A ban on betting on horse racing in Israel has been blamed for an alarming slide in Tote betting in recent months.
Last year the Israeli government announced it was ending betting on horse racing just five years after a deal was secured there to allow Irish and British racing to be shown in betting shops.
That deal saw significant money bet into Irish racing's Tote pool and contributed to seven successive years of turnover growth in the wholly-owned subsidiary of racing's ruling body, Horse Racing Ireland.
A 7.2 per cent increase in 2017 saw Tote turnover reach €103.8 million. In 2016 it had risen by 22.1 per cent despite a continuing decline in on-course betting in Ireland.
However, the first half of 2018 saw Tote betting take a dramatic 32.8 per cent drop from €48.2 million to €32.4 million. Total turnover for the year in total could drop significantly from 2017 when final figures for 2018 are released shortly.
Tote turnover at Leopardstown’s recent four day Christmas festival fell by almost a million euro on the previous year to €1,606,297.
Horse Racing Ireland officials are currently examining the results of an internal consultancy report carried out by Deloitte to look at future strategic options for the Tote which works on the basis of customers betting into a common pool rather than against a bookmaker.
On Monday HRI's chief executive Brian Kavanagh said the largest element to the sharp decline in turnover is due to betting money from Israel not contributing to pools anymore.
A joint-venture company called GBI racing was set up to sell picture rights internationally for horse racing in both Ireland and Britain. In 2013 it beat off competition from French and South African racing to supply pictures to betting shops in Israel.
“These deals ultimately wend their way back in some shape or form into Tote pool size and a return to racecourses for pictures,” said Kavanagh.
“The biggest deal was with an Israeli betting organisation who opened betting shops throughout Israel. Rather than betting at fixed odds with local operators punters there bet into the host Tote pool.
High turnover
“It was low margin business but with very high turnover. It’s not an unusual arrangement and happens in a lot of jurisdictions. The attraction of Israel was that it was the only product on offer there. It produced a significant amount of turnover,” Kavanagh explained.
“The contract was due to terminate in August of this year. But in August of 2018 the Israeli government clamped down on betting activity in some sort of philosophical debate as to whether betting should or shouldn’t be legal or permitted. So that revenue stream, for both racecourses and the Tote, ceased,” he added.
The importance of such international pool betting appeared to be illustrated in particular in 2016 when the ‘Pick Six’ bet grew by 165 per cent. Several pools exceeded €500,000 that year culminating in a record pool of almost €2.2 million at a Curragh meeting in September of that year.
That left Tote Ireland making a profit of just over €630,000 in 2016 after costs and payments to racecourses.
With uncertainty about future sources of international pool betting, and off-course Irish pools dropping by 37.3 per cent to €25.6 million in the first half of 2018, HRI commissioned a Deloitte report to help steer the Tote’s future.
“This is an experience that Totes around the world are having. The Tote system thrives, and operates very successfully, where it has a monopoly operation. Where it is competing with low margin, fixed odds operations it’s a more challenging environment.
“It’s an important aspect of racing in Ireland and has done some good work in recent years. Its cost base has been substantially reduced. The challenge is on the turnover side.
“We have to go back to the board [of HRI] with a pathway to the future for the Tote. We are looking at all options. You must operate on a sustainable basis and I believe it is sustainable,” Kavanagh said.
Inspection posts
The HRI boss also confirmed talks have begun with the Department of Agriculture about the need to develop a new border veterinary inspection post for animals travelling by sea in the event of a no-deal Brexit.
Should there be no deal in place at the end of March, and if there is no replacement or extension to the tripartite agreement that allows freedom of movement for horses between Ireland, France and the UK, thoroughbreds entering the Republic from the UK will be required under EU regulations to be inspected by vets.
The only two such border inspections posts currently in operation here at located at Dublin and Shannon airports.
“It’s not something anyone wants to see implemented but we have to plan for the possibility of a no-deal exit.
“We’re in talks with the Department of Agriculture about the need for, and potential options for, a land-based inspection post as opposed to air-based, probably somewhere in Dublin ports and docks.
“We need to get at least one somewhere in the country. If Britain is to be listed as a third country, which we hope will not happen in the event of a deal or a no deal, the EU requires all movement to go through a border inspection post.
“And the highest volume of horses travelling are sea-based,” Kavanagh added.
