General Chat

[BigChaang]

Romeo Coolio not declared at Punchestown. Classical Creek neither. Thursdays card at Thurles has been abandoned.

I was at Thurles last Thursday with some Mates , Only Flat Meeting they have there apparently .
and there were a few non runners that day due to the going ..

[Wayward Lad]

And the hits keep coming……for UK Horse Racing

I apologise now to those who would rather not talk about such matters, as it’s negative and doom mongering, but folks its reality now and the reason for my post is a message for my fellow acolytes of this forum to enjoy racing and it’s foibles as it’s now, in its current format, as I can only see it getting a lot worse on many levels.

The ‘hit’ I mention above is the news of potential massive tax hikes under the new government with their Oct Budget (purposefully leaked to soften the blow?)……..National Hunt racing is my passion and it is seriously under treat in its current format in my opinion and many others recently quoted within the sport.

The leaked intel suggests massive increases in taxation for bookmakers on sports bets (inc horse racing) and online business, looking to take an estimated £3b out of the bookmakers gross profits. As a result yesterday the major bookmakers share prices lost between 5% and 10% (massive numbers for the value of these big amalgamated companies). Remember many of these companies are now multi national and no longer rely completely on UK business.

When these big companies announce their annual accounts and we all curse when we hear about their massive profits, how much do you think is delivered by UK Horse Racing ? I suspect much less than you think and that’s why I think the business model of horse racing is seriously under treat if these tax increases go through.

Why do I think this ? Because so much has changed over the last 10 to 20 years which has masked the true profitability of horse racing in the Uk. As the Government, the Racetracks and the Levy have wanted more to support horse racing, then the product has showed continued decline in both Turnover and Margin. The bookmakers profitability growth has come from other products inc numbers betting, FOBTs for a few years (now more fruit machines due to the stake reduction legislation) and FOOTBALL. Think about how many Football coupons there were in betting shops 10 years ago to now, how many Football markets have been created…look at the marketing in the front window of betting shops, it’s all Football as it’s now the key product to encourage the young bettor. No longer is Horse Racing the key product.

Financial disclosure has sped the turnover decline trend up with Turnover of UK Horse racing declining by 20% over the last two years alone ! - I suspect the trend has been about an annual 5% for the previous 8 years or so.

Then there is margin. I estimate that the average margin bookmakers make out of Horse Racing is around 10% with the comparison of Football betting delivering double that margin…..yes double.

Then we come to the cost of providing the opportunity to bet on the product. Bookmakers pay around £100m per year on Levy from horse racing and an additional, £100m in media rights to racecourses. This is separate to the tax they pay to the government. The levy is based around gross profits at the moment with some wanting it to go back to being turnover based (either way it’s going to decline and quickly in total amount of money available based upon the decline in horse race betting) at the moment the amount given out by the Levy has been maintained at around the £100m by ‘reserves’ whatever they are but they cannot be available for ever ! So the Levy payments to racecourses will reduce and in turn prize money.

My prognosis is that IF the bookmakers are hit with massive tax rises then the £100m media rights payment will be one of the first things that is challenged, at the same time bookmakers sponsorship of major races will reduce as contracts come up for renewal and free bets and concessions will dry up (some already are). They will have to pay the Levy and the Tax, but other costs are technically voluntary. I estimate that sponsorship combined is around another £20m a year. Look at how many of the big races are now sponsored by bookmakers, where the tracks have been unable to get other sponsors ? Whether we like it or not, business brands don’t think it’s good business to sponsor horse racing.

Bookmakers pay £100m in media payments to show horse racing on line and in betting shops. Betting shops that have reduced in number significantly over the years with the trend increasing. (14k betting shops in 1973, just over 8k 10 years ago and just over 6k now). With the stakes limit on FOBT’s and Financial Disclosure then this will continue in my opinion at a faster rate. Shops may stay open for a while until their lease runs out as they lose less in trading than remaining dormant.

Bookmakers then pay £100m in Levy to be able to bet on horse racing.

Now consider what they pay to be able to bet on Football. No Levy payment and no media rights payments. Only a small fee per shop (£300?) and online to the governing body of Football (total less than £5m) Then consider what level of turnover/profit Football generates verses Horse Racing ? It used to be maybe only 5% of a betting shops turnover, yet now I would suggest it is over 50%. I would also hazard a guess that because the margin is so much higher than horse racing that most betting shops will be showing a higher profit on Football than horse racing. So why would you want to pay £200m for the right to accept a bet and show horse racing ?

What I see coming over the next few years if these tax rises happen is;

- a faster rate in prize money reduction (as an example the Cesarewitch prize money has reduced from £500k to £175k in less than 5 years)
- more bookmakers challenging the media rights payments with some meetings not being streamed and some not priced etc (which has happened already thus year)
- sponsorship not being renewed when contact ends
- tighter margins on horse racing
- much less, if any, concessions and free bets
- racecourse closures similar to what happened to greyhound racing
- less races

Don’t be fooled into thinking the large amount of money being spent at Tattersalls last week is a barometer of racing’s health, as it’s the top end of the market and in no way represents the majority of owners within the industry. How many of these owners do it to support their passion and hobby and not as a business? - I suspect many.

Unfortunately the large prices paid at Tattersalls couldn’t have come at a worse time as any arguments against significant tax rises hurting potentially the horse racing industry and not just bookmakers as the Government intend, may fall on deaf ears.


My message is enjoy what we have now and enjoy it for as long as it lasts !

ps….i do have some solutions to the headwind problems coming racings way and will happily detail these if anyone’s interested (most won’t happen due to racings divided factions) but for now i need to have a few beers to sincerely hope I am wrong on my forecast for the sport which is my passion.

[BuckingThe Trend]

Nicky Henderson Stable Tour suggests Sir Gino might stay hurdling. B365 immediately cut Ballyburn (5/2 to 9/4), Firefox (8/1 to 6/1) and Slade Steel (12/1 to 8/1) for the Arkle. Doesn't take much to move a market does it.

[Lobos]

Nicky Henderson Stable Tour suggests Sir Gino might stay hurdling. B365 immediately cut Ballyburn (5/2 to 9/4), Firefox (8/1 to 6/1) and Slade Steel (12/1 to 8/1) for the Arkle. Doesn't take much to move a market does it.

Seeing as he said that last season it certainly doesn't!

[somer1]

Could someone be a love and cut and paste the 25 most exciting jumps horses from the racing post please?

[Istabraq]

Wayward Lad
Thanks for that, very informative.
Though your finger of blame appears to be pointing at government for potentially imposing additional taxes on bookmakers; bookmakers themselves have been allowed to restrict/close punters at will for many years forcing an enormously large number of punters to the black market or to lose interest in the game, if they welcomed back those punters with some (non brutal) restrictions their income will increase, their profits will increase and their contribution to the levy will also increase, it's a win for bookmakers, it's a win for racing and it's a win for punters, the only losers are the black market operators and there'll be very limited sympathy for them.
There's a reason why bookmakers don't do anything proactive to re-dress their income/profit hits, they don't want racing business, they would be happy for the game to go to the wall and their only customers are casino crackheads and mug football acca punters.
You are of course correct, they'll increase margins across the board, punters will pay and it'll be another nail heading towards the coffin...

[Wayward Lad]

Thanks Itsabraq, I hope you found some of the info surprising, especially around what the bookmakers pay to lay a bet on football verses horse racing, as this example should show how expensive racing is as a product verses other products for bookmakers. There is no mandatory levy on any other sports product. Even greyhound racing is only a voluntary levy.

I agree with you around bookmakers not being prepared to lay a bet and not wanting business that potentially beats the book. Unfortunately nowadays the major betting companies are run by Accountants and they are by and large not prepared to take a view. They also want you to move from volatile horse race betting, which is a skill product, to more built in margin products such as casino, numbers, fruits etc

I didn’t mean to point the finger of blame at the governments door as I believe there are many different factions to blame for where UK horse racing is and where it’s going. Too many have their noses in the trough I’m afraid, although I don’t believe the government gives a rats **** about racing. Their words say they do, but their actions say otherwise.

Racecourses would be equally at fault with government and bookmakers, and probably my leading villain as they receive both media right payments and Levy payments, yet run as separate stand alone businesses and there is no transparency around how much of the Levy contributions made to them go towards Prize money? I think it should be all. Peter Savill (ex BHA chief and Plumpton racecourse owner) has said that racecourses should show how much of their Levy payments goes to there Prize Money.

Why should the Levy subsidise the profitability of some racecourses when some open for less than 10 days a year ?

In my view for horse racing to survive then all levy payments should go directly towards prize money, less racecourses as a result of not subsidising their profits and also as a result less racing (especially as there aren’t enough horses in training to support the fixture list). The bigger tracks should survive with quality racing and higher prize money.

At the moment it’s the owners and punters who are keeping horse racing afloat through supporting their hobby and passion, when knowing deep down that it’s going to cost them in the long term.

My message is enjoy it whilst it’s here !

[thorne365]

At the moment it’s the owners and punters who are keeping horse racing afloat through supporting their hobby and passion, when knowing deep down that it’s going to cost them in the long term.

My message is enjoy it whilst it’s here !

2 good posts Wayward Lad! Further context: All the big UK [+ Ire] bookies are multinational these days and the UK TAM [Total Addressable Market] is shrinking in comparison to other jurisdictions. Fanduel [Flutter - Skybet/pp/betfair] just added ~80% to their estimate of the US market size in 2030 [up to 60 billion - I think GGR (Gross Gaming Revenue) in the UK is not much more than a tenth of that]. 365 have 'americanised' their app which has to taken as a signal of intent [Because they're privately owned, they are the barometer for longer term thinking - such as it is/can be in the industry] . In addition South America [Brazil right now] is starting to regulate which is drawing company focus.

Racing makes up virtually none of those markets fwiw.

I differ from most people engaged in racing in that I don't necessarily blame bookmakers for where we are with regard to falling racing t/o - they operate in a supply / demand ecosystem which isn't telling them to focus on Racing.

I find it hard to make an argument that any decent sized bookie is gonna ever focus on Racing again unless its pushed to by customer demand. Thus the only thing I can see that will ever reverse the current trend is proper long term thinking / planning about how to regrow the sport so that its embedded in peoples minds again. Damned if I know how to approach this - things like the Racign League have the right sentiment [possibly - I like the idea of different branding to engage new fans and possibly keep them longer, but the current reach means its can't work] but are far too short termist and demanding of instant results imo.

For me/us, its a great betting medium - for the majority of people it's a closed shop that a pain to attend, understand, follow and empathize with it's competitors [when compared with football in the UK, and especially NFL in the US] - there simply isn't enough widespread grass roots understanding of it as a sport.

[Istabraq]

I differ from most people engaged in racing in that I don't necessarily blame bookmakers for where we are with regard to falling racing t/o - they operate in a supply / demand ecosystem which isn't telling them to focus on Racing.

Not sure that's true.
Bookmakers have been restricting punters for many years, this isn't new, I had my first account closed (not restricted) in 2005
I know two black market operators, one is based overseas with significant turnover, the other is a smaller more private operation based in UK, I speak to both of them and they say the vast majority of their business is on UK horse racing and their client base is built up entirely of UK punters who have either been restricted by UK bookmakers or had accounts suspended due to failing to comply with affordability intrusions.
And believe me, whatever numbers you hear banded around re the value of turnover with black market operators, this is only a fraction of what is really staked, the regulator can't give accurate figures because it will highlight the complete mess they've made of regulating the industry with incompetence of the highest order allowing bookmakers to run the industry how best suits them with no consideration for the punter, the lack of opposition from bookmakers around affordability checks is telling, performing these checks allows them to unearth duplicate accounts.
Bookmakers want it all ways, always have, for sure there's blame that can be apportioned to others but it starts with them....

[thorne365]

Not sure that's true.
Bookmakers have been restricting punters for many years, this isn't new, I had my first account closed (not restricted) in 2005
I know two black market operators, one is based overseas with significant turnover, the other is a smaller more private operation based in UK, I speak to both of them and they say the vast majority of their business is on UK horse racing and their client base is built up entirely of UK punters who have either been restricted by UK bookmakers or had accounts suspended due to failing to comply with affordability intrusions.
And believe me, whatever numbers you hear banded around re the value of turnover with black market operators, this is only a fraction of what is really staked, the regulator can't give accurate figures because it will highlight the complete mess they've made of regulating the industry with incompetence of the highest order allowing bookmakers to run the industry how best suits them with no consideration for the punter, the lack of opposition from bookmakers around affordability checks is telling, performing these checks allows them to unearth duplicate accounts.
Bookmakers want it all ways, always have, for sure there's blame that can be apportioned to others but it starts with them....

I don't think any of that matters to the main point does it? That being that Racing is now a small product in most 'mainstream' bookies portfolio so what incentive do they have to protect it - and who can protect it?

[I had gone through a few points in your response with comments but decided against dragging it out here - happy to take off-line if you want]

[Wayward Lad]

Andrew Rhodes CEO Gambling Commission stated in his Sept 2023 questioning by MP’s that the Black Market was overstated and very small ! ….with no acknowledgement or acceptance that it was growing at pace with the trend generated by OTT financial disclosure activity by bookmakers afraid of losing their trading licence.

He went on to detail what activity the GC were taking against illegal operators but accepted that VPN’s (virtual private networks) were a stumbling block (my words) to take action against these illegal sites. All he was interested in was stopping these sites, rather than reducing the harshness/strictness of the financial disclosure activity undertaken by bookmakers…..which was supposedly meant to be a ‘light touch’ approach ! The GC doesn’t give a monkeys about what turnover is lost through financial disclosure as it’s not in their remit and they are not measured by it.

I have never thought about why the bookmakers didn’t challenge the massive fines that have been levied against them over the last few years (over £20m), thinking that they were just scared of losing their trading licence. But thinking about it now then why didn’t they have a legal challenge against the fines - whether they were proportional or fair. Maybe just one of them as a test case? They did it with VAT on FOBT’s and won after a long battle with HMRC. Maybe there were ulterior motives in doffing their caps and meekly accepting the massive fines as Istabraq infers…..

Whatever the reality, customers restricted or blocked for refusing to provide financial disclosure will either stop betting (unlikely as for many its a hobby, passion, habit, part of their routine etc which they enjoy) or find alternative sites/mediums where their business is accepted without having to provide financial info. Deep down the industry/regulator/government knows this is going to happen but accepts the GC’s approach of stopping the opportunity of betting illegally rather than amend the legislation that is making it happen and fuelling the growth of the black market !

There are so many vested interests and players within the industry/sport that, is it any wonder Racing is in such a state?

[Spectre]

The bookmaker solution is really simple and always has been. The Government should only license bookmakers to operate in the UK that both reside and pay full tax in the UK. All those that are registered in tax havens should be regarded as unlicensed.

Light touch financial checks are okay with me, but anything beyond that is unacceptable. None of us need to be told how we can spend out money. We aren't told what we can spend on anything else, nor should we be.

As for bookmakers restricting punters, closing accounts, etc, it should be a term of their license that they should take a bet, as it is in other countries. They shouldn't be compelled to include racing as a sport though. If they don't want to take a bet on racing don't include it. They'll never admit it, but they need racing because of the amount of accounts it opens, and the amount of bets they take from people who don't have sufficient knowledge to make it pay.

Quite frankly it's time someone stood up to them and called their bluff. It's a big game they're playing, and they win because the UK legislation both allows them to, and the deterrents (fines) aren't big enough to genuinely deter them.

[HoldenTheReins]

The bookmaker solution is really simple and always has been. The Government should only license bookmakers to operate in the UK that both reside and pay full tax in the UK. All those that are registered in tax havens should be regarded as unlicensed.

Light touch financial checks are okay with me, but anything beyond that is unacceptable. None of us need to be told how we can spend out money. We aren't told what we can spend on anything else, nor should we be.

As for bookmakers restricting punters, closing accounts, etc, it should be a term of their license that they should take a bet, as it is in other countries. They shouldn't be compelled to include racing as a sport though. If they don't want to take a bet on racing don't include it. They'll never admit it, but they need racing because of the amount of accounts it opens, and the amount of bets they take from people who don't have sufficient knowledge to make it pay.

Quite frankly it's time someone stood up to them and called their bluff. It's a big game they're playing, and they win because the UK legislation both allows them to, and the deterrents (fines) aren't big enough to genuinely deter them.

100%

On the AK bets podcast the lawyer on there said some casino online with a license here took 40k from someone who won on slots and he can't sue them as they don't have an office here. Fucking scandalous that is and should be illegal.

[Istabraq]

I don't think any of that matters to the main point does it? That being that Racing is now a small product in most 'mainstream' bookies portfolio so what incentive do they have to protect it - and who can protect it?

[I had gone through a few points in your response with comments but decided against dragging it out here - happy to take off-line if you want]

I think it is relevant but there is so much wrong with how the game/industry is run we could write a book in here.
Wayward Lad raises some very interesting points...

[Istabraq]

Andrew Rhodes CEO Gambling Commission stated in his Sept 2023 questioning by MP’s that the Black Market was overstated and very small ! ….with no acknowledgement or acceptance that it was growing at pace with the trend generated by OTT financial disclosure activity by bookmakers afraid of losing their trading licence.

He went on to detail what activity the GC were taking against illegal operators but accepted that VPN’s (virtual private networks) were a stumbling block (my words) to take action against these illegal sites. All he was interested in was stopping these sites, rather than reducing the harshness/strictness of the financial disclosure activity undertaken by bookmakers…..which was supposedly meant to be a ‘light touch’ approach ! The GC doesn’t give a monkeys about what turnover is lost through financial disclosure as it’s not in their remit and they are not measured by it.

I have never thought about why the bookmakers didn’t challenge the massive fines that have been levied against them over the last few years (over £20m), thinking that they were just scared of losing their trading licence. But thinking about it now then why didn’t they have a legal challenge against the fines - whether they were proportional or fair. Maybe just one of them as a test case? They did it with VAT on FOBT’s and won after a long battle with HMRC. Maybe there were ulterior motives in doffing their caps and meekly accepting the massive fines as Istabraq infers…..

Whatever the reality, customers restricted or blocked for refusing to provide financial disclosure will either stop betting (unlikely as for many its a hobby, passion, habit, part of their routine etc which they enjoy) or find alternative sites/mediums where their business is accepted without having to provide financial info. Deep down the industry/regulator/government knows this is going to happen but accepts the GC’s approach of stopping the opportunity of betting illegally rather than amend the legislation that is making it happen and fuelling the growth of the black market !

There are so many vested interests and players within the industry/sport that, is it any wonder Racing is in such a state?

They simply can't acknowledge the extent of the black market 'problem' because it will just confirm the incompetence of how racing authorities and the regulator have 'managed' the sport in recent years.
You are bang on about the regulator's strategy in attempting to eradicate the black operators rather than tackle the issues that have created their emergence which has to be high level ignorance and stubbornness, the black market can/will never disappear just as it hasn't in every industry, they will find a way.

The point Spectre raises about the licences is interesting, I know in the States restrictions are now commonplace albeit less brutal than here, I also know in Australia that restrictions on accounts doesn't exist, presumably the regulator there has seen the chaos caused by the behaviour of UK bookmakers and insisted they can't do it.
Sending the gambling underground helps no-one and maybe the Aussies are cleverer than I've ever given them credit for in realising this.

I do believe that while the game is funded the way it is the potential exists for catastrophe, like everyone I hope someone somewhere has a masterplan that can be implemented to ensure its' success and future growth but attitudes all round (regulator, BHA and bookmakers) right now don't suggest that's imminent....