If you have been reading financial news, you may have come across stories about Non-Fungible Tokens (NFTs). Concisely put, an NFT can be described as a record of ownership of something digital, usually a piece of online art.
More precisely, NFTs are little bits of digital art bought and sold like tangible art. They are recorded on a blockchain ledger linked to the cryptocurrency Ethereum.
Just as a physical piece of paper with the signature of a famous person would be considered valuable, so too are certain digital items. The initial tweet—by Twitter founder Jack Dorsey—was recently sold as an NFT, with the buyer paying a hefty $2.9 million.
So, what in the world has this to do with horse racing? Well, a few weeks ago, news broke that a company, Zed Run, had secured $20 million in funding for its virtual horse racing game. Calling it a “game” is a little bit of a misnomer, however. It is more like a virtual stable, where people can buy horses, race them, breed them, and sell them to other buyers.
As you might have guessed, the horses in question are NFTs that potentially sell for a few hundred dollars to thousands of dollars. A person could invest in a real racehorse for that kind of money, so why do people bother with NFTs? For the same reason they invest in cryptocurrency or buy a digital record of a tweet: they think it will appreciate.
It’s too soon to tell whether NFTs pose a threat to the racing industry. While digital alternatives to actual racing are already available, ranging from Virtual Grand Nationals to Frankie Dettori’s Magic Jackpot 7 slots, NFTs are altogether different. Dismissing them as a fad could be an error similar to what transpired in Bitcoin trading a few years ago. One might think Bitcoin is fake money, or a Ponzi scheme, but millions of others do not.
It is imperative that a company be ever vigilant about the purchasing behavior of people, particularly those in younger generations, who are comfortable operating within virtual worlds. For many of them, the idea of spending thousands of dollars on a digital racehorse may feel more natural than investing in the genuine thing. The risk of losing younger fans to the virtual world is not unique to racing, of course–virtual offerings are a phenomenon that should be taken seriously by any sport.
Zed Run may turn out to be just another example among many of a niche product that received millions of dollars of venture funding but was a commercial bust. On the other hand, plenty of established industries have been digitally disrupted in the past, and many more will be in the future.
The popularity of events like the Virtual Grand National has demonstrated that there is an appetite for the dramatically new in horse racing, even among traditional enthusiasts. Will there eventually be auctions for lines of computer code that constitute a legendary digital racehorse–a Secretariat or Frankel–in the same way that yearlings are bid for today? Don’t rule it out.
Horse Racing Business
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