PMU gam­bles on na­tion’s horse en­thu­si­asts

China Daily (Canada) - - BUSINESS - By LI XIANG in Paris lix­i­ang@chi­

While gam­bling re­mains il­le­gal on the Chi­nese main­land, Europe’s largest horser­ace bet­ting op­er­a­tor PMU is keep­ing a close eye on China’s emerg­ing eques­trian in­dus­try, hop­ing to gain first-mover ad­van­tage once there is any sign of the ban be­ing lifted.

The re­cent grow­ing in­ter­est in eques­trian sports in China has prompted Philippe Ger­mond, chief ex­ec­u­tive of the Paris-based bet­ting op­er­a­tor, to fre­quently travel to var­i­ous Chi­nese cities to pro­mote the French busi­ness model of horse-race bet­ting in a mar­ket he be­lieves could be worth 100 bil­lion eu­ros an­nu­ally ($136 bil­lion) if le­gal­ized.

“If at some point in the fu­ture the Chi­nese govern­ment de­cides to le­gal­ize the bet­ting on horse races, we can of­fer the French busi­ness model that may fit the ex­pec­ta­tions of the Chi­nese govern­ment,” Ger­mond told China Daily in a re­cent in­ter­view.

In France, about 80 per­cent of the fund­ing of the horserac­ing in­dus­try comes from bet­ting rev­enue. The en­tire net profit of PMU goes to the fi­nanc­ing of the French horserac­ing in­dus­try, in­clud­ing breed­ing, train­ing and or­ga­niz­ing races, said Ger­mond.

Mean­while, PMU, while be­ing a pri­vate com­pany, is man­aged by a com­mit­tee con­sist­ing of mem­bers of the French Min­istry of Agri­cul­ture and the Min­istry of Econ­omy and Fi­nance, which means that the busi­ness is highly con­trolled and reg­u­lated by the state, Ger­mond said.

PMU is also will­ing to trans­fer to China its sys­tem of com­mu­ni­ca­tion and in­for­ma­tion tech­nol­ogy that man­ages and

The people of France spend more than 9 bil­lion eu­ros on bet­ting on horse races a year. That’s a coun­try with only about 60 mil­lion in­hab­i­tants. You can imag­ine the po­ten­tial will be huge for a coun­try with a pop­u­la­tion the size of China.” PHILIPPE GER­MOND CHIEF EX­EC­U­TIVE, PMU

mon­i­tors 12,000 bet­ting out­lets across France in real time and pro­cesses bil­lions of trans­ac­tions on a yearly ba­sis.

“What we are try­ing to demon­strate is that horse-race bet­ting can be op­er­ated in a way that is highly con­trolled by the govern­ment with strong IT tech­nol­ogy to en­sure there is no cheat­ing or ma­nip­u­la­tion of the races,” he said.

Ru­mors of China lift­ing the ban on horse-race bet­ting have long been cir­cu­lat­ing. Lo­cal and for­eign in­vestors have al­ready placed their bets by in­vest­ing in the con­struc­tion of race­tracks, breed­ing horses and train­ing fa­cil­i­ties in cities in­clud­ing Bei­jing, Shang­hai, Tian­jin and Wuhan, the cap­i­tal of Hubei prov­ince.

Tian­jin, for in­stance, has in­vested 1.4 bil­lion yuan ($230 mil­lion) to build an Equine Cul­ture City, an ex­trav­a­gant five-year project that in­cludes 4,000 horse sta­bles, a clinic, 150 of­fices for train­ers, in­ter­na­tional stan­dard race­tracks and a horse auc­tion cen­ter, ac­cord­ing to me­dia re­ports.

Ho­hhot, cap­i­tal of the In­ner Mon­go­lia au­ton­o­mous re­gion, last year held the first China Eques­trian Cul­tural Fes­ti­val, which was ac­claimed as the first high-level in­ter­na­tional horser-ac­ing event ever held in the Chi­nese main­land since the govern­ment le­gal­ized horserac­ing in 2008.

Al­though there is no im­mi­nent sign that Bei­jing will le­gal­ize bet­ting on horse rac­ing soon, the Chi­nese mar­ket will be an in­evitable des­ti­na­tion for French bet­ting oper­a­tors and horserac­ing or­ga­niz­ers, which are fac­ing de­cline do­mes­ti­cally be­cause of the eco­nomic cri­sis in Europe.

In 2012, PMU posted a net profit of 865 mil­lion eu­ros, down by 1.3 per­cent on the pre­vi­ous year.

“Bet­ting on horse races in France is a ma­ture busi­ness so the ca­pac­ity to ex­pand with dou­ble-digit growth is no longer fea­si­ble,” Ger­mond said, adding that the cur­rent eco­nomic cri­sis in Europe has re­sulted in tight­en­ing the leisure bud­gets of its cus­tomers, given that the bet­ting busi­ness is di­rectly linked to the macroe­co­nomic en­vi­ron­ment.

“Ex­pand­ing the busi­ness out­side France is our pri­or­ity to main­tain the growth of our ac­tiv­ity and net profit,” he said. Last year, PMU achieved 94 per­cent year-on-year in­ter­na­tional growth, which helped com­pen­sate for the slow­down at home, he said.

In 2012, PMU be­gan to ex­port its bet­ting prod­ucts to the United States, South Africa and Bel­gium, which gen­er­ated an ex­tra 112 mil­lion eu­ros of turnover for the com­pany, ac­cord­ing to its fi­nan­cial re­port.

Ger­mond said he has sim­i­lar hopes for the Chi­nese mar­ket if the ac­tiv­ity is le­gal­ized in the coun­try. PMU is look­ing at ex­port­ing its prod­ucts and ser­vices to China, which will al­low Chi­nese pun­ters to di­rectly bet on French horse races in the fu­ture.

“The people of France spend more than 9 bil­lion eu­ros on bet­ting on horse races a year. That’s a coun­try with only about 60 mil­lion in­hab­i­tants. You can imag­ine the po­ten­tial will be huge for a coun­try with a pop­u­la­tion the size of China,” he said.

But Ger­mond ad­mit­ted that bet­ting on an overnight change of heart by the Chi­nese govern­ment on horse-race gam­bling re­mains a long shot.

Some in­dus­try ex­perts said le­gal­iz­ing bet­ting on horse races still re­mains a sen­si­tive sub­ject in China be­cause the govern­ment may worry about its neg­a­tive ef­fect on so­cial sta­bil­ity and fi­nan­cial se­cu­rity.

“We may ben­e­fit in the fu­ture but we un­der­stand that it is not just a busi­ness de­ci­sion but also a po­lit­i­cal de­ci­sion for the cen­tral govern­ment,” he said, not­ing that the first step should be build­ing a high qual­ity in­ter­na­tion­al­stan­dard equine in­dus­try in China in­clud­ing breed­ing, train­ing and or­ga­niz­ing races.

France Galop, the gov­ern­ing body that reg­u­lates flat and jump races in France and the par­ent com­pany that owns PMU, has signed an agree­ment on the ex­change of horse-race spon­sor­ship and the ex­port of French horses with Chi­nese com­pany Desert Star Hold­ings Ltd, a Hong Kong-reg­is­tered in­vest­ment com­pany in the equine busi­ness and the main in­vestor in the Tian­jin horse-rac­ing project.

“It is an op­por­tu­nity for us to bring our ex­pe­ri­ence and knowl­edge to China. The project of cre­at­ing a ‘horse city’ in Tian­jin seems ex­tremely at­trac­tive to us,” said Ber­trand Belin­guier, the pres­i­dent of France Galop.


An in­ter­na­tional horse-rac­ing fes­ti­val takes place in Wuhan, Hubei prov­ince. Ru­mors of China’s lift­ing a ban on horse-race bet­ting have been cir­cu­lat­ing, and in­vestors al­ready are putting money into con­struct­ing train­ing fa­cil­i­ties in big cities such as Bei­jing and Tian­jian.

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