Changing the game for UK racing

The more things change the more they stay the same, and nowhere does that seem to be truer than UK horseracing in 2017. As the jostling for control shifts between the media owners, betting firms and horseracing authorities, the war for new customers rages on and nobody really seems to be winning.

The news that bet365 pulled its Best Odds Guaranteed Plus product caused something of a collective sigh of relief in the UK egaming sector. At a time when margins are being squeezed on all sides for horseracing, the easing off of the pressure from the biggest player in the sector was more than welcome.

While the reasons for bet365 removing the offer aren’t clear, it appears it wasn’t the next silver bullet in CRM and the net result is a temporary escalation of the enhanced odds offer wars. At least for the time being. And now the cost of horseracing has returned to sharp focus, the timing couldn’t have been better.

In the same week it emerged Ladbrokes, Coral and Betfred were left with no live UK racing coverage in their shops after failing to agree a deal with the rights owner The Racing Partnership. Escalating media rights costs are not unique to horseracing, with this likely to be an increasing issue across various sports over the coming years, but with horseracing margins ever lower it’s here they are most keenly felt.

Something for nothing

Everyone, it appears, wants an ever larger slice of the pie. At the end of the year, SIS shocked the sector by revealing it would be the exclusive data provider for its racecourses, with existing third-party resellers cut out of the loop. And that’s not to mention the ongoing issue of the levy to the horseracing industry itself and the disagreement over the Authorised Betting Partner scheme.

Operators are being pushed into a corner and are understandably fighting back against the seemingly endless demands on contributions from a part of the business that’s showing, at best, modest growth. Racing is still a hugely important acquisition and retention tool, but what we’re starting to see is operators saying it can’t simply be a loss-leader.

And underneath all of this we have the pressing issue of FOBT regulation looming over the entire sector. Outside of the online bubble, the retail betting sector is still a huge contributor to horseracing with the industry deriving just under £600m of revenue from horseracing betting annually, according to the latest Gambling Commission date.

Significant changes to the staking levels on FOBTs could have a big knock-on effect on the profitability and sustainability of many of the 8,700 shops in the UK. And that in turn could hit racing. With so much uncertainty it’s hard to know which way things will turn for racing and the betting industry, but the signs are starting to emerge that real change is coming.

Business as usual

For the typical punter looking on, however, it seems like business as usual. Ladbrokes – which is not a member of the ABP scheme – was the instigator of BOG+ and horseracing is still prominent on both its online and mobile offerings.

But it also seems to be the firm most willing to take the fight to the horseracing industry and the company most likely to lead any move to de-prioritise racing as a core betting product. And it is a realistic threat. There are no shortage of other products and sports to promote and relatively limited real estate on the mobile apps.

There seems to be considerably less appetite for this from its main rivals, however, with William Hill sponsoring the new ITV horseracing coverage and launching a new bonus offer on horseracing. Paddy Power and Sky Bet also continue to keep up the pressure with major money-back offers, while some of the newer entrants are using horseracing as a way of building brand value in a very crowded sector.

Betway, which has invested heavily in racing sponsorships, launched its BOG+ product in December and we’ve seen the likes of 32Red, Sun Bets, 188BET and Matchbook take up some major racing sponsorships as they look to grab market share. This year’s Cheltenham Festival with Sky Bet, Betway and Sun Bets as lead sponsors has a very different feel to previous years.

And perhaps this eventually is where racing is headed. A sport more reliant on a new breed of online operator looking to claim a share of the market and less reliant on the retail industry with whom it’s had a symbiotic relationship for decades. As revenue on horseracing continues to decline in the retail sector (down from £844m in 2008 to £597m in 2015) and online continues to grow, the shift in relationships is if not inevitable then conceivable.

The question then is what is the true cost to all involved?