Dog bites man

I see there's a headline on page 14 of the Racing Post today which reads, "Hills in call for government to tackle Betfair over levy".

In it, Ralph Topping (for it is he) states that William Hill pays more than three times as much levy as Betfair (that'll be because you make three times as much money on racing, Ralph), and that Betfair receives 'extremely favourable tax treatment'.

I would write more, but I'm afraid I'm falling asleep (as I am sure are you).

Just before I nod off, I've got one thought, though. Why don't the Racing Post just leave page 14 untouched for the next year? It will save them having to re-format each time, and I'm not sure anyone will notice.

Can anyone tell me any other story that hasn't changed in eight years that is still reported by the newspapers?

Punchestown

Over the last few months, when I have talked to people about my on-going bemusement about the arguments that continue to rage in the racing industry about what I consider to be non-existent issues based on lack of understanding about the mechanics of our business, the reply I have most-commonly received is that people don't think that racing is, as I keep saying, cutting off its nose to spite its face.

There is, people tell me, little evidence that, as it pursues its quest to get more money out of Betfair, the racing industry worldwide is merely giving up money on a promise to nothing. Two in the bush, in other words, is worth more than a bird in the hand. And my continued references to this ten-year battle are, I am told, a waste of time, since racing might as well fight us for more cash even if it is unlikely to get it, particularly as it isn't losing out on anything in the interim.

And then this week, there's Punchestown.

Need more be said?

Well, perhaps one thing.

In case anyone should think this is an isolated incident, I could also point to an identical situation Down Under earlier this year, when our proposed (and agreed) sponsorship of the Magic Millions sales was killed off because we were the backer, and in the end went ahead without a sponsor.

Or the offer to a major British racecourse to become title sponsor of a three-day meeting at a cost north of £750,000, which was agreed by its commercial manager but was rejected by its Board with a "thanks, but no thanks. We think you're bad for racing."

Or, indeed, the offer we made to the BHA three years ago of £250,000 a year to put on races which had been abandoned because of bad weather. Our only condition at the time was that the re-arranged fixture should not be set for a day when there were already five meetings.

The response on that occasion? Again, "thanks, but no thanks. We think you don't pay the right levy, and until you do, we won't accept anything from you."

Fair enough. I guess we can spend it somewhere else.

Cheltenham

As bookmakers reflect on a successful Cheltenham, I have been left wondering about the logic of racing's accounting year being so weighted towards a short-term view of the world.

Consider these two bookmaker quotes.

First, from Ladbrokes:

[The Gold Cup] was a result beyond our wildest dreams. The cheers for Imperial Commander came from the bookies and we roared him up the Cheltenham hill. The gamble on Kauto Star was colossal. Had he won we’d have handed back all the cash we made earlier in the week. Getting the big two beaten was nothing short of superb."

And this from William Hill: "This will go down in history as the worst set of results Cheltenham punters have experienced."

One can imagine that a similar sentiment was felt by the hierarchy in racing. In simple terms, the estimated £60million that the bookmaking industry won will result in a £12million levy differential compared with had the industry lost a comparable amount.

Of course, it works both ways. In 2003, when 10 out of 20 favourites ran in, the opposite was true: the bookmakers took a bath, and the levy fell by a commensurate amount - the loss to the betting industry being doubled up in levy terms, because it would have been offset against previous, levy-generating, gains. With two weeks left til the end of the accounting period, the figures never recovered.

This year, the fact that 10% of the £60million will come to racing will doubtless be seen as a good thing. But I'm a bit sceptical, myself, about racing rejoicing that its biggest set of customers should have suffered four days of pain. If the same thing happened consistently over a five-year period, sensible punters would start to spurn Cheltenham as 'impossible', 'a lottery', a 'punters' graveyard' - and would bet on something that gave them more of a chance. The long-term impact on the sport could be disastrous in that scenario.

The fact is that the fastest way to turn a customer away from the game - any game - is to leave him feeling that he never had a fair go. Casinos know this very well, and are all about recycling funds and making sure the customers get a good run - the very reason that slot machines pay out more than they are required to do by statute. It's about the lifetime value of the customer, and not about how quickly you can bleed someone dry.

I remember watching a race not so long ago where the short-priced favourite was beaten, and two of racing's most senior figures, who were standing next to me, high-fived each other at the benefit that would bring the levy. But where the traditional bookmaking industry can delight in its adversarial relationship with its customers (because it knows that those customers will keep betting with them, and will simply find themselves a new product to turn their luck), Racing has no such luxury: if punters decide they lose money too quickly when they bet on the horses, they'll punt on something where they think there is more representative form on which to base an opinion. Like football, perhaps.

So, while I wouldn't begrudge Racing a wry smile that this is a good year and not a lean one, I do wonder whether it would not make more sense for the sport to move the end of its accounting year so that the biggest week of punting doesn't come right at the end of it. A bad week for punters at Cheltenham might be good for the sport as a one-off; but in terms of lifetime value, it doesn't serve for Racing to rejoice in its customers' misfortune, and doing so over a period could have serious implications which are not immediately apparent when this year's levy figures are announced.

Political statement?

The second race on the card at Fontwell's forthcoming Cheltenham preview meeting, on 10th March, raises an interesting question: what constitutes a fact and what constitutes politics?

Betfair's proposed name for the race was the "Betfair pays £7m horseracing levy Maiden Hurdle", which is, I grant you, something of a mouthful.

But it's also a statement of fact: last year, Betfair paid £6.15million in compulsory levy on British horseracing from UK customers (that is, 10% of our gross profit from those customers betting on British horseracing, in line with other UK bookmakers), and an additional £1.25million in voluntary levy from our overseas customers betting on British horseracing (in contrast to most other UK bookmakers).

So, it's not an opinion, as "Betfair pays the right levy Maiden Hurdle" would be. It's a straight statement about the fact that we pay the horseracing levy (and how much it comes to), which you might think was justifiable to promote given that an extraordinary number of people seem to be unaware of it. I often get told that the trouble with Betfair is that we don't pay tax or levy, as if we were not based in Hammersmith and licensed in the UK.

But Fontwell have called us to say that the BHA have asked for the race title to be changed, on the grounds that it is a "political statement".

Surely there can't be anything wrong with letting people know what levy we pay, can there? Why would the BHA not want people to know?