Game face – can betting pools find a new market for European racing?
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By Lissa Oliver
Where there is competition, there is gambling. Punters naturally take an interest in a sporting outcome and enjoy “putting their money where their mouth is” when it comes to having an opinion on the winner, but never more so than in horseracing. Rightly or wrongly, our industry seems to be inextricably interlinked with gambling and increasingly dependent on betting options. Can betting pools be turned to our advantage and bring in new fans?
A totalisator, or pari-mutuel system, is similar to a lottery in that all the stakes on a race are pooled with a deduction to cover costs and a contribution, where obligated, to racing. The remainder of the pool is divided by the number of winning units to provide a dividend.
On-course bookmakers are struggling to compete with online betting opportunities, and on-course pari-mutuels are no exception. The Irish Tote returned a year-on-year 33% decrease in 2018 to under €70m, due to falling international turnover. Yet a sliver of silver shines in the gloom for 2019, with first-half figures showing a 5.4% increase on-course.
Speaking to a government committee in November, HRI CEO Brian Kavanagh announced a strategic review of the Tote in Ireland, saying, “There is talk of a new gambling regulator being appointed and the taxation status of the Tote has been raised as an issue. The Tote is facing the same struggle as on-course bookmakers. We are in discussions with a number of parties with regard to the future of the Tote, and we will be bringing some strategic options to the board.”
It's interesting to note that in countries such as Ireland and Britain, where horseracing is managing to retain its popularity with the general public, the simple win-only bet is by far the most popular bet, suggesting punters are following form and looking outside our sport for more adventurous fun bets.
The most popular bet in Britain, Ireland, France, Germany, Spain and Switzerland is the win-only, in Greece the trifecta, multiples in The Netherlands, and in Denmark, Norway, Sweden and Russia, it’s the Jackpot that most captures public interest and investment. Understanding the market and what attracts customers is half the battle, but attracting new customers is the greatest challenge.
Cyril Linette
Cyril Linette is the CEO of the French PMU, the biggest betting pool in Europe and the third-largest in the world. Having turned the ailing fortunes of L’Équipe newspaper successfully around, he is now turning his attention to revitalising the PMU. Earlier in 2019, he outlined a new “operating roadmap” designed for corporate recovery and transformation strategy, reviving French racing for all stakeholders.
At a conference in April, Linette expressed confidence in PMU’s long-term prospects, despite declines across its portfolio in 2018—notably sports and poker betting down 2.3% to €9.7bn and horseracing down 2.6% to €8.8bn. This comes on the back of a 20% decrease in betting since 2011, when betting on horseracing has almost halved during that period.
In response to these declines, Linette has launched a €30m cost savings plan, sanctioning “strong actions” across PMU’s retail network, which currently generates 75% of corporate wagers. “If we do not find a solution, in five or 10 years the company puts the key under the door,” Linette warned starkly. As a result, the operator will no longer service the Brazilian horseracing market, ending its partnership with Rio de Janeiro’s Hipódromo da Gávea.
A key proposal is the revamping of the Quinté, which celebrated its 30th anniversary in 2019, removing all bonus rounds to make it “less reliant on chance.” Linette states his aim to simplify the Quinté: “The Quinté is a rather complicated game, not in its formula, but finding five horses is complicated. There are very simple bets where you just have to find the horse that will win, to attract a younger clientele. That is the big challenge in the years to come—to try to rejuvenate our clientele.”
Among other measures introduced is a new loyalty programme, to engage and reward regular French racing patrons.
“The PMU will place horseracing bettors back at the centre of its business, take good care of today's customers; because our PMU clients are important, they contribute to the social link, they contribute to the financing of the sector,” Linette vows.
This goes hand-in-hand with a nationwide campaign to improve the general public’s awareness of the sport and hopefully bring in a wider audience. “I do not know if the PMU is corny, but it's a world a little closed,” Linette acknowledges. "The younger generation is not going to naturally play PMU and does not always go to racetracks. There is a real value to our public image. The PMU is known but not sufficiently considered.”
Linette explains, “One thing is certain: diversification towards gambling is over. The PMU has had years of decay; we are no longer in the 1950s, 1960s or 1970s, during the glorious Thirty Years when we used to play the trifecta to buy our new clothes, caravans or something else. There was competition, so at one time the PMU went into lottery games, games of chance, and I think we were losing our soul a little.
“Basically, it's a life-size board game—you have to find the right combination, and the one who finds the right combination deserves to be rewarded, whether in very expert games like the Quinté or in games a little simpler like finding the horse that wins.
“I think we have two ranges of customers: the turfistes (400,000 people), which represent 80% of our turnover, and those who we could call the gamers (2 to 3 million people), which are more volatile. For the first, we must go back to fundamentals by erasing the maximum references to games of chance. Return to the DNA of horse betting, sagacity and gains. For the latter, we must work on image and innovation, so new types of bets to keep them or conquer them.” The message here is clear: stop trying to diversify and instead specialise for each group of particular clients.
Harald Dorum
The issue of attracting a fresh, new and younger audience is not just a problem for France. Paull Khan spoke with former CEO of the Norwegian Betting Operator Rikstoto, Harald Dorum, who stepped down earlier in 2019 to “allow a ‘new broom’ to attract a younger audience, with whom racing is struggling to communicate.” He remains President of the European Pari-Mutuel Association, however.
Dorum places much emphasis on the benefits of the pool betting model. Primary among these is the greater susceptibility to race-fixing of fixed odds bets and, especially, exchange models.
“The pari-mutuel operator is completely independent of the result of the race. If a punter places a large stake on an unexpected result, his winnings will be correspondingly lower. Moreover, bets on losers are not allowed,” he says and even claims, “In countries with the Tote model, there has been no case of fixed races for years.”
Despite this, pool betting has not been immune to a general trend in public opinion, which is hardening against gambling and focuses not only on its links to race or match-fixing but also on its use for money laundering, the growth of illegal betting and, perhaps most notably, on the social cost of gambling addiction.
“We have to modernise. We have to find a way of bringing a new and modern product to the market, while still taking care of the integrity of the sport. And fixed odds may be a part of that mix,” Dorum concedes.
He believes that the likelihood of public support will be increased if Tote has a real and clearly explained public mission, whereby some of its profits are directed to other causes, such as financial support of broader equestrian interests.
It is an oft-observed fact that there is no universal rule book for horseracing and the discrepancies in the interference rules significantly deter many punters. Dorum agrees that the recent progress in harmonising these rules under the so-called ‘Category 1 approach’—now uniform pretty much the world over save for North America—has “absolutely been good news.” Medication rules would be top of his list of the remaining rules to harmonise. Aside from harmonisation, Dorum believes that the sport’s rules must chime with the sensibilities of today’s population, in particular the need to limit the use of the whip to a broadly acceptable level.
Dorum concedes that progress towards a Global Bet, a single world-wide product available around the world and backed by strong marketing and branding has been very slow with neither the betting operators nor the racing authorities gripping the concept and taking ownership of it. But software developments promise an imminent technical solution, he believes. “Just like with a lottery, you have the chance for a life-changing win, but at the same time, you have a great experience.”
In his view, success in launching a Global Bet will require a joint effort between betting operators and Racing Authorities and this, in turn, will require a commitment in terms of time and policy prioritisation, from the global Racing Authorities, both for galloping and trotting races. And there is a general feeling that the key to this must be the support of the powerhouse that is the Hong Kong Jockey Club. For Dorum, it is political issues rather than technological or legal ones, that have hindered the Global Bet. For instance, he explains, a time of day must be agreed by all the parties, and a publicity programme then to surround it to give it the marketing reach.
Further, Dorum believes, “We need to increase our cooperation between Tote operators and find solutions and future products together.”
In this context, it has been reported that the PMU, Europe’s pre-eminent Tote operator, is considering its future within the EPMA. “I very much regret, if it will be the case, that the PMU will be leaving the EPMA in May and joining the World Lotteries Association. We and the WLA have a lot to learn from each other, and we have established a working group to determine how we might work and cooperate together.”
