Sunday, 28 April 2013

Racecourse Bookmaking

In a previous life, I was a racecourse bookie, and in some ways it was fun, others, a living hell.

Mainly due to taxation complications, of professional bookies, as opposed to professional gamblers, I moved away from the racecourse, but, 10 yrs on, Betfair has made life v hard for pro gamblers, and the racecourse is an option.

I have spent the last few weeks, looking at horse-racing in the UK.

There are about 60 horse race-courses in the UK, spread up and down the country. On any given day, there is probably an average of 3-4 meetings.

Each racecourse, have different numbers of fixtures. The all-weather tracks, like Southwell, Lingfield and Wolverhampton, have between 80-100, per year. Some have as few as 20, with an average of .. Say 25.

Raceourse bookmakers, now have to buy a 40 yr licence, to bet at each racecourse. These licences, are bought and sold, thru an auction process, for licenced bookmakers. Each licence, or pitch, as they are commonly known, is valued based on its seniority.

Seniority, is just that. Number 1 pitch, has first pick, where he wants to operate from, Number 60, has just that. So, at an average course, Number 1 pitch probably costs the bookie, £50k, Number 60, £500.

The difference in value, is just associated to what money, the bookie can hope to take, off the public.

Each bookie, will pay, to work on each day, 6 times the Tattersalls entry money .. so, if Joe Public pays, £21 to enter, the bookie will pay £126 to work.This payment, is the same, for Number 1, and Number 60.

They also, now pay a yearly marketing fee, of about 8 times, admission.

If we look at an average racecourse, where they race, 30 times a yr.

If you have number 1 pick, the cost of working on a day, is :

£50k for the licence, spread over 40 years, divided by 30 meetings .. so 50000/1200 = £400

The days licence - £121, plus marketing fee .. £8

You need .. 2 staff .. probably £100 each

The kit to operate as a bookie, costs .. £15k, so, lets take £50 a day for that.

Petrol etc .. another £50.

All-in, if you bet in a prime spot, the costs are £800. In a poor spot, £350.

Bookmaker income, is based on margin. In a good spot, you would hope to take £1000 a race, probably more, at 10%-15% margin. so 7 races, on average, you would hope to win £1100, less expenses of £800, u get £300 per day .. thou, you have a huge capital investment, in racecourse licenses, which will fluctuate in value, over the years.

A poor pitch, will take, maybe £400 per race .. at worse margin, so, its v v hard .. thou, u probably have less workmen, as its less busy.Poor pitches, only really have a value, on realy good days (summer usually), when a lot of people attend .. a racecourse might get 2000 people attending, a run-of-the-mill meetng, but, its summer days, might get 10000. On these days, all bookies will make money, off-setting, the v many poor days, where it rains, and few people attend.

Its a tough game, made harder by the effect of mobile betting, as people can now bet on their cell-phones, via apps. As a rule, people do like to bet in cash, but, in hospitality areas, the temptation not to move, to place a bet, is quite big.

Anyway, having seen quite a few raceourses over the last 3 weeks, its obviously an industry, going thru a lot of change, and is greatly affected by the strength of the local economy. South of the UK, is still fairly strong, as is the north, but the midlands, is really suffering .. (from industry moving away/closed).

IMHO, there are still too many racecourses in the UK, and the prime land, will no doubt, be lost to housing development. I would think, 40-50 racecourses would be sufficient - and more viable, for everyone.

The sheer cost, of becoming a bookie, makes fresh blood almost impossible. This is worrying, from the long term aspect, but, some bookmaking families will no doubt train off-spring. I would hate to be a new guy, starting out, with a bank, of .. say £30k. It would be v hard. With £200k to play with, you would have a chance, but .. banks, wont lend u anything, based on these licences, so, basically, getting the capital .. will prove beyond, most.

Working as a racecourse bookie, you see a lot of things, some funny, some not so.

In previous years, the off- course firms used to hedge a lot of their off- course liabilities, which may have accumulated at their betting shops, in the High Street. This hedging, would reduce the Starting Price, at which most off-course bets are settled, and everyone was happy. These days, the SP mechanism has become outdated, as its doesn't reflect betting exchanges, and less hedging takes place.

This is natural evolution, but, yet another source of income, for a bookie, that has dried up. Experienced bookmakers, with capital, will still win .. But, it's no fun. Working, when its pouring with rain, and your only cover, is an umbrella.

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