House of Commons - Culture, Media and Sport

Select Committee on Culture, Media and Sport Fifth Report

2 THE HISTORICAL ALLOCATION OF PITCHES

6. In order to understand fully the nature of the current dispute between bookmakers and racecourses, it is useful to look back at the way in which on-course horserace bookmakers' pitches—the physical position each bookmaker occupies on a racecourse—have been allocated in the past. This section of the Report outlines the arrangements which have governed the presence of on-course bookmakers at racecourses since 1928, covering the voluntary arrangements for the allocation of pitches that existed before 1998, and the subsequent arrangements enforced by the Levy Board. It also discusses the value of list positions.

7. It is important at this stage to be absolutely clear about the difference between "pitch positions" and "list positions"—two distinct concepts that are easily confused and mistakenly used as synonyms. A "pitch position" is a physical position in a betting ring—the area allocated by the racecourse for betting by on-course bookmakers—from which an on-course bookmaker may trade on a race day.[2] A "list position" refers to a bookmaker's position on a list of bookmakers held by each racecourse. Each race day, bookmakers that attend the racecourse are entitled to pick where they stand in the betting ring in the order in which they appear on the list—that is, in accordance with their respective list position.[3]

Before 1998

8. The Racecourse Betting Act 1928 made it legal for a bookmaker to stand in a defined location at a racecourse, and set out a maximum charge that could be levied by a racecourse in return for permission to operate as a bookmaker from that defined location.[4] From 1928, a system for allocating pitches to bookmakers evolved, based on a bookmaker's position on a list drawn up according to a bookmaker's seniority (that is, the length of time the bookmaker had been operating). Under a list system, the bookmaker with the highest list position is given the first opportunity to choose the pitch that he wishes to occupy, the person with the next highest list position is given the second choice, and so on. While the 1928 Act made it legal for a bookmaker to operate at a racecourse, it did not establish bookmakers' lists and the Government points out that "pitch positions have never been directly provided for in gambling legislation".[5]

9. In 1958, the National Association of Bookmakers (then the main trade association representing on-course bookmakers), the Racecourse Association (RCA) and the Jockey Club entered into a voluntary agreement—the Fergusson Agreement—which underpinned the administration of racecourse betting rings. The agreement also recognised seniority on lists and the transfer of seniority on lists.[6] Seniority lists were maintained for each betting ring at each racecourse, and there were different lists for different meetings at the same racecourse, for example Ascot Summer, Ascot Winter and Royal Ascot.[7] Under a system known as "deadman's shoes", a bookmaker's list position was capable of being transferred, upon the bookmaker's death, to a registered successor—who could only be the son, daughter or spouse of the list position holder.[8]

10. While the system governing the allocation of pitch positions was not codified in a legally binding way, other matters relating to on-course bookmaking, including the maximum price racecourses could charge bookmakers for admission, were set out in legislation. The Betting, Gaming and Lotteries Act 1963 (the 1963 Act) established the Levy Board, with responsibility for issuing certificates of approval to each racecourse in Great Britain.[9] These certificates could be subject to conditions that the Levy Board might impose, and the 1963 Act provided that, as a condition of the grant of a certificate of approval by the Levy Board, racecourses should provide a place where bookmakers may carry on their business and that the charge to a bookmaker for admission to an enclosure should not exceed five times the amount of the highest charge to members of the public for admission to that enclosure (the "five times rule").[10]

11. In 1991, the National Association of Bookmakers (NAB) and the RCA entered into negotiations to try and modernise the administration of on-course horserace betting. These negotiations failed, however, and in October 1997 the RCA serviced notice on the NAB, terminating the Fergusson Agreement with effect from 7 October 1998.[11]

After 1998

12. After the RCA gave notice that it would terminate the Fergusson Agreement, the Levy Board decided to intervene in order "to avoid a lacuna in the administration of betting on racecourses throughout the country".[12] The Levy Board appointed a subcommittee, chaired by Sir John Sparrow, to review the conditions for the administration of racecourse betting areas. The Levy Board considered the subcommittee's report—known as the Sparrow Report—and in March 1998 accepted, with some amendments, the report's recommendations. This included recommendations to establish a new body to administer betting areas on racecourses and to introduce a system for transferring list positions via auction, retirement or will.[13]

13. The Levy Board established the National Joint Pitch Council (NJPC) to administer betting areas on racecourses from 8 October 1998. The NJPC was given responsibility for issuing new National Pitch Rules, which governed the conduct and administration of betting rings on racecourses. Among other things, the National Pitch Rules provided for bookmakers' lists, maintenance of list positions and the transfer of list positions.[14] In 1998, the Levy Board issued each racecourse in Great Britain with a new certificate of approval, subject to conditions which included a provision that racecourse betting areas should be administered by the NJPC in accordance with the new National Pitch Rules.[15] That is, compliance with the bookmakers' lists was a condition of certification by the Levy Board. The conditions of certification outlined in the 1963 Act—the five times rule and the requirement for racecourses to provide a place for bookmakers to carry on their business—also remained in force.

List position values

14. In December 1998, the NJPC held the first auctions of list positions under the new system. Between 1998 and 2007, the NJPC held 71 auctions, with 8,164 lots sold for a total price of £56.3 million. In addition, 4,430 list positions were sold privately for a total of £33.3 million. On 1 January 2007, according to NJPC valuations, the total value of all list positions within the maximum designated numbers (the highest number of bookmakers permitted to stand in a particular betting ring on any given race day) and extra ten (the next ten bookmakers on the list after the designated numbers) for all betting rings was about £70 million. On that day, 667 authorised bookmakers were eligible to bet in 221 betting rings at 59 racecourses in Great Britain.[16]

15. We received a range of evidence on the value of individual list positions held by bookmakers. The RCA told us that, according to NJPC valuations, the average value of a list position in 2006 was £5,581.[17] The highest valued single list position mentioned in the evidence we received was for the number one list position for the courtyard ring at Cheltenham, which was valued by the NJPC at £160,000 in early 2007.[18] The RCA, however, said that in 2007, over 98% of list positions were worth less than £30,000 and over 83% of list positions were worth less than £10,000.[19] Average values of a single list position, however, hide the range in size and nature of on-course bookmaking businesses. Robin Grossmith, Director of the Federation of Racecourse Bookmakers,[20] told us that "there are certainly bigger bookmakers and smaller bookmakers" and added that the value of list portfolios would differ between bookmakers.[21]

16. Keith Johnson, vice-chairman of the NAB, said that most bookmakers who operate full time would need a portfolio of at least 30 list positions, and that a bookmaker would have to invest up to £200,000 in total to make a viable business.[22] Robin Grossmith estimated that between 100 and 150 bookmakers operated on a full time basis, and that these bookmakers would each need an investment in excess of £100,000 to be viable.[23]

2 Ev 35 Back

3 Ev 34 Back

4 Ev 2 Back

5 Ev 64 Back

6 Ev 78 Back

7 Ev 86 Back

8 Ev 50 Back

9 Betting, Gaming and Lotteries Act 1963, section 13 Back

10 Betting, Gaming and Lotteries Act 1963, section 13 Back

11 Report of the Sub Committee appointed by the Horserace Betting Levy Board to review the Administration of Betting Rings at all Meetings at Horse Racecourses having a Certificate of Approval from the Horserace Betting Levy Board, March 1998, p 1 Back

12 Ev 47 Back

13 Ev 47 Back