Interview: How blockchain is disrupting horse racing

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Sean Aylmer: Welcome to the Fear and Greed daily interview. I’m Sean Aylmer.

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Sean Aylmer: At first glance, blockchain and horse racing don’t seem to

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Sean Aylmer: have a lot in common, but an Australian startup is

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Sean Aylmer: now using blockchain technology to offer micro shares in race horses.

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Sean Aylmer: It’s a fascinating idea to say the least, and one

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Sean Aylmer: that secured some powerful backers. Remember, this is general information only.

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Sean Aylmer: It’s certainly not investment advice. You should seek professional advice

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Sean Aylmer: before making any investment decisions. Steve Piek is the Founder

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Sean Aylmer: and CEO of BTX Racing. Steve, welcome to Fear and Greed.

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Steve Piek: Thanks for having me here, guys.

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Sean Aylmer: Now, I’ve never thought I’d put blockchain and horse racing together,

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Sean Aylmer: neither do I understand particularly well, but both I try

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Sean Aylmer: and follow quite closely. So tell me how does it work?

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Steve Piek: Yeah, look, we’re a technology company, so what we did

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Steve Piek: was we’re actually bringing blockchain to the equine industry to

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Steve Piek: bring some new ownership models and business models to the

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Steve Piek: equine industry to solve some of their core problems. So

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Steve Piek: if you’ve ever looked at owning a racehorse, you’ll know

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Steve Piek: that racehorse ownership’s pretty expensive. And by using fractionalised ownership of racehorses,

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Steve Piek: we can actually break that down to basically a one-off

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Steve Piek: price of $75, is one of our more affordable horses.

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Steve Piek: So it shows the power of using an efficient technology

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Steve Piek: to do that.

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Sean Aylmer: Okay, I’m just going to break that down a bit.

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Sean Aylmer: So let’s say a racehorse at the Easter Sales might

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Sean Aylmer: be 500,000, let’s go for a million dollars, just ’cause

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Sean Aylmer: the numbers make it easier. And you are using blockchain

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Sean Aylmer: technology to offer, so there might be a parcel of 10%

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Sean Aylmer: of that horse, which I’m making this up, so jump in, Steve.

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Sean Aylmer: Is that how it works, there’s a parcel of 10%

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Sean Aylmer: that then can be kind of on- sold using blockchain technology?

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Steve Piek: Correct. And so BTX may a acquire that 10% from

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Steve Piek: the auctions, and we may split that 10% into a hundred,

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Steve Piek: 200, a thousand ownerships to make that price more affordable. So we’ve

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Steve Piek: got ownership models at the moment where we’ve got a $400,000 horse

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Steve Piek: where we own 15% and we’ve got 1500 units available

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Steve Piek: in that horse.

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Sean Aylmer: Why blockchain technology? Where’s that come into it?

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Steve Piek: For us, blockchain is a really good enterprise software. So

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Steve Piek: when you think on the backend of a technology stack,

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Steve Piek: for us, having more efficient and trusted transactions was really

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Steve Piek: important. So really the efficient processing for us, because if

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Steve Piek: you’ve ever done traditional ownership, it’s pretty manual and paper

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Steve Piek: base. Blockchain, as an automation software, is actually a really

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Steve Piek: powerful tool.

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Sean Aylmer: Okay. So if I want to buy one of those 1500 units in the $400,000 horse, of which you have 15%,

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Sean Aylmer: that’s right, isn’t it, I think?

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Steve Piek: That’s right.

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Sean Aylmer: How do I go about that? Are you trying to

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Sean Aylmer: appeal to retail investors or is it… I mean, it’s

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Sean Aylmer: more than friends and family, if there’s 1500 units.

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Steve Piek: That’s right. I wish I had that many friends. But

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Steve Piek: we have ownership. So the ownership actually starts from $125.

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Steve Piek: So that includes the value of the horse, but it

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Steve Piek: also includes prepaid training fees as well. So when you

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Steve Piek: actually pay that upfront costs, you actually don’t pay any

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Steve Piek: more with BTX ever again, which is a really unique

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Steve Piek: proposition because we don’t want to be collecting those monthly

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Steve Piek: training fees every month from our owners. But what we

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Steve Piek: do do at the end of the ownership period, is

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Steve Piek: pay back any of those unused funds to our owners

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Steve Piek: as well. So it’s as simple as basically heading over

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Steve Piek: to our website or our mobile app. We have a

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Steve Piek: marketplace and you can buy your retail investments, you can

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Steve Piek: look at the product disclosure statements. All our horse ownerships

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Steve Piek: are offered under an AFSL (Australian financial services (AFS) licence), so they’re financial investments. So

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Steve Piek: that gives you the regulatory overlay of our products.

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Sean Aylmer: And can you pick your horse? I mean, there’s obviously

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Sean Aylmer: a limited number of thoroughbreds available, but presumably you own

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Sean Aylmer: a few of which the cost of a unit might

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Sean Aylmer: differ, depending on the horse. Is that right? And you

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Sean Aylmer: can choose? Is that how it works?

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Steve Piek: That’s correct. At the moment we’ve got about 10 ownerships.

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Steve Piek: So we’ve got ownerships with Ciaron Maher Racing, so he was the

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Steve Piek: winner of the 2022 Melbourne Cup. We’ve got a couple

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Steve Piek: of horses with Gai Waterhouse. We’ve also got some short

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Steve Piek: term ownerships with the O’Dea-Hoysted Racing as well. So one

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Steve Piek: of our more popular ownerships as of late was a

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Steve Piek: Group One racing horse called Chaillot, that’s actually racing this

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Steve Piek: weekend in a Group One Tatts Tiara, which is a really

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Steve Piek: exciting opportunity and one that probably wouldn’t have been affordable

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Steve Piek: to most of those people previously, ’cause shares in that

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Steve Piek: horse are $88. So really exciting proposition there.

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Sean Aylmer: Okay. So let’s say I own a share. Let’s say it

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Sean Aylmer: does win a Group One or a horse that wins

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Sean Aylmer: a lot of money, even better wins The Everest. Right?

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Sean Aylmer: So how do you… Do I get some sort of

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Sean Aylmer: share of the prize money? And I hasten to add,

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Sean Aylmer: I have owned parts of racehorses and never, no matter

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Sean Aylmer: what they’ve won, have I ever got a return in

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Sean Aylmer: terms of prize money, to be honest. But if it

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Sean Aylmer: does win a lot of money, do I get some

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Sean Aylmer: sort of return?

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Steve Piek: Absolutely. So if you’re talking about that horse that you

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Steve Piek: bought into the 1500 shares, your ownership percentage, you’ll get

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Steve Piek: the same ownership proportion as your prize money. So if

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Steve Piek: you own 1% of the horse in our ownerships, you’ll get

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Steve Piek: 1% of the prize money. So that’s the really neat

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Steve Piek: option here with us is it’s not just about the

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Steve Piek: experience of ownership, it’s the prize money opportunity as well.

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Sean Aylmer: Okay. So it’s democratising horse ownership in many ways. What

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Sean Aylmer: sort of response have you had so far?

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Steve Piek: It’s been really positive. I think it’s a unique investment

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Steve Piek: opportunity. There’s not many investments on the market at the

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Steve Piek: moment where when once you buy into the asset. For

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Steve Piek: us it’s actually you get regular training content, you get

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Steve Piek: stable tours and race day experiences. Obviously, the experience gets

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Steve Piek: better as we start to hit the track more. And

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Steve Piek: as an early stage company, we’re starting to do that

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Steve Piek: more frequently, which is building the experience every month for

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Steve Piek: our owners, which is really cool.

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Sean Aylmer: Stay with me, Steve, we’ll be back in a minute.

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Sean Aylmer: I’m speaking to Steve Piek, Founder and CEO of BTX Racing. Okay.

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Sean Aylmer: So who’s a typical investor?

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Steve Piek: Look, we’ve had a range. We’ve had owners all around Australia.

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Steve Piek: People that have owned in syndicates before who, during COVID,

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Steve Piek: would actually have said, rather than owning one horse for

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Steve Piek: $5,000 , they might own all 10 horses with us

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Steve Piek: to get a varied experience. That’s been a really common one.

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Steve Piek: And a lot of the punters who actually like to

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Steve Piek: punt have also said, well, the ownership experience is complimentary

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Steve Piek: to that experience as well. So we’ve seen a variety

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Steve Piek: of people, and we’re starting to see a lot of

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Steve Piek: people interested in the Web 3 and blockchain area, actually

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Steve Piek: dabble in how we connecting blockchain to real world assets

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Steve Piek: because it’s a really unique proposition.

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Sean Aylmer: Okay, who’s… Oh, I’m going to say who’s ponying up

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Sean Aylmer: the money? Pardon the pun, who is investing in BTX

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Sean Aylmer: Racing? Where’s your money coming from to allow this to happen?

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Steve Piek: We’ve had a number of private investors to date, and

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Steve Piek: we’ve been fortunate enough to have people and industry partners,

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Steve Piek: like Ciaron Maher Racing and Trilogy Racing, come on board because they see

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Steve Piek: the power of what our technology can do. It’s not

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Steve Piek: just the racehorse ownership that we’re looking at. We’re looking

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Steve Piek: at how blockchain can actually bring value across this industry.

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Steve Piek: So we’re seeing it from racing to breeding to some

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Steve Piek: of the business transactions as well. So it’s a broad

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Steve Piek: spectrum of people that have become involved with BTX, but

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Steve Piek: we’re always looking for more partners as well.

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Sean Aylmer: Of course. So the blockchain technology, can it actually shift

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Sean Aylmer: beyond horse racing then, what you’re talking about?

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Steve Piek: Absolutely. I think over the next couple of weeks we’ve

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Steve Piek: actually got a product that’s coming out in breeding, which

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Steve Piek: will be fractionalised breeding. So unlike your comment there around

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Steve Piek: the racing and the prize money, there is an element

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Steve Piek: of luck in racing, I must say. But on the

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Steve Piek: breeding side, we’ve got a product over the next two weeks,

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Steve Piek: which will be launching, which will give people the avenue

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Steve Piek: to invest in broodmares. It’ll actually give you the ownership

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Steve Piek: in their foals to take to the auctions, which is

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Steve Piek: a real alternative investment, which should be of a lot

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Steve Piek: of appeal to people as well, because the financial returns

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Steve Piek: are actually quite predictable on the breeding side. There’s a

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Steve Piek: lot more analysis and a lot more information, and that’ll

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Steve Piek: be a product which will be really exciting.

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Sean Aylmer: Okay. So I’ve got to ask, Steve, you’re an accountant

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Sean Aylmer: by trade, you spent almost a decade at EY. How

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Sean Aylmer: did you get into this?

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Steve Piek: Yep. No, I am an accountant by trade, chartered accountant.

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Steve Piek: So look, I really saw the application of the technology.

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Steve Piek: I was fortunate enough to work in part of the

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Steve Piek: digital team at EY. And look, part of my passion

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Steve Piek: really stems from, what are the innovative solutions we can

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Steve Piek: bring to new markets? With a passion for horse racing

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Steve Piek: and a passion for blockchain, look, it was really a no-brainer.

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Steve Piek: Once you understand the industry problems that they’re facing, whether

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Steve Piek: it’s expensive ownership or manual paper-based processes in this industry,

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Steve Piek: blockchain’s a perfect application. And I can’t help but get

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Steve Piek: excited that this is an industry that’s right for disruption.

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Steve Piek: And as a tech company, this is something that we’re

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Steve Piek: really passionate about.

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Sean Aylmer: You talk about Ciaron Maher Racing and others investing in what you’re doing.

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Sean Aylmer: You are a disruptor in the industry, but obviously people within the industry

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Sean Aylmer: see that and want to be part of it.

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Steve Piek: That’s right. We have an ethos that we would like

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Steve Piek: to work with the industry. There’s no point building products

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Steve Piek: for people that don’t want them. So working with trainers,

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Steve Piek: breeders, regulators, we have an open mindset that we want

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Steve Piek: to work with the industry to build products that work

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Steve Piek: for the industry. That’s what’s going to create long- term

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Steve Piek: value for the industry. And as we can build products

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Steve Piek: that hopefully bring in younger, the next generation, the Gen

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Steve Piek: Z of the future of racing, that’s a really exciting

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Steve Piek: proposition for us to work with the industry, to bring

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Steve Piek: new audiences, bring new crowds. And ultimately increase value for

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Steve Piek: the entire industry, is our vision.

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Sean Aylmer: Steve, thank you for talking to Fear and Greed.

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Steve Piek: Thank you very much for having me.

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Sean Aylmer: That was Steve Piek, founder and CEO of BTX Racing.

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Sean Aylmer: This is the Fear and Greed daily interview. Remember, you

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Sean Aylmer: should get professional advice before making any investment decisions. Join

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Sean Aylmer: us every morning for the full episode of Fear and

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Sean Aylmer: Greed, Australia’s most popular business podcast. I’m Sean Aylmer. Enjoy

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Sean Aylmer: your day.