Thursday 1 February 2018

“Money, Money, Money, it’s a Rich Man’s World” (And, Alas, a Poor Man’s): Moral Dilemmas of FOBTs and Bloodstock Sales

In last month’s blog I had a look at the prices vs. returns of NH horses at the Tattersalls’ Cheltenham Sale in May 2016. The total spend including purchasing the horses and then training them came out at £1,922,300. Yet they only went on to win five races in total, and the measly prize-money of £63,169, at an average per horse of £6,317. That gave a total return on investment (or as I like to refer to it, Return on Ownership) of a staggeringly dismal 3.2%.

This struck a chord with a number of blog readers who sent me similar examples, including Tattersalls’ Book 1, October 2015. I’m sure you can guess the record of the top 10 there as well. Many of you, I know, will shrug your shoulders and say that if rich people want to waste such prodigious amounts of money, that’s up to them. But before I list out those lots, why not just reflect on the moral dilemma that is now facing politicians and in turn British Racing over Fixed Odds Betting Terminals (FOBTs).

The Department for Culture, Media & Sport launched a review 15 months ago in response to widespread concerns about the addictive nature of FOBTs. This culminated in a decision in October 2017 to cut the maximum stake from £100 to somewhere between £2 and £50. The Department then launched a 12-week consultation period which came to an end last month. The review also encompassed wider socially responsible measures to protect the vulnerable. This is definitely a case of a poor person’s world.

The Sunday Times led a scoop front page announcing that the Government was going to cut the FOBT stakes to a maximum of £2. Many of you, I know, will strongly agree with this. However it didn’t take long for the bookmaking industry and British Racing to examine the impact of a £2 maximum stake. Whether the figures are accurate or not I don’t know, but Martin Cruddace, boss of Arena Racing Company, caught the headlines when he forecast that an FOBT limit reduction would lead to 4,000 to 5,000 betting shop closures. Some took a more cautious view that maybe only 3,000 shops would close, but apparently the average shop pays £30,000 for media rights so the loss of income could easily be in excess of £90 million per annum with a view that, in turn, at least £55 million could be axed from prize-money.

Clearly, this is a very sobering story and it cannot be easy to deal with. Racing needs every pound that it can get its hands on, but surely not through the “crack cocaine” of FOBTs. A moral dilemma indeed.

In this context, the lunacy of bloodstock prices at sales such as Tattersalls almost appear like comic relief. Here are the top 10 from October 2015.

Lot 304, Dubawi – Loveisallyouneed. £2,205,000. Hasn’t raced, prize-money zero.

Lot 30, Galileo – A Z Warrior. £1,365,000. Named Key To My Heart. Won twice, prize-money £47,652.

Lot 43, Galileo – Alluring Park. £1,312,500. Named Douglas Macarthur. Won twice, prize-money £122,189.

Lot 255, Galileo – Jacqueline Quest. £1,260,000. Named World War. Won once, prize-money £26,068.

Lot 254, Oasis Dream – Izzy Top. £1,155,000. Named Dreamfield. Won twice, prize-money £12,291.

Lot 293, Galileo – Like A Dame. £1,050,000. Named Longing. Won once, prize-money £9,285.

Lot 71, Dubawi – Badee’a. £945,000. Hasn’t raced, prize-money zero.

Lot 204, Dark Angel – Folga. £866,250. Named Dirayah. Hasn’t won, prize-money £385.

Lot 439, Street Cry – Shastye. £840,000. Named Secret Soul. Hasn’t won, prize-money £,684.

Lot 107, Oasis Dream – Caphene. £787,500. Named Watchman. Hasn’t raced, prize-money zero.

Dear, oh dear. If we add a million or so for training fees and commissions, then the ROI / Return on Ownership is 1.72% on a total prize-money of £219,554. Indeed it must be even worse than the return on FOBTs, which says something.

Just to finish on a sobering note though the gross gambling yield, i.e. the amount kept by the betting shop operators after winnings are paid out, in the year to March 2017 was £1.39 billion from traditional betting ….. and a staggering £1.86 billion from FOBTs. It will be very surprising indeed if the Government doesn’t crack down hard on these machines and in turn, bookmakers ….. and I’m afraid, on racing’s income.

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