Race body shuns Betfair's €4.5m
Double or nothing, says Horse Racing Ireland
Horse Racing Ireland (HRI) has refused to take a voluntary investment worth almost €4.5m from leading online betting exchange Betfair, despite having to announce massive cuts in funding this weekend.
In the past three years, Betfair has given over €4.49m to horse racing's governing body in a "cooperation agreement" for the good of the sport, and had sought to continue the arrangement for another three years, despite the impact of the recession.
According to documents seen by the Sunday Independent, despite cuts in its State funding, Horse Racing Ireland, which announced further cuts in prize money on Friday, saw fit to turn down the Betfair offer, demanding the company pays double.
Correspondence between HRI's chief executive Brian Kavanagh and Betfair's Martin Cruddace reveals that Mr Kavanagh insisted that HRI would only do another deal if the amount of money paid over was doubled.
In one letter to Betfair, Mr Kavanagh said: "HRI believes that the contributions by betting exchanges should be doubled, and that is the basis the board would be prepared to enter a further arrangement [with Betfair], namely a payment of €2.4m a year index linked for three years."
Betfair's offer of payment comes despite the Irish operation representing less than 5 per cent of its total revenue.
Mr Cruddace responded saying that HRI's refusal of Betfair's offer of almost €5m was unfortunate but that Betfair could not accede to HRI's demand.
He said that no arrangement could work for 2009 but sought to leave the door open for a deal in 2010.
Mr Kavanagh responded saying that the HRI's board were disappointed with Betfair's response but warned further that any deal done in 2010 would have to be done on a "pre-condition that it would be backdated to the start of 2009".
There has been some suggestion that these voluntary payments may in the future be made legally mandatory but the turning down of funds by Horse Racing Ireland has been greeted with outrage and fury within Government circles.
"How in the hell can they turn down a single cent at a time when budgets all over the place are being squeezed. Someone needs to take a very quick reality check," said one senior Government Minister yesterday.
On Friday, after meetings with the Department of Finance, HRI announced that it was cutting a further 5 per cent in the level of its prize money for 2009. This is on top of the €1.2m hit to the industry in April's emergency budget. In total, prize money will now fall under €54m and capital development projects "will continue to be curtailed with no new projects approved in the short term," Mr Kavanagh said on Friday.
Last week a number of bookmakers expressed concern that the new betting levy of 2 per cent which came into effect on May 1 could cost the industry thousands of jobs, and one bookmaker has said he will have to close half his shops as a result.
Sports Minister Martin Cullen is to meet a number of Irish bookmakers to discuss the impact of the levy. John Hackett of Hackett's bookmakers said the additional levies will force many shops to close. "We have already seen 50 shops close, and that figure could be 300 by the end of the year. We are struggling to stay in business," he said.