Will Cartoon Hot Dogs And Dancing DJs Spell Doom For Horse Racing?

Creators of cypto-based running game think it could dethrone Sport of Kings
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Mike Seely has written about horse racing for The Daily Racing Form and America’s Best Racing, and has contributed pieces on a multitude of topics including casinos to The New York Times and Los Angeles Times, among other publications. He can be reached on Twitter (@mdseely) or via email at [email protected].

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The most famous match race in horse racing history took place in 1938 at Baltimore’s Pimlico Race Course. There, the West Coast’s top racehorse, Seabiscuit, upset the East Coast’s top horse, War Admiral, by four lengths over 1 3/16 miles, the same distance at which the track’s recently concluded Preakness Stakes is run annually. 

In addition to the 40,000 spectators who attended live, some 40 million people around the world tuned into the radio broadcast of the two-horse race — including Franklin Delano Roosevelt, who halted a Cabinet meeting to listen.

Horse racing has fallen several rungs on the sporting ladder since then, but it still thrives at several tracks and attracts millions of casual viewers and horse bettors every spring during Triple Crown season. It has long been en vogue to predict the sport’s imminent demise, but time and again, horse racing has somehow persevered.

But could a video game tied to fluctuations in the cryptocurrency market finally be the straw that breaks the thoroughbred’s back?

Racing, with a side of dancing

As crypto- and metaverse-based entities go, Elite Token’s Runiverse is, at its core, relatively simple and at least somewhat reminiscent of horse racing.

Like Seabiscuit vs. War Admiral, every Runiverse race is a match race. Only instead of living, breathing horses, the competitors are animated NFTs, each of which represents a different coin, or token. Every race lasts 30 seconds, and the winner is determined by which token’s market value rises the most within that window of time.

On the other side of the virtual window, every play-to-earn (P2E) bet is a peer-to-peer wager involving $5 in crypto apiece, with each contestant picking their favorite of several participating tokens. The winner doubles their money minus a 5% surcharge, which is mostly divvied up among the owners of animated NFTs — including a guy dressed as a hot dog! — representing the runners (or skins) and the tracks upon which they race. These NFTs are to be auctioned off to the highest bidder once every two weeks, according to a press release. Elite Token estimates that owners of Skin NFTs could make $120,000 annually, compared to $270,000 for Track NFT owners.

One of Elite Token’s advisors, Jimmy White, told US Bets that while the company is involved in discussions with several athletes and celebrities over name, image, and likeness usage for the Runiverse’s various NFTs, so far the only ones to sign on are the token’s co-founder, Gianluca Vacchi, and his wife, Sharon Fonseca. 

Vacchi, described in the press release as “an Italian multimillionaire stock magnate turned DJ,” has gained over 22 million Instagram followers largely on the strength of a “famous beach dance” that went viral on social media. His dances are among several “cosmetic NFTs” featured in the Runiverse, along with “the unpublished soundtracks of famous DJs.”

 

Replacing real horses with celebrity avatars?

Despite launching the Runiverse just last week, Elite Token makes the lofty claim that its “P2E app stands to replace horse betting with crypto racing, and horses with celebrities.”

When asked if the company really sees its product as central to horse racing’s demise, an Elite Token spokesperson said, “That’s the brash idea, in any case, and it looks like they may have a good chance to achieve that.”

Uh, hold your horses.

“It seems a ludicrous proposition on their part,” scoffed one industry source who requested anonymity.

Chad Beynon, who follows gaming trends as a managing director of the Macquarie Group financial firm, offered a more measured assessment. 

“I think the horse racing customer is a very loyal customer that is in many ways different than iGaming and sports betting,” he posited. “There hasn’t been great cross-sell. Some of the big horse racing companies just haven’t been successful in terms of that, so I don’t really think it could dent that industry.”

Setting the vanquishing of thoroughbred racing aside, Beynon said of the Runiverse, “We keep seeing the user bases increase in these types of areas. If this generation of people is engaged or interested in these types of products, it could grow.”

However, he cautioned that “with something like esports, everyone talks about these huge addressable markets and how big a space it’s going to be, and it’s just taken forever. And I feel like esports is light years ahead of where something like [the Runiverse] would be.”

Aftershocks of recent crypto crash

Billed by its boosters as the future of money, crypto’s recent crash — in which hundreds of billions of dollars in digital currency were sold off — made it seem a lot more like a risky tech investment than something you’d fork over for a caffeinated beverage on your way in to work.

“[Cryptocurrencies] were intended to be a substitute for fiat money. And I think, in that respect, they have not succeeded,” former Federal Reserve Chairman Ben Bernanke said in a recent interview with CNBC. “Because if Bitcoin were a substitute for fiat money, you could use Bitcoin to go buy your groceries. Nobody buys groceries with Bitcoin because it’s too expensive and too inconvenient to do that. So I don’t think that Bitcoin is going to take over as an alternative form of money. It’ll be around as long as people are believers and they want to speculate.”

“Companies don’t like to really handle currencies that see this type of volatility. I think [the crash] will delay acceptance,” said Beynon. “Until we see some type of stablecoin, there will be skepticism.”

Betting at sportsbooks with crypto is legal in Wyoming, and some operators — including Barstool — allow customers to make crypto deposits in states like Colorado, although the digital dollars are converted into equivalent U.S. currency before any wagers are actually placed.

But “while accepting cryptocurrency deposits offers several advantages to sportsbooks,” said Sharp Alpha Advisors Managing Partner Lloyd Danzig, “there are currently formidable challenges standing in the way of widespread adoption, including lengthy transaction times, asset price volatility, and KYC (know your customer) hurdles.”

“The big issue right now is companies don’t want to hold crypto on their balance sheet,” said Beynon. “That’s kind of a tricky thing because, in [the sports betting] business model, there are times when companies could be holding hundreds of millions of dollars of cash deposits from their customers. I don’t think they’re ever going to want to hold that same level of crypto.  

“For companies trying to get an edge or gain market share, it’s more of a marketing ploy than something that’s gonna move the needle. For some of the smaller companies, it wouldn’t surprise me, but I wouldn’t expect a Caesars or MGM to accept [crypto].”

NFT hiccups and the acquisition funnel

For better or worse, crypto and sports are now thoroughly intertwined. 

The name of the crypto exchange FTX is splashed across both the Miami Heat’s home hardwood and the shirts of Major League Baseball umpires, while Crypto.com is the namesake sponsor of the Los Angeles arena formerly known as Staples Center, as well as Formula 1’s Miami Grand Prix. Athletes as prominent as Steph Curry and Tom Brady have become crypto evangelists, with the latter launching a high-profile line of NFTs with DraftKings. 

The convergence of athletics and NFTs has gotten off to a somewhat rocky start, both at DraftKings and with soccer’s Premier League, where one interested party said he’d be “better off investing in a pack of hot dogs” than in the Cryptodragons metaverse.

Despite these challenges, DraftKings remains undaunted — at least for the time being.

“DraftKings seems to have a different vision of who they are,” explained Beynon. “DraftKings believes that they are an Amazon or Apple, where they’re going to continue to create new products and enhance features, while a lot of their competitors view themselves as gaming companies. DraftKings doesn’t consider themselves to be just a gaming company. They’re a test and learn type of company.

“The goal with all of this is to find what can feed into the [customer] acquisition funnel. Figure out a way to communicate with players, offer them products they like, and cross-sell them into other products. They have this marketplace business that they just started and have been pretty open in terms of, ‘It can go in a lot of different directions.’ Right now, it’s just NFTs.”

As for DraftKings’ competitors, Beynon said, “Some of the others have stuck to their knitting, saying there’s good connectivity with retail and online customers for sports betting or legal online casinos, and most companies have said, as of now, they’re not that interested in these new sub-sectors.”

Photo courtesy of Elite Token

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