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President's speech

 Ladies and Gentlemen

When Frankie Dettori rode his four-timer on Gold Cup day at Royal Ascot it was a time for the whole of racing to rejoice. Not only was it one of those occasions when racing reaches the wider world of sport, but it also made a deep impression on the general public.

You cannot put a price on these very rare events. Their marketing value for racing is inestimable as they pull in new audiences and entice once-a-year racegoers to go racing again. Frankie’s day at Ascot made TV coverage a sheer joy to watch, as the excitement and enthusiasm was brilliantly conveyed by the ITV Racing team – so well done to them.

It is also good, you would have thought, that events like this encourage people to bet on racing, thereby putting more money into the levy. Yet there is an irony here. In a purely monetary way, Frankie’s momentous achievement meant racing would lose out. Quite simply, we would lose because our levy system is based on gross profits not turnover.

The gross profits system does, of course, mean that when bookmakers win, we win. So when bookmakers were quaking in their boots on that memorable Thursday, scared rigid that the fifth one was also going to go in, their losing day was also our losing day.

It has always struck me as odd that racing’s fortunes are aligned with bookmakers, not punters. Before I came into the racing industry, I naturally thought that racing’s central funding from betting was based on a percentage of money bet on the sport – simple and logical.

Of course, I can see why in 2001 it was attractive for racing to agree with government and the betting industry to switch the levy to 10% of gross profits. It had the enormous attraction of no-tax betting for the punter, but in those days the betting world was a very different place.

The betting exchanges were barely on the horizon and few could have predicted the extent to which this brilliant concept would become so central to the whole betting system in this country or how in the intervening years they would drive down the profit margins to which bookmakers bet.

Even less could anybody have then predicted the way major bookmakers would often use horseracing as a lost leader on Saturdays and at big festival meetings to draw in new credit customers with a range of money-back offers, thereby squeezing their margins on which racing income is based.

By continuing with this system, the levy is likely to suffer. Betting is steadily moving from shops to online. Betting shop margins are better for bookmakers, whereas online punters as a group are shrewder and are more inclined to shop around for the best price.

Annual horserace betting is currently around £12billion. Even as little as 1% of turnover would produce a levy of £120m, which would be the highest-ever figure, and over £40m more than the most recent levy yield.

All of which says to me we have to do our best to persuade the government of the day that our existing central funding system needs attention. Are we whistling in the dark? Well perhaps in these difficult days of Brexit, yes, but sooner or later sanity will return and governments will start to think about other things.

It is reassuring to know that we as an industry are ready for that time because our relationship with successive governments and politicians has improved so much during the last few years.

We have, of course, seen what government support can do when the scope of the levy was widened to include those UK bets processed offshore and we must remain alive to the possibilities of what might emerge from further legislative changes that could mean our levy benefiting from British-based punters betting on overseas racing.

We must therefore continue to impress on politicians of every political persuasion that the racing industry is crucial both to the rural economy and to rural employment. That racing represents the acceptable face of betting; that it creates the best possible welfare environment for both staff – some of which has been highlighted during Racing Staff Week over the last few days - and horses; and that it is open and inclusive in embracing people of all social standings and minority groups.

By constantly pressing these arguments while showing that racing is vulnerable not only to the effects of betting shop closures, brought about by the new FOBTs legislation, but also to a fluctuating and diminishing source of income from the levy can we hope to get the changes made that would allow us to rejuvenate levels of prize-money while injecting funds into self-help schemes throughout the industry.

This is why, when the time is right, serious discussion needs to be had on a return to a levy based on betting turnover rather than gross profits – or on some form of in-between hybrid system – to provide a much truer reflection of racing’s continuing worth to the betting industry.

It is clear to me that government help and support is also dependent on the racing industry working together and certainly not delivering conflicting messages as it used to do. It is why, sometimes against my better judgement, I believe horsemen and racecourses must continue to show a united front even when it sometimes gets very difficult.

The enormous growth of income from media rights over the last decade has been a wonderful thing for racecourses and racing in general. Without this source of income we would certainly be in a sorry state. But there is a tiny problem here. The money – now thought to be in the region of £150m annually - flows directly to racecourses and the rest of us don’t really know how much it is and have little or no control over how it is spent.

Owners and the horsemen believe it would be fair and just if 50% of this money went into prize-money and appearance money because it is our horses, our trainers, our jockeys and our stable staff which allow racecourses to earn these impressive sums of money.

It is also certainly possible that racecourses would find fresh impetus from working closer with the horsemen. Understanding all the implications from every perspective would allow the sport to make better informed decisions about future strategy, while it would be a big step towards the industry being able to construct a much-needed and joined-up commercial plan.

For my final comments I shall return to Royal Ascot and what that week taught us about the potential of the Tote in this country. Tote pools on most of the Ascot races received a massive boost by virtue of the fact that punters in several countries, including Hong Kong, were betting into what was described as a World Pool in a complex co-mingling operation.

But what I found most exciting about the Tote at Ascot was not so much that the Tote win dividend beat SP 16 times in 30 races, but how a £10 win stake on all Royal Ascot races would have left the Tote punter £830 better off than if he or she had had those winning bets at starting price. The new people behind the Tote should surely be shouting these figures from the rooftops.

If we can replicate what Ascot did at other major meetings, I ask myself why wouldn’t more people start gravitating towards betting on the Tote? And when the new Tote App comes on stream, why, if properly marketed, would it not enfranchise a significant and growing part of the off-course online betting market with all the possibilities that that would bring?

It would be very good news for owners and the whole of the industry because a successful pool betting operation in this country would be a major contributor to racing.

The Tote has often been referred to as British racing’s ‘sleeping giant’. Now, with digital technology knowing no bounds, we can see this giant is waking up.

Thank you Ladies and Gentlemen.

 

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