Six years after the Tote was privatised, a deal to establish a rival to the betting system is due to be signed within a fortnight supported by all but four of the country’s racecourses.
The project, which has been two years in the planning, promises to provide an additional multimillion-pound revenue stream for racing after it launches in July next year, as the venture will keep all profits for the sport rather than for shareholders.
It is understood that 56 of the 60 tracks, including all those in the Jockey Club and the Arena Racing Company (ARC) groups plus independent tracks such as Goodwood, Newbury and York, have committed in principle to the venture. The glaring exception at present is Ascot, the Queen’s racecourse.
The Conservative-led coalition sold off the Tote — which pools all bets and pays out based on how much is in the pot, rather than offering fixed odds — in the midst of the financial crisis in 2011, a move condemned as gesture politics. It had been established in 1928 by Winston Churchill, the chancellor of the exchequer in Stanley Baldwin’s government, solely for the good of racing.
It was bought by Betfred, the high-street bookmaker, for £265 million with racing receiving 50 per cent of the net proceeds of £180 million, ring-fenced for the future in a charity, the Racing Foundation. The sell-off gave Betfred, run by Fred Done, a monopoly on pool betting online and at racecourses.
Of the four courses that have not committed, Chester and Bangor run their own fixed odds, while Chelmsford is owned by Done. That leaves Ascot. It is understood to be ready to renew its contract with Betfred, although it is not thought to have signed off yet. Ascot’s absence would not, though, make or break the deal. A spokesman for the course said: “We will make an announcement in due course.”
It is estimated that Betfred returns £9 million after VAT into racing from its Tote business and associated sponsorship of races. Those behind the new company, which cannot be called the Tote, believe that it could in the first instance increase money for the sport by 50 per cent, and, in time, double that.
As well as betting on course, punters will be also able to do so in bookmakers, who will be able to buy rights from the new company. “This will grow commercial revenues for racing,” Simon Bazalgette, chief executive of the Jockey Club, told.
“Strategically it will be a powerful foundation to provide a unique product to bookmakers in their shops and to remote betting sites because they are looking for different products that can help them generate revenues from their customers alongside fixed odds. This can be a key part of a foundation to growing the relationships between betting and racing.”
Racing’s existing contract runs out in July next year, but the finishing touches to the new venture are already being put together. Neil Goulden, a gaming industry veteran, will be the chairman, while branding and a new name will be announced in due course.
Martin Cruddace, who took over as chief executive of ARC in 2015, said: “The statement for me is that the strength in British racing working together is far greater than if we work independently. When I got here there was a realisation that the industry should align itself with others in the industry to enjoy the benefit of its own tote.”
Each course will have the flexibility to run its own pool betting as part of a central operation. All partners will get out of it what they put in; those tracks which generate most get most back.
“The bigger courses will get more revenues,” Bazalgette said. “Everyone will be better off. Everyone will be involved in building the thing as a whole. Each racecourse will have full profit and loss control, of what happens on their course and how customer service is delivered.”
Goulden said: “Each course will be in charge of their own on-course operation supported by a central system, at the same time having a share in what we hope will be a growing income from other channels and contribution. There is not a course I have spoken to who isn’t behind this.”
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