The European gambling scene – which way for horseracing?
The war is over: so said France Galop director general Louis Romanet a year ago, after he had put his name to a ground-breaking deal with British bookmakers Ladbrokes. For the first time, live pictures of all French races – Flat, jumps and trotting – were being made available to show in UK betting shops, via a new broadcasting service known as Ladbrokes Xtra. A unique, dedicated channel, Xtra is now in all Ladbrokes’ 2,140 shops in Britain and Ireland, and is there to provide extra – hence the name – opportunities for punters, over and above the traditional daily mix of horse and greyhound racing, virtual reality racing and numbers’ betting. Xtra needed product to make up its programme, and French racing was an obvious target, provided the old enmity between the parties could be overcome. The French racing and betting authorities have generally abhorred fixed-odds bookmakers for a century, ever since their like were driven out of the country by legislation that strengthened the national pool-betting monopoly. For their turn, Ladbrokes, which has a well established business in neighbouring Belgium, had engaged in court battles against the French for at least the past 20 years, seeking to break the mould so that it could take its product into fresh areas. Suddenly, peace had broken out between the two old adversaries. More specifically, pragmatism had prevailed. Ladbrokes needed betting opportunities to fill the gaps in its new service, and the French had them in abundance, even if the idea of putting money on the outcome of a trotting race still seemed slightly alien to UK viewers. On the other side of the counter, the French could see an opportunity to enhance its betting take, because as well as allowing for the delivery of live pictures, the deal enabled Ladbrokes to put bets straight into the PMU pools, for a fee, of course, which generally works out at three per cent of turnover to the host provider. One year on, the two sides are more than happy with the arrangement. Ladbrokes has a guaranteed product to put before its customers, and the French PMU has another source of income, as well as a useful driver for increased pools. Romanet says: “The arrangement is progressing well, better than we expected, and we have very good relations with Ladbrokes, which will grow. The more people that are part of the pool, the more interesting it becomes. “French racing is benefiting, and it is good for Ladbrokes, because with pool betting the bookmaker doesn’t mind which horse wins.This is a proper deal, worked out between the racing authority and the bookmaker on proper terms, which is very different from what other betting operators, such as the exchanges, have suggested. They came to us and said they would give us 0.25 per cent of turnover. We said No. We are not beggars.” So there we have it; the new enemy is revealed. The betting exchanges, with their low-margin operation that cuts into the traditional market, have taken the place of the British bookmaker as the bad guys. But the exchanges are not the only target, and nor is France – the Ladbrokes deal aside – the only European country taking a stand, though its policy towards private betting and gambling operators is considered among the most restrictive in Europe. The real storm has been whipped up by the pervasive phenomenon of the internet, which has turned the European gambling scene into a maelstrom. On one side are the state-controlled monopolies, generally making their money from lotteries and hanging on to their status for dear life under national law. On the other is the European Commission, steeling itself to intervene under EU legislation. And in the middle are the private betting operators, prodding governments into short-term legal action with the long-term aim of getting to the European Court of Justice, where they anticipate a wider, more liberal ruling. For betting operators, it may prove to be a case of taking two or more steps back before they can make a half-step forward, but if the mood among European Commissioners is any guide, they will get there, some day. In September, the internal market minister Charlie McCreevy took to nine – Austria, Denmark, Finland, France, Germany, Holland, Hungary, Italy and Sweden - the number of national governments against which the EC is opening infringement proceedings for restricting the provision of sports betting (including horseracing) and gambling services. The EC is following the line that under EU law countries can curb private gambling operators but only on grounds that are “non-discriminatory, proportionate and consistent”. A country cannot justify restrictions simply to protect its gambling or lottery monopoly, it says. Fellow commissioner Malcolm Harbour, who represents Britain, adds: “Member states cannot, on the one hand, incite and encourage people to participate in national lotteries, while at the same time invoking customer protection as a reason to suppress sports (and horserace) betting.” The testing ground for these views is being laid out even as some national governments continue to bear down on unwelcome betting operators, and as is the way with such issues, the workings of the law will grind away slowly, and expensively. Meanwhile, and perhaps ironically, two countries on McCreevy’s hit list – Germany and Italy – are moving towards deregulating their betting landscape from inside. Spain, too, is gently opening its arms to fresh possibilities, and emerging areas of eastern Europe will not be far behind. Major British-based bookmakers have worked out the angles, and, inevitably in view of their vast experience at putting on a fixed-odds show for their customers, they have made strategic alliances or are looking for individual representation. Stanley International, based in Liverpool, has been operating through agents in Italy for around five years. Its legal challenges have been an irritant for much of that time, but they have produced important legal decisions. Now Stanley is looking to advance through being awarded some of the 17,000 licences – 7,000 for sports betting shops and 10,000 for horserace betting – that are being opened up to commercial competition in Italy. In September, Ladbrokes paid €1.3m for a joint venture with local betting company Pianeta Scommesse and is promising to spend €100m over the next five years on a betting-shop project. “There is clearly unsatisfied demand in Italy,” says Ladbrokes chief executive Chris Bell. Gala Coral already operates in Italy through Eurobet and is bidding to expand, while William Hill can hardly afford to be left out, though its main thrust into Europe will be through Spain, which is moving towards a degree of sports-betting deregulation, and then Greece once it treads softly into liberalisation. Spain, which has new legislation on the stocks in three of the country’s 17 autonomous regions, is also the target for Betbull, a polyglot of an organisation, since it grew out of Austria, is based in Gibraltar and run by Simon Bold, who first made his name as a bookmaker in Liverpool. Bold says: “The Spanish retail market is immense, and will embrace the concept of sports betting in comfortable outlets that combine high-level technology with leisure and catering facilities”. So, where does all this to-and-fro activity leave horseracing? That’s the million-euro question for authorities running the business and individuals practicising within the pursuit, who see their rewards diminishing and wonder if, or how, they can hang on to the tail feathers of the golden goose of betting. Steve Fisher, British co-founder and director of Stan James Bookmakers, is as close as anyone to the central attractions. He was among the first to spot the potential of online betting, and has known days when his firm will offer nearly 400 separate markets on a multitude of sports, but he also supports horseracing to the hilt, including sponsoring both the Guineas on the Flat and the King George VI Chase over jumps. “Aside from lotteries, the gambling market in Europe is dominated by gaming – casinos and slot machines – and fixed odds can never compete for profitably per square metre,” he explains. “Britain, Ireland, France, Germany and Italy may be the dominant horseracing countries, but betting has to compete strongly with other sports, and horseracing is a minority activity even in such as Germany and Italy. Spain is a worry for any operator because it does not have a history of betting. Its gambling is based on lotteries, numbers, bingo and slot machines, so expansion will not happen overnight. In central and eastern Europe they predominantly bet on football and other sports, from basketball and cycling to darts and ice hockey, so these are also markets that do not instantly lend themselves to horserace betting. The point about sports betting is that most European countries bet on events in other countries, as well as their own. Taking horseracing into another country is not easy. It would be no good the UK, or anyone else for that matter, simply saying, ‘Here is our wonderful horseracing, you must have it.’ To betting people in most other countries it’s just another horserace, and there is a huge barrier if the commentary is in a foreign language and the odds are not up to date.” Gloomy for horseracing, or what? Fisher sees the picture as it is. “I have a betting shop in Moscow, using the latest Finsoft software to provide a Russian translation, and we show virtual horse and greyhound racing every five minutes,” he says. “No live racing, because I cannot get the pictures. But even if I could get live racing, I’m not sure how much interest there would be. If I was marketing a betting product to eastern Europe, for example, I would have more success with a virtual greyhound race than a live horse race. It’s easier for customers to understand. Of course, I want to be enterprising, and am keen to promote horseracing. But you would need a lot of co-operation from everybody, and that includes pricing. Horseracing should not think there is lots of money to be made out of its product, because that is not the case. And that’s not pessimism. It’s realism.”