General Scheme of Horse Racing Ireland (Amendment) Bill 2014: Discussion

I remind members and witnesses to turn off their mobile telephones. We are meeting to discuss the general scheme of the Horse Racing Ireland (Amendment) Bill with representatives from the Irish Thoroughbred Breeders Association, Mr. Derek Iceton, chairman, and Mr. Shane O'Dwyer, manager; representatives from the Association of Irish Racehorse Trainers, Mr. Noel Meade, chairman, Mr. Michael Grassick, chief executive, and Mr. Dermot Weld, committee member; representatives from the Irish Jockeys Association, Mr. Andrew Coonan, chief executive, Mr. Ruby Walsh, committee member, and Mr. Michael Kinane, association member; and representatives of the Irish Bookmakers Association, Ms Sharon Byrne, chairperson, and Mr. Mike O'Kane, business director at Ladbrokes.

I thank the witnesses for attending and I propose hearing the chair of each group in the order in which I welcomed them. This is pre-legislative scrutiny, which is something of a new departure, and the purpose is to discuss the Bill before it is introduced on Second Stage in the House. We hope to provide a report to the Minister before the end of September.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they are to give this committee. If they are directed by the committee to cease giving evidence in relation to a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

Mr. Derek Iceton

I am the chairman of the Irish Thoroughbred Breeders Association and we greatly appreciate the opportunity to address the committee. We welcome the efforts of the committee to create a more efficient and transparent structure, to create savings and to help reduce costs on participants in this wonderful industry. Our association is a 32-county, democratically elected body with approximately 6,250 breeders. We represent at least 90% of all breeders in terms of annual foal production. The thoroughbred industry is acknowledged as one of Ireland's great indigenous success stories, with an incredible amount of total added value in the country, generating direct employment of 17,000 people. In the past, it was about 25,000 people. The employment is based throughout rural communities and contributes approximately €1 billion to the economy. We are probably at the bottom of the production cycle and, if we can get a little more funding into our industry, we will be in a far better place to accommodate any increase in the industry that will come once the cycle returns. Breeders contribute approximately €1.25 million per annum through an annual foal levy.

Irish horses, breeders, jockeys and stable staff excel throughout the world stage. There is not a corner of the world without an Irish horseman or successful Irish horses. In America, the Far East, the Middle East and Australia, Irish-bred horses are the predominant prime product of the industry.

With regard to the Bill, under heading 4.7(1), it is envisaged that three members of the board will be appointed by the Minister.

We ask that one of these nominees would have a thorough knowledge of the industry itself and that the other two would have a working knowledge. There are particular skill sets required for our industry and we ask that whoever is appointed would be fully cognisant of the industry's requirements. Under point 3 on the explanatory note, while we understand the need to provide greater transparency, we contend that there may be occasions where a specialised chairman may be required to fulfil a specific function. We believe some of the specifications in this regard are slightly too tightly drawn. There are certain nuances within this industry for which one often needs to go outside and acquire an extra skill set to help. This would allow greater flexibility in future when new statutory committees are established in subsequent heads.

As for the nominating body, we ask that we, the Irish Thoroughbred Breeders Association, ITBA, should be the nominating body for the breeders’ representative on the board of Horse Racing Ireland, HRI. As I stated previously, we are democratically elected every two years and our chairman, also elected, spends a two-year term. It probably is the most democratic farming organisation extant. We are organised by region, having regard to the number of horses produced in each region, but all corners of the country are represented on our council in respect of both the flat and national hunt sectors. While we probably will revert to the foal levy later, it is an important issue for us. If the foal levy is to be totally accountable, it must be sold by the breeders themselves to our own members as to why they should contribute to it. In addition, a number of minor, lesser bodies are being run by HRI, a particular one being Irish Thoroughbred Marketing, to which the breeders themselves contribute approximately €400,000 per year. Obviously, we are at the bottom level of our cycle at present but heretofore, we have been giving up to €600,000 per year to Irish Thoroughbred Marketing. It is a significant amount of money for the breeders of Ireland to be handing over to Horse Racing Ireland. I ask, as of right, that we should have a position on the committees and boards of Irish Thoroughbred Marketing. In addition, the foal levy committee is the committee of Horse Racing Ireland that is given the job of raising the aforementioned levy and spending it. The least we could ask for in this regard is that we, of right, should have some seats on the foal levy committee.

With regard to other committees, under head 6 the ITBA believes the fixtures committee should have some independence from HRI and therefore should not be limited to HRI board members. It should include members of the authority and other individuals from the industry. This is an area which requires highly specialised expertise. This committee must be fully responsive to the requirements of both the racing and breeding industries. The ITBA also recommends that the existing programmes committee should remain. Programming has a broader remit in terms of pattern - in other words, the quality of race and their timings - and its work has implications both nationally and internationally. If it is subsumed into the fixtures committee, whose decisions can be overturned by the HRI board, there is no external oversight as has previously been in place. It is important to maintain and enhance the international profile of our own race fixtures. We also ask that the new industry services committee needs clear criteria regarding constituencies and methods of election. Thus far, the specific people mentioned have been jockeys, qualified riders and persons employed in the horse racing industry. I suggest the breeding industry also could be part of this committee, in particular with regard to welfare issues for our staff.

In respect of the foal levy, probably our greatest concern here today is that as currently drafted, British breeders will be allowed to register their Irish-born foals in Britain, which would result in a reduction of levy income of approximately €170,000, which probably is 12% to 14% of the total levy. We have suggested a rewording of the provision - and have some work in this regard from Weatherbys as well - to state “The levy shall be paid by the owner of a thoroughbred foal born in the State in advance of registering the foal in a stud book in the State”. I cannot emphasise enough how important this is. We have this levy in force and it took a lot of work between the breeders of this country and HRI to have an efficient and fair collection method from our members. We do not need any slippage in this regard and if some foals are exempt, there would be leakages of registrations back to the English studbook from Irish breeders, who therefore may not pay the levy at all. In addition, in a technical point, the section as currently worded states that Weatherbys may refuse to register a foal if the levy is not paid. Again, we ask for much more robust wording in this regard, which states "A person who maintains a studbook will not register a foal". At present, this levy has a compliance level of 98.3% in respect of who pays it, which is very high and we do not want to lose out on that.

In respect of the racing regulatory authority, in order for the authority to maintain the functions of a truly independent regulator it must have access to all funds with regard to licensing. Any other model has been shown to be flawed in any other sport. Any compromise on the independence of the racing regulatory body, RBB, has serious implications for integrity, which is the cornerstone of Irish racing internationally. As the proposed requirement in section 11(1)(d) to consult with HRI before the RRB sets licensing charges is new, consequently it clearly is not in keeping with the requirements to have an independent regulatory body. As previous Acts did not include point to points, we believe they should not be included at this time. Point to points are a voluntary sporting activity akin to the GAA and are self-regulated.

On the funding of racing, despite the fact that our industry remains to the fore internationally, there are signs that it is in decline, with a reduction in numbers across the board. The numbers of mares in Ireland have reduced substantially, by 40%, over the past five or six years. As I noted earlier, we are at the bottom of the production cycle and now the number of horses in training has started to rise in our major market, we would like some pump-priming to happen here to try to help our racing and breeding industry. The key to the future of the Irish racing and breeding industries is to put in place a secure funding mechanism and we are requesting this joint committee to call on the Minister for Agriculture, Food and the Marine to lobby the Minister for Finance to restore the off-course tax to the 2006 levels of 2% in the forthcoming budget and to extend its coverage to currently untaxed forms of betting.

As the representative body for the largest number of constituents in the industry, we would appreciate it were the joint committee to give consideration to our submission for inclusion in its report to the House. I thank members and look forward to their questions.

I thank Mr. Iceton and call on Mr. Noel Meade, chairman of the Irish Race Horse Trainers Association.

Mr. Noel Meade

I am accompanied today by my chief executive, Mr. Michael Grassick, and by my colleague, Mr. Dermot Weld. I thank the joint committee for its invitation to give our views today and will hand over to Mr. Weld, who is a member of our committee, as well as being one of our most successful trainers, having trained winners in all parts of the world, including two Melbourne Cups. He will make a short submission after which we will be delighted to answer any questions members might have.

Mr. Dermot Weld

We welcome the proposed amendment Bill of 2014 and hope it will be implemented as soon as possible. To survive, racing needs proper funding. The racetrack is the shop window of the breeding industry. The horse racing industry has shed up to 4,000 employees since 2008.

It has considerable employment potential as an all-island rural natural industry.

Horse racing is an excellent source of inward investment, both directly and indirectly. Having gone on Government delegations to China and then seen the excellent work that the Minister and the Department of Agriculture, Food and the Marine have done, all of this will be to no avail if we let Australia and France get ahead of us. I employ 80 staff. With a secure and properly funded industry, this can be much increased. Ireland is a world leader in this field. Let us build it for the future generations.

Members are indicating that Mr. Weld had a different script in the submission, but it is fine. We will take that as the contribution. Members are happy because we have the gist of it. It is a summarised version and we welcome brevity.

I now call Mr. Andrew Coonan, chief executive of the Irish Jockeys' Association.

Mr. Andrew Coonan

I appreciate the opportunity. I am accompanied by Mr. Ruby Walsh, a champion jockey, and Mr. Michael Kinane, a former champion jockey. The submissions are already before the committee and I hope it has had the opportunity to consider them.

First, I would adopt the position taken by my colleagues who have spoken already in welcoming the general scheme of the Bill and, more importantly, the vital necessity of adequate funding for the industry. In that regard, the obvious point is that the Betting (Amendment) Bill 2013 needs to be addressed without delay.

Our submission raised four particular issues with the committee which are reflective of the position of jockeys' association. First, under head 4, on the HRI body corporate, the jockeys take the view that they are entitled to and should be given a position on the board as opposed to the sub-committee, being the industry services committee. It is difficult to understand at this point in time why the jockeys, being to the forefront and the representatives of the industry, both abroad and to the public generally, are not in the position of having a board seat. As I set out, it is important to differentiate the position of the jockeys from that of those working within the industry otherwise. In particular, I would highlight that the jockeys, being self-employed, are entirely dependent on the prize money in racing. Other staff members working within the industry are employed and covered by legislation to protect them in those circumstances. My colleague, Mr. Walsh, would point out that three of his 16 professional years have been spent in injury and without earning. While jockeys are not in a position to race ride, they have no protections other than those that are given to themselves. Therefore, they must be in a position to represent themselves at the board by way of addressing those issues. Funding, such as charitable funds and pension funds, are all matters that they have put in place for themselves, but they must be protected. From that point of view, I would ask the committee to consider their position in terms of a seat on the board itself.

The second issue I would ask the committee to consider relates to the racing regulatory body, which I addressed in the submission. The power of the racing regulatory body should be considered. The power vested in the racing regulatory body with regard to disqualification and imposition of penalties is excessive in so far as it is ungoverned under the 1994 Act and there is no position under head 11 that such should be governed. Effectively, the racing regulatory body will have unfettered power to disqualify or suspend persons licensed by the body for extended periods of time - a privilege or advantage which is given to that body over other similar bodies, such as the Medical Council and the Law Society. It is incumbent on the proposed legislation to provide limits to that power that is already being vested in it. We do not object to the power itself, but it must be controlled and appropriate amendments need to be incorporated into the proposed Bill.

Dealing with the specific issue as set out at head 7, prize money, I would address the committee to section 27 which makes provision for the racing regulatory body to deal with the issue of charitable funds. While it is welcome that the HRI has the authority under the proposed legislation to make directives with regard to prize money, the check or balance in relation to charitable funds exists and is given to the racing regulatory body. The difficulty with it is that the jockeys' pension, which is specific to the jockeys, is not a charitable fund although they have other funds which they have put in place for themselves. That is not a charitable fund and, therefore, it is within the power of the board of HRI to amend prize money contributions to the pension, if it so wishes, without recourse to the jockeys' association. That is crucial because the pension, which currently works in terms of a sportsman's pension, is provided to these riders once they qualify at age 50. The power to amend that is given exclusively to the HRI under the proposed Bill without any recourse to the jockeys' association. I suggested an amended wording. I think this is an oversight rather than anything else. It can be readily addressed by virtue of the wording we considered and provided in the submission.

Finally, there is the issue of the media rights. The media rights, under the 1994 Act, as the committee will be aware, are given exclusively to the race courses with administration or distribution through Horse Racing Ireland. That is inappropriate. It is unreasonable that the jockeys' association and other industry bodies within the organisation do not have any entitlement under this or the previous legislation to any of the media rights money that is being generated. That can be subject to challenge. The proposed Bill presents the opportunity to address that issue and I would implore the committee to consider that.

I am available to answer any of the committee's questions, as are my colleagues who can speak to the day-to-day relevant issues for jockeys.

For the purposes of clarification, is it the membership of the media rights sub-committee to which Mr. Coonan refers?

Mr. Andrew Coonan

Correct.

I now call Ms Sharon Byrne, chairperson of the Irish Bookmakers Association.

Ms Sharon Byrne

I thank the committee for allowing the Irish Bookmakers Association, IBA, to participate in this discussion concerning the heads of the Horse Racing Ireland Bill. I am the chairperson of the Irish Bookmakers Association which represents 70% of the 992 shops in Ireland today. I am accompanied by Mr. Mike O'Kane, who is business director with Ladbrokes.

Irish betting shops are the main contributors to the fund paying over €24 million in betting duty last year. Bookmakers sponsor many meetings across the country and betting shops also pay approximately €30 million in media rights for pictures from Irish racing.

Betting shops, therefore, provide a significant level of support for Ireland’s racing industry and are the primary source of funding for the racing body. More than 6,000 people are directly employed in the industry in Ireland and the number of shops has fallen from 1,365 in 2008 to 992 today. That has resulted in 1,600 job losses across the country. An important figure is the turnover in betting shops which has dropped from €3.6 billion in 2008 to €2.4 billion today. The main reasons for the decline in turnover include recessionary factors plus the increased availability of mobile and online operators which are untaxed.

The IBA believes the current taxation regime on betting shops is inequitable, punitive and requires modernisation and reform. Betting shops are subject to a turnover tax which takes no account of our profitability. Another interesting fact that merits serious consideration by everyone in this room is the fact that inside a betting shop 12% of turnover is on Irish horse racing. For every euro that comes over the counter, 12% is on Irish racing. Betting shops pay a betting duty of €24 million plus another €30 million for the pictures they display in their shops.

The final point I will make before I hand over to my colleague, Mr. Mike O’Kane, is that we have been calling for several years for additional usage of the track at Dundalk. It is the only all-weather track in Ireland and it only races, on average, one night a week throughout the winter. We call for racing to take place there two to three nights per week throughout the winter which would give us additional revenue, increase the turnover tax we pay and give opportunities to trainers, owners and jockeys throughout the winter when we have a very small amount of racing.

Mr. Mike O'Kane

Thank you, Chairman, and committee members. I am here to support Ms Byrne. As one can tell from my appearance, I have been in the industry a long time. I started as a bookmaker in 1975, hence my aged appearance. I have a wide range of experience both in Ireland, the UK and Europe in terms of funding, media rights and the relationship between tax and regulation. I wish to give a personal overview on some of the comments made. I sit on the levy board and the bookmakers committee in the UK. I am also a member of the media rights buying committee in the UK so I understand all the issues.

The point must be made that the relationship between all parties present is symbiotic. I hope the committee appreciates that is what is required. The issue is how one ensures that all parties are successful and grow their share of revenue in the industry. Bookmakers are a key player both in terms of the tax that is generated from the consumer and shops but also from media rights. It was indicated that approximately €30 million comes from media rights to Irish racing. The longevity of the contract from 2017 onwards will depend on the quality of the product presented both to Irish bookmakers and UK and European bookmakers. I would like to see coming through in the amendments-----

There is mobile telephone interference.

Mr. Mike O'Kane

-----a closer symbiotic relationship. I would also like to see a greater involvement of the bookmaking industry within how the HRI and the industry are run. We would recommend that because of the financial contribution from the industry that the HRI should consist of more than one bookmaker seat, preferably two seats. At the moment there is one seat for on-course bookmakers. The contribution of on-course bookmakers in media and tax payments is relatively small compared to the Irish retail sector. Within the betting committee, at the moment it is recommended that there are five members but there is no clear indication of how that structure should be put into place other than a reference to on-course, exchange and retail. Clearly, as the retail pays something like 85% of the revenues that go into Irish racing from bookmaking, the betting committee should reflect the contribution of the retail sector.

I have the pleasure to sit on the betting patterns working group in the UK which is there to advise the levy board and the BHA how to maximise the revenue that comes from the racing product. That committee quite clearly wants to protect the pattern and the quality within the UK racing product. The same would apply in Ireland. We believe we can contribute greatly to the fixture discussions because at the end of the day when the fixture programme is sold to the media buyers, whoever they happen to be, the media buyers will look at how that fulfils their need. We have something to contribute both in terms of our experience but also our knowledge of what generates good volumes from a media perspective.

The issue of the HRI controlling the media sales was addressed in our submission. That must be examined again. There needs to be an enlightened view about how media sales are transacted; who owns the rights and to whom they can sell. Bundling of media sales in the way that happens at the moment through the HRI might in the long term work against Irish racing when the media buyers, who are the customers, come forward and decide what they want to buy in 2017 and 2018.

Funding has been mentioned by other contributors but it was not in our submission. I would be happy to let any member of this committee look at my performance from my Irish retail business in Ladbrokes in any year they wish to choose to decide whether they think the 1% or 2% turnover tax will necessarily generate additional revenue. It would appear to, but from a Ladbrokes perspective it would decimate our retail sector and would not deliver the revenue people require. This industry in the long term will depend on its ability to sell its rights, pictures and data rather than the tax model. I offer the committee the opportunity to come and look at my numbers for any year it wishes to choose.

I have a brief question on taxation. I thank all witnesses for their excellent contributions and presentations. We in Fianna Fáil support much of what has been proposed by Mr. Iceton on the various amendments tabled. I wish to focus on taxation. It was rather interesting that Mr. O’Kane finished his presentation talking about taxation by saying that a 1% or 2% betting tax would not generate revenue. I recollect that when Charlie McCreevy was Minister for Finance in 2003 he introduced a betting tax of 8% which was rapidly reduced over the succeeding years down to 1%. Perhaps Mr. O’Kane could correct me on the sequence of events on the betting tax in this country. When the late Brian Lenihan as Minister for Finance wanted to introduce an increase of 2% in 2008 or 2009, he was lobbied so efficiently by the betting industry that he left it alone. We are left with the current situation. That is why I am anxious for Mr. O’Kane to focus on the betting tax or lack of it.

Irrespective of what Mr. O’Kane said – I would love to see the figures – the public perception is that the betting industry is getting away with blue murder and that it is coining it to an extraordinary extent. One only has to turn on one’s television at any time of the day or night, in particular during sporting events, to see the multitude of betting companies that are advertising on national television and on satellite television. I was fascinated to discover the number of variations that now exist for betting on a football match. It is extraordinary. I am curious to hear the specific proposals Mr. O’Kane has on increasing the tax. I am fully in favour of increasing the tax and for the money to be used to address many of the issues the industry is concerned about.

I will take four questions first. The Betting Tax (Amendment) Bill is a Bill that is at a more advanced stage in the Houses but it has relevance to the matter under discussion. We are talking about the configuration and organisation of the HRI.

I thank all witnesses for their presentations.

We will be studying the Bill in great detail in the weeks ahead. The importance of horse racing to the economy is evident. I noted in one of the presentations that there are 60,274 breeders. I did not that realise there were that many involved in the industry. Also, the industry is important to rural communities. Rural Ireland is dependent on the industry, especially in recessionary times with the impact of emigration and so forth.

Under head 4(7), in respect of the board member nominees, it is contended that all should have a working knowledge of the industry, with one having a thorough knowledge of the horse racing and breeding industries. Could that person be nominated by jockeys?

I will come back to the Deputy. We will bank these questions.

Mr. Andrew Coonan said in his presentation "that one member of HRI should be nominated by jockeys alone". I would appreciate if he would elaborate on that point. It was also stated in the presentation that: "The Racing Regulatory Body enjoys unfettered discretion in this regard and its powers are not subject to supervision by the Oireachtas or any other body." I fully concur with that position. We need independent people there. One of the functions of this committee should be part of that in terms of supervising it and so forth.

Although a few more members are offering, while those points raised by Senator Mooney and Deputy Martin Ferris are fresh in our minds, I will ask the representatives to respond to them starting with Mr. Iceton from the Irish Thoroughbred Breeders Association.

Mr. Derek Iceton

I thank Senator Mooney for his questions. I am not a taxation specialist but I have the figures in front of me. If we go back to 1998, the level of duty was 10%. It was reduced to 5% in 2002 and in July 2006 it was reduced to 1%. While it is hard to work out the industry norm, work that has been done for us indicates that the average rate of betting duty throughout the world is about 7.7%. In Britain, our nearest neighbour, the basic level of duty is 2.5% plus an additional 1.5% for racing. With regard to the level of taxation in this country going to 2%, about which bid makers seem to quibble, they are able to work with double that level of taxation sometimes in their own home country, and that slightly throws me to one side.

Following on from Senator Mooney's question is the question of what we need to do with our money. The basis of our business is prize money. If the prize money is right, people will invest and if people invest, it will keep the jockeys and trainers in business and, ultimately, fellows like me who are breeders. That is why we need more money coming into the industry. It is a trickle-down effect in that prize money lifts all boats.

Deputy Ferris asked about persons with knowledge being board nominees and perhaps one of them being nominated by the jockeys. Specifically in regard to the Act, it states that the Minister for Agriculture, Food and the Marine will have three ministerial appointees. That is fine because obviously if the Department of Finance is investing a good deal of money in us, the least we can give back is transparency in respect of the money with some relevance and regard to the Oireachtas. Our only request is that among those three people would be someone with either a working or a decent knowledge of the industry. It is a difficult business; it is not like any other one. We are very fortunate that the previous chairman of Horse Racing Ireland was Denis Brosnan, who was a very good breeder, understood the industry and was a very good businessman. They are the sort of people we need, rather than somebody who is just good in business and sees this as just an ordinary business enterprise. It is quite different.

I call Mr. O'Dwyer.

Mr. Shane O'Dwyer

We welcome the Betting (Amendment) Bill and that a good deal of work has been done. We as an association have been lobbying for the past number of years to get a secure funding mechanism in place. We as an industry do not want Exchequer funding and I want to put that on the record. We have been at this since 2009. We welcome it and we know it has gone through Committee Stage and is progressing nicely.

I call Ms Byrne next to be followed by Mr. Coonan.

Ms Sharon Byrne

On Senator Mooney's questions, I would make three points and they would answer all his questions. Since the dates the Senator mentioned when the tax was 15% or whatever was the initial tax rate, the difference between then and now is that it was paid by the customer. Today it is not paid by the customer. The year 2006 marked the end of the tax being placed on the customer and it must now be paid by the bookmaker. The other change that was made that year was that bookmakers were forbidden from passing it on to customers. It is expressly written in the legislation that the bookmaker must pay it out of turnover. The reason it was reducing every year was that Internet and telephone betting were being born. They were starting to take the turnover from retail betting. To allow retail betting compete with an online mobile world, the tax had to keep falling and it was taken off the customers. That is the first point.

The second point relates to the averages Mr. Iceton referred to across the world and across the water. There is a serious difference there and the difference in those countries is that the tax is on profits. In Ireland it is on turnover. In an Irish betting shop, turnover tends to get higher when Ruby Walsh is riding a number of winners. Our turnover gets higher, our customers win money so they have more money in their pockets, they place more bets, turnover gets higher, so they pay higher tax when they are losing money. Our problem is the tax rate on Irish retail betting is on turnover and not on profits. If any of the members would like to check back on any of our submissions for the years since the foundation of our association, they will note that we have been calling for a model such as that in the UK where the tax is on profits. We would have no problem with paying tax on our profits. It is the tax on turnover that is unfair, inequitable, penal and is unique in Europe. In the other countries in Europe where it does apply, they are state-owned operations and they can set the margin of profit they make and that is how they pay it.

The last point I would make relates to tax and how operators are able to pay 50% gross profit tax in the UK plus a 10% horse racing levy. The reason they can do it in UK shops is that they have a different business model. They have machines. Some 60% of the revenue taken in British betting shops is by way of machines. Those terrible things we hear called FOBTs in the UK generate 60% to 65% of their income. We have a totally different business model in Irish shops where we still use a pen and paper and there are papers on the wall. We have also been calling for online betting to be taxed because to date it is only the retail betting operators that have been contributing to the fund. In every submission we have made, we have called for online operators to pay their share of tax. The taxation model cannot work with online poker, online bingo and all those operators being let off scot free. The only operators being taxed in this betting Bill are the sports books because turnover tax does not work in any of the other types of gambling, whereas if it were a profits tax, it would apply to them all in the morning.

Ms Byrne has made a fair contribution. I call Mr. Coonan.

Mr. Andrew Coonan

I thank Senator Mooney and Deputy Ferris for their questions. On the tax issue, regarding what Ms Byrne and my colleagues have said, what is not disputed is that Ireland has the lowest betting tax regime in place at 1%. That is being reflective of what prevails in our nearest neighbour in the UK and other racing industries throughout the world. That is undisputed. That is the reason we are in the difficulty we are in with regard to funding. That must be addressed but I accept the Chairman's point that it is a matter for another Bill on another day but it is relevant to the self-sufficiency of the business.

That was raised in the presentations and it seemed to be central. I appreciate what the Chairman said.

We all appreciate that the Horse Racing Ireland (Amendment) Bill is about a structure. It is the skeleton on which we want to build an industry and we want to build it on a better frame but we cannot build it without resources. That is accepted. The point has been made that while turnover on betting has increased tenfold, revenue from the industry has decreased regardless of whether it is on profit or on turnover. The turnover has increased on all betting and I accept the point, as I believe the members would, that it should cover all forms of betting, online betting and betting from outside the State on any event that takes place within the jurisdiction of the Twenty-six Counties. I will move on.

Mr. Andrew Coonan

Just to address Deputy Ferris's point, which is well made, there is absolutely no reason whatsoever the sought-for representative that Mr. Iceton refers to could not be a nominee of the jockeys. The man sitting beside me, a former champion and well known to us all, is in fact the breeder of a derby winner already, so I think that answers that particular question. He would have that knowledge to a very high level and obviously that could well be a fit.

I thank the representatives for appearing before the committee and imparting their views on the Bill. It is important to outline the process, which is the first time the committee has done this. We have introduced a new reform in how we deal with legislation. Normally, the Bill would be brought through the House and one would argue the toss over amendments on Committee Stage. This is a pre-legislative stage in which all stakeholders, such as the witnesses, appear before the committee and tell us where there are potential nominees. Mr. Andrew Coonan pointed out a number of them, as did the Irish Thoroughbred Breeders' Association, ITBA, around the foal levy and a number of different issues. This allows us to pass Bills more quickly. If we can head off some of the potential problems at the start by feeding them back into the Department, we hope that when the detailed Bill comes before us some of the problems will be headed off. That is what makes this process very useful.

I am interested to hear from all the bodies appearing before us whether there are elements of foreign practice from which we could learn. Are there things that other countries do in how they run their racing that we could do better here? I am aware that not every country can be compared to Ireland. In terms of funding streams and betting, I am conscious that a country such as France is not comparable as it does not have the same betting system as Ireland. In the area of integrity and mergers, have other countries done something similar? Are there pitfalls of which we need to be aware and from which we can learn?

Perhaps Mr. Iceton would outline some details around the foal levy. How much is the foal levy? While he has pointed out the role it plays, perhaps he would expand on it, as it is a key role.

Mr. Derek Iceton

I see that-----

If Mr. Iceton does not mind-----

I will group my questions, as there are a few areas I wish to touch on. A point was made about board composition and the Minister's representatives having a thorough knowledge and some having a working knowledge. It is absolutely key that any representative of HRI understands the industry. As an industry, it can be a tight clique. It is hard to get that balance with a person who has the required knowledge yet is perceived as objective and unbiased and not from a certain camp. If we were to appoint somebody to the board who does not understand the basics of how the industry works and the importance of the industry to the country, it would be a waste of time. I concur with the views of the witness. It may be no harm to be more prescriptive than is provided for in the heads of the Bill.

The witness mentioned that some of the committees having outside members is beneficial. Some of the committees can have outside members. It is important to clarify that. I think Mr. Iceton was referring to the need for specialised chairpersons on occasion. Whatever about the chairperson being specialised, the ability to bring in outside expertise is very important. That is acknowledged particularly with regard to media rights and other areas. I will return to media rights later because the jockeys raised a valid point.

The fixtures committee is absolutely crucial. I concur with some of the points made. Perhaps I will touch on Ms Sharon Byrne's presentation later. I agree that the bookmakers have an integral role to play. In some ways there is much animosity in the industry and there can be much friction between the bookmakers' side and the other side, but it is in everyone's interest that we get an industry that works as well as possible. I am aware of what happened in Punchestown a couple of years ago when Morgiana day had as a sponsor a big bookmaker that put a large amount of money into it, and it had its biggest crowd in a number of years. The promotional expertise was brought in from the bookmaker's side. There was a clash the following year with the open meeting in Cheltenham. The bookmakers stood back from their sponsor because of that and everyone lost out. The Punchestown crowd was much smaller. It was an occasion on which the fixtures committee appeared to be acting a bit aloof. There is great merit in making sure the fixtures committee and the programme committee take on board all the other sides, including foreign elements that may come in.

On the trainer side, I commiserate with Mr. Dermot Weld on Vintage Crop, a great servant of his and to the industry. Reading through his submission, I noted that it focused very much on the funding element, which has been a key component. While this is the Joint Committee on Agriculture, Food and the Marine, which deals with the structures around how the industry operates, the betting tax is a matter for the Joint Committee on Finance, Public Expenditure and Reform and, in particular, the Minister for Finance, Deputy Michael Noonan. The points made here have been noted and will feed into a larger debate.

Mr. Andrew Coonan made a presentation on behalf of the jockeys. Again, he referenced the funding issue. The Betting (Amendment) Bill passed Report Stage last week. I will get to that when I come to Ms Byrne's submission. His point that the jockeys deserve a place on the committee is well founded. The representatives of the Irish Stable Staff Association who appeared before the committee last week said likewise. Is everyone happy that the industry as it was in 2001, when we set up the HRI legislation, still has a representative board? Are we just arguing about who is represented and whether everybody is equally represented, or is there a sense that we need to get away from a representative board? I am just throwing out that general question. I take the point that jockeys need their own individual representation. I am conscious that Mr. Ruby Walsh and Mr. Michael Kinane are present. Not every jockey is lucky to be as skilled as those two individuals and to get the high-quality rides they have got down through the years. I am particularly mindful of the jockey who is totally dependent on the money for riding out in the morning and if he gets a win, it is a bonus, as opposed to supplementing his income. For the jockeys who are down the pecking order it is a tough life, because they have to make all the sacrifices and they get the same injuries as the witnesses. It is tough going and the career span in the industry is limited. It is an issue we need to be mindful of. Without our high-quality jockeys representing us around the world, we would not have the name we have in the industry.

Points were made about the regulatory body. I asked earlier if there are lessons to be learned from abroad in respect of integrity and all the areas of the regulatory body. The Bill is attempting to ensure the industry runs as smoothly and efficiently as possible and that we get good value for the money put in by the State. At the same time we cannot allow any change to take place which, down the line, would damage our integrity. Integrity is something one has and one can take it for granted, but when one loses it one does not get it back. By the time one realises it is lost, it can be too late. The points made in respect of integrity need to be borne in mind in any report we send back.

The media rights in respect of the jockeys are well founded. It is an extremely important committee. In her presentation Ms Sharon Byrne pointed out that €24 million of the fund comes from betting shops in Ireland and €30 million goes to SIAS and all the others for the media rights. There is as large a pot of money there. While we could spend all our time talking about the betting tax, there is an equally important amount of money on the media rights side, which it would be wrong to ignore or not to give it the same level of attention. I am conscious that most of what Ms Sharon Byrne said in regard to the bookmakers' industry was about betting shops. She stated that the number of betting shops had decreased from more than 1,000 to 992 and that turnover had decreased significantly. The elephant in the room is the fact that people have not stopped betting; they have just changed their mode of betting. Their iPads and iPhones are the new means of doing that. The Betting (Amendment) Bill, which extends the betting mode, passed Report Stage last week and hopefully will be enacted by the end of September. That Bill will give us a much broader mechanism to take in tax, something which should have been done some time ago. We can have a discussion when we have a proper system that measures equally everyone who lays a bet. We can also have a debate on the rates.

Is there any opposition to the point made about increasing the amount of racing at Dundalk? Again, that comes back to the fixtures committee and media rights. I expect it is in the interests of all the representatives to have racing. We have many horses in the country but not as many as in the height of the boom. Why has that not happened before now? I have heard before that we should have racing more than one night per week in the winter. If anybody has any views on that issue I would like to hear them.

The point made by Mr. Shane O'Dwyer that the industry never wanted to be dependant on State financing is a valid one. The changes Senator Paschal Mooney discussed, particularly the reduction from 2% to 1% by Brian Cowen in 2006, have left the industry in a situation in which the State is supplementing it.

The industry employs 17,000 people but has the potential to employ 25,000, the number it employed at its height. It creates economic activity in areas where there is very little other economic activity. When one is fighting for taxpayers' money one is competing with the hospitals, with schools and that is not the position that an industry of this size and calibre needs to be in. We need to get to a position where between the media and the different elements, we have an appropriate funding stream for the industry.

I welcome the representatives from the four groups that are here today. Last week representatives from the owners and the stable staff appeared before the committee. That shows how important the industry is to Ireland.

We are considering this Bill in an unique way in that we are discussing the heads with the interested parties before its Second Stage reading. It is important that during our exchanges today we do not get bogged down by a debate on betting tax. That is an issue for a different Bill completely. Everybody thinks that the bookmakers are out to rob the punters, but we all love taking money off the bookmakers, whether the Minister for Finance, Deputy Noonan takes money off them in tax or we take our winnings, we do not care. What we need to ensure is that when the Horse Racing Ireland (Amendment) Bill 2014 completes its passage through the different stages in the Seanad and the Dáil that we have a better industry at the end of the process. Our main focus is how the industry progresses. We know how many people are employed in this important industry. Whether a person breeds a horse, breaks or trains a horse, rides a horses, bets on a horse or works in a betting shop, it takes a great deal of money and care to get a horse to a racecourse. It is important that we create the conditions to make the industry better.

How we fund the industry is an issue for another day. The Bill is all about getting a better industry. The two main contentions that the four groups present today and the two groups last week relate to heads four and six. Everybody is vying for a position on HRI and on its committees. Do the representatives believe that the committee, as proposed in the Bill, is not large enough and that the number should be increased from 12 to 14 members? As they said, it is about the expertise on the board. I would love to see the jockeys and the stable staff on the board, as they have expertise at a different level from the trainers and owners. It is important to get the legislation right at the beginning.

I do not think the Bill is about knocking the bookmakers but about getting the business right. The taxation of betting will be covered in the Betting Bill.

I welcome the witnesses. Their presentations were succinct and they have set a standard for future presentations to the committee. They must be complimented on the structure of their presentation because sometimes we are faced with long-winded presentations with neither head nor tail to them.

I would like to see representatives of all the bodies we have met on the HRI committee. The Indecon report recommended a reduction in the board size but have the representative groups given any thought to that recommendation? We are faced with a Hobson's choice. I think the points made by all witnesses must be taken note of, because we need to ensure that people with detailed knowledge of the industry are appointed as well as those who represent various facets of the industry. The stable hands have a different representational value from jockeys, owners and everybody else. It is important that they all come together so that the different niche interests are involved. Perhaps we could make a recommendation on the level of representation on HRI. Many of the suggestions that have been made on the membership and general function of the HRI are worthy of consideration. I come from County Westmeath, which is horsey country and I have seen the significant drop in the level of activity of racing and breeding. I am not surprised, as I used to be a horse owner. Has anybody given any thought to the demands of HRI - from the time one gets up in the morning to the time one goes to bed at night, the HRI is looking for money from the horse owners? I remember getting letters every morning, the wife was nearly going to set fire to some of the stuff that was coming in the post. Apart from the recession and other expenses, why should the HRI charge for renewing the colours every year? The colours do not change. Is the HRI efficient? It seems to be looking for money for everything. In fairness, one can bargain with the trainers but one cannot bargain with HRI, because when it demands it gets the money. I was certainly perplexed by the number of demands for various things from the HRI.

I know that many small bookmakers are struggling, especially those on the main streets and in rural areas. The industry has employment opportunities in every corner.

I was particularly interested in the presentation made by the chief executive of the Irish Jockeys Association, Mr. Andrew Coonan. I would like to see a proper appeals mechanism in place because some of the measures that can be imposed upon on jockeys, which is their livelihood, can be fairly draconian. I was surprised at the point he made about seeking a specific right of appeal to the High Court to be set out. That is almost taken for granted because one can go to the High Court by way of injunction or by judicial review. As it is an administrative decision, one has a right of doing those things, they are costly and I know where he is coming from, not every jockey has a deep pocket and while one or two may be doing well, many are just struggling. Did Mr. Coonan consider seeking a right of appeal to the Circuit Court because the Circuit Court has increased competence and increased jurisdiction and that would be a cheaper option? It would involve lower costs than the High Court. Mr. Coonan states that the racing regulatory body has everything set out and is a master of its own cause but is he looking for an independent appeals system, that would be chaired by an independent person, let it be a person with a legal background or from another walk of life who is competent to be a chairperson of the appeals body. Is Mr. Coonan saying that there is no use in having a fight with the devil and having the court in hell? He wants an independent process. I would like Mr. Coonan to elaborate on that and set out who would chair the body. Mr. Coonan is seeking the specific right to go to appeal to the High Court to ensure that justice is done between all the parties in the case. I have no doubt it is an administrative decision and I would have seen such an impact on a person that he would have other rights. I am interested in the reason that he advocates so strongly for this line. Mr. Coonan is involved in much of the regulatory procedures as he represents the jockeys. I want to know how he would see this working out because I would then take it on board.

I have more members offering, Senators O'Brien and O'Keeffe and Deputy Lawlor, who is not a member of the committee. I call Mr. Iceton as there were a few questions addressed directly to him.

Mr. Derek Iceton

Deputy Heydon asked three questions, first I will respond to his question on the pitfalls - unless the structure is right, we are definitely at risk. I see where the British Horseracing Authority in Britain is worried that not enough horses are being produced to have a full racing programme. One only has to look at America to see what has happened in the past 12 years, where the funding mechanism was wrong and betting went all over the shop. The number of races in America has reduced from 53,000 in a year to 37,000 last year. The average number of runners for a race is now under seven, when one is looking for eight runners for an each way bet.

If one is to have competitive racing, breeders must breed horses and must make some money if they are to so do in the first instance.

As for the foal levy about which Deputy Heydon asked me, at present it is approximately €1.25 million. The breeding industry is unique in that it is self-regulated and so for argument's sake, what pertains to the regulation and registration of horses internationally is a self-regulated industry. We meet other bodies and for instance, Mr. Shane O'Dwyer and I were in Chile a couple of months ago. We need funding to make sure of the rules on regulation and the control of the industry, as well as for events such as this meeting, while working on behalf of the industry. We need some money from the foal levy and get approximately €350,000 of that. We give approximately €400,000 per year into Irish Thoroughbred Marketing. Members might consider that although we have an industry worth €1 billion, we are spending little more than €1 million to promote it worldwide. Just to sidetrack, when Kerrygold rebranded Dairygold last year, which was the number one butter on the Irish market, it spent €1.5 million in so doing. Yet here we are with a prime industry and have €1 million with which to promote horse racing throughout the world. It is a pitiful amount of money. However, of the €1.1 million being put into Irish Thoroughbred Marketing, the breeders themselves are contributing €400,000. In addition, we are putting approximately €800,000 into the Irish Equine Centre because the Department of Agriculture, Food and the Marine for many reasons has pulled back from providing diagnostic services on behalf of the industry. Obviously, our industry needs fast response times and we have an equine centre that probably is one of the greatest centres of veterinary excellence in the world. For example, were I to send a blood sample to it this morning at 12 noon, a full biochemical report will come back to me by 3 p.m. That is the purpose of the levy. We are not afraid to put a lot of money into this business to look after ourselves and then we have the European Breeders' Fund, EBF, with which the standing farmers put a lot of money into prize money.

Third, Deputy Heydon and Senator O'Neill asked about representation. Basically, we seek a position of right. I have outlined how our association is completely democratically elected across the Thirty-two Counties within regions and so on. Moreover, we are self-renewing every two years. I would like the breeders' seat on the proposed body to be given to the Irish Thoroughbred Breeders Association. We are the only representative body for the breeders and would like the person we put forward to be the person who is accepted. I presume the same argument goes for my other colleagues sitting at the various tables in this committee room.

Deputy Penrose asked about money going into Horse Racing Ireland, HRI. Were it properly funded, HRI would not need to be scalping the owners as often as it does. Owners are paying 30% of the prize money and are paying a huge percentage of the administration of racing. Ultimately, the owners basically are paying to put on the show and they need some amelioration on how they are being scalped along the way in respect of the costs of just having and training a horse. As the Deputy observed, one at least has some say in what one pays the trainers but these add-on expenses are making it quite difficult.

Mr. Noel Meade

I will get back to Deputy Heydon on a couple of issues he brought up. He referred to the fixture in Punchestown that was sponsored by the bookmakers but which ran into opposition with the open meeting in Cheltenham and he wondered why it could not be changed. While I am aware the bookmakers think it would be easy simply to race when they wanted to so do, the pattern must be taken into consideration, whether it be on the flat or over jumps. For example, the jumping season's graded races probably start in October and every week thereafter throughout the entire season, a number of graded races are run. They run one into another with the result that one will have the big meeting in Down Royal, which runs two weeks before the meeting in Fairyhouse and so on. Consequently, if one changes one race, such as the John Durkan Memorial Chase or the Morgiana Hurdle race at the particular meeting to which the Deputy referred, by bringing them back or forward by one or two weeks, one would be running them into another race meeting and into another race. This is where the problem with the fixtures comes in. I have no doubt but that the fixtures require a complete overhaul. It requires a blank sheet and to start it again but this cannot be done by stating it will be done in a particular way by next year. Were someone to start the whole thing again with a blank sheet by moving whatever races needed to be moved and were we to move along bit by bit, it would take until 2020.

The Deputy also raised a point on the size of the board. The race horse trainers certainly have no problem with the board being as big as whatever. I have been on the board for two terms, with just one year to go, and I do not believe the board's size ever caused a problem. The board works very well and I would have thought that having everybody represented is what it is all about. I cannot understand why it is proposed to make it smaller or what difference it would make. The board meets every six weeks to give our opinions and the executives take whatever from that. It is a good system that works well and I see no reason whatsoever for it to be made smaller.

In respect of the other point about racing in Dundalk, at present the bookmakers fund winter racing in Dundalk, in conjunction with Dundalk, which works quite well. Were the bookmakers prepared to do that again and to continue, I would say they could race every day of the week. I do not know whether there would be enough horses available to do that but if the money to race in Dundalk is taken out of the general prize fund, it will decimate the prize fund for the regular racing. One will reach a situation where there will be no money for anything. At present, we are struggling and the prize fund is poor and what will then happen, which has happened in England, is that when racing at the all-weather tracks gets down to such a low level, it basically becomes crooked because people are not getting paid for racing and so they find other ways of doing it.

Mr. Mike O'Kane

I thank members of the joint committee. I wish to pick up a couple of comments from Senator O'Neill and Deputy Heydon. To me, it all seems to come together at the relationship between the various parties. We have discussed representation and committees not being used to exercise power but to get information and expertise to come together to the benefit of all, which is very important. A question was asked on the use of expertise from elsewhere and while I would not wish to appear before the committee and hold up the United Kingdom as an example of the ultimate, I refer to one useful area within the United Kingdom's structure. As members are aware, the Horserace Betting Levy Board brings in the funds and then, with the British Horseracing Authority, BHA, distributes them through various prize funds and fixtures committees. It has a betting patterns working group on which I sit and is the only group of which I am aware that has bookmakers present. It includes the racecourse companies, the Racecourse Association, the horsemen's representatives, the BHA and the Horserace Betting Levy Board. That group comes together, shares a lot of the data on performance, betting rights and so forth and then makes recommendations that are fed into the levy board. As for the proposed committees under discussion here, it would be useful to be able to get to the point at which one has that shared expertise whereby people are open and are able to provide data and think about how the quality of the product here might be expanded. I would recommend that as an example of how it works better somewhere else.

In respect of the fixture committee, one point that is clear is when it comes to the value of fixtures and when one seeks to monetise this value through media rights, Irish racing is not a sole seller in this regard as it competes with racing in the United Kingdom. When, in my Ladbrokes capacity, I look to buy picture rights for horse racing here in Ireland, Belgium, Spain or the United Kingdom, I will look at a number of products. One would be the cost per meeting to buy from the United Kingdom or Ireland but more importantly, how does it fit into the programme. One piece of work carried out by the betting pattern working group concerned clashes between Irish racing and United Kingdom racing. I accept fully the point made by Mr. Meade that one must protect the pattern.

At the same time, when it comes to selling its product in 2016 or 2017 - whenever the media deal expires - Irish racing will, for all the right reasons, want to be in a position to say it has a product that stands up against the UK media product. As a bookmaker, I will have to decide what I want to buy. Work that can be done by the individuals here and in Horse Racing Ireland in the interim could put the industry in a position where it can maximise its media rights payments from the UK and elsewhere. There may be some small adjustments to be made, such as having races at Dundalk on one additional evening per week, for example. The funding figure at this time is €30 million, but it will probably be something different in 2017 and 2018. That is the way to commercialise the industry.

When it comes to media rights, it is important to remember that there is no right in terms of what one will get paid, and Irish racing has to compete with UK racing. The industry in our neighbouring country is very concerned about whether UK bookmakers will buy Irish rather than UK. It will be a very competitive market. I would welcome the opportunity to participate in committees, either as a standing member or adviser, to offer what expertise I can to the bookmaking sector.

Mr. Andrew Coonan

I will deal with the points raised by Deputies Heydon and Penrose. On the question of whether there is a better way of doing this, I would answer in the negative by pointing out there is a worse way of doing it. The board, as it currently exists, works quite well in so far as it is reflective, as Mr. Meade observed, of much of what is happening within the industry. As to whether it might need to be expanded or more focused, my view is that it certainly should be more representative. I have already raised that point with regard to jockeys. An ability to take views from those participating in it is absolutely vital to the progression of any industry. The existence of a regulatory board is appropriate at this point in time but should be developed further. Senator O'Neill asked whether the board should be larger. As I said, what is important, in my view, is that its composition should be reflective of those who are involved. That will be of benefit to the industry itself.

Some of the points raised might be more relevant to the two men who are here today but perhaps less so to the guy who is riding one or two horses per week and is essentially subsisting. Jockeys themselves have put in place a pension structure, for instance, under which money from the higher prize earners goes towards those who are less fortunate and who quite often find themselves in very difficult situations. It is absolutely vital, as I see it, within the whole prize money structure, that jockeys would be able to continue to look after themselves and their colleagues. I accept that their interests are sectional, but it is vital that they should have the ability to look after their own in that regard. That is why representation on the board is crucial.

Deputy Penrose referred to charges and costs. A 4% transaction charge is actually very high in terms of the cost to the owner, jockey and trainer. That has to be addressed and an obvious way of doing it is by way of a betting amendment and an increase in the tax. Greater prize money will lead to greater funding on a cascade effect. That, in turn, should see a reduction in transactional charges and costs. Certainly, that is what the board should be working towards. It is a very obvious way of addressing the issue in a way that encourages owners into the industry and keeps them involved.

I do not have a problem with the racing regulatory board per se, but there must be checks and balances in place which ensure a strong and robust system and integrity within the industry. That is absolutely vital because the betting industry depends on that integrity. I am concerned that the proposed amendment does not address the fact that the racing regulatory body, the Turf Club, effectively has carte blanche in terms of penalties imposed. There is no upper limit on the penalty to be imposed on a trainer, rider or any licensed person by the regulatory board. We have an opportunity here to address this problem with the 1994 Act. This issue has been raised in another forum and is currently sub judice. That the legislation currently in place prescribes no upper limit for the racing regulatory board in terms of penalties it can impose and so on is not acceptable. However, this can be readily addressed in the very same way as the parameters within which other semi-State bodies work are defined in legislation.

To clarify, I am not necessarily asking for an independent board or a new appeals system, but the right to redress should be limited in terms of cost and available to all who are subject to sanction. I am calling for the Bill to limit the powers of the regulatory body in terms of the penalties it can impose, or at least set bounds to them. The question of the automatic entitlement to address the High Court is, in fact, currently under consideration by way of a Supreme Court appeal. Heretofore, the racing regulatory body was not regarded as amenable to judicial review.

I will now take a final round of questions, beginning with Senator Mary Ann O'Brien.

I was struck by the comments in regard to head 6 in the submission by the Irish Bookmakers Association, because I would not have thought about bookmakers participating in the race fixtures committee. We are not supposed to talk about money and funding today, but I would appreciate some commentary from Ms Byrne or Mr. O'Kane on this point. An Irish racing fixture is worth an average of €1.3 million in turnover. However, if another fixture is taking place on the same day, it is only worth €200,000 or €300,000. The suggestion was made regarding separate days and it was noted that Mondays and Fridays are under-utilised as fixture days. I am sorry to hear from Mr. O'Kane that profits are down. As I understand it, three quarters of bookmakers' profits now come from online business, with revenue growing by 17% this year to €745 million and profits up 5% to €141 million. Online is where it is at as opposed to traditional betting shops.

My next question is for the racehorse trainers.

I am keen to hear a little commentary from Mr. Weld, Mr. Mead or Mr. Grassick. Although they did not mention it today their submission called for the licensing of a racehorse trainer to be included under the responsibility of Horse Racing Ireland and transferred to HRI from the regulatory authority. I am keen for some commentary on the last line of the relevant paragraph which states:

In particular, the existing criteria used in granting licences to both professional and restricted trainers does not at present require a structured training program therefore resulting in a reduction in proper standards, horsemanship and business acumen.

Mr. Weld mentioned something very inspirational to me earlier and perhaps he could repeat it for the other members of the committee. He said that the 29% cut in funding to the entire industry and HRI since 2008 has had a negative impact and that there are 3,000 fewer horses in training and 4,000 jobs have been lost. Each of the deputations before the committee today as well as the owners association last week have brought home the point that this wonderful industry, in which we are best-in-class in the world, is slipping and slipping fast because of the lack of funding. Will Mr. Weld repeat the story about the owners as people who produce jobs? They are an IDA Ireland or Enterprise Ireland group. This is foreign direct investment. I was having a cup of tea with the trainers earlier. Perhaps they could share their thoughts with the other members. Most of the money coming in to this industry is from abroad rather than within the State. Most of the owners are wealthy people from abroad who are creating employment and bringing in business.

I thank the deputations for their presentations. Will the representatives of the Irish Jockeys Association offer some clarity on their request for a share in the earnings from the media? What sort of conversations have taken place before now? Why is the association still in a place where it does not have a share? This is an area with which I am not as familiar as many of my colleagues. It seems to me to be fairly straightforward. The Irish Jockeys Association ought to have a share but clearly that is not the case. Will the association elaborate a little?

The betting legislation is pending. Many other organisations pay taxes regardless of their profitability. As the Chairman has said, we know the level of betting has not stopped. I am a little puzzled by that observation. That is my main query.

Finally we have Deputy Lawlor. You were not being deliberately ignored. I have to allow all members of the committee in first. I was testing your patience.

Thank you. I apologise for not being here earlier, I was at another committee. Senator Mary Ann O'Brien touched on one question for the trainers. In their presentation the trainers asked to be associated with HRI rather than the regulatory body. Why is that the case, seeing as every other section within the industry is under the regulatory body? Why should the trainers be excluded?

Another question for the trainers is to do with fixtures. There are approximately 350 fixtures per annum. I do not know whether Mr. Meade is on the fixtures committee, he probably is. Is that too many or is it sufficient, given the number of races with small numbers of horses running? In this regard I highlight our flagship race, the Irish Derby. This is no reflection on owners or trainers but it only had five runners this year. That does not go down well for the future, particularly in the case of the flagship event. I have seen this happen with pattern races. Are there too many pattern races? Could this have led to the problem that Deputy Heydon highlighted, that is, the fact that the open meeting clashed with the Punchestown meeting and that the bookmaking industry had put such an emphasis on the former? It was a great meeting. Children and everyone who represents the future, including punters, goers, jockeys and those in all parts of the industry, go to such meetings. I am keen to hear a comment on that.

In their submission the thoroughbred breeders asked for the removal of point-to-point racing from the regulation. Why is that? It is an integral part of racing. Mr. Meade is aware that most of his owners buy horses from the point-to-point sector. What if there is no regulation or integrity associated with that? This is something we are trying to do on the greyhound side. Coursing is not overseen by the regulatory body but we would like to see it brought on board because there is betting there as well. We want to have some sort of integrity associated with it. I am keen to hear the comments of the breeders.

All four groups before the committee referred to funding. They have probably honed in on the betting side of things. There is no mention of the tote within this legislation. It is not even mentioned in the betting committee. Tote Ireland has been a loss-maker to the industry and has made no contribution to racing. Are the deputations keen to see the tote directly involved in the betting committee or some scrutiny of it by the betting committee? As I said earlier, it is adding no value to the racing industry. There are other sides related to funding that should be considered. The tote is one area, tax betting is another and sponsorship is a key area that we should consider.

All the groups have mentioned media rights on several occasions. Media rights will be a major part of the funding of the industry in future, particularly racing itself. I would hate to see initiatives by racetracks whereby they sell their media rights. In particular, I take on board Punchestown, which has several grade 1 races that its sells to the French market. This allows betting to be done overseas. It is vital to incentivise racetracks that have media rights and a product to sell their media rights to improve the entire sector. I realise the jockey deputation might not agree with that. They are probably the stars but the horses are stars as well. There is potentially huge money on that side of things as well.

The betting Bill is coming up. Tax is paid by every punter who lays a bet one way or the other except on the tote. There is no tax income to the racing industry from the tote. If I lay a bet of €20 with Ladbrokes then Ladbrokes pays the tax for me but if I put it on the tote no tax goes to the racing industry. That should be considered as well.

That is the final array of questions and comments. Who want to start?

Mr. Noel Meade

Mr. Grassick will reply to Senator Mary Ann O'Brien on the licensing of HRI.

Mr. Michael Grassick

Reference was made to trainers' licences. In 2007 we had a grand total of 460 trainers but we are down to 380 now. In the meantime we have had renewals and new trainers coming in, approximately 25 per year. We are losing between 45 and 50 trainers per annum according to those figures.

A two-week course is run at RACE for new applicants for trainers' licences. At the end of the two week course, there is no examination as such. A person is granted a licence from The Turf Club. All a trainer's business and transactions are with HRI.

HRI complains to us that many of the applicants are not being professional. Therefore, there is a lack of communication between HRI and the Turf Club on how they operate. It should go to HRI because it works with trainers on a day to day basis.

Who runs the two week course?

Mr. Michael Grassick

It is run by the Race Apprentice Centre of the Turf Club.

Is Senator Mary Ann O'Brien happy with the rationale behind it?

As the Bill will mean more integration, there should be more communication.

This arises from head 11 and is not an amendment. It is the existing position and not included in an amendment. Is that correct?

Mr. Michael Grassick

Yes.

Therefore, Mr. Grassick is asking for a further amendment to head 11 whereby it would be deleted and moved to head 4.

Mr. Michael Grassick

It should be moved to HRI.

It is a specific request. It is not clear in how it is written in the submission, but we understand it.

Mr. Noel Meade

With regard to Deputy Anthony Lawlor's point about the period of 355 days and the number of runners in certain races, it is a movable feast. It is like having no one who wants to play Dublin because everybody thinks they will be beaten or running into Australia in-----

Mr. Meade is not going to the match on Sunday then.

Mr. Noel Meade

Yes, I am. In the Irish classic this year we had possibly one of the best three year old colts which had raced in Europe this year. People are inclined to run away from him, which is why some of the fields can be very small. It is not altogether due to the fact that we have too many races. Sometimes we do not have horses at the very top level. We must have these races, but sometimes they are not as competitive as we would like. It is unfortunate that this season has turned out to be so disappointing, but this will not happen every time. It is about getting back into the pattern. We must keep up with English and French racing patterns. There is a need to reschedule some of the pattern races. Generally, the number of race fixtures is fine and we have plenty of horses to run in the number of fixtures we have.

Mr. Andrew Coonan

To answer Senator Susan O'Keeffe's question on what conversations have occurred on media rights and jockeys' entitlements as being the front of office - this is what the world sees when a horse takes part in a race - these conversations have been short and very negative. There has been no offer under the current regime. My consideration is set out on the last page of my submission. This point is not exclusive to jockeys, as trainers do not participate in the benefits; neither do the owners nor the stable staff. The 1994 legislation is entirely inequitable. It is open to challenge, but it has not yet been challenged. The Bill presents an opportunity to address it and it needs to be addressed. It can be done through the media rights committee. For this reason, it is very important that it be considered. It would be to the benefit of all to hear the views of Mr. Weld on the issues raised by Senator Mary Ann O'Brien on the input of foreign investment. Hearing the views of someone very much at the coalface of dealing with domestic and international owners would be worthwhile. The difficulty we have with funding which I will not rehash as all members are aware of it is fundamental to the success of the industry.

In other countries do jockeys and others have a share, or is Mr. Coonan asking for something outrageously different?

Mr. Andrew Coonan

That is a very good question. In other places such as Hong Kong media rights have a cascading effect. The revenue generated from media rights goes into prize money, the provision of funding, charitable organisations and towards looking after stable staff and jockeys. That is not what happens here under the legislation.

Mr. Dermot Weld

To answer Senator Mary Ann O'Brien's point which we discussed at lunchtime, there is much inward investment by international owners which means an increase in employment. Not only is a particular new international owner helping me to employ more staff, he is so taken by his visits to horse racing in Ireland that he is moving his head offices which were located in Melbourne, Australia and London to Dublin. He will employ between 250 and 300 people in his company offices. He had never been to Ireland before last year and visited again recently. He enjoyed the country and visit and because of horse racing will move his main offices and employ between 250 and 300 people. This is a spin off and such things do happen. I always try to get across the employment factor. The horse racing industry is a 32 county rural employer and produces spin-offs in terms of further employment in other industries.

Mr. Mike O'Kane

I wish to clarify several technical points. On the graph we included in the submission on the value of one or two meetings per day, the reason there appears to be a disconnect is simply in an Irish retail betting shop Irish racing competes with the UK product. If there is one Irish meeting and three UK meetings on a particular day, it may get its fair share of airtime or customer attention, but if there is another meeting on the same day, the timings may well clash. That is why an extra meeting would not necessarily double the value of the turnover generated. Rather than having four meetings covered in a betting shop, there would be five to be covered, together with everything else going on.

The tax model in Ireland means that it does not matter on what people bet because the tax applies to everything. However, it makes a big difference in selling the rights abroad. Wearing my UK hat, if I was looking to buy four fixtures today and I already had three UK fixtures, would I buy a second Irish fixture if the number of fixtures moved from four to five? The fifth fixture, as indicated, would be of lesser value.

The Irish fixtures programme should not be governed by what is happening throughout the world, but it must be mindful of the extent to which events can be monetised. Of the €30 million which goes to Irish racing from its media rights, only 10% of the value comes from Irish bookmakers. A total of 90% of the €30 million comes from UK-based organisations buying the pictures. The danger in not being aware of this fact is that in 2017 or 2018 the UK retail sector might not want the extra fixtures, which would make a very big hole in the funding of Irish racing.

A question was asked about another organisation which received three quarters of its profits online. I am not sure which organisation this is because clearly it is not ours. I wish we made three quarters of our profit online.

None of the bookmakers that represent their numbers online indicate where that revenue comes from. Much of the revenue from one of the bookmakers the committee may be thinking about comes from other jurisdictions where there may not be the same kind of retail environment. Online numbers can be very complicated.

The Senator who has now left asked about the growth in the value of betting on football. As our submission shows, retail betting in Ireland has declined and continues to decline. Some of that has transferred to online but that does not make up the difference in the Irish market. All of us in this industry, working together, have to decide that where there is a revenue stream from Irish online and retail businesses, we can take this product and sell it abroad. The elephant in the room is how will media rights be discussed, advised and how will everyone buy into them when signing them in the future.

The number of runners per race is decided by several factors, for example, are they playing in Dublin, what is the horse population, what is the racing structure, how is that race made up, which horses qualify for that particular race, what else is going on and prize money. The British Horseracing Authority, BHA, has the same problem in that the average number of runners per race appears to be falling. In fact, the average is a false number. Certain race types are suffering because the horse population in those classes is weak and there is probably too much of that particular type of race whereas the other types of race are constantly divided. Subtle changes may help the race fixture programme, in terms of the number of runners per race not in that particular example, but in other areas.

Horse Racing Ireland, HRI, has full responsibility for media rights. All I and others ask is that we are party to how those media rights are monetarised to ensure there is equitable sharing of those benefits through the industry. I support the comments made by other members here.

Mr. Derek Iceton

Deputy Lawlor asked why point-to-point racing should not be included in the Bill. We contend that the sport has gone from strength to strength under the auspices of the Irish National Hunt Steeplechase Committee. It is an amateur sport whose ethos is sporting endeavour and we see no reason that the State should interfere through HRI in what is a voluntary sporting organisation, akin to the Gaelic Athletic Association, GAA.

In response to the question on the Tote, it never ceases to amaze me how something run on the basis of the Tote can give so little back to the industry. The returns are very poor. Sometimes it is said that the pool here is too small. I note in Chester, since the sale of the British Tote, the racecourse has installed its own Tote system, which is highly profitable and is putting large sums of money back into the racing there.

It amazes me when I travel around the world how difficult it is to see Irish racing. I was recently in Singapore on a Friday where they show French racing. There is French national hunt racing on a Friday, which people would not naturally bet on, but on that day in Singapore more money was bet on the French national hunt than in the whole of France. There were no Irish pictures. Where are our media rights? I subsequently spoke to somebody whose job it is to sell media rights and asked where are the bright sparks for our media rights in the future to which he replied "Italy and Israel". We have a world class product here, administered and regulated to the highest standard, yet we cannot get the pictures out to other countries, to give them a product to bet on, of the highest world standard. That is one of the greatest shocks in the industry.

On the point-to-points the officials said there is no interference with the Irish National Hunt Steeplechasing Committee which controls the running of point-to-points.

The commitment we have been given in the Bill is that the €50 registration fee that would normally go to the Turf Club will pass through HRI. There are property rights associated with it so it has to be explicitly stated that it must go back through HRI. Officials have told us it is an accounting exercise to ensure the money is properly accounted for with no other interference.

It is a valid point that on first reading does raise a concern. Maybe it is not as serious a point as at first appears. I thank all the witnesses for appearing before the committee today.

I apologise for not being here earlier but something urgent came up. I will read the submissions. When we are making our report I will take the submissions into account.

I appreciate that Deputy Ó Cuiv had other business to deal with today.

I thank everyone for sharing their insights. Having sat through meetings between the meat industry and farm organisations, I can tell the witnesses that the relationship between the bookmakers and the rest of the industry is much healthier and more friendly than between those groups.

We have met owners, trainers, breeders, jockeys, stable employees and the betting people, all of whom are part of a very valuable industry. Senator Mary Ann O’Brien summed it up when she said this is an IDA Ireland-type of industry. It should be regarded as an engine to bring in foreign direct investment and tourism. Some of that involves media rights. The witnesses should not underestimate the value of the time they gave us here today. This is pre-legislative scrutiny.

HRI can answer Deputy Lawlor’s questions on Thursday morning. We will reconvene on 16 September for the remainder of this scrutiny when we will hear from the Turf Club. We hope to furnish a report to the Minister and Department officials by the end of September. By the time the Bill comes before the House as a Green Paper, it will have reflected some of the wishes of the witnesses. This Bill will not work without the Betting (Amendment) Bill 2013. We would love to see the overall turnover of everything that happens in this country captured, from coursing to online casinos. I am not au fait with much of it. A little lift from everybody would help to fund all the industries.

I thank the witnesses. That concludes our proceedings.

The joint committee adjourned at 4.19 p.m. until 9.30 a.m. on Thursday, 17 July 2014.