Zeturf - the waiting game
Emmanuel De Rohan Chabot has been looking for partners to tackle the French horseracing tote market with his company Zeturf. But there is little he can do until he is licensed - or not - to operate in France
AS FRANCE PREPARES to regulate its online betting and gaming market next year, most eyes have focused on the poker and sports-betting verticals.
Meanwhile, French horseracing has not attracted the same attention. This is because Pari Mututel Urbain (PMU) by and large has maintained its monopoly on the French market, whereas lottery and sports-betting monopoly operator Française des Jeux will have to compete with major private operators on fixed-odds sports betting and poker.
One could even question why any private operator would go up against Europe’s largest pool- betting company, but that is precisely what Emmanuel de Rohan Chabot’s company Zeturf is planning on doing next year “ with the help of commercial or white-label partners.
The fact that Rohan Chabot is looking for partners to tackle the French market next year is not surprising, PMU had a turnover of around 9bn in 2008 and online gross gaming revenues of 100m. Zeturf says it has around 15% market share in France, or 15m gross gaming revenues, although such a claim is impossible to verify.
More to the point, Zeturf has been looking for a partner or a trade sell for some time, so why has there been no movement on that front?
Rohan Chabot says: “Many potential large new entrants are suspicious about the French authorities and PMU. As a company, PMU has a deep political presence in France.”
Maybe it is not that surprising that Zeturf has still not found a partner in such a context. Should that be the case, Rohan Chabot says Zeturf will offer a white-label solution for French tote betting. “We are ready to offer network liquidity through an API that is already built. But the key is for people to understand that poker and (fixed odds) sports betting will not be easy. Sports in particular will take at least two to three years to be profitable and newcomers will need to have very deep pockets to survive.”
With its guaranteed margins, tote betting does have advantages. PMU’s current payout ratio is around 77% while Zeturf is between 95% and 97% and it has better prices than PMU as a result. The maximum allowed will be 85% under the new legislation. How will Rohan Chabot compete if he cannot offer his punters the best price? “PMU’s current payout is around 74%,” he says, “and it will stay at that level next year. Zeturf’s will drop to between 80% and 85% so we will still have a price advantage over PMU. We will also be able to advertise openly and stream live pictures of races, this will have a massive positive impact on the business.”
Zeturf has the liquidity to compete with PMU up to the Trefactor but not on the Quinté Plus product, according to Rohan Chabot. But of course whether Zeturf can do all this will depend on it being licensed, and there is no guarantee of that. “I met recently with the head of the Autorité de Régulation des Jeux en Ligne (ARJEL) and he assured me I would be licensed,” Rohan Chabot says, which also means all his prospective partners will wait to be certain of that before they commit to any business with Zeturf.
Beyond this, Rohan Chabot is optimistic that the new PMU chairman Philippe Germond is more open minded than predecessors and the lawsuits the likes of Zeturf and other private operators will launch against the monopolies for unfair competition and abuse of dominant position will also bear fruit.
Rohan Chabot is in a contradictory position: French regulation should mean extra revenues and long-term stability for his company, but only if he is licensed will he be in a position to find the partners that will allow him to compete against PMU.