Kevin Blake's blog (10 August)

Kevin takes an in-depth look at how bookmaker restrictions and account closures are affecting the industry and identifies solutions to level the playing field for punters.

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Are bookmaker restrictions strangling betting on Racing?

This column has often bemoaned the incredible ability that the people in horse racing have to make mountains out of molehills.

However, it is even more worrying that they are also just as capable of turning mountains into molehills by all but ignoring some very serious matters.

For me, the latter tendency has been exhibited to no greater extent than in the case of the ever-increasing reluctance of bookmakers to lay bets of meaningful size to almost anything bar consistent losers.

Of course, the vast majority of people that have a bet on horse racing will bet in small stakes and lose in the long term thus won’t meet with too many problems, but for those that have the temerity to win or even show the tendencies of those that win, account closures and the restriction of stakes to miniscule levels have become an everyday issue.

This will come as a surprise to many casual observers who are so used to hearing bookmaker’s representatives reporting the big bets they have supposedly taken, coupled with the fact that the issue isn’t regularly discussed in the racing media, but I would go so far as to suggest that this reality represents a serious threat to the long-term popularity and financial prosperity of horse racing.

That may seem like a big statement, especially to the many in racing who are not into the betting side of the sport, but whether one likes or not, horse racing and betting are joined at the hip.

Racing depends on betting for a significant proportion of its funding and public interest in the sport, thus it is of great importance that everyone in racing is made aware of the extent of this issue and the background to it so that it can be addressed and remedied before irreparable damage is done to the sport and it’s following.

PUNTING IN THE NEW MILLENNIUM

To briefly give some background, the betting world has changed dramatically in the last 15 years or so. On one hand, horse racing punters have never had it so good in their pursuit of profit.

The internet is a treasure trove of horse racing information and knowledge.

Race replays can be called up in seconds and vast form databases are available for free. In a nutshell, the tools to become a competent punter and judge of racing has never been more accessible than they are right now.

On the surface, the betting world has also never looked more attractive for punters. Competition amongst the bookmakers and exchanges has resulted in tighter margins than ever before, prices have become available for races earlier than ever and a vast array of concessions and offers are routinely made available to punters.

However, many of those things are essentially a mirage for anyone that shows competency in their betting, as during that time bookmakers have also become increasingly reluctant to lay bets of even modest amounts by any person’s standards to anyone but proven consistent losers with rare exceptions.

Without resorting to the tedium of anecdotal examples, one only has to venture onto Twitter or any betting-focused internet forum to see for themselves just how big a topic of conversation this reality is amongst betting people.

“Getting on” has become a bigger problem than finding winners for those that are capable of winning in the long term and that is frankly a ridiculous and worrying situation.

So, why has it become so difficult for so many people to get a bet on? There are many factors at play that have brought about the current situation, some of them understandable, others not so much.

ONSET OF THE INTERNET

The single biggest factor has been the onset of the internet. The rise of internet betting has made it much easier for bookmakers to track and profile their customers in a way that was much more difficult for them in the days when cash in betting shops was the biggest part of their business.

This has been a substantial help to them in identifying the type of customer that they want to do business with, the consistent loser with little discipline or skill, and the type of customer they don’t want to deal with - the skilled, informed and price sensitive punter/trader.

The proliferation of online bookmakers quickly led to the emergence of odds comparison sites. This went a long way to removing bookmaker loyalty amongst value-discerning punters, as it made it easy for them to see where the best price was available and to go get it.

With these websites making price and concession/special offer differentials between bookmakers all the more glaring, they were a factor in driving price competitiveness amongst bookmakers and squeezing the margins.

This has bred a situation where many bookmakers will offer loss-leading prices and offers in a bid to attract new accounts, but in almost every case, the permitted stakes are restricted to miniscule amounts that are only relevant to the type of small-staking punter these bookmakers want.

EMERGENCE OF EXCHANGES

Just as significant as the onset of the internet for betting on horse racing was the emergence of the betting exchanges. They changed the game forever in that they allowed punters to become legal layers for the first time.

Amongst other things, this created traders, those that seek to back horses either on the exchanges or with bookmakers, then lay them at shorter prices on the exchanges to secure a guaranteed profit win or lose.

This has served to place even heavier emphasis on the value of getting the best price relative to what price can be laid on the betting exchanges, blurring the line between genuine value-seeking punters and those that are just aiming to arb for no-risk profits in the eyes of bookmakers.

All of the above changes have contributed to reducing the former art of bookmaking to what is essentially a branch of low-risk accounting.

The employment of highly-skilled odds compilers and the retention by bookmakers of winning and well-informed punters with a view to having their card marked by what they are backing is no longer necessary. The exchanges offer a transparent and liquid market for every race and those markets are essentially what drive prices across the entire modern bookmaking industry.

The end result of all this is a bookmaking industry that essentially only wants to do business with two types of horse racing punter, the small-staking fun-seeking punter that will bet their twenties and fifties all day long on multiple races with little concern for value or discipline, and on a lesser scale, the bigger-staking ill-informed whales that are expected to lose significant sums in the long term.

Anyone that wins consistently or even just beats the starting price consistently is going to have problems of one extent or another with stake restrictions and account closures. That has just become a reality of betting on horse racing.

KNOCK-ON EFFECTS OF RESTRICTIONS AND CLOSURES

Where this stops being just a problem for a sector of the betting public and becomes a potentially major problem for the entire racing industry is here.

The group that bet restrictions and account closures affect the most may not be big in number in the overall context of the entire punter population, but they are one of the most important groups of all racing followers, passionate racing enthusiasts that have the made the long-term commitment to grow their knowledge to an extent that enables them to bet successfully on the sport.

Those customers are exceptionally difficult to attract from scratch and those that we already have should be cherished and looked after by the racing industry.

However, there is little doubt in my mind that bet restrictions are the single biggest source of frustration for this highly-valuable group of people and my fear is that if the situation doesn’t change, they will be frustrated into reducing their interest in betting on racing.

The dangers of this should be obvious, given that racing’s share of the overall betting pie has already been significantly reduced in the last 15 years due to the ever-growing popularity of sports betting and online casino-style games.

TURNING PUNTERS AWAY FROM THE TURF 

An even bigger development in Great Britain has been the introduction of extremely lucrative fixed-odds betting terminals in 2001. Such low-risk high-turnover betting mediums are far more attractive betting products for bookmakers than horse racing. They are also much cheaper for bookmakers, as horse racing costs bookmakers many millions in media and data rights.

Indeed, a cynic might suggest that it would suit the interests of bookmakers just fine if punters continued to turn away from horse racing and towards other betting mediums, but horse racing cannot afford to lose such valuable customers.

Given just how vital media/data rights and the funds generated by betting tax/levy are to the funding of horse racing at both sides of the Irish Sea, anyone with an interest in the future of horse racing needs to sit up and take notice of this issue, as the long-term consequences for what is going on should be clear to everyone.

If bookmakers continue to be allowed to conduct their businesses are they are, effectively making it very difficult for anyone with a clue a fair shake at making a profit by betting on horse racing, the future effects on betting turnover on horse racing could be very serious.

A further drop in betting turnover on horse racing will not only detrimentally effect betting tax/levy takes, but it will inevitably lead to a drop in value of media/data rights that play such a prominent role in racing’s finances. In that event, closures of racecourses and prize money reductions would be inevitable.

So, what can be done about all of this?

A SOLUTION FROM NEW SOUTH WALES

The most important thing is that awareness of the realities of the situation is raised across the industry.

The reason you haven’t heard much about the issue in the past is that punters do not have a representative voice in the industry (the ongoing formation of the Horseracing Bettors Forum by the BHA is a very positive step in this regard) and bookmakers have a very powerful influence in the industry through their vast sponsorship and advertising spends.

This situation has not been healthy for a long time and the difficulties that the betting public are facing in horse racing now need to be highlighted and bookmakers challenged on the fairness of some of their business practices.

In terms of what can be done in practical terms to help level the playing field for genuine horse racing punters that wish to pit their judgement against the bookmakers to fair stakes, they are a few interesting roads that could be taken.

A very curious precedent has recently been set in Australia. Last year, officials in New South Wales introduced a minimum bet that bookmakers must accept, with bookmakers with turnover of more than AUS$5 million being obliged to lay a punter to lose AUS$2,000 at a city meeting and AUS$1,000 at country fixtures, while bookmakers with less than AUS$5 million turnover will have to lay their customers to lose AUS$1,000 on all thoroughbred meetings.

All of these conditions apply to bets placed online or on the phone from 9am on the day of an afternoon meeting and from 2pm in the case of an evening meeting. This ruling was greeted with great criticism from local bookmakers, but almost a year on from its introduction, the vibes from Down Under is that it is working well for both punters and bookmakers.

Closer to home, Coral have guaranteed to lay any horse in a race televised on Channel 4 to lose £5,000 to any customer after 9am on the day of the race.

Interestingly, the issue has recently entered the political arena, with former First Minister of Scotland Alex Salmond recently stating to the Guardian that: “It is not acceptable for bookmakers to refuse to take a reasonable-sized bet because the client has a record of winning. If it is not a breach of advertising standards, then it should be. Bookmakers today simply don’t want to take any risks.

“There is a difference between bookmaking, an entirely respectable profession, and fleecing people, which isn’t. Maybe it is time that the distinction was made harder in terms of the law. There is a difference between being risk-averse and being responsible for misleading advertising.

“An unreasonable refusal to accept bets should, in my estimation, be a reason for disqualification from a bookmaker’s licence.”

With recent legislative changes in Ireland now obliging all betting operators to apply for a license to allow them to take bets from Ireland-based punters, how about following the lead of New South Wales and making it a requirement for a license holder to lay a bet to lose a similar minimum after 9am on the day of the race to online/phone customers?

This isn’t just about fair play for all punters and protecting the future of horse racing, this is about the moral question of whether bookmakers can continue be allowed do as much business as they like with losing customers, but yet be allowed restrict how much business they do with winning customers.

Surely any fair-minded person can see the problem with that?

The precedent of enforcing a minimum bet on bookmakers has been set elsewhere and, as discussed above, this is a much bigger issue for the future of racing than most realise.

The time to talk about this is now.

Kevin Blake's blog (10 August)
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