Horse races in Portugal

Contributed by Gonçalo Figueira

Every so often newspapers come out with headlines announcing “The horse races are coming!” At first sight, it does not seem exciting news – horse races are very common in most European countries and throughout the world.

However, it has not been possible to establish the “The Races” in Portugal. When a newspaper announces that they are coming, we remember the story about the boy who cried wolf…as no one seems to believe it anymore.

Recently, two public tenders were issued for the construction of a racecourse, with the winner being granted the betting rights. Interestingly, there were no candidates…

Apparently, another public tender is being prepared for the concession of horse races, including the construction of a racecourse and all the infrastructures. Hopefully, this time, the necessary homework will be done, by studying the legislative solutions and the financial strategies adopted in other countries, starting with our neighbour, Spain. It is also important to be aware that obtaining the concession of horse race betting will not necessarily be a gold mine. If all this is not done, once again there will be no candidates.

In the first place, implementation of horse races and the construction of the racecourse should be separate from the management of the same, and the racecourse should not be limited to horse racing or betting.

A modern racecourse, similar to some of the best in other countries, has very high construction costs. So much so that the construction of the new racecourse in Madrid, or the one in Andalusia, or even the new one which has been built in the United Kingdom, have been financed almost exclusively by public funding. The only case of a big racecourse being planned, in which financing has been secured exclusively by private funds, is located in the East End of London, an area with a strong betting tradition.

In Spain, a country with a big gambling tradition, there are six racecourses. The reconstruction of The Big Racecourse of Zarzuela in Madrid is underway and, curiously, it was not possible to have a private consortium to finance the construction, so it had to be financed by public funds – 90 per cent from the SEPI (Sociedade de Participações do Estado) and 10 per cent from the State Lottery. Also in Andalusia and throughout all of Spain, construction has been financed by public funds, either at central government level, autonomous government level, from the municipalities, or even from publicly funded companies or public institutes.

A racecourse must be conceived differently to those we see in American movies, where we bet on a horse and that is it. You have to think of it as a multipurpose venue, with not only the horse racing and betting aspects, but also an educational space for riding instruction and entertainment.

As to the location and number of racecourses to be licensed in the country, market studies would be highly recommended, but it is thought that the Lisbon or Algarve areas would be the best. The Algarve is a possibility not only because it is near Andalusia, but also because of the guaranteed tourism market.

Horse races are greatly financed by betting, and the admission fees at racecourses are very small. Internationally, there are two tendencies in the way bets are made. The English model is based on betting at the course and at bookmakers, and the French model is mostly based on mutual bets. In Portugal, this last model would probably be the most easily implemented.

The distribution of the betting income, after payment of respective taxes, is something that also needs to be discussed. In Spain, the distribution is dealt with as follows: 70 per cent in payment of winning bets, 26 per cent for the course operator, 21 per cent for the horse breeders and the remaining two per cent towards a fund for other riding activities. The 26 per cent must be sufficient to pay all the employees, along with maintenance and all other costs resulting from the activity. The overall profit, therefore, cannot be much.

If we really want horse racing in Portugal, it will be necessary to conceive a racecourse as a public infrastructure, with multiple functions. Public funding, whether it be through financing the construction or funding grants to private parties involved in the construction project, will also be necessary.

Bets on races in other countries should also be allowed. This already happens in several other countries. The permission to bet abroad allows the regularity of betting, even if there is no racing for some time in the country. It also makes bets more appealing and variable.

Finally, it would also be important to have specific television channels. In almost every country where there is horse race betting, there is at least one dedicated TV channel. These very successful channels represent a source of income for racecourse operators. Presently in the United Kingdom, there are two specialist channels, one of which represents the interests of a group of racecourse owners. One of the options of subscription to these channels is the concession of a credit for bets equivalent to the value of the subscription.

The careful planning of every aspect of horse racing is essential, and it is the only way in which we will ever have it in Portugal.

• Gonçalo Figueira can be contacted via ndr@nevillederougemont.com