The new face of off-track betting
Five years after deregulation, the market for horse race betting in France is reinventing itself for the 21st century.
On April 6, 2010, France adopted a law that legalized online gambling, thus giving operators like Betclic and Unibet a foothold on the home turf of the country’s off-track betting authority, Pari Mutuel Urbain (PMU). Nonetheless, five years later PMU continues to dominate the market, collecting 85% of all bets placed in 2014 for a turnover of nearly €10 billion. As a non-profit organization, it hands over its entire net revenue, which last year represented the tidy sum of €860 million, to the horse racing sector. The mainstay of the industry, supplying 80% of its funds, PMU provides livelihoods for everyone from jockeys to owners, breeders and veterinarians.
But now two phenomena are tipping the balance in off-track gambling. For one thing, total betting has been in a downturn for the past three years. The amount of money wagered has dipped by 1% annually since 2012, a peak year, and is falling faster than the number of players. In other words, people are betting less money and/or less often than before. The primary cause of this slump is competition from sports betting, which has grown by 30% since 2014 and is especially appealing to the younger generation. For the first time this year, the total amount wagered on other sports (€1.1 billion) exceeded the total bets on horse racing (€1 billion).
Secondly, the online-only gambling houses have won a decision by the French Competition Authority to require the separation of wagers at PMU. Having both an Internet platform and a bricks-and-mortar monopoly through its network of betting parlors, PMU was previously able to pool bets from both sources, which allowed it to offer stabler odds and larger payoffs. The split, effective as of September 2015, enables newcomers to align their offers with the market leader.
To cope with this loosening of the market and strengthening of the competition, all the operators are rethinking their strategy. For many, the first reaction was to diversify by offering sports betting and accepting foreign wagers. PMU, which now represents 25% of all sports betting in France, and Zeturf, which has launched Zebet, are counting on market growth to offset the drop in income from the racetracks. Looking beyond national borders, the Internet platforms have proven very appealing to foreigners who want to bet on French races (+14% in 2014). To develop this niche, PMU recently acquired Belgian and German operators that have been enjoying strong growth. The potential opening of the market in China, where betting on horse races is currently banned, should offer another key opportunity, and the Chinese authorities have expressed interest in French know-how in the field.
Does all this mean that off-track betting is on the way out in France? Far from it! According to PMU managing director Xavier Hürstel, the lower figures reflect not so much a loss of interest as an aftereffect of the recession. A former amateur jockey and an alumnus of the prestigious National School of Administration (ENA), Hürstel points out that every time the unemployment rate rises by one percentage point, gambling turnover drops by two. In addition, the innovations introduced by various operators should revitalize the sector’s appeal. PMU has undertaken a program to modernize its agencies, exemplified by the opening of new-generation betting parlors in large towns. Called “PMU City,” they are conceived to draw a fresh clientele of younger, novice but tech-savvy bettors, making the experience more exciting with 3D broadcasts, drone-mounted cameras and interactive touchscreens.
Another technological breakthrough is the introduction of a tracking system: the horses are equipped with sensors that monitor various kinds of data in real time during the race: speed, acceleration, trajectory, etc. As in tennis and soccer, the idea is to enrich the spectator’s experience by offering a wealth of information of particular interest to bettors. However, this system will not be used in France to allow the gambling houses to offer betting on virtual races, which they do in the UK, as a means of reviving the allure of “playing the ponies.”
Crédits photo : Pluris