Further supplementary memorandum submitted
by the Racecourse Association
DRAFT FRAMEWORK FOR COMMERCIAL ARRANGEMENTS
BETWEEN RACECOURSES AND ON-COURSE BOOKMAKERS
1. PROCESS
1.1 This note deals with existing betting
areas, as at 1 September 2007 only. New betting areas created
after 31 August 2007 will be subject to commercial arrangements
determined by the racecourses. In all cases it would be a condition
of those arrangements that the on-course bookmakers complied with
the racecourses terms and conditions of entry.
1.2 The RCA envisages a dual track process.
1.3 The RCA is keen to discuss with the
Federation of Racecourse Bookmakers (FRB) potential frameworks
and or models for future commercial arrangements, from 1 September
2012 onwards, between racecourses and on-course bookmakers. These
discussions can take place without pre-conditions on an open or
without prejudice basis.
1.4 The RCA recommends to members that they
embark, in parallel with the national discussions referred to
in paragraph 1.3, on discussions locally with bookmakers currently
operating on-course regarding future arrangements. We have set
out in section 2 some suggestions as to how such arrangements
might be organised although this is not to suggest that there
might not be alternative approaches. Particularly we would welcome
suggestions from the FRB or on-course bookmakers generally.
1.5 The local discussions should commence
as soon as possible irrespective of whether the FRB is prepared
to enter discussions with the RCA, as suggested in paragraph 1.3.
2. TRANSITIONAL
PROVISIONS
2.1 The RCA has already recommended to members
that, subject to the confirmation from the on-course bookmakers
generally, they permit the existing List Positions and allocation
of pitch rules to continue until 31 August 2012.
2.2 In accordance with regulations laid
by Government, the price charged for operating in the existing
betting rings will be limited to a maximum of 5 times the admission
charge for the relevant enclosure (together with a recovery of
any administrative costs incurred by the racecourse).
3. PRICING
3.1 Racecourses will need to determine new
pricing structures for existing betting areas from 1 September
2012 onwards. We recommend that they consult with on-course bookmakers
before deciding on these charges.
3.2 The RCA favours a structure which charges
bookmakers according to the business generated on course. One
of the principal weaknesses of the current system is that it charges
the same amount to each bookmaker within that enclosure even though
it is clear that the bookmakers position within that ring can
have a significant effect on the success of the trading by bookmakers.
3.3 We would therefore propose that a proportion
of the charge should be based on the bookmakers' betting turnover.
This is the same as the model generally used in Ireland. There
are of course alternative models that could be considered.
3.4 We recognise that bookmakers have not
hitherto provided racecourses with such information. However we
believe that transparency of this sort is essential to constructive
long-term relationships between racecourses and on-course bookmakers.
Racecourses would undoubtedly commit to keeping such information
confidential. Bookmakers will, in any event, be obliged to disclose
turnover information to the Gambling Commission.
3.5 There are fixed price models that could
also work. The weaknesses of the current system could be overcome
by variable charges within the enclosure and variable charges
for different racedays. However, in order to set a reasonable
charge the racecourse would still need the information set out
in paragraph 3.3.
4. FIRST RIGHT
OF REFUSAL
4.1 As we have consistently stated, we do
not see any prospect of racecourses acknowledging that on-course
bookmakers have any rights of tenure, whether in perpetuity or
otherwise. The NJPC and HBLB have both confirmed formally that
no such rights ever existed. Nevertheless, this should not prevent
reasonable commercial arrangements being reached with bookmakers
to enable them to trade from the existing positions.
4.2 We are recommending to members that
they offer, without prejudice to racecourses legal rights, a first
right of refusal to existing on-course bookmakers in the order
of their existing list positions, for a licence for a further
period at a commercial rate determined by the racecourse after
consultation with the bookmakers (see paragraph 1.4).
4.3 We would suggest an initial period of
three years to 31 August 2015. Racecourses and bookmakers could
then discuss at a suitable future date the arrangements for future
periods. We see no reason why a further licence period for the
same list position would not be possible, provided the on-course
bookmakers had fully complied with the racecourses terms and conditions
of entry. It is likely that the first right of refusal will not
extend beyond the first round of licensed negotiations.
5. WIDER OFFER
5.1 Where a bookmaker declines to take up
the commercial licence offered by the racecourse (see paragraph
4.2) then we would expect that the racecourse would wish to offer
the position to on-course bookmakers generally. As a consequence
bookmakers would not automatically "move up the list".
6. SUB-LICENCES
6.1 Racecourses may well wish to include
within the licence minimum attendance requirements. This could
include payment of the fixed element of the licence fee whether
or not the bookmaker turned up.
6.2 It would be consistent with the approach
suggested in paragraph 6.1 to permit the bookmaker to sub-licence
his position provided the terms of the sub-licence were the same
as the head licence, that the licensee was responsible for the
performance and behaviour of the sub-licensee and that the racecourse
had the right of consent to such sub-licensee (such consent not
to be unreasonably withheld).
November 2007
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