Betfair and British Racing, comprised of the British Horseracing Authority (BHA), the Racecourse Association and the Horsemen’s Group, have signed a landmark five-year commercial agreement worth at least £40 million to the sport, providing a template to help secure the long term funding of British Racing.
Over the period, Betfair has agreed to pay British Racing 10.75% of all revenues on the sport from its UK customers. The agreement also contains substantial guaranteed minimum payments reflecting both parties’ confidence in the strength and growth potential of British Racing.
British Racing has made commitments linked with these minimum payments that ensure a minimum number of fixtures per year. Betfair’s betting data will be used to help construct a fixture list that will optimise British Racing’s attractiveness as a betting product for punters, the racing industry and betting operators. The agreement therefore aligns Betfair’s interests with those of British Racing in seeking to increase revenues derived from a thriving horseracing industry.
The five-year agreement will replace Betfair’s current annual voluntary Horserace Betting Levy payments, with the agreement taking effect from the 51st Levy Scheme covering 2012-13. Betfair has already made upfront Levy payments of £6.5 million for 2012-13 which will be offset against payments due under the new commercial agreement.
The agreement is the first of what could become standard practice for both industries. The Department for Culture, Media and Sport (DCMS) has indicated that it intends to consult in 2012 on proposals to reform or replace the Levy, which could include options to require all betting operators licensed in Great Britain that take bets from British customers to enter into their own commercial deals with British Racing.
Paul Bittar, Chief Executive of the British Horseracing Authority, who in conjunction with Simon Bazalgette, Group Chief Executive of The Jockey Club (the largest commercial group in British Racing) led Racing’s negotiations, said:
“We are delighted that we have been able to reach an agreement with Betfair, one which represents a landmark for both the racing and betting industries. It brings many benefits, including substantial and increased guaranteed funding as well as importantly providing certainty for the sport in relation to Betfair’s contribution. We hope that similar arrangements with other betting operators will follow.
“This agreement has required a high degree of co-operation both within Racing, with all the major organisations closely involved in negotiations, and of course with Betfair, who have shown great commitment in their intent to be a constructive commercial partner with our sport. In particular, I would like to recognise the BHA Chairman and the Board for their vision and unwavering commitment in pursuing improved and more stable financial outcomes for the sport, as without it the deal would not have been possible.
“We firmly believe both in the value of British Racing as a product and the need to work closely with the betting industry for our mutual benefit. Government has committed to bringing forward proposals to address the long-standing and damaging flaws in our current funding mechanism. We continue to engage fully in this process, but in parallel British Racing also seeks long-term commercial deals such as this to assist in the transition to a wholly commercial future.”
Martin Cruddace, Chief Legal and Regulatory Officer at Betfair said:
“This deal is a genuinely historic moment. For the first time, British Racing and Betfair have proved it is possible for us to work together on a truly commercial basis. Of course it has not been easy but the end result completely justifies all the hard work.
“We hope that this marks a new era and call on other betting operators to adopt similar agreements to help ensure a strong, healthy and vibrant horseracing industry in this country.
“I would like to personally thank Paul Roy and those who have represented racing through this process for the time and energy they have invested in helping us all work together to bring about this deal.”
John Penrose MP, Minister for Tourism and Heritage at the Department for Culture, Media and Sport said:
“The Government has always believed there should be a commercial relationship between British Racing and betting operators and I pay tribute to all parties for bringing about this deal.
“Betfair’s willingness to be the first operator to do a deal is impressive and admirable, as is the commitment of Paul Roy and Paul Bittar’s team at the British Horseracing Authority, without whom the deal would not have been possible. I hope others will follow swiftly in their wake.”
Notes to Editors:
1. About the Commerical Deal
Based on guarantees from British Racing, Betfair commits to paying the sport the estimated sum of 10.75% of Betfair’s profits from UK customers betting on British Racing with a built in Year-on-Year percentage increase so British Racing can share in Betfair’s success. This sum comes to over £40 million in the next five years. Each annual commitment also includes £500,000 which is a discretionary sum that Betfair will contribute to prize money via racecourses, including grassroots horse racing and/or related horseracing charities in each year.
Betfair has already made an initial payment of £6.5 million in respect of the 51st Levy Scheme for 2012/13 and as such this sum shall be off set.
British Racing has made commitments about the size and nature of the Fixture List for the five years of the deal. The specific metrics are commercially sensitive.
British Racing has also committed to ensure it will discuss key performance indicators (KPIs) with Betfair and that the latter will have a role in proposing how these KPIs will be formulated and advising on the mechanism for distributing funds.
2. About proposed regulatory changes to accommodate future commercial deals
The Government recognises that while the current commercial relationship between British horseracing and betting operators remains important to both industries, concerns have been raised as to whether the existing structure of the Horserace Betting Levy reflects the modern betting landscape. The Government also does not believe that it should be directly involved in the what should ideally be a commercial relationship. It is therefore considering options to reform the Levy, or replace it so that all betting operators taking bets from British registered customers on British Horseracing enter into an appropriate commercial relationship with the sport. DCMS plan to formally consult on its proposals by the end of 2012.
3. About British Racing
British Racing is represented by the BHA, RCA and the Horsemen’s Group.
• The British Horseracing Authority (BHA) is the governing and regulatory body for the sport of horseracing in Great Britain.
• The Racecourse Association (RCA) is the trade body for 59 British Racecourses.
• The Horsemen’s Group is the collective representative body for British Racing’s participant groups – including owners, trainers, jockeys, stable staff and breeders.
Britain’s Racing and Breeding industries play an important role in the British economy, particularly in rural areas – with an annual economic impact of almost £3.5 billion. Horseracing is the country’s largest sporting employer, supporting nearly 100,000 full-time jobs – 18,600 of these directly.
In Britain, Horseracing is second only to football in terms of revenue and attendances – with a record 6.15 million people attending race meetings in 2011. Last year, nearly 95,000 runners participated in 1,469 fixtures and over 10,000 races at 60 racecourses. These races generated an estimated £10 billion plus of betting turnover.
The Levy yield – the annual return from betting to Racing in place since the 1960s – has fallen from an average of over £100 million between 2003-04 and 2008-09, to £59.5 million in 2010-11 and a forecast £65.4 million, exclusive of voluntary contributions, in 2011-12.
Following agreement being reached in this deal, the BHA has agreed to withdraw from the Judicial Review against the Horserace Betting Levy Board.
4. About Betfair: (www.betfair.com)
Betfair is one of the world’s largest international online sports betting providers and pioneered the betting exchange in 2000. Driven by cutting-edge technology, Betfair enables customers to choose their own odds and bet against each other. The company now processes over five million transactions a day from its three million registered customers around the world. In addition to sports betting, Betfair offers a portfolio of innovative products including casino, exchange games and poker.
Betfair has twice been named the UK’s ‘Company of the Year’ by the Confederation of British Industry and has won two prestigious Queen’s Awards for Enterprise, being recognised for Innovation in 2003 and most recently for International Trade in 2008. Betfair currently employs over 2,000 people worldwide. The company holds betting licences in Gibraltar, the US, Tasmania, Italy and Malta.
Since March 2011 Betfair has continued to pay the Horserace Betting Levy in exactly the same way as if the betting exchange was still licensed in the UK by contributing a fixed share, currently set at 10.75% of the profits it makes from British customers betting on British Racing. This deal cements Betfair’s continued commitment to British Racing.
