Changing the media rights model is our best best
As someone who has always believed the levy should be collected on the basis of turnover rather than gross profits, I was much intrigued by two items of news in recent
weeks.
One is that the two main racecourse media groups are seeking to change the system by which online betting operators pay for their racing pictures, from a ‘bet and watch’ model to one that is based on a small percentage of turnover on all online bets on British horseracing.
The other is that the Levy Board has asked betting operators to clarify how they treat their numerous cash-back concessions to punters to ensure the levy legislation is being applied correctly, the implication being that this marketing spend gives bookmakers a way of avoiding paying some of their levy dues.
Both subjects have obvious implications for prize-money. With the levy having fallen by £17 million in the last financial year and media rights income expected to continue to feel the chill wind of betting shop closures, it is crucial for racing that every effort is made to reverse the decline.
The move on media rights is being driven by both Racecourse Media Group, which represents 34 racecourses including many of the major ones, and The Racing Partnership, representing the ARC racecourses and a number of small independents.
There are important factors at play here. Betting is gradually moving online, irrespective of shop closures, and the margins operators bet to online are about half of those in shops. We must never forget, however, there is always a relationship between margins and turnover, so that if one goes down the other increases.
The big online betting companies can give better prices to their punters because their turnover is greater and their costs lower, just as the internet giant Amazon can offer their customers a better deal because of the massive scale of their operation.
Both Racecourse Media Group and The Racing Partnership will have to play a very astute game in the coming months, getting the principle of a turnover payment for their live pictures accepted without making horseracing pictures too expensive for the online betting operators. This emerging situation is not unlike how it was when racing established a proper pricing mechanism for live pictures in betting shops 12 years ago. Then it required Turf TV to play hardball with the bookmakers, with some shops even being without pictures, until the bookmakers eventually capitulated and a deal was reached.
The Arena courses in particular are under pressure to make the new system work, as they well remember how quickly owners and trainers can withdraw their horses as a reaction to declining prize-money. While the media companies’ natural inclination is to maximise the percentage of turnover they receive, they must also acknowledge that if online punters have access to the great majority of racing pictures it would have the dual attraction of stimulating betting on horseracing and acting as a natural
marketing tool for our sport.
What is certain for racing is that we cannot let this opportunity pass, as turnover is the name of the game with online betting and we are stuck with the gross margin model for the levy for quite some time yet.
In the meantime, we should take some cheer from indications that betting shop over-the-counter business on horseracing is picking up as a result of a proportion of FOBTs money now coming racing’s way. We must also recognise that when a betting shop closes, some of its business will gravitate to a nearby shop. This may provide cold comfort for the racecourse media groups, but it is good for the levy.
All of this underlines the fact that our sport provides a perfect and socially acceptable betting medium – and if you can watch the race you are betting on, so much the better.