It is already apparent that the sale of the Tote to Betfred has produced a shockingly disappointing outcome for racing.
Despite all the earlier government assurances, the expected share of the proceeds going to racing will be significantly fettered by European State Aid and delayed by the government allowing Betfred to pay on deferred terms.
While it is true that racing has been told it will receive £10 million in each of the next four years, the expected full payment of £90m remains a long way from our grasp, to say nothing of the conditionality surrounding how the money can be spent. The deferred payment that allowed Betfred to buy the Tote means the government and industry have effectively loaned Betfred a significant part of the purchase price. Is this State Aid, one asks?
Whatever the outcome for racing, the only certainty is that it will never be an adequate payment for the loss of the exclusive seven-year pool betting licence.
Already the Tote brand is losing its profile. The name Betfred has replaced the Tote on every major sponsored race previously supported by the Tote. All Tote betting shops are now Betfred shops and phone calls to what used to be Tote Credit now receive responses from ‘Betfred’. The sponsorship that was once effective in promoting the Tote as a friend to British horseracing is now advertising the wares of a bookmaker who is using racing as a vehicle to help sell non-racing betting products.
Betfred, the owner of the Tote, is avoiding paying substantial sums to the levy
Betfred continues to operate online betting through offshore channels. Any betting, whether pool or fixed odds, that falls outside of the UK tax and Levy Board regime, allows a betting operator to mitigate what it pays in gross profits tax and levy on British horseracing bets. Although the Tote may not have moved offshore, there is a hollow ring to “Bet with the Tote and support British racing” when Betfred, the owner of the Tote, is avoiding paying substantial sums to the levy.
Before the sale, the Tote’s annual contribution to racing, net of levy, was approximately £11.5m annually, made up of commissions to racecourses and sponsorship. Betfred has agreed to match that figure to the end of March 2012 but, after that date, the contribution to racing becomes an “expected” £9m annually. How has this been allowed to happen?
Soon after Betfred’s acquisition of the Tote, the company acted swiftly to remove the ROA’s Totesport sponsorship scheme. Then, as part of the latest levy settlement, Betfred rejected a proposal to row in with the other major bookmakers in their guarantee of a minimum levy contribution of £45m.
There is a condition attached to Betfred’s exclusive pool betting licence agreement with the government that Betfred continues to support a Tote betting service on all racecourses. However, as the Tote provided the pool betting service at a loss on the majority of tracks, it will be interesting to see how Betfred complies with this stipulation.
In fact, two racecourses, Chester and Bangor, have recently announced they are to run alternative betting systems through their Tote betting windows and it would be no surprise to see other courses follow suit. This may have consequences for the pool as, before the Betfred acquisition, about a third of total pool betting came from the racecourse.
It is, however, Tote Direct, operating in most betting shops, which fuels the big bets such as the Scoop 6. And here again there might be a question mark hanging over the future, this time over whether the likes of Ladbrokes and Hills will remain comfortable with accommodating Tote terminals owned by a very commercially-driven rival.
Yet, even with all these obstacles and unanswered questions, there is still the opportunity for Betfred and racing to make optimum use of the Tote if constructive dialogue could replace antagonism and score settling.