At the invitation of Mister Jacques Toubon, Under the patronage of Mister Joseph Daul, Member of the European Parliament Member of the European Parliament Member of the EPP-DE group President of the EPP-DE group

« HORSERACING AND ONLINE BETTING: DOES THE EUROPEAN HORSERACING INDUSTRY HAVE A FUTURE IN EUROPE? »

Conference of the European horseracing industries professionals

Thursday 6 March 2008 European Parliament Brussels

Minutes of the conference

- 1 -

SUMMARY

OVERVIEW ...... 4

COMMON DECLARATION OF THE EUROPEAN HORSERACING INDUSTRIES...... 6

VERBATIM...... 7

Jean-Pierre KRATZER, Chairman of the Swiss Trotting Federation...... 8

Fernando MELCHOR, Chairman of the Spanish Thoroughbred Breeders Association...... 8

Tore FYRAND, General Secretary of the Norwegian Trotting Association ...... 9

Christiane HEAD-MAREEK, President of the European Trainers Federation ...... 9

Jacques TOUBON, Member of the European Parliament, EPP Group ...... 10

Joseph DAUL, Member of the European Parliament, President of the EPP Group ...... 10

ROUNDTABLE 1: WHAT ECONOMIC FUTURE IS THERE FOR THE EUROPEAN HORSERACING INDUSTRY? ...... 13

Franck JOYEUX, Representative of the Internationaler Club v.E. (Germany)...... 13

Nick COWARD, Chief Executive of the British Horseracing Authority ...... 15

Bernard FERRAND, Chairman of the French Thoroughbred Breeders Association ...... 18

Joe HERNON, Chairman of the Irish Thoroughbred Breeders Association...... 21

Malcolm HARBOUR, Member of the European Parliament, EPP Group ...... 24

Mr. Íñigo MÉNDEZ DE VIGO, Member of the European Parliament, EPP Group ...... 25

ROUNDTABLE 2: WHAT MODEL OF ORGANIZATION FOR HORSERACING AND BETTING? ...... 28

Paul ESSARTIAL, Chairman of the French Horse Council Federation...... 28

Jean-Pierre KRATZER, Chairman of the Swiss Trotting Federation...... 29

Fernando MELCHOR, Chairman of the Spanish Thoroughbred Breeders Association...... 32

Tore FYRAND, General Secretary of the Norwegian Trotting Association ...... 34

Patrick SANDIN, Chairman of the European Trotting Union...... 35

- 2 - COMMON POSITION OF THE EUROPEAN HORSERACING INDUSTRIES ...... 37

Christiane HEAD-MAAREK, President of the European Trainers Federation...... 37

DIALOGUE WITH THE AUDIENCE ...... 39

SYNTHESIS ...... 44

Jacques TOUBON, Member of the European Parliament, EPP Group ...... 44

- 3 - OVERVIEW

Thursday 6 March 2008, at the European Parliament in Brussels, at the invitation of Jacques Toubon, Member of the European Parliament, and under the patronage of Joseph Daul, President of the European People's Party and European Democrats (EPP- ED) group, representatives of horseracing professional organisations from all Europe gathered to express their concern and to propose solutions to ensure the future of their activity, which is facing the growth of online betting.

Breeders, trainers, owners, jockeys, representatives of horseracing authorities, trotting and gallop professionals from 12 European countries were present in the room and at the tribune, on the initiative of the French professionals: Germany, Belgium, Spain, Finland, France, Italy, Ireland, Norway, Czech Republic, United-Kingdom, Sweden, and Switzerland.

Journalists and European officials were also invited to this conference, which is unprecedented in the world of horseracing.

Debates put forward the diversity of present situations, in particular regarding betting models. Some professionals, French foremost, expressed their conviction that the mutual betting system, which represents 80% of the world’s betting on horseracing, is the only one which allows the horseracing industries to face the future and to respond to nowadays’ economic and integrity challenges. Others, from UK and Ireland, have always had the bookmaking system and want to create sustainable mechanisms guaranteeing a fair financial return of betting, including online betting, to the industry.

The European horseracing industry agreed on two core facts:

- The European horseracing industry has to face a common challenge, the uncontrolled development of online betting, whereas several industries in Europe are experiencing severe economic difficulties and others see their model questioned by the European authorities; this is not to dismiss or exclude technological evolutions, but their rapid development raises ethical and economic issues, especially due to the fact that horseracing’s development is, and always was, closely related to betting;

- Horseracing industries represent common economic, social and cultural values, which are also a great asset for Europe: 100 000 races per year, 500 racecourses, 58 000 horses born each year, 150 000 horses participating, 800- millions euros per year market… and 400 000 full-time jobs contributing to the activity.

- 4 - Concerning the future, debates highlighted three clear principles, supported by the European professionals’ organisations:

- a part of horseracing betting income must return to the industry: those who offer bets on horseracing must pay back into that sport, this return must be controlled and protected by national and European authorities ; races cannot be without bets, but their relation must be healthy and economically balanced;

- each Member State should be able to determine, within its legal system, which forms of betting are allowed and which mechanisms will guarantee a fair return to the races and the integrity of the activity; betting on horseracing is not an activity like any other, this obvious fact justifies the application of the subsidiarity principle for Each Member State;

- the European Union must make betting and races ethics a top priority : the trust of the audience and punters is the horseracing industries’ most important capital, and the competition that impassions them, must be unimpeachable ; public order stakes are real.

Representatives of the horseracing industries have adopted a common declaration (see hereinafter), on which they wish to associate as many organizations as possible.

By pointing out the historic character of this appeal, Jacques Toubon, Member of the EPP-DE group, declared that from now on the stakeholders’ goals should be, on the one hand, a European legal framework containing common principles and, on the other hand, a progressive and controlled opening of the national markets. Both are indispensable to ensure the development of the European horseracing industry.

- 5 - COMMON DECLARATION OF THE EUROPEAN HORSERACING INDUSTRIES

We call the European Parliament, the Council and the Commission, to recognize urgently the need for a clear and coherent legal and regulatory framework, guaranteeing:

1. A fair return from betting to the racing on which it is promoted or offered;

2. The protection of the future integrity of the sport.

We call on the European Commission to develop a policy to achieve this, in consultation with the European horseracing organizations.

It is necessary that, in conformity with the principle of subsidiarity, Member States have a European legal framework on betting, which will allow them to exercise their own competence in conformity with EU law.

- 6 - VERBATIM

Jacques TOUBON, Member of the European Parliament, EPP Group

“What now has to be done is for us to use our imagination and apply a political will to reconcile the internal market principles and the specific situations. I cannot see any other way to frame community legislation setting out a number of common principles”.

Joseph DAUL, Member of the European Parliament, President of the EPP Group

“Horseracing is a sector that contributes to the economy and to rural development in many countries of Europe. This sector must survive. For this purpose, the returns need to flow back into the sector. Europe is not meant to break what already works in the countries and the subsidiarity can be handled, even in an internal market system”.

Franck JOYEUX, Representative of the Internationaler Club v.E. (Germany)

“Betting and gambling is very sensitive sector. And it differs a lot by culture and character of different nations. Therefore, the principle of subsidiarity seems to be the best way to carefully handle this area in the future. For Germany and German horseracing, an environment of integrity and responsible gambling must be secured and guaranteed”.

Nic COWARD, Chief Executive of the British Horseracing Authority

“There is a very common theme: anyone anywhere offering a bet on any of our racings has to be paying a fair return to the sport and has to have an interest in looking after and protecting the future and the integrity of the sport. All racing nations should have a law in place in order to give this affect”.

“These are global issues which require a global debate and a global solution. We have the fantastic opportunity to start this debate here in Europe, where racing is so important to so many people, and where we can understand the issues”.

Bernard FERRAND, Chairman of the French Thoroughbred Breeders’ Association

“In France, when you bet ten euros, one euro automatically goes back to the industry, which is fair, efficient and boosts the sector’s development”.

“With mutual betting, the French system avoids this type of economic relationship. There is a co-existential link between the form of betting and the way to fund the industry. That is the reason why the organisations were set up”.

“We can talk of a mutual betting “ecosystem”: around a betting model, all an economy put in place. That is why the rude entrance of competitors systems, and not competitors, has a disastrous impact on these ecosystem’s equilibriums”.

- 7 - Joe HERNON, Chairman of the Irish Thoroughbred Breeders Association

“There are ways of controlling the market and ensuring that it pays its fair share to those who form the product, the owners and the horseracing industry”.

“The decline of racing and breeding in Belgium is undoubtedly linked to the strategy of offshore bookmakers. The result has been a huge number of job losses, substantial decrease in revenue for both the Belgium tax authorities and the breeding and racing industry. Punters were systematically pushed towards betting on foreign racing which do not provide a return to racing. Births of thoroughbred foals in that country had a high of 400. There are currently less than 40. Racing days in Belgium have been reduced from a high of 150 to 40.”

Mr. Íñigo MÉNDEZ DE VIGO, Member of the European Parliament, EPP Group

“I really appreciate the idea of an Ecosystem of the mutual betting. There are a lot of things connected to betting. There is a whole industry. People have been working for it for years and they have a passion for horses and breeding”.

Paul ESSARTIAL, Chairman of the French Horse Councils Federation

“Horses are very important in Europe: a common patrimony built by generations of breeders we must not loose. It is very easy to destroy the industry, but building it again, with all its competences, would be almost impossible”.

Jean-Pierre KRATZER, Chairman of the Swiss Trotting Federation

“Is it possible to legislate in all our countries so that agents are obliged to pay a contribution to the industry from the bet’s place? Can we affirm that gaming, betting are not an ordinary activity and that each country has the right to introduce measures to maintain public and social orders? Can we set up a sort of surveillance body and make every online agent get a licence? Is it possible to locate the origin of the bet by the IP address or by the way the better is being paid for? To all these questions, the answer is yes, with the kind of agreements we have between France and Switzerland, we can do it. The only real question may be this one: do the governments have the will to make online betting possible while respecting the very nature of the bet?”

“The thinking goes like this: you have taken the stakes, you redistribute a share. If you want to save money on all your activities, you replace horses by virtual races, you move to another country, you pay no taxes and you can give more to the punters. That makes the operator more appealing but there will not be any more races”.

Fernando MELCHOR, Chairman of the Spanish Thoroughbred Breeders Association

“It seems important to recall this truth: the horse Europe exists, we all met it. The weakening of one of our industries would be a concern for all the others”.

- 8 - Tore FYRAND, General Secretary of the Norwegian Trotting Association

“These topics are on the top of the list to make sure that our industry is sound, ethic, wise. We have to meet the challenges in a real framework that is organised by authorities. I hope really that this meeting is the start of a political discussion on how to deal with this challenge.”

Christiane HEAD-MAREEK, President of the European Trainers Federation

“Despite the differences, we all realise we are interdependent. Anything that affects one of our branches will affect all the others. All of us know what our branches represent for Europe economically, socially and culturally: 400,000 full-time jobs, 500 racetracks, 100,000 races and 58,000 births a year... We all know that. Does the European Union know it too?”

Francesco RUFFO, Manager of the Milan racecourse

“Our common objective is to guarantee the rights of the owners on the data, on the results of the races. It’s not a lottery but the result of an organised competition”.

- 9 - WELCOME AND INTRODUCTION

Jacques TOUBON, Member of the European Parliament, EPP Group

First of all, on behalf of Joseph DAUL and my own behalf, I would like to thank all of you who have come to Brussels for this conference. Many of you have come a very long way. In so doing, you demonstrate how important the matter that the professionals of the horseracing sector have wished to treat Today is. As members of the European Parliament from France Joseph DAUL and I have felt that we should do something to raise awareness of what is at stake in the horseracing sector, particularly as regards community and law.

Pierre-Luc SEGUILLON, a well-known French journalist, will be the moderator. Joseph DAUL, who is the President of the EPP Group, will be now taking the floor for further introductions.

Joseph DAUL, Member of the European Parliament, President of the EPP Group

Welcome to the European Parliament.

We have already met in Paris in a number of occasions. Horseracing is a sector that contributes to the economy and to rural development in many countries of Europe. This sector must survive. For this purpose, the returns need to flow back into the sector. Europe is not meant to break what already works in the countries and the subsidiarity can be handled, even in an internal market system. Therefore, we want the sector and the industry to continue to operate. We are operating in an internal market that needs to function. Rural and urban development is very important and we are not willing to undermine that system.

I hope this debate will allow us to seek solutions going beyond economic interest and taking account of social interest. I wish you success in your work. We are counting on your support. I have full confidence in Jacques TOUBON.

I’d also like to thank Mr. HARBOUR, who is one of our main coordinator in the internal market committee, and Mr. MÉNDEZ DE VIGO, who is one of the architects of the new treaty. He will be listening very attentively to any reference to subsidiarity. This principle will help the sector and the industry to survive. Thank you very much and good luck. I have to continue to work elsewhere in the European Parliament. I will eagerly wait for your conclusions.

Jacques TOUBON, Member of the European Parliament, EPP Group

Thank you Joseph DAUL for enabling us to organise the conference. I’d also like to thank my two colleagues from the EPP Group, Mr. Malcolm HARBOUR, who is my coordinator in the internal market committee, and Mr. Íñigo MÉNDEZ DE VIGO, who is an active member of the constitutional affairs committee. You probably know that he himself is a horse-breeder in Spain. He will be speaking about his own expertise on the legal situation and also showing his passion for horses, horse breeding and racing.

- 10 - How the application of community law to the industry will make it possible to guarantee two main objectives: transparency and integrity of the sport? Horseracing is a sport where integrity is very important. It also guarantees that the sector can survive and ensure that gaming and the whole gambling system can contribute to the balance and the development of the sector. On the economic side, 400,000 jobs are at stake in Europe. Those people are working this afternoon and they get up very early for the training. They represent one of the most important industries. All these questions are part of a broader issue which is the betting system.

The European Parliament did not wish to examine gaming and betting in connection with the directive on services on the internal market which was adopted as of December 2006. Our view was that the problems connected with gaming, lottery and betting were too complex to be dealt only from a legal and economic point of view. Therefore, we decided to exclude the whole sector from the scope of the directive. The sector is subjected to the internal market and competition rules of the EU. But it is also a sector which raises social questions. How to ensure that there is no impact on betters? It also raises questions of public order: security and the fight against money laundering and any form of organised crime that may be connected with gaming.

How to ensure the principles of the internal market and how to ensure that social and public order issues are taken in account, as member states have done with their own traditions and their own culture? This particularly applies to horseracing. Since excluding the sector from the services directive, we have felt that legislation was lacking. There is a need for community policy to define common principles for the whole sector. Indeed we are seeing a new phenomenon today: online cross-border betting. For any sorts of betting, applying the principles of the treaty as the European Court of Justice has done is clearly not the way to go. That is not a desirable situation. But it is a situation in which the European Commission is today.

What is at stake in the coming months and years is to see the Commission taking an initiative towards community legislation that can fulfil two objectives: the economic and the social objective, while respecting the principle of subsidiarity. In the light of the huge importance of this industry, an enormous amount is at stake, which is why many of MEPs who are here and who are active in many areas are interested in this subject. It is not a minor issue, although we are talking about gaming or betting. Very often, it is dealt as a society issue. But that is not the case. Everyone realises that millions of European citizens participate regularly in sporting events or attend horseraces and place bets. That represents an enormous economic sector. Therefore, we have a duty to discharge. That is why the MEPs who are here Today and many others support your efforts to ensure that the European Union takes a position and defines principles.

As it involves animals that are very carefully tended to, horseracing is a sector that involves very local organisations. Of course rural life is very important. Life in Europe involves both urban and rural areas which have to be given their due treatment. Many people are passionate about that and many people are betters. That is why the sector is so significant and why we

- 11 - wish to devote our attention to it as actively as possible. Thank you to all of you. I will now give the floor to Pierre-Luc SÉGUILLON.

Pierre-Luc SÉGUILLON, moderator

Before we start, we are going to show you a film.

Those pictures are a good introduction of our huge interest in the horse and all the activities and games that exist around horses. The scope of this meeting is threefold. Firstly, how can we better guarantee the integrity and transparency of gambling? Secondly, how can we guarantee the funding of the industry? The third part deals with the adoption of a common position. We can now input some common principles that may inspire the possible European legislation.

There will be two roundtables. The first one will be dealing with the economic future of the industry. Talking about the future requires talking about the current situation. The second roundtable will be dealing with models for horseracing and betting. Here are the members of the first panel: Franck JOYEUX, former President and representative of the Baden-Baden International Club, Nick COWARD, Chief Executive of the British Horseracing Authority, Bernard FERRAND, Chairman of the French Thoroughbred Breeders Association, and Joe HERNON, Chairman of the Irish Thoroughbred Breeders Association.

- 12 -

ROUNDTABLE 1: WHAT ECONOMIC FUTURE IS THERE FOR THE EUROPEAN HORSERACING INDUSTRY?

Pierre-Luc SÉGUILLON, moderator

The first round table will be analysing the economic situation and the future of the European industry. We are going to listen to examples from different countries. This morning, I had the opportunity to discuss with Franck JOYEUX. I felt that he was quite pessimistic about the situation in Germany.

Franck JOYEUX, Representative of the Internationaler Club v.E. (Germany)

That is right. First of all, Ladies and Gentlemen, let me thank you for having the opportunity to tell you about the current financial situation of German racing and the relationship between tote and fixed horse betting. Indeed, I’m a little pessimistic about the German case. But we are looking for a new structure. This conference is very important to us. Things might change to a better future. Before we talk about the future, let me go back to history first. Fixed-odds betting which corresponds to the bookmakers system legally exists besides the mutual system. The tote betting system – mutual system – was established in 1922.

One of the main purposes of the law was to guarantee the financing of horseracing and breeding which is regarded as an area of national interest in Germany. Basically, the law is almost unchanged. Only some of the additional implementing regulations have been changed over the decades. Originally, the funding of racing was secured by a 60 percent return of the betting tax, laid on the tote and bookmakers’ bets likewise. At the beginning of the 1960’s, this policy changed, as the tax return from bookmarkers’ bets on racing was stopped. Instead, the refund of betting tax on tote bets was raised to 96 percents, which on first glance looks good. But in the long run, this change was disastrous to racing, as off-trade betting grew much faster and bookmakers got more rights. For example, they gained the right to take bets on foreign races – French races, English races, South Africa, wherever. And in getting these rights, they were able to offer a wide range of attractive betting opportunities that the tote system could not.

At the beginning of the 1990’s, the German racing authorities choose to establish the existing private licensed bookmakers as agents for the tote, guaranteeing them the right to use pictures of the races. From then on, the bookmakers have the choice: either to take a bookmaker’s bet on their own on a German race or to transfer the bet for a royalty into the tote system. There was no obligation for them to only transmit bets into the tote system. Foreign races have not been affected anyway. They took all the foreign races in their own pockets. To make a long story short, in the long run the bookmakers transferred less and less bets to the tote, but instead attracted more and more punters to their private bet offers.

- 13 - This situation was the advent of electronic, online betting and sports betting. The bookies, most of them, started to transfer the bets to outlets own by them in the so-called tax-heaven countries. In so doing, they avoided to pay the German betting tax and could therefore offer better conditions and more incentives to the punters, everything that the tote system could not do.

At present, betting on horses is the only legally permitted sport’s bet in Germany. Licensed private bookmakers are entitled to take bets on horses. Bookmakers still transfer the bets to tax-heavens. Some of them totally stopped to transfer any bet into the tote system. The situation of the trotting area is even worse than in the thoroughbred racing. As a consequence, within the last ten years, all the figures of German racing dramatically declined. tote betting turnover fell from 130 million euros in 1998 to 48 million euros in 2007.

All the developments have never been in favour for the horseracing industry with mutual and fixed-odds betting side by side. For a population of 80 million people, at peak time, the turnover amounts to 130 million in racing whereas it is 8,5 billion euros in France. And as a further consequence, racing fixtures fell from 347 in 1998 to 217 in 2007. All the areas of racing halved within a ten years time – amount of breeders, owners and so on. But that does not mean that betting on horses fell in the same way. We can only estimate the bookies’ turnover, because most of the bets are transferred – Gibraltar, Croatia... Estimations show that in 2007 alone the turnover on horse bets by the German bookies – which is only a handful of people – was between 250 and 300 million, compared to 48 million in the tote system.

Most race organisers are now fighting for their survival. Some of them a really close to bankruptcy and can only survive from the support of local banks or community. German racing starts to reorganise the whole industry by creating a new structure and a jockey club. But we must know how to handle betting in the online era.

Betting and gambling is very sensitive sector. And it differs a lot by culture and character of different nations. Therefore, the principle of subsidiarity seems to be the best way to carefully handle this area in the future. For Germany and German horseracing, an environment of integrity and responsible gambling must be secured and guaranteed. For every euro bet on horseracing in Germany, a fair percentage must come back to the funding of the racing and the breeding industry. Otherwise, this sport has no future and no chance. During the film, you also saw how many emotions come along this sport. I have been passionate for this sport all my life and I don’t want to see it fading away because the money goes to very few pockets, just for private interest.

Pierre-Luc SÉGUILLON, moderator

Are the German authorities aware of this problem, or do they consider this problem as a minor one?

- 14 - Franck JOYEUX, Representative of the Internationaler Club v.E. (Germany)

The figures themselves are not very high. This is why I have the impression that the German authorities and the government is not that much interested to change things about horseracing - which is only one part of the game. We are all working on this matter. Hopefully, something will change in Germany. Breeding and racing is a sector of national interest and it is written in the law. In fact, it is a real task for the government. But they have delegated it to the race organisers. The date of these laws is 1922. The funding has nothing to do with state’s money, but money from betting. This is not a secured situation.

Pierre-Luc SÉGUILLON, moderator

We are now moving to a completely different example: The United Kingdom. One question springs to mind: why the UK bookmakers’ system is doing better than our neighbours’ systems?

Nick COWARD, Chief Executive of the British Horseracing Authority

Very good question. We are delighted to be here to play a key part in this very important debate for the future of racing around the world and around Europe. Horseracing is special and incredibly important. What does the future of the economy of the horseracing industry and the sport of racing look like? With our different model and our different story, we think therefore it can be a very bright future. Racing is built on incredibly strong foundations. We saw an evidence of that in that small clip. The passion and the reach of racing are fantastic.

The statistics from the British example also show that British racing is in many senses in a very strong position. But experience also shows that ignoring the challenges is just not an option. Why is the British racing better and where are we after 50 years of an entirely different model? Perhaps we should ask the 225,000 people who will be going to the Cheltenham festival next week and the many millions who’ll be tuning in to the TV coverage what they think of the state of British racing. You may not realise it, but the British horseracing is the single biggest sport broadcast in Britain. Next Friday, we are moving to the Grand National for which the whole races will stops.

This conference is focused on betting. The British model is on an entirely mixed business plan. We have a different outlook on the relationship between betting and the sport. But there is a very common theme: anyone anywhere offering a bet on any of our racings has to be paying a fair return to the sport and has to have an interest in looking after and protecting the future and the integrity of the sport. Certainly, this debate is a great starting point.

All racing nations should have a law in place in order to give this affect. We are all operating in a global context, a global sporting context and a global betting market. We have to recognise that and we have to act accordingly to protect the future of our sport. For example, we have been 50 years in to a system some of you may consider to be an experiment. We are 50 years into an experiment where we have record numbers of horses in training, people

- 15 - involved in ownership, with record levels in relation to the turnover of our sport. The statistics are telling a very strong story. But as we all know, there are a great many changes out there.

The debate has got to be the start. We have a market-based approach to betting, which obviously sets us apart from virtually every other racing nation. But there should be a fair level of return and a relationship in place that makes sure that our integrity and the future of the sport is protected. And as every other nation does, we expect the government to provide the necessary framework to ensure that this change occurs.

A few years ago, British horseracing sought to adopt a different model. But for reasons that still defeat many experts in this field, the European Court of Justice chose to ignore or declined the opportunity for British horseracing to go down that different route. So we have a levy which is essentially the mechanism by which British horseracing annually receives its own income from the people who seek to offer a bet. At the moment – and this has recently been reconfirmed for this year going forward – it is 10 percent of the profits generated on bets on British racing. We have to reinvest this money in the future of our sport. This year, the system generated a level of around 92 hundred million pounds. When this all started in the 1960’s, the return from the levy in the first year was around a hundred million pounds. In the last two or three years, we have been reaching the highest levels ever of return back from betting on British racing to the sport.

In addition, we all face the same changes. The levy mechanism is a product of 1950’s and 1960’s thinking. We don’t believe that model can cope with the modern market dynamic. Therefore, the return it is generating to British racing is not sufficient and not right. Actually, it should at least be 135 million pounds, a large part of which would seek to create more prize money. Even though, that prize money in Britain is at its highest absolute levels for a year or two. That relationship in English law is not fit for purpose. Overseas operators who advertise into Britain and accept bets from British betters don’t pay any levy. This is an issue for the British horseracing, just as it is for any different model.

We have lessons about the way our model is operating from which this debate can learn in order to understand how we should overcome them. Our government is about to go through a fundamental review of what the levy is in Britain and what it means for the whole British gambling economy. What is the true and fair value of racing in the modern British betting economy as a global leader in its area? That includes the relationship with racing as a product in the shops. Those who experienced coming to Britain and seeing how we operate know how the shop environment has changed just over the last few years, as those shops actually turn into entirely different businesses with a very thriving fixed-odds betting terminal business and a new mini-casino filled to them. As we go forward over the next six months, that review is fundamentally important. I will be very pleased get in touch with this to keep everyone else informed of what is going on in Britain.

Today the process should be the start of us all communicating about our respective debates, both at national and European level. The lesson is clear: the market and our relationship with betting on a European and a global basis is changing at an incredible pace. We also have to adapt to that changing environment otherwise there will be very great consequences. Equally,

- 16 - I hope you understand that we can actually achieve what we all wished to achieve, which is a very strong and thriving European and world sport of horseracing. We need an open debate. That’s the starting point. It must be a debate based on evidence and facts, with the objective of achieving what we all want: a legal and regulatory environment across Europe and across the world. In any system, there must be a fair return to racing from anyone offering and placing a bet. The future, the integrity and the development of the sport relies on governments, European institutions and global institutions ensuring that the framework exists to allow our sport to thrive.

Pierre-Luc SÉGUILLON, moderator

As a responsible for the British racing authority, you are currently negotiating with the board to establish the rate of the funding of the industry. Is 10 percent enough to help the industry survive?

Nick COWARD, Chief Executive of the British Horseracing Authority

The British horseracing authority is the new governing body of the racing in Britain. The people we represent are the courses, the owners, the trainers, the breeders, the jockeys and the stable staff. Those are the chair holders to whom we are accountable. We are also discussing with betting operators. I think it is important to change the language. We are not talking about bookmakers alone, we are talking about betting operators, online betting and exchanges. It is our role to seek to negotiate first with the betting operators. But if we cannot negotiate a settlement – and we couldn’t last year – it goes off to the minister to decide.

The minister has recently decided that it should be 10 percent of the profit which comes back. But we were asking for 15 percent. 10 percent is not the right level. But most importantly, the minister also said that even though he has made a decision, everything is on the table. Over the next six months leading to a conclusion in July, we have an opportunity to restate our case so that we can get what we think is a proper and fair return: a minimum of 135 million and 15 percent of the gross win.

Pierre-Luc SÉGUILLON, moderator

Sometimes, the British bookmaking system is accused of being permeable: race fixing, corruption possibilities… What is your opinion about that?

Nick COWARD, Chief Executive of the British Horseracing Authority

In all of this debate, we have to work on evidence and facts. This debate needs to move in to a clear and open debate. We now have a government or an authority that oversee the entirety of gambling in the UK: the gambling commission. Their task is to ensure that betting and sport are clear. The integrity of the sport must be at the heart of our debate. As far as I know, we cannot say that one model is more or less corrupting. Corruption is a fact of human life. When there is an incentive to be gained, people may seek to take advantage of it. Our role is to ensure that racing is as clean as possible. Why? Because this is the future of the sport.

- 17 - Otherwise 20,000 people who have a livelihood in British racing are out of the job and then the 3 billion pounds economic contribution in Britain disappears overnight. The integrity of the sport is right at the heart of a thriving sport after 50 years of relationship with betting.

Pierre-Luc SÉGUILLON, moderator

Bernard FERRAND is President of the French Thoroughbred Breeders Association. He has a different system to describe, based on the mutual betting system.

Bernard FERRAND, Chairman of the French Thoroughbred Breeders Association

Members of European Parliament, ladies and gentlemen, dear friends from the horse breeding industry throughout Europe, the French model has been around for a hundred years and still holds on to its value. It is still efficient. With the mutualisation system, regularity and integrity of French horseracing is vital. The financial flow is crucial, particularly the origin of the money invested, with the risks of money laundering in the international context.

Firstly, we have to monitor the risk of compulsive gambling and control betting amongst young people. Secondly, we have to finance the whole industry. The different social professional components do not act just as creators of the industry. They also organise the whole spectacle which generates the financial product. In France, when you bet ten euros, one euro automatically goes back to the industry, which is fair, efficient and boosts the sector’s development. Managing and monitoring races and ensuring that the horseracing industry is legal means that the industry is protected against some of the most troubling aspects occurring in other countries of the world.

This way of funding the industry allows a fair distribution amongst the whole stakeholders. There are 250 racetracks in France which represent almost half of all European racetracks. It proves how efficient the principle of mutualisation is. This system has also helped farming linked to breeding. It funds training centres and activities in racetracks. It boosts jobs and helps rural development. The French racing sector represents 67,000 jobs. There are also 6,000 volunteers working. Associations are involved. All this area will disappear if the system was to be changed. Indeed these volunteers know what they do to help the industry survive, and they’re acting in the general interest. They would certainly not do so if only private interest was at stake. 50 percent of French racetracks would have to close down.

The French industry is the first in Europe, third in the world, in the number of studfarms and horses. This is due to way we fund our industry. The concept of a fair return to industry is well adjusted to the current times. A lot of other disciplines are not turning towards this approach. Sport federations and event organisers are also trying to protect their rights when they are exposed to commercial exploitation on the internet. You have probably heard of the legal action taken by French tennis federation. They discovered that the last Bercy tournament in December 2007 generated between a half a billion and a billion euros of bets on the internet without a single cent being fed back into the organisation. We are going through exceptional times. Technology is developing at great speeds. You can bet on a French racing

- 18 - in China or in tax-heavens. There is no monitoring of the money invested and no monitoring of possible money laundering.

One of the main points of this debate then is the link between online betting and the financing of the industry of horseracing. The problem is the same everywhere in Europe. Even for those who practice bookmaking, it is a common concern, which explains why this meeting was organised. Of course, a private commercial agent bookmaker or a website intends to maximise its profits, and that is only natural. But it means that the huge amount of money generated is lost to the industry with a matter of survival.

The British industry is funded by the contribution of the levy board taken from the bookmakers. Each year, this funding is renegotiated between the stakeholders and the bookmakers. Betting is seen as a product just like anyone else. The negotiations determine how much money the professional industry gets. With mutual betting, the French system avoids this type of economic relationship. There is a co-existential link between the form of betting and the way to fund the industry. That is the reason why the organisations were set up. And that is why we do not attach the same meaning to funding the industry as the British do. Online betting in the UK doesn’t pay money back to the industry. But we want to establish this financial relationship in the mutual betting system.

The strength of our model is that it fixes rules that are applicable to everyone. The figures themselves show the difference of approach. French betting represents half as much as the UK betting, but we pay four times as much into our industry.

Besides, we can talk of a mutual betting “ecosystem” is an interesting model: around a betting model, all an economy put in place. That is why the entrance of competitors systems, and not competitors, has a disastrous impact on these ecosystem’s equilibriums. If one system gets the leadership, it will have a disastrous impact on the balance of this Ecosystem. Thanks to mutualisation, betting in France is an example of organisation of a whole area of employment and culture which covers over 200,000 hectares. It gives a fair pay to 67 stakeholders who organise events. It also helps investment in the racetracks which are areas of competition. Then associations meet there and attract investment which boosts regional development.

The United States, Japan and Australia apply the principle of mutualisation because they all understood that this is the most efficient and safest system for the future, given the exceptional development of communications. Many more dangers may be encountered. Only a national organisation can ensure legality, transparency and the survival of our industry.

To conclude, as the President of the trade union of French horse breeders – the strongest socio-professional organisation in France, with over 3,000 members – I would like to say that thanks to mutual betting system there are births of 20,000 racehorses per year in France, bred by men and women who work hard and who are a part of French society. Breeding or horseracing is a part of our heritage. It is not a heritage like the Eiffel Tower or the Château de Versailles. It is a part of human and social heritage. Mutual betting supports not only the 250 racetracks, but also supports thousands of farms and studfarms. It is a part of the French’s landscape, French’s culture and its diversity. I have come to Brussels Today because the

- 19 - professionals in the horseracing and horse breeding industry would not survive if the mutual betting system were to be destroyed. This system was set up to allow the whole industry to survive.

I would like to say that deepest France, real France, would refuse any imposed betting system. We are happy to face any competition and we are not afraid of it. But the system must be applied alongside the mutual betting system which guarantees our honesty and survival. Europe wants healthy, sustainable and natural activities. We do not want to turn the European area of sport and racing into an enormous area which only benefits those who place the bets, excluding those whose life would be threaten. That is why we would like to ask the commission to receive a delegation of all the professionals in the European industry. We are convinced that our position is justified. We are determined and sure that its wisdom will lead to allow every country to choose its betting system. The whole of Europe needs a living horseracing industry which is fairly funded. Without us, there would be no horses, no races or no bets either.

Pierre-Luc SÉGUILLON, moderator

You are not against competition, but against systems competing with each other. What do you mean by that?

Bernard FERRAND, Chairman of the French Thoroughbred Breeders Association

I’m trying to summarise the common position in France. It is based on two cornerstones. Firstly the principle of mutualisation is the only true guarantee of the honesty and viability of our courses. The second principle is the funding the industry. Those two principles have to be respected. If there are European agreements or even legislation applying to all member states in respect of those two principles, we will not need to say anything about the form of the text. We think that those two principles are our main axe of defence.

Pierre-Luc SÉGUILLON, moderator

You stressed the potential danger of online or off-track betting. What’s the best way to tackle this issue? Is it even possible?

Bernard FERRAND, Chairman of the French Thoroughbred Breeders Association

This is first time the entire European sector is invited. We can debate our differences and share our know-how. We all need to consult each other because it is a highly complex issue. Our umbrella organisations have to been involved. We also have to consult the relevant ministries. I refer to Bercy, the French Economy Ministry. We have to find solutions. It would be interesting to get closer to other industries, such as the French Tennis Federation to elaborate means, solutions. But I don’t think I can answer that question today. I don’t think many people would be able to give you a reply.

- 20 - Pierre-Luc SÉGUILLON, moderator

Joe HERNON is Vice-President of the European Federation of Thoroughbred Breeders and also President of the Irish Thoroughbred Breeders Association. He will tell us about Ireland and the current challenges for all European countries. Before I give him the floor, I am tempted to ask Nick COWARD how he reacts to Mr Ferrand’s exposé on the mutual betting system.

Nick COWARD, Chief Executive of the British Horseracing Authority

Our different approaches are not actually incompatible. In France, the particular system operates very well. In Britain, the particular system operates well enough, but we want it to operate better. Actually, I don’t know whether everyone is entirely satisfied with the system in France. Usually, if you ask people if they can have some more, they answer yes. I’m not an expert on the French model, but I do know that what we have to address here is the fact that there is a growing amount of cross-boarder activity, which is actually the real issue.

How do we establish a framework which can accommodate to this growing issue? It is not in anyone’s interest that this activity and people who are engaging it shouldn’t be paying their fair return back to racing and shouldn’t have to have imposed on them very strict requirements to work with us to protect the future integrity of our sport. In my opinion, those who would only want to deal with the national are ignoring what the current economic reality and drive is all across the world. These are global issues which require a global debate and a global solution. We have the fantastic opportunity to start this debate here in Europe, where racing is so important to so many people, and where we can understand the issues.

At this particular time, European Union institutions are considering everything from a white paper on sport and online content. Why are these issues not at the heart of our process to ensure that we can get the absolute best for racing across Europe? We have to change the debate. Our key focus is to be saying out to all the policy makers that they have to listen to us. European racing is incredibly important, from jobs to the cultural life of various member states. We cannot hide away from the fact that there is a massive economic activity going on. And we should ensure that we have the framework to protect our future. Therefore, both systems can upgrade entirely side by side.

Pierre-Luc SÉGUILLON, moderator

How to meet the challenge of globalisation? In Ireland, the system is a mixed one.

Joe HERNON, Chairman of the Irish Thoroughbred Breeders Association

We do have a mixed system regarding the betting. We have both a totalisator and the bookmakers. They work well together at the moment because they are regulated. And like in any racing country, there are problems going forward with the globalisation of racing and betting. There is nothing travelling faster than the globalisation of the betting market. This needs to be addressed.

- 21 - Ladies and gentlemen, distinguished guests and members of Parliament, it is an honour to be here. No country more than Ireland recognises the importance of understanding how Brussels works and how to make sure that we support and promote the racing and breeding industry over Europe. In the past two years, we have had our successes secured and significant rural development funding. And we have had our failures. One example is the commission’s refusal to allow our government to continue to support our industry with the stallion tax exemption scheme. In all instances, it is really vital that we demonstrate to the commission how important our industry is to our country and above all to the rural economies.

Ireland is a successful thoroughbred-breeding nation. We are the third biggest in the world, with the US and Australia leading us. Irish sales of bloodstocks have risen from 112 million euros in 2002 to 191 million in 2006 – reported public sales. No one should forget that thoroughbred breeding industry forms the foundation of a successful racing industry in Europe. No one wants to see a situation where all the horses raised in one of our countries are imported from somewhere else. A healthy breeding industry supports a healthy racing industry, and vice et versa. In 2007, Irish breds have flown the flag for our country throughout the world. Last year’s successes include Dylan Thomas and Authorized. They gave both a huge boost to Ireland and to the whole European scene.

In my opinion, horseracing faces unique severe challenges, which set us apart from all other sports and businesses. We have the only sport’s product that is focused on an animal that has been bred on our farms. We have the youngest sport’s product which is depending on betting for its continued finance. We have clearly and certainly the youngest sport’s product which has its roots in the rural economies of our countries, supporting hundreds of thousands of jobs across Europe in a vast acreage of countryside. Yet, the commission applies the same competition rules to us, as it would to a technology company. But what is also clear is that we cannot expect decision makers in Brussels to understand and support us if we ourselves do not go out and explain how racing works. We must explain our concerns to the right people and help them towards workable solutions that we can both accept.

More and more decisions which affect us are being made at a European level. The European Federation of Thoroughbred Breeders Association has led successful challenges to European legislation, particularly on welfare issues and betting issues. We are currently talking to the commission on important issues such as the VAT on horses and on medication and transport issues. What are the challenges? One of the main challenges going forward is the opening of markets, whether it is in relation to betting or to other aspects of our industry. The treaty of Rome is at the centre of European policy, making the right to free movement of goods, services, capital and labour. This is not going to change. Therefore, Brussels will always want to open up monopolies and create more competition.

Competition in itself is not always bad. The bloodstock industry would not be as buoyant if we did not have a healthy trade between our countries in Europe. Growing the horseracing betting market and creating more punters could be good for racing. Besides, we know that young people use online services more and more. So we need to attract their interest, as they are the punters of the future. Racing needs to promote itself to them and to continue to attract new people who will buy horses. And this in term will help keep people on the farms that

- 22 - produce the horses. Yet, we know that internet betting is difficult to control. This leads to many other problems. Do we collect tax from the country in which the bet is placed, or in the country where the betting operator is located? In certain places of the United States, if you are to have a bet in one state, it can be blocked by the online betting if the money is going out of state. You just cannot do it legally. There are ways of controlling the market and ensuring that it pays its fair share to those who form the product, the owners and the horseracing industry.

The thoroughbred breeding industry in Ireland accounts now for highly significant 10 percent of all animal and livestock output. Historically, racing industries have been funded through betting through the mutual system as in France, USA, Hong-Kong and Korea, or through a combination of mutual and TOTE betting. The bookmakers which Mr. COWARD has referred to do contribute only through regulation. The people who fund our industry and the owners should have the rights to participate in the profits from this other gaming industry. They put on the show. Mr. JOYEUX’s comments regarding the betting in Germany falling from 130 million in 1998 to 48 in 2007 is a frightening statistic when it is taken in a global context. As a direct result, the prize money in Germany has fallen drastically, leading to more and more disappointment and disillusion in that country.

The decline of racing and breeding in Belgium is undoubtedly linked to the strategy of offshore bookmakers. The result has been a huge number of job losses, substantial decrease in revenue for both the Belgium tax authorities and the breeding and racing industry from 1986 to 1996. Punters were systematically pushed towards betting on foreign racing who do not provide a return to racing. Births of thoroughbred foals in that country had a high of 400. There are currently less than 40. Racing days in Belgium have been reduced from a high of 150 to 40. The adequate response from the authorities would be that a fair share gets back to racing. Prize money is the lifeblood of racing. Owning racehorses is an expensive business and the owners supply the medium through which the betting revenue is generated. It is only fair that we receive a fair share through a prize money structure. Without prize money, many trainers would find it very difficult to survive.

What do we need to do now? We need to join the debate and make our voice heard on European policy making. Today, racing needs to unite and ensure that it has an effect of presence in Brussels. The breeders’ federation stands ready to offer its help. A healthy betting industry helps finance a healthy racing industry, and this goes back to the farms, which goes back to the rural areas throughout our countries.

Pierre-Luc SÉGUILLON, moderator

You sent a letter to Mr. McCreevy saying that you support the French system. In this letter, you also underlined that France is a very important actor for the welfare of this industry.

Joe HERNON, Chairman of the Irish Thoroughbred Breeders Association

That’s right.

- 23 - Pierre-Luc SÉGUILLON, moderator

If you had to return to the European Parliament, what would be your message?

Joe HERNON, Chairman of the Irish Thoroughbred Breeders Association

My message would be that racing is globalised as well as the gaming market. Very clever people are running it.

I believe that the treaty of Rome wants competition to be fair. I believe that the PMU is fair. It is looking after a sport. If a major company comes to Europe to employ 30,000 people, the road would be laid out for them, we’d be waving flags to welcome them. There is an industry in France. It is financed through the betting industry primarily and it should be allowed to continue, because those jobs are sacrosanct. And it will not last if the funding to racing is not enshrined.

Pierre-Luc SÉGUILLON, moderator

There will be a general discussion after the second roundtable for specific questions about the substance of the presentation. Malcolm HARBOUR and Mr MENDEZ DE VIGO are members of the European Parliament and they maybe want to say a few words.

Malcolm HARBOUR, Member of the European Parliament, EPP Group

I want to thank Jacques TOUBON for taking the initiative to hold this very important gathering. In our committee, we already recognised the developing issues that the internet is posing. Horseracing is clearly identified as some of the crucial issues around that. But I observe also that there are very big issues with the future of national lotteries who are also suffering from that competition. Indeed online gambling is also starting to affect other sports. The dramatic growth in online gambling is actually not in horseracing, but in football. In a way, that poses a challenge to everyone involved in sports.

The issue is not actually at a European level. Many of us see this need to take actions at a European level. The real resistance is actually being in the governments of the European Union who have been very afraid up to now to destabilise what they regard as being sound arrangements. But as all of you pointed out, things are changing dramatically. We think in terms of a European regime that deals with online gambling issues and particularly ensures that the revenue generated from betting on a particular sporting activity goes to that sport. The second issue is that we put in proper control the social aspects of gambling at the same time. Bear in mind that it also requires your governments from respective countries to be motivated to move forward and to accept the fact that we do need tackling those issues to a European level.

- 24 - Jacques TOUBON, Member of the European Parliament, EPP group

Today is a starting point.

Bernard FERRAND, Chairman of the French Thoroughbred Breeders Association

Today is the starting point of many things, Mr TOUBON. This is the birth of a gathering of all those representatives of the profession. Our problems are the same, even if there is the mutual betting on one side and bookmaking on the other. Leave us enough time to catch up, and you will see us.

Franck JOYEUX, Representative of the Internationaler Club v.E. (Germany)

You are absolutely right. The national governments have a lot of responsibility. They have to be supportive in all these areas. Online betting is one of the great challenges, and there are means to even control online betting. Other countries show us that there are means to control events and to keep a sort of transparency.

There are two different sorts of betting: the mutual betting and the bookmakers’ betting – or the private operators betting. As Nick COWARD said, we are talking about cross-border in the future. But cross-border betting can be done on a mutual basis as well, and no one can tell us that it is only possible with a market-based model. The issue is not about how to get rid of the bookies in Germany or in England, because it is just not possible. The bookies have been in the market since 1922. We cannot ask them to go away. But the coexistence between the mutual and the market-based betting, with exception of the Anglo-Saxon countries in Europe, was a disaster in every other country.

Sometimes, the national government did not properly react. I doubt that the system works very well in England. Without the massive input of money which occurred in the last decade, we would have a totally different picture of prize money. Sheikh Mohammed said that he would go out of England if the contributions of the bookmakers remain as poor as it is Today. Shall we force France to open its system to market-based approach? Why? They don’t have bookmakers and they never had and it works extremely well. Let them be happy. In Germany, we have to cope with the bookmakers because we cannot get rid of them.

Mr. Íñigo MÉNDEZ DE VIGO, Member of the European Parliament, EPP Group

I am in favour of racing. Twenty years ago, I was with Mr MELCHOR’s predecessor, Mr Deljado, who was our Chairman in Newmarket. I met a very senior trainer who asked me if there were bookmakers in Spain. I said no and he replied: “Ah my goodness! Never let them in!” So I understand very well your arguments.

From my experience in European Parliament – 15 years – we mustn’t believe that Brussels’s institutions are very familiar with the subject. They are only 30,000 officials, which is half the number of people employed by the town hall in Paris. They cannot know everything. One day, a regional representative in my country asked me to see what could be done in Brussels. I

- 25 - met the president of the regional government and told him what I found out: Brussels did not know where his region was nor where the city was located. That’s the way things are.

This meeting is an excellent idea to begin discussing the substance and to get a little bit of intellectual ammo. I really appreciate the idea of an Ecosystem of the mutual betting. That shows where the stakes are. Sometimes people oversimplify the issue. In France, you can bet on a racing for the day after. You don’t need a bookmaker to do that. From my point of view, this initial gathering is a signal to the institutions to show. It is not only about betting. There are a lot of things connected to betting. There is a whole industry. People have been working for it for years and they have a passion for horses and breeding. All this has to be taken into consideration. That’s our first duty even tough it is not an easy one. I realise that you want to do a lot of appeal to Brussels and so that is a good thing. Words hang in the air, but paper remains.

Secondly, we must define what can be proposed and planned. Mr. HERNON told us about the competition rules in the Rome Treaty. There is a fair competition, and that question has to be asked. So what we need is good arguments. Anyway, I wish to extend my very warm welcome to the European Parliament. One of the big races is called the “First Step”, so let’s head off to the derby.

Jacques TOUBON, Member of the European Parliament, EPP Group

I want to welcome Paul RÜBIG who is our group’s small businesses specialist. His presence shows the interest on family and small and medium-size businesses.

Pierre-Luc SÉGUILLON, moderator

Before we move on to the second roundtable, are there any specific questions to the speakers?

Patrick FELLOUS, Member of France Galop

I’m an owner and breeder since a very long time. I would like to ask Mr. COWARD how he feels about having to make a 5 percent cut in the returns in England, whereas we have made a 4 percent increase in France.

Nick COWARD, Chief Executive of the British Horseracing Authority

This is a very complicated question. We have a big balance. Let’s put this in context in terms of our income from betting. Through the levy mechanism, our income in betting has doubled from five years ago to now. What we need is an open measured evidence-based debate about issues which to date lot of people seem to have been in denial about – I am not talking about us necessarily. British horseracing, those involved into the national tennis, the Olympic movement and international football, they have all had to come to Britain, because they are now dealing with an issue which they have a sport been in denial of. That is the reason why there is an enormous activity of betting going on around their sport. There are 600 websites offering betting on the international tennis at the moment. They have no idea what to do about

- 26 - it. To answer the issue, there is an enormous amount of information, and these are complex tasks in relation to the whole balance between the opportunity to run as opposed to the influence of prize money. Owners and lots of people involved in our sport have many different motivations.

We now have 50,000 people in Europe involved with many different motivations. This is hugely complex, as you would expect. This model which has grown up over centuries is incredibly complicated economic model, involving many different people who have many different motivations. But at its heart, there is just one single irreducible fact: they are involved in a beautiful fantastic and compelling sport. As Joe said, breeding and racing are intertwined. There is one major activity incredibly complex and rich. It is going to be quite a struggle to convey to people that complexity, that richness, that breath and depth. I think this is a great start to do something which is going to pay ultimately for racing, because that is why we are involved.

Pierre-Luc SÉGUILLON, moderator

Mister Ferrand, I think you want to say a few words ?

Bernard FERRAND, Chairman of the French Thoroughbred Breeders Association

We are going to leave the top table now, even if the meeting is far from being over. I want to thank you, Mister the Minister, that is thank to you we are experiencing such historical moments. Thank you to Mr. HARBOUR and Mr. MÉNDEZ DE VIGO as well. Of course you are members of the European Parliament, but I suspect that you are nonetheless on our side, which is nice to know.

Pierre-Luc SÉGUILLON, moderator

Thank you for participating to this initial roundtable. We thought about the economic future of the industry in racing and betting. We are now going to talk about the best model for horse races and for betting. Paul ESSARTIAL is Chairman of the French Horse Council Federation. Jean-Pierre KRATZER is Chairman of the Swiss Trotting Federation. Fernando MELCHOR, is Chairman of the Spanish Thoroughbred Breeders Association. Patrick SANDIN is the Swedish President of the European Trotting Organisation. Note that Mr. KRATZER is the Vice-Chairman of the European Trotting Organisation.

- 27 - ROUNDTABLE 2: WHAT MODEL OF ORGANIZATION FOR HORSERACING AND BETTING?

Pierre-Luc SÉGUILLON, moderator

Mr. ESSARTIAL, you are the founder and the Chairman of the Horse Council. What is original about this structure?

Paul ESSARTIAL, Chairman of the French Horse Council Federation

Let me introduce myself. I’m a breeder, a horse owner and a trainer. I have been doing this since I was fifteen. I am an administrator of the PMU, as a member of the French Trotting Association. Ten years ago, I created a Horse Council. In the twenty regions of France, we have implemented Horse Councils, and I’m the Chairman of the national federation. They are the economic and social and regional bases. The councils are the only partners for the local authorities. I convinced my friends in the gallop and trot and the French state that it would be good to have an economic and social body. The regions are important and there has to be a division amongst them.

Four years ago, we decided to assign 10 million euros to this organisation. This generated 4 million euros of investment which enhanced and restructured the industry. It was also an incentive to young people, because their enthusiasm requires some funding. It takes a long time to set up those councils. Some of the regions work very well. The main projects deal with epidemiology, fundamental research and horse diseases. There is also a business nursery in the area of horse jumping. If we had not created these councils, this would never have had happened. In all these regions, there are 43,000 breeders, generally in small farms. They’re all enthusiasts, but they need strong regional structures. We are the opposite members to the local authorities. They have been happy to play the game so far.

At a regional level, we have shown how we can generate funds. Politicians understand us. We do need you, ladies and gentlemen of the Parliament. Horses are very important in Europe: a common patrimony built by generations of breeders we must not loose. Apart from the breeding industry, horseracing happens everywhere. Today, we have the means to survive. It is a great heritage from generations of breeders. Don’t think that we can afford to loose this human capital. Those farms have been passed on from father to son. In my own region, people would be unemployed if they had to give up. It is extremely difficult to start over wherever it is and to retrain people from scratch. It is very easy to destroy the industry, but building it again, with all its competences, would be almost impossible. Europe has an opportunity to win over the world horse market. Those people involved are enthusiasts and skilled. I believe in Europe myself, and I have always been a convinced European on condition that everything is done properly.

Gambling gives us the possibility of winning the market on condition that gambling is properly managed by legislation, and on condition that we are a part in the puzzle of the

- 28 - globalisation process. We cannot turn our back on it. We have trotting, gallop and the whole horseracing industry in France. This is a huge opportunity of betting together. We can then discus ways and means of contributing to this European organisation which is indirectly becoming a global organisation. Online betting is bound to be an evident problem. But it is up to the politicians to resolve it. We cannot do it on our own. Therefore, we are convinced that the regions of Europe have a very strong role to play. Talking about gambling means talking about redistribution to the regions and jobs, on condition that we generate all the financial flows created by betting. Horse is a wonderful animal. I have been living with horses for decades, so did my parents and my grandparents. I believe in a strong past winning a strong future. We shouldn’t lose our heritage which is common to all of us. I think I have been speaking from the heart today. Please help us, we do need you.

Pierre-Luc SÉGUILLON, moderator

Thanks a lot Mr ESSARTIAL, the lesson to be carried out from the horse councils could be perhaps that, for its prosperity and health, the racing industry has to be placed in a broader context? And that context is everything that affects horses, the whole horse industry.

Paul ESSARTIAL, Chairman of the French Horse Council Federation

Yes, absolutely. For example, we fund disabled people who want to ride. We fund youth organisations for young people who want to learn how to ride horses. We deal with young people in difficulty. We also offer them the possibility of learning how to ride. Who else would do so? We are the people who channel the funding. We organise courses for people who want to learn how to ride horses. We don’t just want to benefit from it, we want to redistribute the profits. The mutualisation system allows profits to be distributed. I am an administrator of the PMU and of the trotting organisation on a voluntary basis: I don’t get paid for it. We are all volunteers. Racing competitions are also organised by volunteers. If there is no redistribution throughout the horseracing industry, we will all have lost a battle for the countryside and for the redistribution of the profits amongst all those around us. Often people are stronger when together. But if they are scattered all around the country, they have no power at all.

Pierre-Luc SÉGUILLON, moderator

Jean-Pierre KRATZER comes from Switzerland, practically the 28th member state. Swiss horses are concerned. Explain us how you drew up agreements with your French neighbour to organise bets.

Jean-Pierre KRATZER, Chairman of the Swiss Trotting Federation

You can be Swiss and a part of Europe at the same time. Everybody knows that Switzerland has bilateral agreements with Europe and things work quite well. Horseracing is a cross- border industry. Twenty years ago, I started negotiating the very first European cross-border agreement contracted in the betting industry, between France and Switzerland. It was meant to the Swiss lottery. Switzerland has German-speaking and French-speaking regions. Twenty

- 29 - years ago, my colleagues from the German-speaking Switzerland were looking towards Germany. Mr. JOYEUX will remember that, they trusted in certain bookmakers who told us they were going to come in and create a fantastic model. In French-speaking Switzerland, we commissioned a study to analyse what the mutual betting system was, and we signed an agreement. The Euromillion lottery is built on the first model. Of course, France and Switzerland have two different legal systems. Nonetheless, we were able to introduce a system thanks to the respect of a certain number of principles and rules, three of which I would like to explain.

These rules are essential if you’re going to introduce a possible standard model in the future. Fair revenue for horseracing is not just a question paying the horseracing industry where the races take place. In this cross-border agreement, you have the opportunity of paying the other racing industry. There is not just one racing industry. There are many industries in the countries of the agreement. At the very beginning, the rule we introduced was that the stakes made in Switzerland would also be redistributed to the Swiss industry, even if no race were taking place in the country. This principle was essential. When you’re talking about a cross- border agreement, with not just two countries, but three or four in the future, you have to stick to that particular rule. Without racing there are no bets. If horseracing dies, betting will too. It is an economic reality.

The second principle is that gambling is not an ordinary economic activity. Why have we drawn up the agreement then? Because the two countries have the same vision and the same legal system in that particular area. Betting is not a normal economic activity. And transferring wealth through gambling is not an economic activity in the common sense, even tough there has been a ruling of the Court of Justice on that which disputes some of the legal systems. With the Euromillion, with nine or ten countries playing, half of the stakes remain in the country and the other half is redistributed to the winner. If there is somebody in Portugal or Belgium who wins 25 or 30 million, everybody understands that there is no economic activity involved in that. Betting is the same thing.

The key principle for the future is that all the measures are taken to limit the betting addiction, compulsive gambling and major social problems dealing with delinquency. Fortunately, legislation on both sides of the border has the same approach to these problems. The question about bookmaking or mutualisation arose. In fact, at the time, we looked into the history of betting. Just after First World War, people were thinking about what to do. All the countries on continental Europe went for the mutual system, apart from Germany. In 1922, it opened the doors to bookmakers as well. Basically, do you want betters to play against betters, or do you want them to play against the agents? Everybody understands that when the gambler plays against the agent, the agent has resources at his disposal to influence the game and the bets. The principle of mutualisation is to make the market transparent. It also allows limiting the risk.

Thirdly, it is the principle of territoriality of the gross revenue of gambling which slipped into the agreement and which is an important condition for the future. When you bet on the same race in France, if you have 1,000 at stake in France and 100 in my region, you calculate and 75 percent is redistributed. The 25 percent remaining in France is redistributed to the place

- 30 - where the bet was made. It is also redistributed in my country. Today in France, there is a tax for the gross margin of the bet. There is then a fair share to the industry. In Switzerland there is not such a tax, but there are other taxes where the public interest involved. As a result, measures can be taken against compulsive gambling. The cross-border agreement will apply in the future. If we want a common critical mass, the amount which is kept by the agents must be redistributed in the country where it is generated. This principle has allowed the Swiss industry to pay both the French and the Swiss industry from the margin. Out of 120 million Swiss francs, we pay about 60 million to the French industry and 3,5 million Swiss francs goes to the Swiss industry. To sum up, this agreement survives because of the application of the three principles that will continue to be important in the future.

The next question is about the arrival of the internet. The internet didn’t change the structure of betting. It is a means of communicating. It modifies the territorial network and it goes cross-border. Certain questions arise for the future as far as a model is concerned. Is it possible to legislate in all our countries so that agents are obliged to pay a contribution to the industry from the bet’s place? We should also bear in mind that betting is not an ordinary activity. Can we affirm that gaming, betting are not and ordinary activity and that each country has the right to introduce measures to maintain public and social orders? According to its culture and its problems, every country has to cope with these social issues. Can we set up a sort of surveillance body and make every online agent get a licence? The other question is: is it possible to locate the origin of the bet by the IP address or by the way the better is being paid for? To all these questions, the answer is yes, with the kind of agreements we have between France and Switzerland, we can do it. The only real question may be this one: do the governments have the will to make online betting possible while respecting the very nature of the bet?

What is at stake today? There are 8,5 billion bets in France. German trotting amounts to 300 million euros. We have 80 million euros in my own country – which is a small one. Then the real question is a question of responsibility: should be there an opportunity for the bookmakers in Europe? Horseracing in other countries of central Europe wants to develop. But they are not able do so at the moment because of the funding. With a Swiss-type agreement, these countries would be able to develop. The question for us then is: can we look optimistically towards online betting? According with the agreement with France, the answer would be yes. But the implementation has to be closely monitored. I’m convinced that other countries could benefit from this type of agreement in the future.

Thank you.

Pierre-Luc SÉGUILLON, moderator

Just out of curiosity – and playing the devil’s advocate – you said “no betting without horseracing”. Is there not already today virtual races?

- 31 - Jean-Pierre KRATZER, Chairman of the Swiss Trotting Federation

Unless we do something to protect the horseracing industry, there is a great risk if we allow online operators to use any sort of tax-heaven anywhere they like. The thinking goes like this: you have taken the stakes, you redistribute a share. If you want to save money on all your activities, you replace horses by virtual races, you move to another country, you pay no taxes and you give more to the punters. That makes the operator more appealing but there will not be any more races. The countries will be left with gambling addiction and they’ll have to pay for it anyway. That is why we have to take preventive measures. I keep saying to my French friends that the heritage is a treasure for them and also for Europe. If you allow Slovenia or other countries to bet, stakes will go lie in the pockets of bookmakers in Malta or Gibraltar.

We have to struggle to keep the races, the breeders and the owners into place. We don’t want horseracing to be only a game. Everyone knows Euromillion. Every week, 60 million euros is at stake in ten countries, where 30 million is distributed to the players. The rest is the margin of the operators in the various countries. Obviously, some of the taxes go back to the community. But just imagine operators who could do anything they like. What will happen then? They will go off some place where they don’t have to pay taxes. On the 60 million, 45 or 50 million will be distributed. But what is going to happen to the rest? It will disappear. So we have to see how the Swiss model can be applied to the internet.

Pierre-Luc SÉGUILLON, moderator

Fernando MELCHOR is the President of the Spanish Thoroughbred Breeders Association. I will ask him the same question about the future of the model. In Spain, the horseracing sector has suffered terribly in the recent years.

Fernando MELCHOR, Chairman of the Spanish Thoroughbred Breeders Association

Ladies and gentlemen, members of Parliament, we are experts in the horseracing crisis. Unfortunately we had to close down our best racecourse in Madrid during ten years. Not only racetracks closed down, but also the whole industry did so. And that is something we don’t want to see repeated elsewhere. That is why we are here with our European friends to deliver our experience and perhaps to try to make a contribution to the future.

In any event, I want to express solidarity between the various branches in this roundtable discussion. I’d really like to stress not a system or a financing model, but rather a principle of solidarity between our sectors in Europe. Of course, solidarity has an economic aspect. But it can help the professionals who wish to breed horses and win. This meeting shows what ties do bind us. I’d like to take an example from the world of gallop. It is better to raise horses in Ireland, in the UK and to take the betting in France. We have to make best use of the expertise that already exists. The UK is well-known for its ability to train. The returns are high for horseracing in France.

It’s important to see what happens to the professionals and to exchanges. Almost all European countries raise horses and organise races in one or several disciplines: steeplechase, flat-

- 32 - course racing or trotting. But none of these races lives in isolation on a country. There are exchanges that contribute to the vitality of the various sectors and to the health of racing in Europe in general. There are countries such as Sweden, Denmark, Finland and Norway that are specialised in trotting essentially for climate reasons. Countries like France and Italy are involved in all three disciplines. Both countries have organised 45 percent of flat-course racing, 50 percent of trotting racing in Europe. However, respectively they only supply 18 and 7 percent of thoroughbred births. By definition, the thoroughbred is an international race. Genetic improvements are made constantly.

In Spain, we have well-known studfarms and many of its horses race in France. Spain is beginning to be taken very seriously. Our payout has doubled over two years. The number of horses in training has tripled. Breeding has also taken off. When it comes to breeding and improving races, the balance between selection and renewal is extremely important. So there has to be an exchange. No studfarm or breeding farm can survive alone.

Today, there is a ruled market for breeding and thoroughbreds, and France, Ireland and the UK are at the top of it. Ireland and the UK where trotting is rare organise 25 percent of flat- course racings and 60 percent of steeplechase racings. But when it comes to the number of thoroughbreds born, they account for 60 percent of the European production. France, another well-known racing country, accounts for 20 percent of flat-course racings and 30 percent of steeplechases but only produces 18% of Europe’s thoroughbreds. Spain has its contribution as well. The country produces some of the top-studs: Literato, one of the best gallop’s horses in the world, has his mother and grand mother trained in Spain.

Some countries are specialised in horse production, and other are specialised in racing or training.

In that way, the European racing is ruled by exchange and mutual enrichment. The horseracing industry has also a market influence on agriculture. Today Europe is an exporter of horses to other racing countries throughout the world. In recent years, we have spent 8 million euros in France and Ireland. Our sectors are facing a common threat: online betting. We have to pull together. This is a great worry for all of us, as we are all intertwined. It seems important to recall this truth: the horse Europe exists, we all met it. The weakening of one of our industries would be a concern for all the others. Thank you.

Pierre-Luc SÉGUILLON, moderator

You work a great deal with south-western France, don’t you?

Fernando MELCHOR, Chairman of the Spanish Thoroughbred Breeders Association

Yes we do. As a small-scale breeder, I myself go at least twice a month to this part of France. 30 percent of our trainers are based in San Sebastian. They race everyday in other lands in the south-west but also in the east of France. Very often, they go as far as the north of Paris to try to win.

- 33 - Pierre-Luc SÉGUILLON, moderator

Mr. Tore FYRAND, you are the General Secretary of the Norwich Trotting Association and you also belong to the European Trotting Union. We spoke a lot about the financial programs. What about the ethics? According to you, what is the model that helps integrity and prevent from corruption?

Tore FYRAND, General Secretary of the Norwegian Trotting Association

Thank you for the initiative of this meeting. It is important for the whole industry. For me, representing Norway, a non-member here, it is an even bigger chance. Firstly, I am going to give you some information about the Norwich trotting system. Since 1928, we have a mutual totalisator system, just like in France. It has been functioning very well for 80 years. Our organisation started more than 125 years ago, when the people started racing on frozen lakes. The start for this racing industry was when farmers were trying to come first to the church on Sunday. I heard from my family that my great-great-grandfather was not so keen on the worship, but keen on racings. So I know the history from the beginning.

You asked us about the ethic problems, and the well-organised mutual totalisator system pays a lot of attention to them. First of all, it’s a very well organised because each nation’s government accepts the rules. In Norway, the state has a sit in the board, and there is a close connection between the government and the betting company. These questions are on the top of the agenda, instead of being taken away. What happened in the last years is what we described. Norway, like other countries, is challenged by pirates using our starting lists, our results or our programs to make their own betting systems. They pay no tax to the organisations. Of course, we are dealing with ethic problems. You must remember that all mutual organised totalisator companies pay a lot of money to the anti-doping process. That was not mentioned at all today. Without the money from the mutual totalisator system, there would be no money to develop new ways to protect the animal welfare. All that depends on the money brought in by the mutual systems. You can find the same frame all over the countries working with this system.

I’d also like to emphasise that when the state is close to the framework, then we can deal and discuss directly ethical and social problems. We must dare to talk about betting dependency and all other problems linked to our industry. What we see now was summarised by many speakers before me. The threat by internet-based companies in tax-heaven using our sport and industry to take away money which do not come back to the owners, breeders and industry.

Secondly, there is an ethic problem. These companies have just one aim: making the most money out of a least cost. They have no costs for antidoping work, education or scientific research. To us, at the European Trotting Union, these topics are on the top of the list to make sure that our industry is sound, ethic, wise. We have to meet the challenges in a real framework that is organised by authorities. Other companies have the opportunity to steal the lists to make their own betting. I hope really that this meeting is the start of a political discussion on how to deal with this challenge.

- 34 - Pierre-Luc SÉGUILLON, moderator

Patrick SANDIN is Chairman of the European Trotting Union. Your organisation has worked on all the topics mentioned this afternoon. You sent a message to all European governments and European authorities. What did you ask exactly?

Patrick SANDIN, Chairman of the European Trotting Union

During our annual meeting at the Prix d’Amérique, organized since 1920 and therefore a symbol of the trotting history, we made a declaration that was undersigned by all countries: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Italy, Malta, Netherlands, Norway, Russia, Slovenia, Spain, Sweden and Switzerland. And the declaration was distributed to all the governments throughout these countries.

We represent the European trotting industry, with 100,000 people directly employed and 200,000 indirectly employed in breeding, training, agriculture production, equipment, manufacturing and racing events. Annually, we organise 65,000 races on 400 races courses all over Europe, with the participation of 73,000 horses. The declaration from Paris was aiming to protect and maintain the European culture, landscape and environment throughout the lands. We are also referring to other sectors including flat-racing, which adds an even more important factor to the social and economic aspects that we mentioned.

The ETU is reaffirming its commitment to observe the strictest rules in the promotion of animal welfare in horseracing. We are practising the strictest rules against any sort of doping. We are having a clear and transparent agreement to organise legal betting and horses undertaking by non-profit organisations in every country, licensed by all the governments, with a turnover of 9 billion euros annually. Thereby, we are making it possible to the solid providers in horseracing to receive payments. We also input a contribution to taxes and revenues to the national governments of approximately 2 billion euros annually.

We express very great concerns about of the increase of illegal and unauthorised betting on horses. We ask our national governments to take a proper action against such illegal activities. We will continue to support the lawfulness of races and fairness and transparency in betting. We also ask our governments to uphold such a mutual betting system in our countries. We urge our governments to continue to support – at a national and a European level – the system of transfer and income from legal mutual betting to services providers of horseracing.

We would like to express our full support to the French authorities as well as other European countries in their dialogue with the European commission about the open procedure. This procedure will not lead to a financial collapse of horseracing by taking away its main source of income. On the contrary, the solution is the funding aimed to secure the financing of horseracing at the required level to maintain jobs and preserve these conditions for the breeding and racing. We strongly reaffirm that the maintaining of European culture, landscape and environment is a common European good. The great contribution by the horseracing industry to this should be fully recognised by our authorities.

- 35 - Pierre-Luc SÉGUILLON, moderator

I’d like to thank all those who participated to the second roundtable. We have seen that not everyone always agreed. Some are more Anglo-Saxon and some are more Latin. Although there are differences, there is much in common and that is the important thing. That was one of the goals of our meeting. As I observed discussions this morning, it seems to me that there is an agreement for a number of common principles. I felt like I was at a Horses United Nations’ Security Council. Perhaps Christiane HEAD-MAAREK can tell us what the common principles are.

- 36 - COMMON POSITION OF THE EUROPEAN HORSERACING INDUSTRIES

Christiane HEAD-MAAREK, President of the European Trainers Federation

Thank you for inviting us here today. I’m the only woman to take the floor. It doesn’t look like there is parity in that regard. I say this just to start on a light note, because we have been so serious so far. But this is a serious matter. I’d like to read out the joint motion adopted this morning after some discussion. I’d like to say what an honour it is for me to present the points of agreement and motions. It is the text of the joint motion adopted this morning by all participants of this conference and by a number of organisations. I hope that the only reason I have this honour is because I am woman.

We have been through Germany, Ireland, the UK, France, Spain, Norway, Switzerland and Sweden. All these countries have different ideas and mentalities. Not everyone disagreed about everything. But many of us feel that the mutual betting system that exists in about 80 percent of the countries throughout the world is the best. Others, essentially the Anglo-Saxon countries, have always existed with bookmakers. That is why it has not been easy for all of us to agree and why the joint resolution was not easy to draft. Quite aside from differences of opinion on the model, we wanted to highlight the principles that we agree on. Despite our differences, the horseracing profession throughout Europe has succeeded because there is much that unites us. All of us have a passion. We all earn a living from horses and we keep the profession alive. We face a common challenge today: the effect of online betting. That is what brought us together whereas many of us are experiencing grave economic threats.

Other organisations are being jeopardised by European authorities. Plainly, we don’t wish to reject technological innovation, which is unavoidable. But its rapid rise affects horseracing and other popular sports, such as rugby, football and tennis. The main difference is that these sports lived without betting to date. However, horseracing has developed a close relationship with the betting system. In some countries such as France, the system was organised so that an income from betting would support the industry. To support the relationship between betting and breeding, the mutual betting system was adopted. But we don’t wish to see the balance disrupted. Someone said how easy it is to destroy the work of decades in a country. No one is sheltered from that. Despite the differences, that’s why we all realise that we are interdependent. Anything that affects one of our branches will affect all the others. All of us know what our branches represent for Europe economically, socially and culturally: 400,000 full-time jobs, 500 racetracks, 100,000 races and 58,000 births a year. We all know that. Does the European Union know it too?

The common position adopted today is based on three clear principles:

A part of the betting income must return to the industry. Can you imagine the same issue occurring in the field of television? National authorities and European authorities would have to support this principle. You cannot imagine racing without betting, but the relationship has to be balanced.

- 37 - Principle of subsidiarity: organising racing, and the way the industries are organised, depend on a number of things: history, organisation, social factors and so on. But plainly, betting on racing is not like any other types of betting. The MEPs known that they excluded gaming from the service directive for that very reason. We want a balance and we realise that betting is special in nature. The professionals want subsidiarity to be applied at a national level. Each member state should be able to decide how it organises its betting on its national territory.

Finally, Europe should give us the means to protect our racing industry and its integrity and to avoid corruption. Ethics is up the utmost for us because public confidence and confidence of the betters is the most important thing. We don’t want our racing to be besmirched. Therefore, we can’t but agree on that.

We would like to remind European authorities and member states’ governments how important these principles are. Presenting this resolution to Mr. DAUL and Mr. TOUBON who enable this conference to be held, I read out the joint declaration that we signed this morning, by Norway, France, Spain, Switzerland, Germany, the UK, Ireland and others countries which are not represented today but will quickly sign.

COMMON DECLARATION OF THE EUROPEAN HORSERACING ORGANIZATIONS

We call the European Parliament, the Council and the Commission, to recognize urgently the need for a clear and coherent legal and regulatory framework, guaranteeing:

1. A fair return from betting to the racing on which it is promoted or offered;

2. The protection of the future integrity of the sport.

We call on the European Commission to develop a policy to achieve this, in consultation with the European horseracing organizations.

It is necessary that, in conformity with the principle of subsidiarity, Member States have a European legal framework on betting, which will allow them to exercise their own competence in conformity with EU law.

Pierre-Luc SÉGUILLON, moderator

That was the joint declaration. I forgot to point out to those of you who might not know that Christiane HEAD-MAAREK is President of the European Trainers Federation. She is also President of the French Federation of Gallop Trainers. We have more time to look into all of the subjects which were raised at the top table: the economic future of the industry, the different models and which are the best ones allowing the industry to be funded and which may guarantee the integrity of gambling and betting.

- 38 - DIALOGUE WITH THE AUDIENCE

Philippe CASIER, Chairman of the Belgian Jockey Club

I represent Belgium gallop racing. I am the President of the Jockey Club. First of all I want to thank the Irish delegate who gave us a glimpse of the Belgian situation. It has been completely destroyed. Belgium is a relatively complicated country because we have federal and regional authorities. The federal authorities are responsible for the betting and gambling and the regional authorities are responsible for the breeding, horseracing and sporting. The interests are not necessarily convergent. Solidarity is then very important. Next to a small country like us, there are three big countries, Ireland, France and the UK. I don’t really think it is a question of what is the best system.

The issue is how we are going to survive. For small countries like us, the big countries must work well. As the Swiss did, there are ways of finding methods of cooperation. The problem is to commit both the governments and business. Gambling is full of crooks, Chinese gangs getting involved, and matches fixing in football. All in all, it is all a big con. So it is essential to ensure that we get funded. We have to insist on the sporting aspect of the industry. Surely, in any European declaration, we should say that horseracing is an honourable sport. It is not something that should be rejected and just abandoned in the smaller countries faced with governments who are interested and recognise the merit of our activities.

Francesco RUFFO, Manager of the Milan racecourse

I manage the horseracing organisation in Milan. I will speak on the behalf of the 39 Italian racecourses. I will also speak on behalf of a company, the SNAI, which accepts bets outside the racecourses. I can agree with what was said by the representatives of the industry. Today, we have three magic words: globalisation, innovation and online. The risk is that everything is seen as banal. We have to work together though. Our common objective is to guarantee rights of the owners on the data, on the results of the races. It’s not a lottery. It is the result of an organised competition.

The right-holder is the organiser. He must respect intellectual property. Therefore, we would like to ask the governments to continue to support on a national and European level the mutual levy system channelling the profits back to the horseracing industry. And saying that, protecting the rural environment and the countryside is a common heritage. The contribution of the horseracing industry to the countryside is recognised by the authorities. Innovation for the Italian professional organisations is vital. We have to work together and we have to find a common path.

Samuli POHJAMO, member of the European Parliament, ALDE group

I am a MEP from the liberal group. I am also at the board of administration of a breeding association. Today, discussing has been very interesting and very important. I believe that the

- 39 - future of the horse industry in Europe looks good. In my own country, in Finland, trotting and horse industry is going forward. We have better horses. More owners and more people are interested in horses and horse betting. Totalisator is the most important source of income to the industry. It is crucial that our government can decide betting rules. I have heard that other countries have differences. Therefore, the principle of subsidiarity is very important in this field.

UNIBET representative

I am representing UNIBET, which is one of these online companies that have been mentioned several times. First of all, it was very nice to be here. There is room for coexistence. It has been mentioned before that in many countries, youngsters are playing on internet on other products like poker and casino. The mutual products are very popular in several countries. For example, it is the B75 in Scandinavia or the Quinté + in France. Could we even think that private online companies could be distributors of these products? You will get your money and the turnover of these products will give you extra-turnover.

I also want to mention the corruption issue. UNIBET was one of the founding members of European Sport Security Association. Today, we have a memorandum with organisations like ATP in tennis, FIFA and UEFA, when it comes to suspected match-fix in these sports. Is it something the European Trotting Federation could consider? We can give you information and you can all ask us information about potential fixed races. We definitely don’t want corruption. It hurts our wallet as well, because we have to pay out the winnings.

There was also a concern regarding money laundering. I can tell my own experience as a customer of online companies. I have also been to races in fifteen different countries over Europe. Online companies which are in the regulation in the UK or Malta for example have to know their customers. The customers have to provide their identity, documents, bank statements and so on. I’ve never been asked for such things when I go to a racetrack in Europe. We are not that bad and we want to have this discussion with you.

Ambroise DUPONT, French Senator

It’s a society issue and a problem of ethics as well. Perhaps we could go beyond the financing of the industry issue and think about the real problems of gambling. In short periods, some human societies banned gambling altogether because of the damage it does. The human societies realised that the best way to protect individuals was to control gambling and control the quality and the quantity of gambling. That is essential. There are demands being made under the pretext that freedom applies to services. We cannot call gambling a service. It is a voluntary deduction from people’s incomes. By that nature, companies who organise gambling are able to control it. The result of gambling should really go back to society and the state.

When you talk about horseracing and betting on the horses, or betting on any sport for that matter, it is not a question of lottery. It is actually based on a competition with horses or other animals, in which case it is obvious that some part should be paid back to the industry

- 40 - organising the competition. As somebody just said, if the industry doesn’t have any money, there will be no competition. And if they don’t have any money, they cannot control the competition. It is only logical that the industry should benefit from some of the proceeds of gambling. However, profits from gambling should go back to society and the state. That doesn’t happen in many countries. Some case law seems to be going against that and say that it is just not right for the proceeds from gambling to paid back to society. Therefore, it is only natural that people should fill their pockets with these profits.

Patrick SANDIN, Chairman of the European Trotting Union

I would like to give an answer to the UNIBET representative. The Swedish Trotting Association has no intention of cooperating with UNIBET. As you know, we have a legal battle with UNIBET about the rights to our races. And we are only cooperating with government-controlled betting companies in the countries. So there is no intention of any cooperation with UNIBET.

Jean-Pierre KRATZER, Chairman of the Swiss Trotting Federation

As far as distribution networks are concerned, distributing the products of the PMU, as you suggested, would be forgetting the market of men and women which compose the French market. You sell your products, and then you do like in Germany or elsewhere: you propose the products. I think we need a common pool, but you are not prepared to do that. It has more something to do with gaining access to the network.

And the key to what is happening in France at the moment is that wealth is not only ensured by the mutual betting system, but also by the network. The network has been destroyed in Germany and Belgium. And this has been destroying everyone. I’m not trying to give any lessons here, but I think we need to convince the commission. The products speak for themselves. There is only one cross-border agreement between two authorities where the same principles are respected: surveillance and guarantees.

Patrick FELLOUS, member of France Galop

I had a question which I was very eager to ask to Mr. JOYEUX, but he has left. He described a sort of apocalypse of the entry of bookmakers on the German market. We are trying to avoid the bookmakers system in France. In a country like Germany which has been destroyed by bookmaking, can we take steps backward and go back to the original situation?

Jean-Pierre KRATZER, Chairman of the Swiss Trotting Federation

I am not the only person who can answer that question, but I am quite close to Germany. I have my doubts. I think it’s going to be extremely difficult. Franck JOYEUX was talking about galloping. The market in Germany accounts for 300 million euros, which is nothing compared to the 80 million inhabitants. I’m wondering if Mr. JOYEUX knows exactly what we are doing in Switzerland. The only possibility is to have an agreement with a stronger organisation in Germany which can carry out and monitor exercises and can redistribute from

- 41 - the bets in France and Switzerland or elsewhere a share of the proceeds from gambling. That is how you can feed money back into the industry. But the racing industry confronts itself at the moment and there is a certain amount of responsibility.

The French system is strong with the network. It is up to France now to help other countries by introducing international policy. Without this cooperation, Germany will not be able to get back on its feet. The professionals know that.

Patrick FELLOUS, member of France Galop

That is pretty pessimistic then. Even if there is a European agreement, which would be something that everybody would want, we just could not set up again with the appropriate regulation. We could not reconstruct the racing industry in Germany. Everybody knows that there is a lot of horse breeding in Germany and that German horses are excellent and raced in other countries in Europe.

Jean-Pierre KRATZER, Chairman of the Swiss Trotting Federation

If you want a European agreement, first of all, you’ve got to know what the terms of agreement will be. But if it is just a question of who will pay something to the organiser in France, Germany will not get a cent from that. In our cross-border agreement, both industries get something. Both of them need to benefit. It’s not the race which is the most important, but it is the bet and the mass of the stake. The bet and the stake have to cover and support the countries where the bets are registered.

That principle should be applied to countries other than Germany. There are countries like Hungary and others which had a very long horseracing tradition, but they need help now. They want a system like this. If you allow online betting companies to take over, then the betting industry will be destroyed.

Manfred OSTERMANN, Chairman of the German Owners and Breeders Association

I am representing the German Owners and Breeders Association. As you know perhaps, we are in a major process of restructuring German racing. We try to get all data back to a centralised structure which has been built up with the horseracing authority and with the owners, the breeders and all the racetracks. Therefore, we will have the possibility in the near future to build up our own way of distributing our product. This could be without bookmakers. But we have to do it on our own. That means we have to do a major investment.

You know that PMU has about many thousands shops, whereas in Germany we have company which works with the ATT and PMU to serve the French products. This German company has 70 shops throughout the country with 80 million people. So we have to do a major investment. That is the only way to get a better economic future for German racing. We are on the way and we hope that we will get a strong support from politics in Germany and also from the Europe side.

- 42 - Bernard FERRAND, Chairman of the French Thoroughbred Breeders’ Association

I listened to the debate with great interest. This meeting has not just taken stock of current situations, but also possible ways to respond to the new phenomenon of globalisation. It was fascinating. In conclusion, I just want to thank Jacques TOUBON. He was the instigator of this meeting. He responded to our appeal in the Senate to bring together all the countries involved in these problems so that we can explain what the future of the industry will be. I also thank Mr. DAUL for organising this conference. I’m sure this will be food for thought.

- 43 -

SYNTHESIS

Pierre-Luc SÉGUILLON, moderator

That brings us then to the end of this conference. Your concern has been the risk for the organisation of races and online and off-track betting. What is essential to you is to guarantee the funding of the sector and the transparency of betting. You expressed differences of opinion and also points of agreement. I think you have agreed that the national level is a good place to regulate. But as one of the speaker said, we have to survive together, and you described the way that can be done on a European level. Since that we’ve arrived to that level, I leave the floor to Jacques TOUBON.

Jacques TOUBON, Member of the European Parliament, EPP Group

I’d just like to say a few words to close this meeting. These are not conclusions. As Mr. MÉNDEZ DE VIGO said, this is simply a first step. It is the first time such a meeting has taken place. Plainly, we will need to continue working together and holding conferences or workshops of this type. I’d primarily like to say how pleased I have been. The fact that a few MEPs have attended to this meeting is because of the afternoon, a difficult time for them. But the fact that we have been here has had an impact. Mr. MÉNDEZ DE VIGO had to go out, but he is directly involved. Joseph DAUL is the President of the EPP group, representing 270 members. All of us are members working in committees such as the internal market committee, the legal affairs committee and the agriculture committee. And as such, we are able to take into account all the ideas you have expressed.

I’d like to thank you for being here. One thing I found very positive today was that we adopted a European position rather than a national one. It certainly was not a Franco-French position, even though everyone recognises the importance of France in horseracing in Europe. Like it or not, we are in a union based on agreements and principles similar to laws or constitutions for our countries. Despite the enormous differences between the situations of our countries or regions, nothing can be done without dialogue comparing the situations and then finding points in common. That is the way the European Union works. We are an integrated organisation, not only an intergovernmental one. The law applies to all. So we have to see that laws are not framed to only benefits on some and not others or against a group.

At the European level, principles of competition and free circulation free movement have been in the Treaty since 1957. These principles must be applied across the borders to all sectors, including horseracing, which is an economic interest as important as others. The principles are really in the spotlight today because of the new information technology, and internet particularly. We might all have to carry on acting with our national markets for a long time to come. But today, with possibility to globalise through the internet, all activities including gaming and betting must face this situation. That’s the way it is.

- 44 - The fact that we come to talk about that today demonstrate our willingness to take responsibility and the fact that everyone realises that it is at that level that actions have to be taken. We heard the description of the German situation and the fact that there is a tax evasion on a large scale. None of that should prevent us from taking account of the special features of the sector. What is particular to horseracing is that there cannot be any virtual horseracing. Or if there is virtual horseracing, that means the whole industry will disappear. So we have to find a way to take account of the special nature of the industry and to take into consideration the need for safety.

Therefore, there is a need for transparency and honesty. Both together can protect betters, owners, trainers, breeders, jockeys and everyone involved in the sport.

We have to ensure economic growth of the industry and the territorial equality. It is very important to realise that horseracing is an activity that takes place in a lot of areas and not only in large urban areas.

Finally, there has to be a contribution to the public interest in form of a levy or a tax, like in many activities of public interest.

What now has to be done is for us to use our imagination and apply a political will to reconcile the internal market principles and the specific situations. I cannot see any other way to frame community legislation setting out a number of common principles. I was very pleased to hear Malcolm HARBOUR recognise that need. The situation we are facing is that the commission insists about this area as for the lottery and others. We must apply the principles of the Treaty. If there is any dispute, those matters will be taken to the Court of Justice.

We, members of Parliament, have to react to the commission’s initiative. We have to establish the community legislation contending common principles. But we also have to master open- up national markets gradually and in a controlled way, with licensing systems and equal taxation for example.

France has begun thinking about this. I was pleased to hear that the British government is going to review its system in the next six months. Plainly, the system in which betting is taking off and the industry is getting less and less is a con. Even the British government is starting to question this.

This is a two-track approach: a controlled opening while having a European legislation. You cannot say “I am only going to open if you get community legislation” whereas the other one will say “I will draw a community legislation if you open”. You have to be honest. We know that things can happen completely simultaneously. But we have to be fair and allow these two things to proceed at the same time.

We want to get a proposal from the commission. National states are willing to sign up a certain number of principles, which is the European economy. There are countries such as Norway who are bound by agreements, even though they are not members of the EU.

- 45 - Switzerland also has these agreements that it is bound by. I quoted Mr. MÉNDEZ DE VIGO. I repeat myself. This meeting is the first meeting and it is a very important one. The European system in many cases has produced good decisions based on this sort of platform or forum. We call them a stakeholders’ platform. That’s the right way to move forward.

I would like the Commission to move. We, in the Parliament, are going to work for this and you, the professionals, and all the European professionals, need to provide their input. I made my contribution by organising this meeting and we are prepared to organise further meetings. It is a “goodbye”. The French presidency will try and organise something. But once again, we don’t want it to be a purely French model. We want something European. The French may take the lead, but our dialogue has to be from a European angle. This meeting has made us aware that with community level, the diversity that exists, common values that we share, we’ve already achieved quite a lot that we have to build on now.

Thank you.

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