Betting and the racing industry - Overview of British Racing seminar, Newbury, 21 November 2017 Ross Hamilton, Corporate Affairs Manager ...
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Betting and the racing industry Overview of British Racing seminar, Newbury, 21 November 2017 Ross Hamilton, Corporate Affairs Manager
THE HISTORY The history of British betting 1928 Racecourse Betting Act 1961 UK Betting Shops legalised 1986 Television pictures in betting shops 1995 Evening opening of Betting shops in summer months; Sunday Racing 2000 Betfairlaunched 2001 Gross Profit Tax replaces Turnover tax 2005 Gambling Act – Gambling Commission, 4 FOBTsper betting LBO, Online Gambling 2008-11 Many online gambling operators relocate ‘offshore’ 2011 Betfred buy the Tote 2014 Gambling (Licensing and Advertising) Act – Point of Consumption licensing 2014-15 Three interlinked consultation processes on Levy extension, reform and replacement 2016 Government launches review of Gambling industry, particularly FOBTs 2017 Horserace Betting Levy Regulations passed,extending Levy to online operators 2018 July – Pool betting licences to be opened up
TYPES OF BETTING Types of betting in the UK Fixed Odds Bookmakers offer prices, typically in fractions e.g. 2-1, 9-4. Prices shorten the more money is placed on a horse. When bet is made, price is taken. Winners paid out at the odds they bet (e.g. £10 at 12-1 = £120 + £10 stake = £130) Each way bets can be made on places – Top 3 in 8-15 runner race, Top 4 in 16+ (Terms vary) Exotic types of bet also available – Doubles, Triples, Exactas. Pool Betting – The Tote No fixed price when you place a bet. All the bets placed go in to a “pool” – after the race, cost deduction made, and then the remainder of the pool paid out to winning tickets. Price only finalised when race starts – not when the bet is placed. Betting Exchanges Allow people to be both sides of the market – backing horses to win or lay them to lose. In-running betting Small Commission charged on winning bets. Spread Betting The more accurate the bet, the more you win against the spread (e.g. Total number of lengths in winning distance)
THE MARKET TODAY
The UK betting market today - Retail
Number of LBOs – Mar 2017 • c. 8,800 betting shops in the UK
• Market now dominated by the “Big Three”
87% of betting shops
1,175 c. 90% of Gross Win
2,331 • Racing no longer the dominant LBO product
1,457 Ladbrokes-Coral horseracing GW contribution
2008 – 25%; 2016 – 14%
“There is no doubt racing remains an
3,837
integral part of the betting experience for
our customers.” Philip Bowcock
• 34,000+ Fixed Odds Betting Terminal Machines
William Hill Ladbrokes-Coral Betfred Other
• Ladbrokes-Coral 2016 Results
OTC Gross Win: £637.6m (44%)
Machines Gross Win: £816.8m (56%)THE MARKET TODAY
The UK betting market today - Remote
• A much more diversified market UK Online Market Share
• Significant growth in recent years driven by
sports betting
William Hill 2016 Sportsbook stakes =
185% of retail staking
• Racing accounts for approximately 30%-50% of
sportsbook dependent on operator
• Racing now a predominantly online betting
product
Retail T/Over (Oct 15-Sep 16): £ 4.6bn
Remote T/Over (Oct 15 – Sep 16): £ 5.4bn
• In-play markets and mobile presence
Source: William Hill Investor Presentation
particularly significantTHE MARKET TODAY The changing landscape – 2016 merger activity • Merger completed 2 Feb 2016 • Merger cleared – completed 2 Nov 2016 • Significant online revenues of £5bn • 44% of UK LBOs • Group operating profit up 44% in • Online market share of c.12-14% 2016 • 359 LBOs divested to Betfred, Stan • 30-35% racing online betting share James and Bet 21 • Clear – and significant – implications for British Racing from both mergers
KEY ISSUES An industry under pressure
KEY ISSUES
Fixed Odds Betting Terminals (FOBTs)
FOBTs as % of LBO Revenues
• Retail betting market key to British
Racing finances 57 55.6 55.2
55
52.2
53
50.9 51.1
• Fixed Odds Betting Terminals 51
Max Stake £100; Max win £500 49
46.7
Increasing % of retail betting 47
43.3
45
revenues
43
41 38.8
• Significant media and political 39
pressure – “the crack cocaine of 37
gambling”
% of revenuesKEY ISSUES
Government gambling review
•12 week consultation now underway
•Key areas of focus:
FOBT stakes – Four options between
£2 and £50
Other harm mitigation measures?
Funding of responsible gambling
research and treatment
Responsible gambling advertising “Horse-racing is an incredibly important
sector within my portfolio … We do not
• No provision in consultation for pre- envisage these changes having a
watershed gambling advertising ban particularly negative effect on horse-racing
– in fact, they may well encourage
• Racing not directly referenced within bookmakers and others to focus more on
document – but clear implications still exist horse-racing.”
Tracey Crouch MP, Minister for SportBETTING AND RACING
The new Levy – impact on betting
• New Levy took effect on Tuesday 25 April
10% of Gross Gambling Yield on British racing from British customers
Each operator’s first £500,000 of GGY will not be charged (like income tax allowance)
• Full-year projected financial impact for operators : £ 30 – 35 million
• Possibility of legal challenge – likely to come from smaller operator, trade body
Jim Mullen, Ladbrokes-Coral CEO: “Our stance is simple: we had already
accepted the principle that we should pay the levy offshore, and we will pay the
rate that we are legally obliged to do.”
• Relationships to rebuild after Authorised Betting Partners initiative
£12 million+ income raised
• Opportunity for new relationship – including representation under Racing AuthorityBETTING AND RACING The outlook for betting and racing • Levy replacement brings a proper and equitable funding relationship with no loopholes exploited and which reflects the value of racing – Removed key tension • Pool betting licensing changes in July 2018 provide an opportunity for different form of betting to be better promoted • Betting industry under increasing pressure – much of it arguably self-inflicted – but major implications for Racing as public attitude to gambling shifts • All elements of the Racing industry must understand the importance of the betting industry to its future – and work constructively with it – to promote a popular and socially responsible form of betting activity
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