UK co-mingling going well says Hong Kong chief
Exposure for British Tote punters to the Far East’s second biggest pool-betting market behind Japan has gone better than expected since the launch of co-mingling in November, according to Hong Kong Jockey Club chief executive Winfried Engelbrecht-Bresges.
In the same breath, though, he ruled out any direct investment in future tote operations in the UK when Betfred’s exclusive licence comes to an end in July 2018.
“I don’t want to speculate on what may happen, with the likelihood of more than one pool operator emerging,” he said.
“We want to see what the outcome is and I’m sure people will talk to us when they are ready. But we will definitely not invest in overseas markets.”
He added: “We’re not intending to be an operator outside our own jurisdiction, but we’re happy to co-operate with anyone, provided it is in our interest. We are currently involved in the first phase of our HK$4 billion (£397 million) technology redevelopment, which will be completed around the beginning of 2019. Anything else will be a distraction.”
Engelbrecht-Bresges expects the same timeframe to apply to extending the bet types offered by co-mingling into the HKJC pools, which at the moment are mainly open for win, place and quinella bets.
“In order to offer more pools, such as the exacta and quartet, we need to come up with modifications to the co-mingling protocols, and that can only be done as we bring in our new technology,” he said.
The co-mingled pools service, which is being developed by former SIS stalwart George Irvine, continues to grow, with Engelbrecht-Bresges pointing to a five-to-six per cent year-on-year increase in the exchange with Australian operators.
The UK project, which began with betting shops and online platforms of operators including Betfred, Coral and Ladbrokes, is already contributing 65 per cent of the HKJC’s co-mingled turnover.
Last Wednesday’s eight-race card at Happy Valley had co-mingled turnover of HK$67m (£6.65m), of which HK33m (£3.28m) came via the UK.
“I’m extremely delighted with the results,” Engelbrecht-Bresges said. “They are better than I expected. They show that a pool-betting product with attractive pool sizes, attractive racing and the right information for punters can be successful in the very competitive market that exists in the UK.”
Engelbrecht-Bresges refuted the suggestion, which has circulated in some parts of the industry, that a large percentage of the UK turnover on Hong Kong racing relates to generous rebates offered to big-staking punters in the Far East, and not to the delivery of new money.
“That’s not the case, it’s not syndicate money,” he said. “If there has been any shift, it’s been minimal. If it was syndicate money, we would have had a reduction here in Hong Kong, but that hasn’t happened.”
National result hits Scotbet
Times are hard enough for independent bookmakers without the biggest betting race of the year producing a result as painful as One For Arthur’s did for Scotbet.
The firm, which recently filed its accounts for the year to August 1, 2016 to Companies House, were hit particularly hard by the first Scottish-trained winner of the race since 1979.
“I could have done without the Grand National to be quite honest,” chairman John Heaton said last week. “It was absolutely desperate and probably the worst we’ve ever had.
“Everybody in Scotland backed it. We’ve got a shop in Kinross, where the horse is trained, and we have a shop in north Berwick, which is where the owners come from, so everybody backed it.”
Scotbet are down to 49 shops – they closed nine last year and had 75 shops not long ago.
Heaton said: “It’s tough and I don’t think anybody would tell you any different. The Grand National result was extremely unwelcome and those things are difficult for a small bookmaker to get over.”
According to their latest accounts, Scotbet’s turnover from sportsbook and gaming machines fell 14.6 per cent to £118.7 million last year.
However, ebitda (earnings before interest, taxation, depreciation and amortisation) and exceptional items rose by 14.3 per cent to £625,942.
Gaming machines provide around 40 per cent of Scotbet’s profits and Heaton said the delay to the government’s review of machines was not helpful.
“It just adds to the uncertainty,” he said. “We just wait and see.
“I would like to have some self-service betting terminals but I have not done anything pending the triennial review because what I don’t want to do is start putting these SSBTs in my shops on long-term contracts and then find that the triennial review requires me to close down shops. I can’t make any investment until we know what is happening with the triennial review.”
Media rights is another pressure on independents with Scotbet running all three betting shop services – SIS, TurfTV and TRP.
“It’s a combination of media rights and the levy,” Heaton said. “The cost of the horseracing product is rising and yet the amount of betting on horseracing is still falling.
“Quite what the answer to that is I don’t know. It’s just about a break-even product for me and I could do without three suppliers frankly. Operationally that’s a nightmare in the shops.”
Heaton added: “The problem racing has is if numbers of shops go down because it is a flat-rate charge per shop they are going to lose a lot and it will be absolutely disastrous if numbers of shops falls as a result of the triennial review.”
PMU may be turning the corner
The PMU has closed its accounts for 2016 with a net profit of €796 million being returned to racing and trotting, while indications for the first quarter of 2017 show that figures could be on the verge of turning a corner after five consecutive years of decline.
“The aim is to stabilise our activity before moving back towards growth,” said Xavier Hurstel, the director general of France’s former monopoly operator.
The figures for 2016 correspond to the provisional results reported in January, with the PMU having taken €9.738 billion in bets across its racing, sports and poker properties, a decline of 0.6 per cent on 2015.
The results have to be read in light of the French competition commission’s insistence that the company separate its physical and online pools, a ruling it complied with in September of last year.
PMU has been able to largely mitigate a steady decline in betting on domestic horseracing since 2011 through growing its international offerings as well as sport and poker.
Although the amount returned to racing and trotting dipped below €800m for the first time since 2010 – the penultimate year in a 15 year unbroken streak of growth – 2017 has begun promisingly for the company, with the first quarter showing a 0.6 per cent rise in racing turnover at €2.324 bn.
PMU have invested heavily in recent years in modernising its retail estate and launched two new bets for its domestic racing customers this month.
Money laundering assessment launched
The Gambling Anti-Money Laundering Group (GAMLG) last week launched a money laundering and terrorist financing risk assessment of online and retail betting gambling sectors.
In October 2015, the gambling sector was classified as low risk for money laundering purposes in the Treasury’s National Risk Assessment and recently the retail betting sector received exemption from the Treasury from the EU Fourth Anti-Money Laundering Directive.
However, a number of vulnerabilities within the sector were highlighted.
The assessment takes into account a number of identified risk areas including those posed by customers – payment types, geography, product types and employees.
GAMLG chairman Keith Bristow said: “This thorough and independently reviewed risk assessment shows that these sectors do not rest on their laurels of having been categorised as low risk by the government for money laundering purposes, and are committed to continually working to enhance and raise the standards they have in place to further mitigate risks that do exist.
“It demonstrates that the sector realises the importance of putting the safety of the public and operators’ staff first and ensuring the integrity of the industry.”
The GAMLG was established in January last year and comprises the Remote Gambling Association and the Association of British Bookmakers.
Wright joining Tabcorp
Former Ladbrokes trading director Andy Wright is joining Australian gambling giant Tabcorp.
Wright, a former managing director of Stan James who left Ladbrokes Coral after last year’s merger, will join Tabcorp early this month as general manager group trading and product.
A Tabcorp spokesman said: “He brings a wealth of experience in leading trading, operations, technology and product teams and we look forward to him starting.”
Snow leaves Ladbrokes
Acting chief financial officer Richard Snow is the latest member of senior staff to leave Ladbrokes following the merger with Coral.
Snow spent three years with the business and twelve months as acting CFO.
Chief executive Jim Mullen said of Snow: “He helped lead us through a time of significant change, challenge and success for stand alone Ladbrokes as we delivered a business turnaround and successfully completed the merger with Coral.”
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