“1998 was undoubtedly a momentous year for British racing with the launch of the Financial Plan and review of the constitution of the BHB.

1999 could well have an even greater impact on the future of British racing, with the negotiation of the 39th Levy Scheme about to begin and the most dramatic shift in fixture policy for many years already completed.

On the issue of fixture policy, I would just like to say how delighted I am that the racing industry, by embracing a 14 week consecutive period of Summer Sunday racing, has boldly seized one of the few real self help opportunities available to racing, in order to increase its income without reliance on the betting industry, Levy Board or Government. I am confident that, as a result of the BHB decision, racing’s income will increase by about £1.5 million in 2000 and racecourses in the round will be approximately £700,000 better off, since Sundays have both better attendance and better off course betting turnover than Saturday nights.

During the fixture policy process just completed, the BHB was presented with a unique opportunity to create a fixture list unfettered by a levy deal. That it was bold enough to seize the opportunity is testament to its increasing maturity and influence in the industry.

As I have said, the decision to reform the Fixture List is part of our long-term strategy to introduce self-help measures to secure the aims of the Financial Plan.

The second strand of the Plan, as you all know, is to increase the amount of money returned to Racing from betting turnover. It is to the Levy negotiations that I now turn.

In February I attended the BOLA AGM. I sat and listened to the betting industry as it reeled off a long list of reasons why it had no obligation to make a greater contribution to the health of British horseracing. In what has become a tried and tested strategy over the years, it painted a picture of the betting industry as a responsible part of the racing industry trying to work together with a difficult partner who should accept the status quo.

There was plenty of talk about how there was no sign of crisis in racing; how things are better than they were, even if they could always be better; how the betting industry would work with all concerned to ensure a cooperative and constructive levy negotiation, and how it shared a common purpose for mutual growth.

There was talk about the BHB’s Financial Plan being nothing more than a plan to enrich already rich owners enjoying their hobby; that, if implemented, the Plan would lead to job losses in the betting industry; and that in the final analysis the betting industry was looking after the punter who was being robbed by rich owners and simply could not afford to pay any more.

A few new angles were tossed in for good measure – implications that the Chairman of the BHB did not really represent the views of the racing industry; an emphasis on relationships not warfare, self help not ridiculous demands, and unity rather than divisiveness; a desire to work on a joint financial plan.

And of course the ultimate weapon – the threat that if the betting industry had to pay more it would of course have to pass it on to the poor old punter who was already overtaxed.

All very eloquent and geared towards painting the betting industry as the socially responsible, reasonable player in racing looking to improve the sport for the benefit of all.

But behind the image and the rhetoric and the posturing, where was the substance and how truthful was the picture painted?

The answer, sadly, is that the reality is far from the imagery, which conceals a rigid determination to maintain the betting industry’s 100% monopoly of the distribution of betting, to maintain its inflated profit levels and to continue its uncommercial payment to the racing industry for the product.

Let’s look then at the reality.

With regard to the treatment of its profits, the betting industry assiduously states them as a percentage of gross turnover in order to try to show how small a profit it is making; but it always expresses the betting duty and levy it pays as a percentage of customer losses in order to inflate the percentage it is paying to Government and Racing. If it was consistent and showed its profit as a percentage of customer losses, it would show that it was making over 20% profit instead of the 3.3% it claims.

With regard to the size of the betting industry’s profit, Tom Kelly tried to discredit the BHB’s claim of £350 million by showing a chart with only £229 million profit. But the chart conveniently omitted the £65 million profit from AWPs which brings the figure to £294 million. Kelly also omitted to tell his audience that the figures were only up till March 1998 – fourteen months ago. The BHB stands by its figure of £350 million and would ask BOLA to release the betting industry’s profit figures for the year to March 1999.

Mr Kelly then focused on breaking down the £294 million into three parts, only one of which he claimed had anything to do with the racing industry. The £65 million profit from AWPs was nothing to do with Racing he said; but he failed to mention that without Racing’s support for their introduction, support given in order to help the betting industry get over the impact of the National Lottery in the mid 90s, there would probably be no AWPs in betting shops, and therefore no £65 million profit from them.

And what about the £137 million they claim to make from football, numbers, greyhounds and other sports? Does anyone really think they make 60% of their profit from only 30% of their turnover? The Football League certainly doesn’t think so. One of their directors recently told me that the betting industry tells them they make virtually nothing out of football and that most of their profits come from racing!

The betting industry claim that they want to work with us on a joint plan to improve racing. We would be more than happy to consider any proposals they may have, but we have not, as yet, received any.

The concept of the Levy as a subsidy for racing, given a renewed airing in the recent Kronos Report commissioned by BBOA, is a total misnomer. Let there be no misunderstanding: the only people who subsidise racing are the owners.

The betting industry continues to state that Racing claims it is in crisis and continues to argue that Racing is in better shape than ever. No matter how many times we tell the betting industry to stop misrepresenting what we say, it continues to make the same allegations.

So let me repeat our very clear view. Racing is not in crisis – yet. It is a fundamentally strong product, which, despite improvements to its financial structure over the past few years, is still desperately underfunded because Racing receives only about 1% of beCopy2
“tting turnover compared to between 4.4% – 15% received by other countries. Evidence of this underfunding is widespread, though the following facts somehow never make it on to the betting industr?_x0019_s list of how racing is doing:

 A staff shortage of 30% in trainers’ yards, where 36% of boxes lie empty
 Trainers’ profitability at its lowest level for 5 years
 Of the 19 stallions retired to stud in Europe in the last five years standing at £8,000 or more, just five are based in Britain
 Nearly a quarter of owners drop out of racing each year and the number of sole owners has fallen by about a third since the mid-1980s
 The average return to racecourses on their assets just 1-1½%

The BHB has acted reasonably and fairly in its dealings with the betting industry. It originally sought a joint submission to Government with the betting industry on General Betting Duty; but the betting industry refused to consider any part of a reduction coming to Racing. The BHB, in finalising its Fixture Policy for 2000, consulted regularly with the betting industry and was considerate in ensuring that the proposals remained firmly within the current 5 year levy framework. Despite this, the betting industry has consistently represented BHB’s stated desire to create more revenue for Racing as a blackmail threat against the betting industry rather than as a self help measure.

The most disappointing aspect of this attempt by Racing to forge a better relationship with the betting industry has been the political manoeuvring over Fixture List 2000.

Their failure to support the BHB’s fixture proposals, which are clearly in their interest, was blatantly political. To have voted against the removal of Saturday nights which they have been trying to remove for many years, and which constitute their worst betting session of the week, was undoubtedly aimed at embarrassing the BHB and trying to create divisions within racing. We would ask them please to try to work with us to move the industry forward.

It is all very well for the betting industry to claim that Racing is only entitled to a share of the betting industry’s income from horseracing. But we know that punters primarily go into betting shops to bet on horses and that without horseracing there would be no betting shops. We also know that the betting industry admits nothing.

So we decided to go and talk directly to their customers – 1000 of them as they came out of their betting shops all over the country. The survey was conducted last month by Opinion Leader Research, a leading market research company, and it revealed how out of touch the betting industry is with its customers and how closely punters’ views mirror those of BHB.

Before we look at punters’ opinions more generally, let’s look at why they visit betting shops in the first place. The betting industry may try to convince us all that only 30% of their profits are from horseracing, but 77% of punters in our survey say they go into betting shops to bet on horseracing, compared with only 11% for football, 6% for dog racing, 3% for numbers and 3% for everything else, including AWPs. If you take Daily Punters, the figure for those who go in to bet on horseracing goes up from 77% to 88%.

What does this tell us?

 It tells us that horseracing is the reason why punters go into betting shops
 It tells us that horseracing enables betting shops to make money from subsidiary betting opportunities
 It tells us that without horseracing, the betting industry would be dead
 Which convinces us that horseracing is entitled to a much higher percentage of turnover from the betting industry.

But the opinion survey was not confined to what punters bet on. It also investigated what they think about the betting industry….. Their first thought is no surprise ….. 67% agree strongly that the betting industry is profitable. Well, we all know that …..

And half of them agree strongly that they are greedy ….. no surprise there either …..

But it gets worse ….. Only 38% agree strongly that they provide a good service ……

But at least that’s more than those who think they are honest.

And what do you think comes last? Certainly no surprise here ….. “Committed to the Good of Horseracing” ….. just 16%.

Yet listening to them at the BOLA AGM, I kept hearing that they really weren’t that profitable ….. and they certainly weren’t greedy. And of course everything they had done and planned to do was for the good of their punters and the good of horseracing.

The more we heard about the views of betting shop customers, the more we learned. We found that over half of them want more racing on Sundays;

that 77% of them only want a betting opportunity every 15 or 30 minutes as opposed to every 7 or 8 minutes as the bookies insist on thrusting upon them;

and that 69% of them want racing on Millennium Day, whereas the bookies want us to close.

Then punters were asked about some of the fundamental points in the Financial Plan to see if they shared the bookies’ view of the Plan.

The Financial Plan argues that because of the low percentage of betting turnover returned to racing, “British Horseracing is Deteriorating” in many different ways.

The betting industry of course disagrees. It says that British racing has never been in better shape …..

So what do punters think? For they watch British racing every day of the week.

Well, 56% of them agree with the BHB that the quality of British horseracing is deteriorating.

Punters were then asked about prize money, which the Financial Plan consistently argues is too low.

The Betting Industry of course disagrees. It says that owning horses is only a hobby, and most owners are rich anyway – so why should they get any more.

So what do punters think? Well, you wouldn’t really expect them to care about prize money, since it doesn’t get handed out with winning betting slips.

But punters are obviously more committed to the good of horseracing than bookmakers because a whopping 72% believe that prize money is not high enough. And interestingly when punters were asked what was the one thing they would do to improve British horseracing, the number one answer was “Give bigger prize money to improve the quality of runners”.

As you know, the Financial Plan argues that to put British racing on a firm financial footing, owners should recover half of their training costs through prize money against less than a quarter at present. This is not in order to enrich owners, because KPMG showed conclusively that this extra money would be reinvested in the industry. The reason why the BHB wants to see prize money doubled is because it is prize money which helps owners pay the almost £200 million a year in keep and training costs that then get paid out to the stable lads, vets, farriers, transport companies, jockeys and other workers in this huge industry which is so important to employment and Government revenues.

The betting industry of course disagrees. It says that owners are lucky to get back even 23% of their costs because it’s a hobby like owning a yacht or playing golf on a Saturday morning. But the BHB says that’s all very well if you ride your horse along the beach for fun, but when you are responsible for the creation of a multi-billion pound industry, 100,000 jobs and almost £1 billion in Government taxes and duties, you are entitled to lose less than 77% of your investment.

So what do punters think? The survey asked those who thought prize money was too low – the majority of punters – and a staggering 95% said owners should recover at least half their costs. In fact, 36% actually thought owners should recover three quarters of their costs or more.

Next, the survey tested the BHB’s firm contention that “The betting industry should pay more to racing for the product”. About 1% is simply not enough.

The betting industry of course disagrees. It thinks it should pay as little as possible to anyone, whether it’s to punters, to the racing industry or even to Government.

So what do punters think? 91%, yes 91%, agreed with the BHB that the betting industry should contribute more to racing from its profits. I guess they think like we do that the betting industry makes too much money.

The BHB also believes that “the betting industry can afford to pay more to racing without higher deductions from punters”. Why, after all, should their huge profits, more than trebled since 1995, be inviolable?

The betting industry of course disagrees. It tries to protect its profits by saying that any additional payments to racing will have to be passed on as costs to the millions of punters. Bookies couldn’t possibly afford to pay.

So what do punters think? They clearly think that bookies should contribute more without passing the cost on to punters. Because only 6% of punters think that they should contribute more to racing through higher deductions.

So what does all this tell us? It tells us a lot. It tells us that punters don’t have a very high opinion of their bookmakers …….. client/customer relationships are usually better than this;

it tells us that the betting industry is totally out of synch with its customers;

it tells us that punters really do care about the racing industry, whereas the betting industry clearly doesn’t; and it tells us that the racing industry and punters basically share the same views about the problems of the racing industry and how to solve them.

It is interesting that it is the betting industry’s own customers that have exposed the shallow arguments, the insincere rhetoric and the disingenuous reasons for the betting industry’s failure to accept its share of responsibility for the health of the racing industry, and for its unwillingness to pay Racing a proper percentage of betting turnover so that we can grow our industry to the benefit of all.

The longer the betting industry abrogates these responsibilities, the quicker must its 100% monopoly of the distribution of horserace betting be broken. Until that happens, we must all look to the Levy Board to ensure that the betting industry makes a significantly higher contribution to the Levy than it currently makes.