Betting Business Bulletin 24 September 2017

Betfred to walk away from racing in 2018

There have been signs that racing’s relationship with the betting industry is improving but not all is rosy in the garden.

Betfred founder Fred Done has said his company will in effect end their commercial relationship with British racing next July when their exclusive deal to operate pools betting expires.

The firm, a prolific race sponsor and on-course betting shop operator, will shut almost all their track offices and cease sponsoring in July 2018 when the pools licence ends. The move will affect more than 600 races and potentially cost racing close to £6 million a year in lost sponsorship income alone.

Only races at Ascot and the Betfred-owned Chelmsford, which will retain the Tote post-July 2018, will avoid the sponsorship cull, while at least 49 of the firm’s 51 course betting shops will close.

Done’s dramatic move is in response to the decision of 54 British courses to launch their own pool betting operation next year, marking the end of the Tote’s 90-year presence on most British tracks and its monopoly over pools betting.

Among the prominent races that will need new sponsors are the Ebor at York, and the Cambridgeshire and the Cesarewitch at Newmarket.

Betfred sponsored close to 1,000 races in 2016, almost one in ten of the 10,035 contests staged last year. All of their sponsorship deals expire in July 2018.

Done said: “If anything, the regret I have about not being on racecourses is that our association with racing is broken now and will be finished next year. But that’s not business, it’s sentimental.”

He added: “As from next year, racing and Betfred have got to learn to live without each other.”

Done said he believed racing had “never forgiven” him for winning the contest to buy the pool betting operator and has “had this agenda since day one to run their own tote”.


Paddy Power in trouble over advert

Paddy Power have fallen foul of the advertising watchdog once again, this time over a controversial advert before Floyd Mayweather’s fight against Conor McGregor in September.

The advert, which promoted the firm’s decision to pay out early on Mayweather winning the highly anticipated bout, was accused by some of being racist as it included the slogan ‘always bet on black’.

Nine complaints were received by the Advertising Standards Authority following the ad’s appearance in the London Evening Standard and Metro newspapers, arguing that it was “likely to cause serious or widespread offence” because of the obvious reference to Mayweather’s race.

Paddy Power acknowledged the promotion did refer to Mayweather’s race but argued this was not done in a derogatory, distasteful or offensive way. The firm said the ‘always bet on black’ pun was a take on the fight being in Las Vegas and was also a famous line from the 1992 Wesley Snipes film Passenger 57, which they believed their customers would understand.

The bookmaker also pointed to the fact Mayweather himself endorsed the campaign and wore underwear embroidered with the slogan at the official weigh-in, as well as posting related material on social media.

However, the ASA ruled the ad breached rules relating to causing harm and offence and warned Paddy Power regarding their future conduct.

The bookmaker also had to apologise last week for briefly quoting the late Ugo Ehiogu in their betting for the next Birmingham City manager.


The Americans are coming

Gambling technology company Scientific Games is to buy NYX Gaming, the owner of sportsbook platform provider OpenBet, to create “a global gaming and lottery powerhouse”.

Scientific Games, whose business includes supplying gaming machines and self-service betting terminals to betting shop operators in the UK, is to pay C$775 million (approx £466m) for the Canadian-listed firm.

In April 2016 NYX Gaming announced it had bought OpenBet for £270m with William Hill and Sky Bet teaming up to invest £100m in NYX as part of the deal.

A spokesman for Sky Bet said: “We are reviewing what this will mean in the long term, but we know SG well and have a positive and long-standing relationship with them as a games supplier.”

Hills, whose investment in NYX was based on improving their online offering, said their contract continued under the new owner.

Simon French of Cenkos said the news threw up “a number of interesting questions for the online gambling industry”.

He added: “To see a major US head-quartered business acquiring a UK sportsbook suggests UK online companies with proprietary sports betting technology are firmly on the radar of their US land-based peers as they grapple with the potential regulatory reform of US sports betting.”


Tabcorp-Tatts Group deal meets with setback

One deal that is not proceeding so smoothly is the Aus$11 billion (approx £6.55bn) merger between Australian gambling giants Tabcorp and Tatts Group.

Last week it met with a significant setback when the Australian federal court asked the competition authorities to reconsider their decision to approve the deal.

The Australian Competition Tribunal (ACT) gave the deal the go-ahead in June but regulator the Australian Competition and Consumer Commission successfully appealed against the decision.

The Australian newspaper said a new hearing was being fast-tracked and the outcome could become known this week.

Penrose to leave Sportech
Returning to the American market, one company with a major US-focus is Sportech whose chief executive Ian Penrose is to leave the company at the end of this year.

Chief financial officer Mickey Kalifa is also leaving the technology supplier and pool betting firm, which has announced it is undertaking a strategic review.

Penrose, formerly chief executive of racecourse group Arena Leisure, joined Sportech in October 2005.

Sportech chairman Richard McGuire said: “We would like to thank Ian for the tremendous job he has performed at Sportech.

“He presided over the transformation of the company from a UK-focused business into a respected, fully-licensed and regulated global gaming technology supplier and gambling operator in the US with a strong balance sheet.”

During Penrose’s time at the helm, Sportech were successful in securing £97m in a legal challenge over VAT payments and also sold The Football Pools business for £83m.

For more information, please get in touch – james.derbyshire@racingpost.com or visit b2b.racingpost.com.

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