Memorandum submitted by the Association
of British Bookmakers (ABB)
1. INTRODUCTION
1.1 The Association of British Bookmakers
(ABB) is the betting industry's largest trade body, with membership,
excluding those Licensed Betting Offices (LBOs) operated by the
Horserace Totalisator Board, amounting to almost 87% of British-based
units.
1.2 The ABB is pleased to respond to the
Select Committee's (the Committee) invitation to submit views
on the Racecourse Association's (RCA) stated intention to change
the way in which racecourse betting pitches are allocated and
charged for.
1.3 A number of the ABB's members operate
on racecourses, but it is the reliance of the off-course industry
on the racecourse betting market for starting prices (SPs) that
makes the current dispute a matter of great importance to LBO
operators.
1.4 As even small percentage fluctuations
in the margins inherent in SPs can have a substantial impact on
LBO profitability, and as the way in which the racecourse market
trades is sensitive to racecourse bookmaker costs, the ABB is
concerned that any short-term or short-sighted solution to the
disagreement between the Federation of Racecourse Bookmakers (FRB)
and the RCA could render the present starting price system unviable.
1.5 If this were to happen, it would not
simply be a case of market forces taking effect, for the SP system
is widely supported not only by the off-course industry itself,
but by horseracing's governing bodies, the media, the betting
public and informed Parliamentarians, such as members of the All
Party Racing and Bloodstock Committee. Ironically, as the choice
and colour provided by racecourse bookmakers is an important incentive
to the public to attend race meetings, a weakened betting ring
would also be detrimental to the RCA's members.
2. THE DISPUTE
2.1 The ABB is aware of the evidence submitted
to the Committee by the Federation of Racecourse Bookmakers (FRB)
and agrees with all of the main points therein.
2.2 In particular, we are surprised that
the RCA has chosen to interpret the terms of the Gambling Act
2005 in a manner that would, if correct, enable racecourses to
end the ownership by racecourse bookmakers of what are commonly
known as "picks"; ie the seniority system applied in
racecourse betting rings to bookmakers who have purchased at auction
the right to choose which of the trading positions made available
by each racecourse for the purpose of betting they will occupy.
2.3 The ABB understands that this method
of allocation, which, until recently, had been administered by
the Horserace Betting Levy Board (HBLB) subsidiary, the National
Joint Pitch Council (NJPC), since 1998 does not include the purchase
of the land on which the pitches are located, but only the right
to occupy pitches on a numerically descending scale, the highest
priced "pick" being the potentially most valuable in
terms of likely trading performance.
2.4 It has been suggested that the ability
claimed by the RCA to nullify these `picks' in 2012, at which
time the admission charges levied on racecourse bookmakers will
change from the current five times admission price to a commercial
mechanism, arises from a flaw in the drafting of the 2005 Act.
2.5 Having been contributors to and close
followers of the progress of the Budd Review, the DCMS paper A
Safe Bet for Success, and the passage through Parliament of
the Act itself, the ABB does not subscribe to this view. On the
contrary, we believe that the RCA has placed on the provisions
of the Act an interpretation that is difficult to justify and
which, ultimately, would be likely to be overturned in law.
2.6 To this contention we would add that
we have seen no evidence to suggest that at on all occasions "picks"
were auctioned, some of them for large sums of money, the parties
involved in, or on the periphery of, such dealings (the bookmaker
sellers and purchasers, the NJPC, the HBLB, the RCA and its members)
thought anything other than that the `picks' were being purchased
in perpetuity.
2.7 However, even if we are wrong about
this and about the ability of the FRB to eventually establish
the legitimacy of their position in Court, we are certain that
it was not the intention of either the DCMS or Parliament that
racecourse bookmakers should be deprived of ownership of "picks"
that they and everyone else believed had been purchased without
limitation. In support of this view, we understand that more than
one member of the Parliamentary Committee which, under the chairmanship
of John Greenway MP, scrutinised the Gambling Bill, have confirmed
that this was not Parliament's intention.
2.7 We are aware that as the Act was progressing,
the NJPC attached a caveat emptor provision to would-be
purchasers of "picks"; but we understand—and this
has been confirmed recently by the Chief Executive of the NJPC—that
this warning was solely in relation to the widely recognised fact
that the Act provided for the five-times rule being rescinded
in 2012; and that additional competition was likely to emerge
after 1 September 2007 when racecourses secured the right to make
any area of their property available for betting without the approval
of the Levy Board, as had hitherto been the case.
2.8 Given this background, the ABB believes
that there can be no political, moral or, in all likelihood, legal
reason for the RCA to be allowed to manipulate the intentions
of Parliament and that it would be unfortunate if probably protracted
and certainly expensive legal action became necessary. Accordingly,
we believe that the Minister's offer to facilitate discussions
between the FBR and the RCA should be accepted.
3. THE WAY
FORWARD
3.1 When the decision was taken to use the
terms of the new Act to transfer the responsibility for the approval
of racecourse betting areas from the HBLB to Local Authorities,
it was in the expectation that the Government would proceed with
its decision to abolish the HBLB.
3.2 That decision has, for the moment at
least, being reversed and the re-empowerment of the HBLB, through
its subsidiary the NJPC, at least until such times as an equitable
solution to the current dispute can be found, seems to the ABB
to be an obvious way forward.
3.3 Dependant on the longer term future
of the HBLB, such a step might offer a permanent solution, but
at worst it would preserve the status quo until the process the
Minister has advocated has been thoroughly tested.
3.4 In the event of a decision to reinstate
the HBLB and the NJPC not having been taken before the Committee
reports, we believe that such a recommendation from the Committee
would carry significant weight.
3.5 An alternative, though less preferable
than the reintroduction of the HBLB, would be for the Committee
to recommend the appointment of a different body which would have
the same task of ensuring that the rights of racecourse bookmakers
are safeguarded. This body might comprise interested parties from
both sides of the divide, and also, because of the importance
of the SP system, a representative of the off-course betting industry.
3.6 In conclusion, the ABB believes that
the Select Committee can play an important role in avoiding a
potential injustice and, at the same time, help protect a method
of obtaining starting prices which offers betting office customers
outstanding value, all of which is plainly in the public interest.
October 2007
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