Taking over the reins: the UK Tote Group on broadening the historic Tote brand's appeal

In terms of the gambling industry, there are not many operators who can cite a world history heavyweight like Sir Winston Churchill as a progenitor. However, Wigan-based UK Tote Group can make such a lofty link with, who some would call, the greatest Briton. Founded in 1928 by parliament, the Tote initially aimed to provide a safe, state-controlled alternative to illegal bookmakers, while ensuring that betting revenues were used to the betterment of the sport. Thus, it stayed under government stewardship for the next 80 years before being privatised in a sale to bookmaker Betfred in 2011 under an exclusive arrangement for British pool betting which ended in July 2018. Under a banner of ‘Together for the Tote’, the Alizeti Group, now the UK Tote Group, completed a multi-million-pound acquisition of the Tote from Betfred in October 2019. The principle of stewardship of the industry is one that is central to the philosophy of the UK Tote Group as it aims to drive the brand into a new era of technological advancement. It’s about maintaining the 90 years of Tote tradition while modernising for the next 90 years. A key aspect of this is Tote’s de facto philosophy which, broadly speaking, revolves around how the company, through its business activities, can stay true to the founding pillars that set the Tote up in the first place while ensuring it stays a viable business for the next 90 years. As the UK Tote Group explains, it’s namely “about being a safe and responsible way to bet and to provide a source of funding for horseracing, something which is as relevant to today as it’s ever been”. Another is the ownership of UK Tote by representatives working in the nuts and bolts of the industry, individuals with a vested interest in UK horseracing and the know-how to drive the Tote brand back to the big time. UK Tote Group has more than 160 shareholders and there are no funds or private equity entities involved in its ownership. The vast majority of Tote investors are racehorse owners and breeders, who already have a significant stake in the sport and who want to see it thrive in the future. Even Churchill’s own grandson, Sir Nicholas Soames, is a shareholder, something which would no doubt have pleased his grandfather.

– Mark Kemp, UK Tote Group “Our investors, alongside our executive team led by our chief executive Alex Frost, who is an owner and breeder based at Ladyswood Stud, care passionately about racing and want to ensure a successful Tote can help be a greater part of supporting the sport in the future,” UK Tote MD Mark Kemp explains.

Balancing past and present

However, with a historic brand such as the Tote, it’s as much about retaining the core value and proposition which have made it successful over the last 90 years. Its existing staff are a key part of this, individuals which the group highlights as having an “intrinsic knowledge and love of the business” because, let’s face it, it’s as much about retaining success as it is about building new success. “While technology and the market has changed, the core values and proposition that made the Tote such a success hold good – and having great people was part of that,” Kemp notes. “One of the greatest pleasures has been seeing the return of several of the customer care team who have worked for the Tote for years. They have a combined 180 years of experience between them, which provides invaluable historical knowledge, and their enthusiasm and support for the Tote and its customers is infectious. There is lots for us to learn from the successes of the past.” In such a frenetic first few months following the UK Tote Group’s ownership, there can’t have been many chances to take stock and really get your feet under the table. For the MD, the big moment came in March with the Cheltenham Festival, the biggest horserace meeting for the business since its October takeover. As he explains: “Coming as it did following the launch of the website, the success, stability and the feedback that we received on having Tote Guarantee – a pooled betting system that aims to match industry starting price (SP) or pay the pool price if the latter is bigger than the SP on all winning bets placed on the Tote website – available through our digital and racecourse channels, all getting the message over was a great moment.” However, for UK Tote director of communications and corporate affairs Susannah Gill, the real ownership watershed moment came when Wigan MP Lisa Nandy paid a visit to the group’s headquarters in December. “She’s a brilliant MP for Wigan and wanted to hear about our commitment to Wigan, growing the team and our investment in it,” Gill explains. “She came in and talked to members of the team and, all in all, the visit had a really nice feel to it as it felt like we were accepted as the Tote’s new owners.”

Winning custody

Much of the immediate preparation of UK Tote Group’s acquisition of the Tote in 2019 was about assessing the current position of the business, its strengths, weaknesses and looking for opportunities and priorities in growing the brand. “There wasn’t really a roadmap development plan, most of that has come from listening to customers through our Tote Town Hall initiative. All our roadmap has come directly from our team, loyal customers, and insights as to what we think are priority areas to re-establish the Tote,” Kemp explains. The first significant and immediate product development was the relaunch of the Tote Ten to Follow game, which went live just one month after the group took ownership, something which Kemp describes as a “monumental effort” by the product teams. A key aspect of Tote Ten to Follow (Tote’s version of fantasy football, which allows players to select horses from a number of stables with the aim of winning £250,000) is to encourage engagement via Tote’s existing media partners Racing Post and At The Races, which provide coverage for the game and which Kemp claims have really embraced the concept. “The reception was brilliant and over 63,000 stables were submitted for the jumps season,” he adds. The core value of listening to feedback in product development runs deep at the Tote, largely because of the lack of product innovation undertaken by Betfred. In tandem with this was the launch of the new Tote website – tote.co.uk – and brand identity, generating a modern digital format for the brand and bringing it into the 21st century. “Updating the Tote brand was important to signal a new journey and direction for the Tote as we look to grow the relevance of the brand through product and marketing,” says Kemp. “We have built the brand to have capacity to be adaptable, for example with the launch of Tote Superpools at Royal Ascot, as well as Tote Ten to Follow.”

Battening down the hatches

Horseracing in crisis after Covid-19 cancellations; Betting firms to lose £100m+ as racing closes its doors; Grand National suspended. These sorts of headlines would be the stuff of nightmares for any UK bookmaker, but over the last few months these headlines have become almost a daily reality for operators. However, as the saying goes, ‘the show must go on’ and for the UK Tote Group, the crippling adversity caused by the coronavirus outbreak on UK racing has meant a shift in focus away from business expansion toward preservation. Discussing this, Kemp cites speed as a factor in keeping the wolves from the door, with Tote’s existing employees, including the customer care team, quickly shifting to a work-from-home model from the end of March. “We’ve managed very successfully to operate as a remote business, even as a 24/7 remote business effectively, which has been a fantastic testament for the teams and that we’ve put the right technology in place to enable that,” Kemp explains. Indeed, he says the Tote has actually added to its team during the period, increasing the immediate workforce from 100 to 120 permanent members of staff. Building on this, the business has also recently undertaken an apprenticeship programme with two tech houses in the north of England to not only strengthen its existing digital expertise but to bring in the next generation of Tote enthusiasts as well. “We’ve already got a high level of experience in terms of the Tote, but we also want to complement that effectively with new people, who have new and different skills, particularly in engineering where we started, but we’re also looking to bring apprentices into the BI and marketing functions as well going forward,” Kemp says. Another factor of the Tote’s business resilience during the Covid-19 period has been the immediacy of its acquisition. Kemp cites UK Tote Group’s purchase of the Tote in October as providing the company with a war chest of funds from its shareholders, funds which ordinarily would have been used for product expansion but were an important asset to retain during the pandemic. This capital, he claims, could also preserve the business should a second wave of coronavirus hit the UK. “We raised over £100m at the start of the UK Tote, not only to acquire the licence but to also make further investments and acquisitions as time develops. We are still mostly at the start of that long-term investment cycle and that gives us a good financial foundation and position to be able to manage through a second wave,” he adds. While the MD pays tribute to the work of his teams in ensuring this continuation, the closure of the whole of British racing undoubtedly would have put the firm in a delicate position. But where other affected operators have relied on their online casino operations to offset the decline in sports betting revenue, the Tote has pursued an altogether different strategy, which draws on its unique position within the pooled betting market. Beginning almost immediately with Swedish horseracing betting monopoly operator ATG and the Hong Kong Jockey Club (HKJC), the Tote began to sign deals aimed at widening pool betting access to markets to international operators unaffected by lockdowns. “The opportunities of collaboration were perfectly highlighted at Royal Ascot which saw pool betting volumes grow from £92m last year to £137m. We will work to ensure more countries become part of Tote Superpools in the future,” Kemp insists. The company’s opportunities for international growth have also been enhanced by its membership of the newly formed World Tote Association, an organisation whose members have a collective turnover of over €20bn, presenting a whole raft of new expansion opportunities. The Tote UK MD also points to a significant recent alliance with its nearest neighbour, Tote Ireland, in a deal that will see the firm operate the digital Tote across the Irish sea, culminating in the launch of Tote.ie, which will serve as a crucial growth market for the firm. “We will also be rolling out the new Tote brand to Ireland racecourses and working with Tote Ireland and Horseracing Ireland with the aim to grow the Tote in Ireland, alongside the UK Tote,” Kemp adds.

Back at the races

The resumption of British racing in June, albeit on a behind-closed-doors basis, was a welcome relief for an industry which has faced perhaps its most turbulent and indeed bleakest period on record. The real watershed moment for the industry bouncing back came with Royal Ascot, the first of Britain’s racing festivals to take place following the easing of lockdown restrictions. Discussing the Tote’s return to Royal Ascot, Kemp cites the relaunch of Tote’s Superpools buoyed by the world pooled liquidity afforded by both the partnership with the HKJC, along with 19 other racing nations, and Royal Ascot itself. “We beat our first-time depositor targets, our active targets and our turnover targets over Royal Ascot and World Pool itself, with every race having shared comingling liquidity. Our pool numbers were up significantly year-on-year,” he explains. Kemp highlights the “absolute achievements” made by the firm over the course of Royal Ascot week as serving as a good platform for growing the Tote’s new identity even further. This growth was followed up by strong showings at the Derby later in the month, allowing the operator to build on its Royal Ascot progress. “We’re a new business and these events are good areas to allow us to focus on acquisition, retention and differentiation of things like our multi-leg racing bets, which work well during festival periods when the market is bigger, and the liquidity is stronger,” Kemp adds.

Galloping ahead

Building momentum for growth is a very important test for businesses recovering from strong periods of both inactivity and lower financial growth and the Tote’s investors are, given their strong background in the sport, unlikely to head for the hills after one bad year. “We have wonderfully supportive investors. We only set out on this path in October, so they knew that this wasn’t about being a one- or two-year project, it’s very much long term. While this year is not the 2020 any of us had envisaged, it doesn’t change our long-term plans.” Indeed, UK Tote Group is already knee-deep in technological innovation for the forthcoming year, with a primary focus on the development of the fully native Tote Placepot app, an app designed with UX and simplicity as its twin operating pillars. Other forthcoming product changes include a text betting service affectionately known as Betty and further bet types throughout 2021. In recent years, pooled betting on British horseracing has played second fiddle in respect of the more popular and more accessible fixed-odds sports betting offering from traditional bookmakers. However, for Gill it’s not about making horseracing betting more popular than its fixed-odds counterpart, it’s about restoring parity between the two verticals. “We don’t want everyone to give up their existing Sky Bet or Paddy Power accounts and just use the Tote. We know bettors tend to have three or four betting accounts and we want the Tote to be one of them because of the markets and things we offer like Tote Guarantee.” The challenge for the UK Tote is making pooled betting relevant in a UK market that is saturated by fixed-odds sports betting. In other international jurisdictions, like France, Germany, Sweden and Australia, the betting market is much more of an even split between fixed-odds and pooled betting. According to the UK Tote, only 1% of the total hundred-billion-dollar pool betting worldwide market revenue comes from the UK pool betting market. As Gill explains: “We have about a quarter of the top hundred races in the world each year with the likes of Royal Ascot, York, Goodwood and popular jump racing. However, there’s an imbalance between that and the worldwide pool betting market and that’s something we’ve got to change.” With Tote back on the path as set out in its ambitious takeover bid in October, the question remains: would Churchill have given his seal of approval to the UK Tote Group’s custodianship? For Kemp, the answer is unequivocally yes. “We’re ambitious and innovative as a management team, all values Churchill embraced. I hope so and we’ll always continue to be judged on our custodianship and stewardship of the Tote which is important for us and it’s good to be measured in that way,” he adds.