Foreign bookies eye French market

As fans flock to the world’s rich horse race the Prix de l’Arc de Triomphe, betting in France is set to be opened  to overseas bookmakers next

It remains the jewel in the crown of French horseracing. On the first Sunday of each October racing enthusiasts flock to Longchamp to enjoy the world’s richest turf race the Prix de l’Arc de Triomphe, which has total prize money of €4 million, including €2.3 million for the winner alone.   The irresistible lure of the Arc – 54,000 spectators attended last year including 20,000 Britons and it is televised in scores of countries – is testament to the rude health of French racing. Despite the economic crisis the French tote – the PMU (Pari Mutuel Urbain) - saw betting turnover grow 4.8 percent to €9.26billion in 2008. On top of that,  the racing industry’s prestigious annual yearling sales at Deauville in August saw average sale prices rise for the fifth consecutive year to €114,778.

Yet storm clouds are on the horizon for both the closely-regulated French betting industry and the racing industry itself, which heavily depends on the former for funding. For years the French Government has been battling with the European Commission to keep out foreign bookmakers and betting exchanges. In horserace betting itself it looks like being successful. Earlier this year former PMU president  Bertrand Belinguier confirmed that the current mutuel PMU  system of betting on horseracing  will remain the only one legally allowed. Other bookmakers can enter the market, but it will be difficult to make a profit as they will have to be licensed  and taxed in France, operate within the PMU system and give the same levy -  8 percent of turnover - to French racing. In contrast, bookies operating in other European countries pay  between 1 and 2 percent  towards the racing industry, even though a minimum level to keep an industry thriving is said to be 5 percent.

owever, from next year overseas bookies could be making inroads into other sports. The French Government is planning to allow limited competition  in the form of an online betting market for other sports and casinos. This will be taxed at 7.5 percent for sports betting and 2 percent for poker. The measure, which would open up the industry gradually and under close supervision and which is in line with European Union competition directives, will go before the French National Assembly on 7 and 8 October and then be considered by the Senate. It is expected to come into force in time for next summer’s football World Cup in South Africa.

Foreign bookies are watching closely, but remain cautious. Ladbrokes’ Ciaran O'Brien says: ‘The French betting market is of interest, we are monitoring developments and reviewing our options, but  feel the tax rate overall is a bit too high and would prefer a tax on profits as in England, rather than a tax on turnover.’
  Nonetheless the French racing industry, which directly and indirectly employs around 100,000 people, is alarmed at the possible consequences if foreign bookies establish a foothold here. Representatives claim that off-course bookmaker betting is  rarely, if ever, good news for racing itself. ‘Wherever bookmakers exist in strength  the horseracing industry suffers,’ says leading trainer Criquette Maarek-Head, president of  the French trainers  association since 1998. ‘In Belgium and Germany bookmakers have destroyed racing, while in Italy, England and Ireland prize money is going down and we don't want the same thing here.
‘That's why the French plans for opening up the market are necessary to prevent any damage to French racing’s future funding, as bookmakers are interested in making a profit for themselves not funding the sport itself.’ 
  Indeed, for years France has, indirectly, been partially supporting other nations’ horseracing industries. This country’s races have seen a growing number of runners from Belgium, Britain, Ireland, Italy and Germany, as owners and trainers  seek the more lucrative prize money on offer here. In Germany general handicap races are worth only three or four thousand euros to the winner. In France this type of race is worth at least four times as much. In 2002 there were 394 German runners in French flat races, but by last year the number had jumped to 1,583.
  Another potential threat to horse race funding, meanwhile, is the internet betting exchange. In these people bet with each other, taking a price on a horse winning, or laying a price in the hope a horse will lose. Though betting exchanges are not included in the French proposals, some sources suggest that the  leading worldwide betting exchange firm Betfair could yet be given a French betting licence. One reason is that Bernard Arnault, chief executive  of luxury goods company LVMH, has been discreetly  lobbying for Betfair - he holds 10 percent of the company’s shares. According to Criquette Head: ‘If Betfair ever gained a foothold into the French market it would kill racing, as it has already affected the bookmaking market in Britain and Ireland, especially the on-course prices’.
   It remains to be seen if the French legislation will succeed in maintaining the status quo for the country’s horserace funding. Overseas bookies may insist they are not interested in paying  8 percent of their race betting turnover to French racing, or 7.5 percent tax on on-line sports wagers. But some may still enter the market in the hope they can get the tax rate reduced later.  Two of Britain's leading bookmakers, William Hill and Ladbrokes may apply for a French licence; both are currently in the process of  moving their internet betting operations, from Britain to Gibraltar to save on taxes.


This article appears in the October edition of theFrenchPaper, France’s quality national newspaper in English.  For more information visit: www.thefrenchpaper.com

 

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