British Horseracing Authority Blasts Betfair

BHA chairman says Betfair is not returning enough money to racing and that business model needs corrective action

Following this week’s announcement that Betfair plans to list on the London Stock Exchange, British Horseracing Authority Chairman Paul Roy used the spotlight of that decision to call for changes in the company that offers the world’s most successful exchange wagering platform. He said the Horserace Betting Levy Board has determined Betfair is not paying enough to racing.

“There remain a number of fundamental questions around the business of exchange betting. We are confident that these will be resolved as part of the wider issue of the relationship between racing and betting,” Roy said. “The new government has signaled its policy commitment to ensuring a value transfer from betting to racing as it sets policy to catch up with changes in technology and the way people bet.”

Roy also suggested Betfair may have underpaid racing by $46.5- million, based on a “leading betting industry figure.” He said authorities are putting the relationship between exchange betting and racing under scrutiny.

“The markets will understand that we are in the midst of a new process which will decide the basis on which all parts of the betting industry, including Betfair, will contribute to the Levy,” Roy said. “It is clear the contribution is going to have to be on a significantly different basis to what has gone before. We are ready for serious dialogue with the betting industry, which includes exchanges, through the levy board. We await the betting industry’s position.”

Earlier this month the British Horseracing Authority launched its Racing United Campaign for a Fair Levy after noting that Levy funding, paid from betting outlets to racing, had dropped from $178.5-million in 2008 to $116.4-million this year.

Patrick Nixon, chief executive of the Association of British Bookmakers, told the London Telegraph that funding has dropped because of a decline in handle and that bookmakers are putting more money into racing through media rights, sponsorships, and the Levy. A Betfair spokesperson told the Telegraph that Betfair, “pays the full rate of the Levy in exactly the same way as any other U.K. bookmaker. Previous government reviews have concluded there is no case for treating exchanges or their customers any differently to any other bookmaker or their customers. Nothing has changed.”

Betfair received government approval to offer wagering through a system based on database rights. Roy said that system is no longer working and that Betfair is not paying a fair amount to racing while it continues to secure a larger piece of the race wagering pie.

“We would entirely agree that Betfair has been disruptive and fundamentally changed the sports betting market,” Roy said. “Whether intended or not, it has certainly disrupted British racing’s finances and has created severe consequences. It has indeed, for its customers, eliminated the need for a traditional bookmaker, and markets itself as cutting out the middle man. At the same time,Betfair has argued it should be treated as a traditional bookmaker for the purposes of its contribution to our sport. Betfair cannot have it both ways.”

Currently, lawmakers in California and New Jersey are considering allowing exchange wagering. To receive approval from U.S. tracks and horsemen, Betfair has acknowledged that a business plan in the U.S. would have to be different from its United Kingdom model. Roy seems to be calling for a similar commitment in England, although such changes could reduce Betfair’s attraction—its low takeout—to customers.

Betfair is the parent company of California-based advance-deposit wagering company and racing channel Television Games Network. “Any international racing jurisdiction considering permitting Betfair to operate in their territory has to give very careful consideration to the impact on their sport and learn from the British experience,” Roy said. “In fact, we understand that they are offering far better terms to other racing authorities, and we call on Betfair to now engage with us constructively and end the uncertainty.”

(Thoroughbred Times)

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