Earlier this year, 54 of Britain’s 58 racecourses announced they had formed a company to introduce a new pool betting service effective July 2018. The date coincides with the expiration of the Betfred seven-year exclusive licence of the former British Tote.
The 54 racecourses aim to offer an improved service for customers on course. The new company represents an opportunity to provide a significant enhancement of the old Tote pool-betting service, which will also be available off course and for international customers.
The new Tote company will be presented as ‘by racing for racing’, with all profits remaining within the sport.
Four significant opportunities for Britain
This new business represents some significant financial and strategic opportunities for the British racing industry.
The current domination of betting by bookmakers has resulted the lowest return to purses from wagering activity of any Group 1 racing nation. (For more details, see Key wagering indicators spell trouble for U.S. and British racing.) For the first time, the British racecourses will be able to compete with the bookmakers for the wagering customer.
Currently, the courses receive a very small share of the wagering pound, so there is no incentive for them to analyze and implement strategies that will increase field sizes, which directly impacts total betting activity. This new tote/pool-betting business aims to return more money to racecourses and to the industry purse account. This should result in higher purses, which in turn should attract more owners. (For an historical perspective see Bookmakers are a bad bet for the future of British racing.)
New technology, coupled with pool wagering, will result in the introduction of new types of bets for the British racing public. Pari‐mutuel pool wagering will allow the industry to expand the wagering options that will appeal to the serious bettor and will also seek to attract a younger, tech-savvy market. One of the core strategies of the new tote company involves significant technological investment, innovation in the engagement of customers with new bet types supported by social media strategies, and a renewed focus on enhanced customer service. In sum, the major goal should result in a transformation of the entire betting experience for the punter.
The betting and entertainment sports market exists in a highly competitive environment. The new company will give the racecourses direct access to their betting customers to provide them with information to improve the wagering experience. For the first time, the racecourses will have direct access to and will communicate directly with their wagering customers to further enhance the on-course experience.
The team in charge
Representatives from the British racing industry have been working on this new initiative for well over a year. Formal plans for the new entity started to come into focus in February, with the appointment of highly regarded betting industry veteran, Neil Goulden as chairman designate.
It gathered further momentum with the appointment of Nigel Roddis as managing director in June. Roddis has worked on a number of industry racing projects for the BHA (British Horseracing Authority), Great British Racing, At The Races and the Tote.
In addition, Tony May, formerly of Chester Racecourse and the Tote, joins as director of operations. Other senior appointees include Steven Johnson and Kevan Woodcock, who currently act as consultants on the project. Johnson is a qualified lawyer and worked at Betfair for eight years in a number of senior management positions. He was director of technology for the Football Pools at Sportech for the last six years.
The project steering board for the new tote business
Chairman: Neil Goulden
Nigel Roddis (managing director)
Simon Bazalgette (group chief executive ‐ the Jockey Club)
Kevin Robertson (chief financial officer, Arena Racing Company)
Alex Eade (general manager, Goodwood Racecourse) representing large independent racecourses
Jonathan Garratt (managing director, Kelso Races) representing small independent racecourses
Pat Masterson (managing director, Newton Abbot Racecourse) also representing small independent racecourses.
Filling the ‘one big hole’ in the customer experience
Over the last decade, Thoroughbred racecourses in Britain have done an excellent job in improving the on-course experience for customers, including hospitality offerings. As Roddis explained: “The one big hole in the customer service experience was the on-course pool-betting experience. The management of the racecourses were not in control of the pool betting and they got what they were given. There was huge frustration and they wanted to change.”
Bazalgette said of the new tote operation: “This is a significant opportunity for the British racecourses involved. We have made great strides in the raceday experience we offer to customers through hard work and major investment. Yet currently we have no say in the standard of betting experience being provided on our courses to our customers. That is just one of the major benefits of this new approach.”
It cannot be overstated how important it is that the vast majority of the racecourses, 54 to date, have signed on to this pool initiative.
First, the volume of betting on each track’s wagering menu will determine the very important liquidity that will be in each racecourse’s pools.
Second, as will be explained in some detail below, the new technology that will be deployed by this initiative will allow a wagering customer to use his or her phone to bet on any British racecourse that is running live that day. Any bet can be placed on course or off course, and the winnings will immediately be credited to the punter’s account. Money may be deposited or withdrawn at any participating racecourse. If the customer simply chooses to wager on course with or without the phone, that option will be available as well.
Unveiling technology initiatives
The most significant improvement will be driven by technology initiatives that have not been generally available at any British racecourses previously. These will fall into two separate categories. First, I‐Neda, a UK-based business founded in 2002, has extensive experience in delivering pool-betting solutions in the UK, USA, Europe and Asia. It will provide newly developed on-course betting terminals.
Most importantly, an individual’s mobile phone, along with a related account wagering app, will provide on- and off-course wagering capabilities and should improve the customers’ wagering experience.
The phone and the app will provide customer information, free promotional betting vouchers and the ability to deposit or withdraw at any tote wagering machine on track. A new on-course screen system will also be a very visible sign of an improved, modernized offering.
Clearly there will be more information available to the betting customer and the quality and level of service will be significantly enhanced.
The second technology company serving the new tote company is Colossus Bets, a London-based firm specializing in innovative exotic bets and state-of-the-art exotic pool management.
While the final details of the betting menu have not been finalized, some important features have been developed to enhance the experience for both the novice and serious customers. Two such features are the ‘Cash Out’ opportunity and access to a ‘Syndicates’ platform. All new bets will be owned by British racecourses but will be delivered using Colossus Bets technology and wagering tools.
As an example of the Cash Out feature, let’s say on a Tote Jackpot bet, which normally calls for the customer to select the winners of the first six races on a card, you have correctly selected the winners of the first four or five races. The racecourse betting operation will offer to ‘cash out’ your four or five winners at a reduced price to eliminate the risk of losing all your bet if you don’t get the winner of the remaining race or races.
Social media and betting: taking it to a new level
Roddis says he is particularly excited by the possibilities of the new Syndicates feature. “It will enable the crowd-funding of tickets into racing pools. Syndicates will allow punters to very publicly advertise their opinions and to encourage others to join in their bets. Syndicate tickets could be created by a recognized pundit, racing personality or just a regular punter.”
The Thoroughbred racing and wagering business has embraced social media in the promotion of the sport. The Syndicates feature will take the engagement of social media for racing to a higher level.
Another new wagering offering, on multi-position vertical and horizontal wagers, will be guaranteed minimum pool sizes to build wagering interest and there will also be consolation payments on certain types of losing wagers.
Benefiting the bookmakers too
While this new racecourse pool-betting business will be competing directly with the Betfred Tote pool-betting company, whose exclusive license expires in July 2018, it is logical to assume that British bookmakers will want and will be encouraged to wager into the racecourse pools.
With the new technology and the new bet types, the bookmakers can now offer a broader array of bets without having any risk management exposure. Under the current fixed odds and limited exotic bet wagers offered by the bookmaker, when a bettor wins, the bookmaker loses and vice versa. With these new innovative wagers offered by the racecourse pool business, the bookmakers can place bets into these pools and make a profit on every bet they take.
Boost for international simulcast business
Finally, GBI Racing, founded in 2010, offers a one-stop shop for all Irish and British races to simulcast customers around the world.
GBI Racing, in my view, is the most progressive business launched in the international simulcast market over the past two decades. The only current limitation to this racecourse business model is that GBI has had to process all its wagers through the Betfred Tote pool. These wagers in the future will be processed through the racecourse pools and will be providing a further financial return to the racing industry.
Horse racing and breeding in Britain are considered to be among the best in the world. It is truly remarkable that this quality has been able to sustain itself in a country with one of the worst prize money structures among all major racing countries.
Britain has historically had one of the highest levels of wagering per race among major racing jurisdictions yet it has had the lowest payments to purses. This is not a sustainable model.
All the participating racecourse operators and participants in the British racing industry are to be congratulated for their development and work on this critical industry initiative.
There is still much work to be done before the launch next July. I encourage anyone interested in the future of racing in Britain to do what they can to recognize and support this new racecourse pool-betting initiative.