ARC racecourses feel the impact of FOBT regulations

Following the Government’s crackdown on Fixed Odds Betting Terminals (FOBTs), Arena Racing Company (ARC) has announced a reduction to its prize-money contribution by £3 million in 2019.

The changes, which are set to come into effect on 11 February 2019 will impact 3,406 races and means that ARC’s total prize-money commitment for 2019 will be down by 16 per cent from its 2018 contribution at £15.3 million.

The racetrack operator states that further reductions in prize money could not be ruled out, and that ARC “simply cannot continue” to maintain its current contributions to the prize-money fund. The company is currently planning for 1,000 betting shop closures next year as a result of changes to legislation regarding FOBTs and rising costs of media rights.

The £3 million would have been used to access additional prize-money from the government levy funds, however, ARC is hoping that cash will still be made available to them with the plan of using the cash to alleviate the impact the changes will have upon owners, trainers, jockeys and stable staff.

Following a tripartite funding review back in 2017 between the British Horse Racing Association (BHA), the Horsemen’s Group and the Racecourse Association (RCA), a new mechanism by which funding was allocated was developed and was subject to investments in particular races in order to ‘unlock’ enhanced prize money allocation. It included the Race Incentive Fund (RIF) and the Appearance Money Scheme (AMS) which extends prize money payments to placed horses.

However, following the decision to reduce FOBT stakes to £2 from £100, it is predicted that a number of British betting shops across the board are expected to close their doors to punters, which will significantly impact the media rights payments to racecourses that are estimated to be between £40-60 million.

ARC Chief Executive Martin Cruddace said: “The well-publicised impact of betting shop closures on racecourses’ media rights income has already started to take effect, and will only increase in the months and years to come. As a result of this, Arc simply cannot continue to support our current levels of executive contribution to prize-money and unlock all qualifying races, as was the case throughout 2018.”

Cruddace noted that he “completely accepted” the government’s decision to cut FOBT stakes, and emphasised the need for racing stakeholders to do all they can to ensure racing’s grassroots continued to receive financial support. However, he stated that the British racing industry is in a very different position to what it was when the 2017 funding review took place, and as a result, changes will have to be made.

“This increase of approximately £40 million per annum to the Levy, through this extension to cover online operators was, to a large degree, a result of the Authorised Betting Partner policy adopted by British racing in 2016. ARC played a central role in leading and supporting this policy, albeit at the cost of some very significant sums in sponsorship agreements.

“At the time of the 2017 funding review, it was agreed that the Race Incentive Fund and Appearance Money Scheme, paid for by these Levy increases, should be unlocked alongside further direct investment from racecourses.

“We fully understand the importance of prize-money across the industry and do not take such a decision lightly.”

ARC’s announcement has received support from Racecourse Association Chair Maggie Carver who stated that:  “These are challenging financial times for Britain’s racecourses as the media rights landscape, in particular, has fundamentally shifted in recent months, so we can understand Arc’s decision. The RCA and its members will continue to work with Horsemen and the BHA to try to mitigate the situation as the funding environment evolves.”

It is expected that other race tracks and racecourse groups are to consider making a similar decision to Arc in a bid to mitigate costs lost to FOBT cuts and betting shop closures.

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