Tracks refuse to be drawn on takeout from new pool operation
The team behind plans by a collective of British racecourses to set up a pool betting operation from next year are "confident" customers will prefer their service to the Tote when the market is opened up from July 2018.
But they have refused to be drawn on their commercial approach in comparison to the Tote, which have opted to raise deductions from the end of this month.
The Tote are set to raise deductions for their win and place pools to 19.25 per cent and 20 per cent respectively from June 29, blaming changes to the levy system introduced by the government in April.
Under those reforms the Tote are now liable to pay levy on their on-course operations which owners Betfred say already make a loss of £2 million on per year.
The addition of levy payments would push that loss to £3.5m per annum, Betfred claimed, so they have raised deductions to cover those additional losses. Other pools such as the Placepot and Scoop6 have been left unchanged.
Betfred's exclusive seven-year licence to run pool betting in Britain expires next year and more than 50 of Britain's courses have come together to set up their own rival operation to the Tote.
Asked what their plans for deductions would be, Neil Goulden, the chairman of the racecourse project steering board, said: "Our pool betting service will launch in 2018 and until then I'm not going to speculate on what commercial approach it will take.
"But what I will say is we intend to offer an excellent pool betting service that we are confident customers will prefer, while returning to British racing all monies it raises."
A total of 54 tracks have signed commitments to the racecourse project, including those under the Jockey Club, Arena Racing Company and Scottish Racing banners as well as Goodwood, Newbury and York.
Of those not involved Chester and Bangor run their own in-house offerings, Chelmsford City is owned by Betfred, while Ascot is setting up its own operation in conjunction with the Tote.
However, it is understood that Ascot will have the final say on what its deduction rate will be, although no decision has been made. Ascot's chief operating officer Alastair Warwick said: "AscotBet launches in July 2018. We will decide takeout rates in due course."
A further two tracks have yet to commit to the racecourse project, one of which is understood to be Towcester, which is still considering its options.
Betfred have now raised take-out rates twice in five years. In October 2012 deductions rose to 16.5 per cent from 13.5 per cent, the first change since the then Tote chairman Peter Jones reduced the rate from 16 per cent in March 2003.
Jones said he expected the latest change to hit turnover but conceded he understood the move from a business point of view.
"An increase in deductions will obviously hurt the racegoer and therefore turnover and is not to be welcomed from that point of view," Jones said.
"However it is quite understandable that Betfred have got to recover unexpected costs."
What do the changes announced by the Tote mean?
The amount deducted by Totepool from the win pool is set to increase to 19.25 per cent from 16.5 per cent, while the place pool deduction is to increase by two percentage points to 20 per cent, meaning punters will receive poorer dividends than previously.
What is happening next year?
The Tote's owner Betfred lose their exclusive pool betting licence from July 2018 which means that rivals can set up their own pool betting offerings. A racecourse-owned operation is in the process of being put together.
What will racegoers notice that is different?
Totepool will be replaced at more than 50 tracks with the racecourse-owned operation, which has yet to be named. Ascot is due to launch its own operation in conjunction with the Tote called AscotBet, while Chester and Bangor will continue with their own in-house fixed odds offering, although they may also offer pool betting.
What will happen to deductions then?
The racecourse project will have the opportunity to set a lower rate in a bid to raise liquidity and offer better value to customers. However, they have yet to reveal their plans. Ascot has said it will decide the deduction rate for its operation despite being in partnership with Totepool.
What about other tote bets?
Betfred have said they are not going to change the deductions on 'exotic' bets like the Jackpot and Placepot, to which they hold the brand rights. While they may not have much presence on course from next year they have contracts in place with the high street betting shop chains.