Levy reforms blamed for Tote deduction hike
Tote customers betting into the win and place pools are set to get a worse deal from the end of June after it was revealed the operator’s owner Betfred had decided to increase deductions.
The recent reform of the levy system was blamed for the hike.
From June 29, the win pool deduction is set to increase to 19.25 per cent from 16.5 per cent, while the place pool deduction is to increase by two percentage points to 20 per cent.
Deductions from all other pools including Jackpot, Placepot and Scoop6 are to remain unchanged.
Following the government’s reform of the levy system, the Tote must now pay levy on their on-course operations, which they had not done previously, as well as contributing to racing through commission and rent.
Owners Betfred said that Totepool on course was actually loss-making for the firm – profits coming instead from off-course and international routes – and that the additional cost of the levy would therefore have to be passed on to customers to cover their losses.
Betfred founder Fred Done said: “The Tote, with the exception of two years in the 1960s, has never paid levy on racecourses.
“Currently we lose around £2 million a year on racecourses. Unfortunately we are unable to shoulder any additional losses and, without passing on this levy deduction, our losses would increase to around £3.5m a year. I think the words ‘unintended consequences’ apply.”
From July next year, Betfred lose the exclusive pool betting licence the company won when they bought the Tote in 2011.
The team behind plans by a collective of British racecourses to set up a rival pool betting operation said they were “confident” customers would prefer their service to the Tote when the market is opened up.
Asked what their plans for deductions would be, Neil Goulden, the chairman of the racecourse project steering board, said: “Our pool betting service will launch in 2018 and until then I’m not going to speculate on what commercial approach it will take.
“But what I will say is we intend to offer an excellent pool betting service that we are confident customers will prefer, while returning to British racing all monies it raises.”
Later in the week members of the racecourse project’s management team was revealed, with Nigel Roddis confirmed as managing director.
In addition Tony May will join as director of operations, while Steven Johnson and Kevan Woodcock will act as consultants.
Ascot profits rise again
Ascot goes into its biggest week of the year having posted increased profits for the fourth year in a row according to the course’s latest set of financial results revealed last week.
In 2013 the racecourse made a profit of £178,000, the first surplus it had posted since its redevelopment in 2006, but by the end of 2016 pre-tax profits had risen 16 per cent year on year to £5.1 million, boosted by a successful royal meeting with ticket income up by ten per cent.
Turnover rose by 6.7 per cent to £80m due to strong performance from both the royal meeting and other racedays and increased media rights income. Ascot also managed to reduce its net debt by £9.8m to £71.8m by the end of the year.
Chief executive Guy Henderson said: “It’s a solid financial performance across the board. Turnover is up, ticket sales are up, our costs are under control, our commercial programme is strengthened and our international reach is strengthening, which is helping build profile and revenue.
“With a business like this you do not want it to be over-reliant on one particular strength and therefore we are constantly working hard to strengthen all the streams that contribute to our financial performance.
“We are fortunate in that the business is strong and that we aren’t trying to take any money out of the business so we can invest.”
New chief executive at SIS
Richard Ames is the new chief executive at troubled SIS following the news last week that Gary Smith was leaving the company “to pursue other opportunities”.
Smith, who joined SIS in 2012 and became chief executive at the start of 2013, had appeared to have secured the long-term future of SIS when signing a five-year horseracing media rights deal with Racecourse Media Group in 2015, which is due to start next year.
However, the company suffered a major blow last month when Arena Racing Company snatched Newcastle and Sunderland greyhound tracks from under the noses of SIS, which had agreed a deal to buy them from William Hill in February.
The company is also set to lose its contract to provide outside broadcast and integrity services to Chelmsford City racecourse this autumn.
Both William Hill and Chelmsford City’s owner Fred Done are shareholders in SIS.
SIS chairman Roger Devlin said: “The board would like to thank Gary for his dedicated service and contribution to SIS.
“During his tenure SIS managed to secure both the RMG horseracing and Irish horseracing rights. Gary will provide consultancy services for a short period to ensure a smooth transition during this change in leadership.”
Devlin added: “Richard rejoined SIS as interim product director in November 2016 and has extensive experience in the betting and gaming sector, having previously worked at Ladbrokes for eight years, and most recently was CEO at Hornby.
“I am pleased to have secured someone with Richard’s experience of the industry to take over the role.”
European courts rule against tax challenge
A challenge to the government’s point of consumption tax regime by representatives of the Gibraltar gambling industry has foundered at the Court of Justice of the European Union.
The Gibraltar Betting and Gaming Association (GBGA) argued the regime, which came into force in December 2014, impeded cross-border trade, contrary to article 56 of the Treaty on the Functioning of the European Union.
However, the European court’s verdict was that there was nothing to justify the argument that relations between Gibraltar and the UK could be regarded as similar to those existing between two member states.
The court added: “It follows that the provision of services by operators established in Gibraltar to persons established in the United Kingdom constitutes, under EU law, a situation confined in all respects within a single member state.”
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