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Who on earth is advising racing?

I have to say that I saw the BHA’s press release in response to Betfair’s announcement of its intention to float and shook my head in disbelief. Who on earth is advising these guys, and what on earth are they trying to achieve?

If you haven’t seen their statement, you can find it here. If you haven’t the time to read it, suffice it to say that they basically appear to be of the view that the current levy consultation can somehow scare investors off buying Betfair shares. I know Paul Roy has held that position for a while because he once told me over dinner; but when he did, I genuinely thought that, in time, he would see how idiotic a suggestion it was. And that if he didn’t, then someone would warn him off it as a strategy. Sadly for him and for Racing, neither appears to be the case.

OK… I have a vested interest here: as most readers will know, I am a shareholder in Betfair  – arguably a significant one; and  you could claim that I am therefore talking my own book. But I make no reference to Betfair’s float, which I am restricted from discussing in any way, other than to use it as the context for the BHA statement. That statement reveals the astonishing inadequacy of Racing’s leadership, as well as that of its advisers – should, that is, such people exist.

First, the very idea that anyone in the financial markets should give a monkey’s about an on-going Levy Consultation, even if it had any merit or were likely to change anything, goes to underline just how stuck in the past Racing’s leadership is. Yes: back in 2002, Racing was a significant part of a bookmaker’s business. I am revealing very little, and in any case drawing on residual and previously-published knowledge, when I say that eight years ago, it constituted about 80% of Betfair’s revenues. So, too, am I divulging no secrets if I state that now, it accounts for less than 35%. Indeed, I remember it getting as low as 21% of Betfair’s weekly revenues, although admittedly that was in a seven-day period when the football calendar was strong.

How exact or up-to-date the figures are is academic. The fact is that today, Betfair (like most bookmakers) runs a global business, to which the relevance of British horseracing is, unfortunately, falling by the day. This sad and simple truth is clearly lost on Racing’s leaders, who continue to play their cards as if they hold every trump when in reality they hold almost nothing. Indeed, most people have moved on to a different game.

Second, the idea that they think that the current Levy Consultation, or indeed that any Government analysis, is going to come down on their side, simply demonstrates that Racing’s leadership is delusional. I have seen the submissions on the current Levy Consultation both from Betfair and from William Hill, and even taking into account any residual bias I might have in my DNA, the two are chalk and cheese. William Hill’s is unpickable almost paragraph by paragraph – a task I am happy to undertake on this blog should anyone care; while Betfair’s, I suspect, will be dismissed by both Racing and Hill’s as ‘spin’, without them actually being able, substantively, to counter a single point within it. (If I am wrong, either is welcome to send me their counter, and I will publish it here with pleasure.)

Despite that – indeed, in advance of the publication of either submission – Racing has seemed to want to make great play about the fact that it has government on its side, despite what seemed to me to be the most evenly-handed announcement the Racing Minister could possibly have made. Why Racing wants to read into his statement a positive for its sport, or make a great show that it ‘has been in close dialogue with government…for a number of months’ (for which read “we’ve been lobbying them; but by the way, so has everyone else”) I have no idea. Perhaps it believes it can create a self-fulfilling prophecy. Perhaps its political advisors want to persuade it that they are making progress in their campaign and are worth whatever money they are charging. Perhaps they just live in Cloud Cuckoo Land. I don’t know.

But it seems clear to me that Racing’s failure to understand much about anything, as underlined by the release put out yesterday in connection with the Betfair float, lies deep within its psyche. Any political observer with the smallest modicum of observation or nous will tell you that any leadership, of any organisation, that genuinely believes today that it is about to secure a big boost to its revenues prompted by government, in the context of a national economy which is suffering cuts at every level, is simply  deluded about itself, its industry, and the wider world.

In fact, I would argue that – far from putting out punchy press releases attacking something which the BHA (as a public body) has simply no remit to get involved with (leaving aside entirely whether it actually advances their cause, or makes even the first bit of sense) – Racing’s leaders need to be really careful. It seems to me to be as likely, in the current climate of austerity and cuts, that the Government would be happy to rid itself of an annual levy debate by forcing some racecourses into closure – knowing that this year they would be doing so in an environment where so much is already closing and so many jobs are already being lost that no-one will shed an additional tear – as it is that it will come down on Racing’s side and give it a boost to its revenues.

In fact, following on from the BHA’s press release about Betfair’s float, I would go so far as to say this: if, as part of this current round of talks, the Government endorses a change in the Levy process in Racing’s favour at the expense of exchanges (that is, by identifying any section of Betfair’s customers as people who should be paying the levy in a way that is not consistent with the customers of other bookmaking operators), I will run naked down High Holborn and donate £1,000 to a charity of the BHA’s choice; providing, as part of the bargain, that Nic Coward and Paul Roy resign within 24 hours of it becoming apparent that the government decision is to the contrary.

It might seem like a comedy bargain to strike now. But let people be under no illusions that there is a sensible path for Racing to tread, and it is the people running Racing who are resolutely refusing to tread it. When their departure from office is followed by the closure of racecourses around the country as a direct result of the utter folly of their one-eyed, obsessive, leadership, may people in Racing remember for how long they were warned not to follow them, like lemmings, over the cliff.

Posted in Betfair, Betting industry.

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17 Responses

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  1. Basilides says

    As a matter of interest, I picked this up from Betfair’s 2010 Annual Report;

    “In July 2010, Betfair announced that it was to open an office in Dublin, including the opening of a new data centre and the relocation of the Betfair Group’s telephone betting and trading teams. This will provide strategic benefits for the Betfair Group by combining some existing technology and operational resources into a single location, which should deliver long-term improved performance and reduced costs. Betfair’s Dublin base will provide the Betfair Group with additional flexibility as the regulatory environment evolves, should the need arise”.

    “with additional flexibility as the regulatory environment evolves, should the need arise.”

    Is this a veiled threat by Betfair that should things not go its way, it will up sticks to Dublin? And who was it aimed at; government; investors; British horse racing..?

  2. The Geek says

    The trouble with corporate types is no sense of style!

    Make it 10k and the London Marathon, and I reckon you will put Camberton well and truly on the map. ;=)

  3. jackpool says

    With the levy debate and the sale of the Tote (with it’s monopoly on pool betting) I think that the next year will be an defining year for British Horse Racing. With it’s current ‘leaders’ in place I would put money on a ‘charge of the light brigade’ scenario here. There seems very little sense being spoken by the current leadership.

    Betfair also have a physical presence in Malta. Really I think any operator worth its salt would maintain a presence in ideally two or three countries within Europe (given the nature of betting regulations and possibilities of rapidly changing tax structures). So I would say it’s not really a ‘threat’ more just good business practice/common sense.

  4. Leonthefixer says

    Hi Mark,

    Really enjoying your blog now you are posting more often. Quick question, you say:

    eight years ago, it [racing] constituted about 80% of Betfair’s revenues. So, too, am I divulging no secrets if I state that now, it accounts for less than 35%. Indeed, I remember it getting as low as 21% of Betfair’s weekly revenues, although admittedly that was in a seven-day period when the football calendar was strong.

    Would you say the drop was due to more being bet on other markets but racing remaining the same or more on other markets as well as racing turnover falling?


  5. ScottF says

    Basilides – talent pool in Stevenage and Malta has been drained to the extent there’s very little left, and the IT resources in Dublin will be far better than a Mediterranean island. Overall, it doesn’t move a huge percentage of people out of the UK, just shuffles the deckchairs a bit, and I believe it will lead to a return to minimum phone bet restrictions (£2 bet always a stupid idea for the phones, but the genius who came up with that idea gets paid far too much to listen to anyone else’s advice). However, for the affected staff it’s not popular as Dublin is very expensive to live and the wages involved at the low end of the scale.

  6. PPBox says


    I read in the Racing Post that Betfair paid £7.2m to the Levy for the year to April 2010, so that’s £72m of revenues on British horseracing. Betfair’s corporate site has their annual reports going back to 2004, and that one says that 6 years earlier Betfair paid £3.9m in Levy, i.e. revenues on British horseracing of £39m. So Racing has grown, but everything else must have grown faster (Betfair total revenues >£300m vs. £60ish million in 2004).

    I’m staggered by Paul Roy’s press release yesterday. “the figure of an underpayment to Racing of £30m has been stated by a leading betting industry figure”. Why the pretence? That will be Ralph Topping, CEO of one of Betfair’s main competitors, William Hill. That figure comes straight from Hill’s hilarious submission to the Levy consultation, and they work it out like this (and no I’m not joking):

    Betfair paid £6m statutory levy last year.
    Therefore Betfair must have made £60m on UK horseracing.
    Assume Betfair charges 2% commission on all horseracing bets (???)
    Therefore £3 billion was won in total by all customers.
    Assume 10% of them are “business users”. (why?)
    Therefore “business users” had net winnings of £300m
    Therefore£30m of levy wasn’t collected.

    I kid you not. That is Paul Roy’s “compelling” evidence that Racing should get more Levy from Betfair.

    I win £100 from you and pay £5 commission. You win £100 from me and pay £5 commission. Net net I’m down £5, you’re down £5 and Betfair has pocketed a tenner (and paid £1 in Levy).

    Ralph Topping thinks that £10 commission has come from £500 of winnings (at 2%), and that £50 of the money that neither of us won has been pocketed by an unlicensed “business user”, and that Racing’s been shortchanged by a fiver. You couldn’t make it up.

  7. SagaLout says

    I can’t decide whether Topping, Roy, Coward and co really are as dim as they appear or whether they just assume everyone else is stupid and will swallow the nonsense arguments they submit.

  8. Trigger Happy says

    The more I think about it the more outrageous this appears. BF must be livid.

  9. lastfiver says

    Would be nice if I could leave a comment on the BHA website…lol

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