IRISH GREYHOUND BOARD. BORD NA gcon SUBMISSION ON REPORT REGULATING GAMING IN IRELAND

Transcription

1 IRISH GREYHOUND BOARD BORD NA gcon SUBMISSION ON REPORT REGULATING GAMING IN IRELAND

2 TABLE OF CONTENTS Page 1 Response to Recommendations in Report Regulating Gaming in Ireland Replies to relevant questions in the Report Regulating Gaming in Ireland 5-6 Attachments Appendix A Irish Greyhound Board Presentation Irish Gaming Review Regulatory Update 14 Oct 2008 Appendix B Irish Greyhound Board Presentation to Department of Justice, Equality & Law Reform for Committee on the Regulation of Casinos 18 th October

3 1 Bord na gcon response to the Report Regulating Gaming in Ireland Bord na gcon fully supports Recommendations 1 to 7 as set out in the Report. However serious consideration should be given to a suggestion that the regulatory authority that is put in place should regulate all types of betting and gaming and casinos. This would ensure a body with more holistic overview and a body with proper representation would make the best choices for the overall benefit of the country. Also in keeping with current concerns it would mean we would not create another body which increases costs to the country as well as creating too much confusion. Furthermore we would want to ensure that in any issues as they relate to Bord na gcon s existing premises that the local authority would have no input into the process that allows Bord na gcon to have a gaming license. This is due to the fact that our facilities are well established and the granting of a license to us for overall national interests should not be blocked by a local authority. Bord na gcon cannot support Recommendation 8 as this, as currently suggested, does not allow us to benefit directly using our existing stadia from the introduction and proliferation of Casino and gaming products in Ireland which we have shown (i.e. past report) will severely impact our business model. If more gaming and casinos are more widespread in Ireland then we need to use our facilities in order to try to address the significant commercial loss as a result of their introduction. In short gaming and betting should not be treated differently. In practical terms if one reviews all the major websites of the various bookmakers that exist in Ireland one can easily note that betting and gaming opportunities exist side by side. It also reinforces the point of having one overall body regulating both codes. Bord na gcon cannot support Recommendation 20 as this does not allow us to use our existing Stadia in order to benefit from a Casino or Gaming License. In the US alcohol and gaming is allowed. Bord na gcon fully supports Recommendations 9 to 19 as set out in the report. However, we would like Recommendation 15 to be much stronger in its language used to clearly indicate that Bord na gcon should be granted licences as opposed to be allowed to apply as this language implies we are treated like any other applicant. Furthermore once granted the licence we should not be subject to any local planning issue as this is akin to potentially not getting a licence in the first place. Furthermore we applaud Recommendation 16 as this indicates a clear negative effect on our industry and the people employed due to the introduction of a regulated casino environment. A criteria in determining the levy as described in Recommendation 24 should be the significant negative effect on our overall income lines of the greyhound industry. ( i.e. funding and operational performance). Overall we support this recommendation and Recommendation 23. Bord na gcon supports Recommendations 21 and 22 set out in the report. Bord na gcon would support Recommendation 26 once its premises were also allowed to have gaming machines in order to ensure a level playing field for Bord na gcon. We welcome Recommendation 29 as the internet is fast becoming the growing medium for all types of wagering and gaming activity as this needs to be regulated and an appropriate subsidy derived from its use in order to benefit the funding of the Greyhound Industry. 2

4 Notwithstanding the earlier recommendations, our fundamental view is that we cannot support Recommendation 32 due to the huge negative effect on our industry which will have a dramatic effect on industry employment (earlier IGB submission). However if policy makers in considering the overall negative effect on the greyhound industry as witnessed in other countries decide to implement Recommendation 32 then Bord na gcon needs to get the following: - The levy imposed will fully fund the Horse and Greyhound Fund to 2009 levels and also compensate us for the decline of our operations due to the introduction of this new business model. Or - Any gaming or casino licenses granted are solely for Greyhound Stadia and would not be subjected to any local planning laws. The main arguments we have can be summarised into two main points. 1. Gambling Industry Consolidation/Regulation Strategy The major players within the Irish Gambling Industry have consolidated all gambling products into their respective portfolios. In all high street bookmaker chains you now have the ability to bet on any sports event as well as numerous lottery type games as well as virtual racing (we suggest this falls between a gaming machine and remote gaming but it is certainly gaming and not betting on an actual sporting event). This consolidation can best be seen on the remote gambling offerings of the major gambling providers in Ireland. All these sites now offer all categories of gaming and betting in one environment Live Betting, Poker, Casino games including Slots, Roulette, Blackjack, Lotteries, Financial Trading/Spread Betting, Bingo and many other offerings which will continue to grow. All major bookmaker firms offer this consolidation of gambling products across all remote media including PC internet, mobile phone internet. Having a separation between gaming and betting where the Industry is currently completely incorporated will result in multiple regulatory bodies and an impossible regulation task for all involved. Recommendation 8 will have the impact of constricting our commercial opportunity to a point where we will not be able to compete with all other players in the gambling Industry. We have clearly shown in our presentation (Oct 2008 Appendix A) through international experience of Casino introductions the severe impact our current business model will face. We are excited at the opportunity to compete on a level playing field but currently see ourselves both isolated and sacrificed by this recommendation. We recommend a single Regulatory Body governing all aspects of gambling in Ireland with no difference between gaming or betting. 3

5 2. Remote Gambling Migration/Funding Strategy The report defines 6 basic categories of gambling in Ireland at present. We respectfully question the Remote Gaming category and it s inclusion into the gaming area while ignoring the betting area. Remote gambling is a technological method of gambling. The leading industry players all can be accessed remotely currently using your PC/MAC and mobile phones. The migration to remote gambling, as in all other areas of e-commerce (think travel agents), is unstoppable and has and will continue to become a major growth. Remote gambling allows access to all gambling products, as discussed above. Remote Gambling (including all gambling and not just Remote Gaming) needs to be the category and this needs to be regulated immediately. The lack of regulation of remote gambling presents a real risk to the existence of Bord na gcon and the 11,000 people who derive employment from the industry. Currently no betting levy exists on remote gaming and this has meant that no funding from this medium has been derived for the benefit of the Horse and Greyhound Fund. The two main points we have to address is our ability to: (1) continue to benefit from funding from the Industry as it continues to avail of advances in technology, and (2) have the opportunity to compete on a level playing field to expand our business and provide a solid Industry for the future. 4

6 2. Replies to relevant questions on Regulating Gaming in Ireland 1. It has been a feature of our gambling architecture that gaming and betting (as on a horse or the outcome of some other event) cannot occur on the same premises. This is a distinction that the report Regulating Gaming in Ireland strongly supports. This view is not practical and is unfair and certainly not in keeping with the business model in the United States. Firstly by imposing this view it clearly implies that Bord na gcon cannot use its existing premises to develop a casino or gaming business model and this is unfair given the reports that clearly indicate the significant negative effect on our core business. Furthermore all the major gaming or casino venues in the United States have both sports betting rooms and casino and gaming rooms under the one roof. Hence I cannot understand why we would not follow best practices in this regard. 2. Another fundamental feature of our gambling architecture has been the prohibition on mixing gambling and alcohol consumption on the premises. Bord na gcon can implement this recommendation if required. However, again I would question how it accords with best practices approaches in the United States. Remember it would be better to ensure training and appropriate processes and procedures in order to reduce the concern about mixing alcohol and gambling. In all our facilities around the country this currently happens and we have no reports of adverse issues arising. 3. Gaming (e.g. in licensed arcades) is only permitted in areas where Local Authorities have passed a resolution permitting gaming. This would be suitable or supported by Bord na gcon as the following situation whereby we could be granted a licence by the awarding authority but stopped from implementing it by a local authority. Effectively given our premises and locations are well established it needs to be clearly stated that awards of licences to Bord na gcon would be automatic and not subject to review or approval by any local authority. The IGB Greyhound Stadia have existed happily in their respective communities for a considerable amount of time and it is accepted that betting happens in these locations. 5

7 4. Appropriate age at which different forms of gambling are allowed, e.g. you must be 18 or over to purchase a National Lottery ticket, or to place a bet in a licensed bookmaker's office, you can engage in gaming at an amusement hall or funfair at 16 years, or on-course on the tote at any age. Bord na gcon would work with the relevant authority to ensure appropriate and practical measures are put in place to protect minors. 5. The impact of the internet. The impact of the Internet is extremely important in this discussion. High Street Bookmakers are regulated and the tax on this revenue forms part of the Horse and Greyhound Fund. The advancement of internet betting has resulted in a permanent migration of customers to betting on the Internet instead of visiting the High Street Bookmaker. This has resulted in money within a regulated environment now being lost to a non-regulated environment and this loss of revenue will continue to grow. This situation cannot continue. In short all betting and gaming mediums in Ireland need to be regulated and a suitable levy imposed to ensure that the overall funding (Horse and Greyhound Fund and any revenue displacement losses) is made available to these substantial industries. 6

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9 The Irish Greyhound Board Presentation To Irish Gaming Review A Regulatory Update 14 October 2008 by Adrian Neilan CEO

10 The Industry On-course Wagering of circa 150M Total Industry Revenues > 500M per year 90M invested in Facilities over last 10 years 17 Track Facilities Nationwide Total Industry employment circa 11,000 jobs Attendances of circa 1.3M 2

11 Business Impact to Greyhound Racing Will Casinos impact the existing business model of Greyhound Racing in Ireland? What are the Risks and Opportunities that it presents? Are the Risks and Opportunities quantifiable / Real and can they be proven by statistical econometric models and historical empirical data? 3

12 Risks Greyhound Industry will be disproportionately effected by the introduction of Casinos Unique Night Time Gaming Product Regular Meeting each track open 3 nights per week Highly dependant on Admission Revenues Highly dependant on its Tote Operation Profits for distribution of prize money to sustain industry Dependant on its Shared Margin Arrangements on Food & Beverage Operations The Casino Model is a Free of Charge Admission model Subsidised Food and Beverage High Dividend Yield to Patrons 4

13 Risks (cont) Casinos are likely to fundamentally effect the existing business model 2 Key Sources of Statistical / Economic models examining the Displacement effects of Casinos on On-Course Wagering Christiansens Connecuit Study Thalheimers New Jersey Study Empirical Data Connecuit Australian data Lincoln Park, Rhode Island 5

14 Christiansen Projections Christiansen / Cummings Associates reported on gaming in Connecticuit Christiansen developed projections for the combined effects of two proposed Casinos on peripheral locations in the state The projection indicated negative effects of On-Course Turnover of between 30% and 47% 6

15 Christiansen Projections Attendance Per Capita Wager Total Handle Plainfield Greyhound -30.0% -25.0% -47.0% Bridgeport Greyhound -25.0% -20.0% -40.0% Windsor Locks Teletheater -22.0% -18.0% -36.0% New Haven Teletrack -24.0% -19.0% -38.4% OTB Branches (Average NA NA -30.0% 7

16 Christiansen Projections The actual displacement of wagering Revenues in the state was 36% in the first year of Casino operations very much supporting the Christiansen Statistical Model 8

17 Thalheimer New Jersey Study 1992 Study dealt with the effects of Casinos in Atlantic City, NJ on Pari-mutual Wagering Findings An equivalent Negative Impact on both harness and horseracing similiar Impact directly correlated to the number of Casinos licensed Risks (cont) Year Impact of T bred & No of Harness Casinos Handles % -9.8% -18.7% -26.7% -29.1% -31.5% % 9

18 Lincoln Park, Greyhound Track, RI Prior to 2 Casinos introduced & Simulcasting Lincoln Park wagered $165M On-Track Post Casino $40m Live On-Track plus $90m Simulcasting ($130m total) Assuming CPI of 4% this represents $75m in real terms or a 55% reduction on on course tournover 10

19 Conclusions So what does all this really mean for the IGB s existing business Model? Based on Australias average gaming per person AUS $1,000 (Blanks 2002) approximately 75% wagered on Casinos including EGM s This equates to a potential Casino Gaming Market in Ireland of 2.25B Total On-Course betting on Greyhound Racing of circa 150m Anticipated displacement effect of a 2.25B Gaming Market would be 45m with an annual 2.5m adverse effect on cash flows 11

20 Conclusions Based on Christiansen projections Attendances would be negatively impacted by 60% of the wagering displacement ie 21% This has the potential to negatively effect Industry revenues through admission / bar and for revenues by a further 4m gross revenue on annual basis The statistical models and empirical evidence prove the significant threat of casinos to the IGB existing model In effect our existing business model will be fundamentally effected as will the livelihoods of greyhound owners 12

21 Conclusions If Casinos / Gaming machines are to be introduced into Ireland then the IGB must be in a position to compete and supplement its On-Course greyhound revenues from the operation of EGM s and Casino Operations The model has been used for the benefit of the greyhound racing Industry in the US and Australia Lincoln Park, RI returns 30% of net Racino Revenue to racing which has not alone offset the reduction in the core parimutual wagering but provided significant additional revenues for prizemoney distributions The Canadian model restricted the licensing of Casinos to existing Racetrack locations. This had a positive effect on On- Course parimutual wagering of 4 5 % but more importantly provided for 20% of net revenues to be reallocated for the benefit of racing. This amounted to $300m allocation for

22 Conclusions This casino model not only presents a strong proposition for increased Revenue to central exchequer but can be utilised as a basis to support the current deficit in the Horse and Greyhound Racing fund The issuance of Casino / EGM licences to Greyhound Stadia will provide the basis for offsetting the negative displacement effects that the broad licensing of casinos will have on the existing business model 14

23 Conclusions This is only so if requisite planning permission are obtained. Many of IGB facilities are in residential areas and this may present significant planning challenges It is essential that, similar to many other jurisdictions, that a portion of taxes from the operation of Casinos / EGM s are redistributed to ensure strong prize money structure for the greyhound industry which will support the livelihoods of all those working in the industry, particularly those breeders in rural communities. 15

24 Thank You for your Attention 14 October 2008

25 The Irish Greyhound Board Presentation To Department of Justice, Equality and Law Reform An Roinn Dlí agus Cirt, Comhionannais agus Athchóirithe Dlí re: PUBLIC ADVERTISEMENT FOR SUBMISSIONS COMMITTEE ON THE REGULATION OF CASINOS 18 October 2006 Michael Foley CEO (Acting)

26 The Industry On-course Wagering of > 140M 2005 including Tote of > 50M Total Revenues > 300M per year 90M invested in Facilities over last 10 years 17 Track Facilities Nationwide Employment of ~3,000 jobs both direct and Indirect Attendances >1.3M last year 2

27 Business Impact to Greyhound Racing Will Casinos impact the existing model of Greyhound Racing in Ireland? What are the Risks and Opportunities that it presents? Are the Risks and Opportunities quantifiable / Real and can they be proven by statistical econometric models and historical empirical data? 3

28 Risks Will the Greyhound Industry be disproportionately effected by the introduction of Casinos then other vested Interests? Why is this the case? Unique Night Time Gaming Product Regular Meeting each track open 3 nights per week Highly dependant on Admission Revenues Highly dependant on its Tote Operation Profits for distribution of prize money to Owners Dependant on its Shared Margin Arrangements on Food & Beverage Operations The Greyhound business to a large extent operates the legal night time gaming and bookmaking market The Casino Model is a Free of Charge Admission model Subsidised Food and Beverage High Dividend Yield to Patrons 4

29 Risks (cont) Casinos are likely to fundamentally effect the existing business model but to what extent? Real Threat or Imagined? 2 Key Sources of Statistical / Economic models examining the Displacement effects of Casinos on On-Course Wagering Christiansens Connecuit Study Report of Lisa Farrell, Geary Institute & School of Economics (UCD) Thalheimers New Jersey Study Empirical Data Connecuit Australian data Lincoln Park, Rhode Island 5

30 Christiansen Projections Christiansen / Cummings Associates reported on gaming in Connecticuit Christiansen developed projections for the combined effects of two proposed Casinos on peripheral locations in the state The projection indicated negative effects of On- Course Turnover of between 30% and 47% The displacement effect on Attendances approximately 60% of the wagering displacement effect 6

31 Christiansen Projections Attendance Per Capita Wager Total Handle Plainfield Greyhound -30.0% -25.0% -47.0% Bridgeport Greyhound -25.0% -20.0% -40.0% Windsor Locks Teletheater -22.0% -18.0% -36.0% New Haven Teletrack -24.0% -19.0% -38.4% OTB Branches (Average NA NA -30.0% 7

32 Christiansen Projections The actual displacement of wagering Revenues in the state was 36% in the first year of Casino operations very much supporting the Christiansen Statistical Model 8

33 Dr Lisa Farrell Australian Study Examined Australian Empirical Data and through economic modelling looked at the impact of the licensing of Casinos and Electronic Gaming Machines (EGM s) on On-Course race betting turnover. Findings? A $1 increase in Casino Turnover results in a 2c decrease in On-Course betting Turnover A $1 increase in EGM Turnover results in 0.7c increase in On-Course betting Turnover 9

34 Thalheimer New Jersey Study 1992 Study dealt with the effects of Casinos in Atlantic City, NJ on Pari-mutual Wagering Findings An equivalent Negative Impact on both harness and horseracing similiar Impact directly correlated to the number of Casinos licensed Risks (cont) Year Impact of T bred & No of Harness Casinos Handles % -9.8% -18.7% -26.7% -29.1% -31.5% % 10

35 Lincoln Park, Greyhound Track, RI Prior to 2 Casinos introduced & Simulcasting Lincoln Park wagered $165M On-Track Post Casino $40m Live On-Track plus $90m Simulcasting ($130m total) Assuming CPI of 4% this represents $75m in real terms or a 55% reduction on on course tournover 11

36 Conclusions So what does all this really mean for the IGB s existing business Model? Based on Australias average gaming per person AUS $1,000 (Blanks 2002) approximately 600 of which 75% or 450 wagered on Casinos including EGM s This equates to a potential Casino Gaming Market in Ireland of 2.25B Total On-Course betting on Greyhound Racing Bookmaker 95m Tote 55m Total 150m Anticipated displacement effect 2.25B x 0.7% or 45m displacement or 16.5m tote displacement with an annual 2.5m adverse effect on cash flows 12

37 Conclusions Based on Christiansen projections Attendances would be negatively impacted by 60% of the wagering displacement ie 21% This has the potential to negatively effect Industry revenues through admission / bar and for revenues by a further 4m gross revenue on annual basis The statistical models and empirical evidence prove the significant threat of casinosto the IGB existing model In effect our existing business model will be fundamentally effected as will the livelihoods of greyhound owners 13

38 Conclusions If Casinos / Gaming machines are to be introduced into Ireland then the IGB must be in a position to compete and supplement its On-Course greyhound revenues from the operation of EGM s and Casino Operations The model has been used for the benefit of the greyhound racing Industry in the US and Australia Lincoln Park, RI returns 30% of net Racino Revenue to racing which has not alone offset the reduction in the core parimutual wagering but provided significant additional revenues for prizemoney distributions The Canadian model restricted the licensing of Casinos to existing Racetrack locations. This had a positive effect on On- Course parimutual wagering of 4 5 % but more importantly provided for 20% of net revenues to be reallocated for the benefit of racing. This amounted to $300m allocation for

39 Conclusions This model not only presents a strong proposition for increased Revenue to central exchequer but can be utilised as a basis to support the current deficit in the Horse and Greyhound Racing fund The issuance of Casino / EGM licences to Greyhound Stadia will provide the basis for offsetting the negative displacement effects that the broad licensing of casinos will have on the existing business model 15

40 Conclusions This is only so if requisite planning permission are obtained. Many of IGB facilities are in residential areas and this may present significant planning challenges It is essential that, similar to many other jurisdictions, that a portion of taxes from the operation of Casinos / EGM s are redistributed to ensure strong prize money structure for the greyhound industry which will support the livelihoods of all those working in the industry, particurally those breeders in rural communities. 16

41 Thank You for your Attention 18 October 2006 Michael Foley CEO (Acting)