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Transforming the Tote: consortium plans digital overhaul

| By Stephen Carter | Reading Time: 5 minutes
Azileti chairman Eamonn Wilmott on the opportunities for the Tote following the consortium's takeover announced last week, including working with Britbet

Following last week’s news the racing industry-backed Alizeti consortium is to take over the Tote, chairman Eamonn Wilmott says he sees the brand’s currently ‘miniscule’ online presence as a big opportunity

iGaming Business: You have mentioned during the acquisition what a great job Betfred has done since 2011, so why has racing decided to take this step? Why is it important for the industry to have control of the Tote and pool betting on horse races in the UK?

Eamonn Wilmott: There are very few, if any, racing jurisdictions around the world that flourish without a strong Tote and so one of the reasons we have such a high percentage of investors in the racing industry – more than 90% of our investors are racehorse owners – is because they see this as a crucial investment to secure racing’s future.

From that standpoint it is important that racehorse owners and racehorse breeders are getting behind this. But on a practical level, the team that has been brought in plans to transform the Tote and add to its strength as a brand very much in the digital landscape.

So is Totesport, which today is a small part of the UK online market, a big part of the future plan given the background of both yourself with Total Performance Data and also Andy Hobsbawn with his substantial digital experience? 

One of our major plans is to transform the Tote in terms of its digital presence. That is our skill, that is our background, so when we chatted to Betfred about that they did see that this was a perfect match.

When we looked at the opportunity, one reason we went ahead with the acquisition is because online B2C is miniscule right now for a variety of reasons and we see that as an opportunity, not a problem. We see that as something that we can and will transform.

Then the other thing that we think is an enormous opportunity is the international landscape. When you speak to racing jurisdictions around the world, one of the brilliant things is they all understand now that it is crucial that racing has to promote itself and grow itself, not only in every area where it operates, but also as a global sport.

Even the Hong Kong Jockey Club, which in many ways has a golden ticket — they have got a monopoly there and their numbers are unimaginable — said in Seoul last week that racing needs to focus on promoting itself as a sport and there has to be more international co-mingling.

How is the partnership likely to evolve from here —  is there a definite agreement to purchase the rest from Betfred?

Yes. No question. Absolutely.

Given that’s the case, why is the deal being done in stages rather than just a total acquisition from the outset?

We felt it made sense for everyone to work in partnership initially. Betfred has a lot of experience with the business and part of our plan is not to transform everything from day one but instead to engage with not just existing clients, but the future clients we need to grow the business, to identify exactly what they want.

As such it will be business as usual initially, with the transformation taking place over a number of years.

The deal is said to be worth about £150m, which on paper makes it look as though Betfred is looking at a significant loss having paid £265m in 2011. How was the value of the deal arrived at?

Betfred has not made a loss as part of that deal was that they bought 500-plus shops and they are keeping the shops, we are not buying the shops. The business we are buying needs a significant injection of cash to transform it into a 21st century digital business.

Our team are highly experienced in building transformational digital businesses.

Are you concerned about the shortfall in funding for racing that will result from the £2 FOBT cut as each shop pays up to £30,000 in media rights to racing, and how will this deal help?

Firstly, I was on the board of the British Horseracing Authority until the end of the last year so I know it is definitely going to have a significant impact on UK racing. It is a big, big number.

I’m concerned as it relates to racing, as it relates to the business we are acquiring here, our business has a massive online focus so we don’t see that as impacting our business model.

We also see our contribution to racing being a crucial part of the plan, so we are not claiming that we are going to fill the hole that is going to be left in the short term by FOBTs, but we are going to be making a contribution at a crucial time.

According to one reported forecast from Alizeti, the Tote could see £65m of EBITDA after five years under the new ownership structure. That’s a huge increase, do you think this is realistic and how you plan to achieve this?

I’d be very disappointed if that is all we achieved in five years, we plan to build liquidity and build a place where people can have a significant bet.

If we went to Hong Kong tonight and put £5,000 on a horse at 3/1 it probably doesn’t move, you probably get 3/1 back. If you put £5,000 on a horse in the UK; a) you probably can’t get it on but; b) if you do you are blowing up the market.

So where we want to be is building significant liquidity over the years ahead and that will generate significant proceeds, a great chunk of which will be going back into racing.

What is your relationship with the Britbet consortium – I know it’s been mentioned you are in talks about a partnership?

That’s not certain at this stage and we are in conversations with them. I think everyone around the world is massively keen on there being one pool in the UK and an improved pool. Everyone is looking for the liquidity in the UK to improve and so we are hopeful that we can work together.

I know questions have asked about Britbec’s likely success due to the falling liquidity that could be caused by split pools. Is that also likely to be an issue for the Tote if you don’t combine for a single pool betting solution?

I don’t think it is good for anyone and I don’t think it is good for UK racing.

When you speak to partners internationally they will say, ‘you’re kidding, you need to be growing the pot, not splitting the pot’. We need to be absolutely building the pool to make it more attractive for people from anywhere in the world to bet into so I am hoping the right decision is made there.

If a partnership goes ahead would Britbet become the main brand ahead of the Tote at racecourses, and if so, how would this happen?

We are absolutely committed to the Tote brand. That’s what we’ve bought and that’s what we believe in tremendously.

What are the next immediate steps for the consortium?

The next step is starting to engage with clients and asking them exactly what they want.

Although we have got our own plans and our own strategy, part of that is constantly talking with clients so we are going to be talking to them about bet types and stakes and takeout; we are not going to go in and make major changes day one.

We are going to go in and listen and engage with our clients and our future clients and they will help set the strategy.

The other thing that is crucial to us is that we are not looking to do a flip, we are not looking to do a couple of years here. This is something where we see the Tote securing racing’s finances for generations to come so this is a very long-term play.

Eamonn Wilmott has been a pioneer in the technology industry since the early days of the consumer internet. In 2008 he launched state-of-the-art Wiltshire training centre Horses First Racing with trainer Jeremy Gask, and is co-owner of 2018 Melbourne Cup hopeful Lord Fandango. He is currently chairman of in-running horse racing data company Total  Performance Data (TPD) Limited. He was a non-exec  of the British Horseracing Authority from 2014 to 2017, credited by the board for driving through improvements in ownership administration and experience.

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