PART I: The Greyhound Industry and Issues Affecting its Regulation
THE BOOKMAKERS' AFTERNOON GREYHOUND SERVICE (BAGS)
In the early days of off-course cash betting, sometime before 1967, there was a feeling among certain bookmakers that it would be useful if betting shops had an alternative product to offer their customers on those days during the winter months when horse racing was abandoned. On 8th September 1967, the Bookmakers' Afternoon Greyhound Service, now universally known as BAGS, was incorporated as a betting industry body which would, indeed, pay greyhound tracks to put on meetings on afternoons when the horseracing was cancelled because of bad weather.
In those days there were just 4 tracks on BAGS, of which Oxford is the only current survivor, but from that modest start, BAGS racing has grown to the extent that there are now substantially more greyhound races than horseraces broadcast into the betting shops of the United Kingdom and the Republic of Ireland.
The Service grew steadily during its first years but the first main engine of major growth was the arrival of Satellite Information Services Ltd in May 1987 and with it the transmission of live pictures into the licensed betting office (LBO) estate. By 1992 the number of tracks contracted to BAGS had risen from about 6 or 7 pre-1987 to 12. A further impetus was given to the service during the foot and mouth disease outbreak in 2001 when additional product was required to replace horseracing and, by 2002, the number of tracks on BAGS had risen to 16 and, in 2007, stands at 18.
BAGS racing is transmitted daily from 6 or 7 tracks (4 on Sundays) and, in 2006, 20,817 races were run on the BAGS fixture list; there will be further expansion next year when, following the legalisation of year round evening opening, further meetings are planned staging over 26,000 races.
As is evident from this brief history, BAGS has developed enormously from its beginnings as a "filler" on a wet winter's afternoon to a key element of the products offered in virtually every betting shop. It is thus crucial to the betting industry as a whole, and therefore to this Review, because, as is explained below, not only does BAGS racing generate almost all the off-track betting income to licensed greyhound racing, it also necessarily requires very large numbers of greyhounds to make the programme work.
This consistently high demand for greyhounds must be met by a ready supply and this imperative raises issues of its own. As we discuss elsewhere in our Report, the number of greyhounds bred in Great Britain is possibly no more than about 3000; annual turnover of greyhounds entering and leaving the sport is variously estimated but is in the order of 10,000. Thus it is clear that many thousands of greyhounds must be imported each year, of which nearly all come from Ireland. The scale of BAGS racing, therefore, has always been a major cause of concern to the Welfare Groups in terms of the potential for the overproduction of greyhounds, the consequent wastage of those that do not make the grade and the challenge of re-homing those that do make the grade but retire from licensed racing every year.
A particular concern of the welfare lobby is their belief that, because trainers employed to fulfill BAGS contracts have to deliver a large stream of runners, they must, of necessity, acquire the required numbers of greyhounds themselves in order to meet their contracted commitment to the track. They thus become owner/trainers because there are not sufficient private owners in the sport to meet the demand. This "mass production" racing is alleged not to be accompanied by the necessary care for the re-homing of dogs once their racing careers come to an end.
However, the BAGS contribution to these issues needs to be placed in context. BAGS racing accounts for about 1/3rd of all greyhound races run under Rules in Great Britain; thus 2/3rds of the races run are not under BAGS contracts.
But the conundrum is there for all to see: the more BAGS racing there is, the greater the income to those tracks directly involved and to licensed greyhound racing in general through access to the correspondingly increased resources of the BGRF; but the greater number of greyhounds required by an expanding programme means that more resources will be required to ensure their welfare standards are maintained both during their racing careers and in their subsequent retirement.
Of course, the equation is not perfect and some of the increased demand may be met not solely by acquiring more greyhounds but also by running some greyhounds more often, although that option is also problematic in welfare terms if abused, and possibly by the better option of extending their racing careers. Nevertheless, the welfare dimension to BAGS exists and cannot be ignored.
Who is Involved?
BAGS is, in essence, a consortium of bookmakers which arranges for the provision of greyhound racing, mainly but no longer exclusively in the afternoons, the main purpose of which is to provide a betting product in the LBO estate in the United Kingdom and the Republic of Ireland. The live transmissions are carried into the shops by SIS and integrated with the horseracing programme of the day, as well as with other betting opportunities such as 49s and virtual racing (horse and greyhound).
As noted above, there are currently 18 out of the 30 NGRC licensed tracks which are contracted to BAGS. Of these, 4 are operated by the Greyhound Racing Association (GRA), 2 by Stadia UK Ltd, and 2 each by Coral, Ladbrokes and William Hill. The remaining 6, including the largest, Walthamstow, are run by independent, sometimes family, operators. Contracts are let for periods of up to 5 years following an invitation to tender issued by BAGS; it is open to all NGRC licensed tracks to submit bids and, typically, about 22 or 23 do so. All applicants are subject to inspection by BAGS staff and must meet certain high standards in terms of facilities, track conditions, kennelling and welfare provision before being selected and awarded a contract. Regular inspections during the course of the contract are carried out and any failure to maintain the required standard can, and does, result in the contract for that particular track being terminated.
The relationship between greyhound racing, BAGS and the betting industry, therefore, is that of service provider and service purchaser, with the betting industry itself as the service user. It is thus a customer of greyhound racing rather than a stakeholder in the sport.
We have received evidence which states that the betting industry owns "a substantial proportion of the tracks which stage BAGS racing" and that the betting industry is in a position to decide which tracks receive contracts and how much will be paid. The three major bookmakers own 2 tracks each and, taken together, that amounts to one third of the total number of tracks on contract. Just over 50% of BAGS races are run on these 6 tracks. However, these companies are not actually "the betting industry". They are in competition with each other and do not operate as a block. It can be expected that a company founded to commission greyhound racing for the betting shops should decide from whom it is going to purchase the product and for how much. It is open to all licensed track operators to bid for contracts and that there are always more who do so than there are contracts to let, suggests that the price offered is sufficiently attractive to those promoters who bid.
The Betting Market
Approximately 18% of off-course betting turnover is generated by greyhound racing and, of this, over 99% is generated by BAGS racing. The market at any greyhound race meeting operates in the same way as that on a horse racecourse with the SP being returned from the on-track betting ring. With some exceptions, BAGS afternoon meetings are poorly attended with few spectators and punters. The market at such meetings can thus be weak and readily influenced by comparatively small sums of money as there is little incentive for the bookmakers on track to compete with each other. As a consequence, BAGS racing has been criticised as being poor value for the betting shop punter. Yet, as in horseracing, the SP remains the preferred method of pricing amongst punters; the alternative, which would be most likely based on company or industry generated SPs, would, we suspect, be viewed with even greater concern by the critics. It is interesting to note in passing that the betting exchange market on BAGS racing is vibrant and competitive.
The Contribution to Greyhound Racing
As noted above, over 99% of betting turnover on greyhound racing is on BAGS racing although, as we have already seen, such racing represents only 1/3rd of the total. It is on betting turnover that the voluntary greyhound levy is based and it is therefore self-evident that virtually all of the £11.5M paid into the British Greyhound Racing Fund is attributable to BAGS racing. Add to this the approximately £18M paid by the bookmakers through BAGS to the contracted tracks and it becomes clear that, were it not for BAGS, there would no longer be a sustainable licensed greyhound racing industry in Great Britain.
Although, like horseracing, there is a considerable local and social dimension to greyhound racing, the principle economic driver of the sport is off-track betting and the principle vehicle for off-track betting is BAGS racing. If BAGS were not there, the sport would probably run as the independents run now, because the resources to pay for the licensed structure would not exist.
The Association of British Bookmakers (ABB) has told us in evidence that some 40% of the BGRF's income of £11.5 million was this year earmarked for greyhound welfare. Whilst there may be a discussion about what heads of expenditure may be properly attributed to "welfare", the percentage is still significant. The ABB has also stated that, in their opinion, this figure could be increased out of the Fund's current level of income if it can be established, by us or others, that an improvement in regulation of the sport as a whole depended upon more expenditure in this area. Whilst accepting the proposition, also put to us by the ABB, that more rigorous enforcement of the Rules may be as, or more, important than simply increasing welfare funding, we believe that this Report has made that case.
We have heard in evidence that the integrity standards at BAGS meetings are of a very high order, indeed that they exceed the requirements of the Rules of Racing in some respects. We have also received evidence regarding the high standard of welfare provision at some of the larger tracks and observed it for ourselves at others. We therefore take the view that the leading tracks, including those with BAGS contracts, must recognise, individually and collectively, that they have a major responsibility for driving the welfare agenda across the licensed industry.