Following today’s announcement from Betfair that it intends to list on the London Stock Exchange, Paul Roy, Chairman of the British Horseracing Authority, said:
“Today’s announcement is no real surprise to the markets. What will be of great interest is that it comes a day after the close of a major consultation process by the Horserace Betting Levy Board, that strikes at the heart of Betfair’s model, at a time when the figure of an underpayment to Racing of £30m has been stated by a leading betting industry figure, and during which the future relationship between exchange betting and Racing is under close scrutiny by the relevant authorities.
“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. 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. A failure to resolve issues by agreement will see it referred to Government and the Secretary of State for Culture, Media and Sport at the end of October.
“British Racing is the sport upon which Betfair was founded, and from which it continues to generate a substantial proportion of its business. There are many in British Racing who for a great many reasons would not have allowed exchange betting, had it been our choice as opposed to the Government’s. The history of the last few years has proved those sceptics to have been right. This was compounded significantly by the failure of a system based on database rights which was intended to replace the Levy. Under that system, Betfair would have had to enter into commercial arrangements with Racing, as well as any betting operators wanting to offer bets on the sport.
“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. The new Government has signalled its policy commitment to ensuring a value transfer form betting to Racing as it sets policy to catch up with changes in technology and the way people bet.
“We would entirely agree that Betfair has been “disruptive” and “fundamentally changed the sports betting market”. 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.
“Our response to the Levy Board consultation states that it seems certain that some customers of Betfair and other exchanges that carry on the business of receiving or negotiating bets, and that should therefore be paying Levy. This is entirely consistent with Betfair processing more transactions per day last year than all European stock exchanges combined, with some of their clients making many thousands of transactions and data requests on a daily basis.
“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. 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.”