October 20, 2006 at 14:45 #3197SirHarryLewisParticipant
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THe below article was in the IRish times today.<br>Bookies jockey for position as EU targets betting
Commission aims to open up betting markets across Europe, writes Barry O’Halloran
The EU’s competition commissioner, Charlie McCreevy, enjoys taking money from bookmakers, but his office’s drive to open up betting markets in Europe looks likely to put a few extra euro in their satchels.
McCreevy has responsibility for the EU’s internal market. One of his key roles is to ensure that member states play by the rules governing the free movement of goods and services throughout the union. Theoretically, free movement of goods and services means that someone who’s selling a product in one EU state should be able to do so in all the others.
But one service that is not as widely available throughout the EU as it is in others is betting. Unlike the Republic and Britain, where there is a free market, there are many states where you cannot go to a bookie’s shop and bet on a horse race or a football match. Similarly, you don’t have the option of doing it online or over the phone.
This is because many member states control gambling in their jurisdiction and operate it as a monopoly or near monopoly. Some of them claim that because betting carries the risk of addiction and other social problems, it needs to be controlled. However, others argue this is merely camouflage for the fact that gambling is a valuable source of income for these governments.
For example, the Pari Mutuel, the French tote system which provides the country’s only avenue for betting on horse racing, generates an estimated ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬600 million a year. The Pari Mutuel, or PM as it’s known, operates at all French racecourses. There are no conventional bookmakers like those you find at tracks here and in Britain. If you want to have a bet, you have to go to the PM and take whatever dividend it pays out. In contrast, at Irish race meetings, you have a choice between the State-owned Tote (a pool system like the PM) and the bookmakers, who are private operators.
But if you want to bet off-course in France (that is on the high street), you have to go to a Pari Mutuel bar. France does not allow private enterprise-owned betting shops like the Paddy Power and Boylesports outlets that are a common sight here.
Not long ago, two executives of Bwin, a licensed online gambling operator based in Austria, were arrested in France for allegedly violating legislation that protected its betting monopoly.
McCreevy and the European Commission currently have France, Italy and Austria in their sights for this and other restrictive practices. Brussels is taking infringement proceedings against them because their restrictions on betting contradict European law. And the commission has teeth. UCC lecturer in European law Declan Walsh points out that it fined France ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬250 million for infringements of fisheries law. He says it has the power to keep fining countries if they fail to bring themselves into line.
The pressure is clearly beginning to work. Italy, which earlier this year earned the commission’s ire when it blocked its residents’ access to gaming websites, has just announced a formal deregulation of gambling. Its government is seeking bids for licences from private operators who want to open betting shops and offer online gaming there. This will open up the sports betting market in a country where there are only a limited number of high-street betting shops and no legal online channels.
British betting chain Ladbrokes was first out of the traps with its response. The company (also one of the Irish market’s big players) said it intended investing Ãƒâ€šÃ‚Â£100 million (ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬149 million) on building a presence in the Italian market. The company recently estimated the total value of the Italian sports and horse race betting markets at ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬3.7 billion a year, while casino games are worth ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬2.8 billion. Assuming that margins would be in line with those earned from Irish and British sports and horse race betting, that market would deliver gross profits of about ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬500 million a year.
It’s no accident then that Irish operator Paddy Power is also said to be looking at the possibility of moving in there, although it’s not clear what route it will take. One analyst suggests that the company will go cautiously. "You’ve no idea how big the market will turn out to be," he says. "And it is going to be very competitive." But NCB analyst Cillian McNally argues that Italy is an attractive market for the Irish bookmaker. "The market there is undersupplied, with only 770 betting shops serving a population the size of the UK, where there are over 8,000 betting shops," he says.
Paddy Power already operates a German-language website. Two years ago, it pinpointed this country as one where restrictions prevented it from operating. But a recent domestic court ruling declared these regulations to be unconstitutional. Germany is now planning to deregulate its market as well. There are similar moves afoot in Spain, while Belgium already has a free market that resembles those in Ireland and Britain. Others, like France and the Netherlands, are well behind the pace of change, but it seems inevitable that they will have to join the rest.
Across the Atlantic, they are moving in the other direction. The US Congress last week signed off on a law banning online gambling. The move follows a controversial few weeks that saw its authorities arresting various executives of online gaming operations for breaches of a 40-year-old federal law banning interstate gambling on telephone lines. In a reversal of the days when people were forced out of Europe and headed to the US, it now looks like the gambling operators who have found the US closed to them will now move in on Europe’s markets, which appear to be opening up at just the right time.
As soon as the doors slammed shut on the US, quoted online gamblers like Pokerparty.com and Sportingbet saw their share prices plummet. More than ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬2 billion was wiped off the value of these stocks in a bloodbath reminiscent of the internet crash at the decade’s beginning.
Europe now offers them the only viable hope of recovering ground. Sportingbet, one of the companies hit by the US shutdown, said it was now concentrating on rolling out its Paradise Poker product in multi-language and multi-currency sites geared at European players. However, its recent results do illustrate one downside of doing business on this side of the world. Acquiring customers (gambling websites require people to register) is easy, but the cost is going up. In the 12 months ended July 31st, Sportingbet’s European customers were up 80 per cent at more than 295,500. But the cost of recruiting them grew 15 per cent to ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬235 per person.
It’s also finding it harder to make money from them. While its European betting turnover hit ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬800 million, it was making a gross win of 7.5 cent for every ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬1 wagered. This is close to half the normal margins that bookmakers expect from betting.
Bookmakers’ margins have been falling for the last five years for a number of reasons. This is about to be partly shored up by changes to methods of settling starting prices in British horse racing, which attracts the bulk of betting on the sport in Europe.
Whatever happens, it now looks like the EU’s 400 million population is fair game for the bookies. They may have to compete for the business, but it still looks like they’ve won this one. But then, they always do.
<br>Ãƒâ€šÃ‚Â© The Irish Times
SHLOctober 20, 2006 at 14:59 #80706davidbradyMember
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Interesting article SHL. Originally I thought you meant EC our former forumite!:o Ãƒâ€šÃ‚Â Love the "Ãƒâ€šÃ‚Â© The Irish Times" at the end.October 20, 2006 at 15:28 #80707SirHarryLewisParticipant
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Quote: from davidbrady on 3:59 pm on Oct. 20, 2006[br]Interesting article SHL. Originally I thought you meant EC our former forumite!:o Love the "Ãƒâ€šÃ‚Â© The Irish Times" at the end.
I never thought of that :)
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