out if the horse prefers racing over longer distances or sprints or whether it prefers running on a dirt track or turf. There are also a number of products customers can apply to their horse to enhance its performance. They can get alumites (racing shoes), blinkers and vitamins to make it run faster and if they have a colt they may find gelding it concentrates its mind on racing. Players nominate their horses to race against horses trained by other owners. Races are viewed using an enhanced race viewer, which provides graphics of the horses racing. The racing may be virtual, but the prize money is real. The top horse on Raceclubs has won over £21, 000 to date. Raceclubs has no vested interest in the outcome of races. The software and race results are audited by PricewaterhouseCoopers. At the time of writing, Raceclubs was in its 27th season of virtual horseracing (each season lasts four months). There was over $420, 000 in sponsored stakes during the current season. When players register as a new member on Raceclubs they receive their first horse free. They can train the horse and enter it into special Free Newbie races. Raceclubs then have two special offers for new members to choose from, available for 30 days from the date of joining (see table). PalamaxGaming software provider Palamax B&G designs, develops and licences community cash games primarily for the betting and gambling industry but also for any sport media that wishes to monetise its online audience. Palamax B&G entirely focuses on game concepts where people face each other. It does not offer any game where users play against the house like traditional casinos games or fixed odds betting systems. The company believes community cash games are the future of e–gaming as people really enjoy competing against each other for cash prizes. It claims that gaming surveys show that people play longer when they are given the opportunity to interact with other members of the community. Palamax B&G provides e–gaming operators and sport media companies with three kinds of white–labelled products: 1. Virtual Racing Games (Horse Racing, Greyhound Racing) that are skill games and where racing results follow pure logical paths and mathematical formulae (almost 10 years research in breeding algorithms). 2. Sport Forecast competitions (pool betting), through its London–based subsidiary, regulated and licensed by the UK Gambling Commission. 3. Fantasy sport games (through third party developers partnerships). The business model behind all products that Palamax B&G licenses is always the same: the operator acts as a service provider to facilitate competition between players and earns an administration fee for doing so. The operators have no vested interest in the outcome of virtual races or sport results and merely facilitate the virtual races, betting or forecast competition for the benefit of players. Palamax B&G has been powering technology behind the worlds leading simulation and strategy online game in the area of horseracing since May 2006 – ZErace. com. ZErace is a multi–player online game that simulates the management of virtual horses and where members of the community face each other. It is an entirely virtual racecourse world based on real money, at the border between a simulation game, a management game and a gambling product. It provides a unique entertaining experience, promoting real horse ownership aspirations. Within a few months, ZEraces Virtual Horse Racing Network became what Palamax B&G claims is the largest community of virtual racehorse owners in the world. ZErace players can choose one or more roles in the game: Stable Owner, Breeder, Trainer, Jockey, Racetrack Manager, Punter. Players organise virtual horse races 24 hours a day, seven days a week. They can play alone or in groups via a Clan system. Owners are rewarded when their horse wins a race or is placed. Meanwhile, Palamax B&Gs DogRacer. com applies the same principles but within greyhound racing and requires a combination of strategy, simulation and breeding. Described as a game of management and a game of money, joining DogRacer means becoming the owner of online dogs, managing their career (training, registering for races, selling studs, etc), trying to win races and prestigious cups and to implement a successful, profitable breeding strategy. Hundreds of real races (greyhounds and whippets) have been filmed, analysed, interpreted and modelled as background for the site; and dozens of interviews with professionals in this field by Palamax B&G have led to a greater understanding of race results determining factors. DogRacer is licensed and regulated by the UK Gambling Commission. About The ReportOnline Sports Betting: A Market Assessment and Outlook, written by leading industry writer Rachael Church–Sanders, examines the main issues surrounding the growing online sportsbook industry including betting market overviews by region; areas of opportunity; factors affecting growth in the industry; the mobile revolution and how it is affecting sports betting offerings; marketing strategies of online sportsbooks; regulatory issues and demographics of players. It provides case studies of the major online sportsbook operators and suppliers and analyses them to determine their business models and revenue streams as well as who the winners and losers will be. http://www. igamingbusiness. com/content/global–business–online–sports–betting

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