IAGR Conference 2014 PhiladelphiaOctober 2014

Horserace betting in France

Legal framework

Pari mutuel is the only legal form of betting on horseracing in France.

Between 1881 and 2010, only horse racing associations (nonprofit) were allowed to organize betting on horseracing :

– On racetracks only until 1931,– Off-track since 1931, through PMU.

In 2010, the law opened the French online gambling market (horserace betting, sports betting and poker) to competition :

– Horseracing associations keep the monopoly for on-track betting and, though PMU, betting in retail networks,

– 8 operators (including PMU) offer online betting on horse racing.

Offline and online gambling markets are now regulated by different laws and monitored by supervision bodies, of which ARJEL regulates online gambling.

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Horserace betting in France The market

In 2013, horserace betting accounted for : € 9.93 billion handle 23% of total gambling expenditures in France in 2013

23%

5%

24%

33%

15%

French Gambling Market per Gambling Offer in 2013 (handle)

Horserace Betting Sports Betting LotteriesOffline Casinos (estimate)Online Poker

97%

1% 2%

PMU (horserace only)

PMH

Online licensed opera-tors

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PMU, a company created to fund racing Created in 1930 by French Horseracing Associations, PMU is a leisure

company whose role is to conceive, market, totalize and promote bets on horse races for their account.

Since 1985, PMU has been an Economic Interest Group (EIG), now made up of 58 horseracing associations

o Diversified into online sports betting and poker in 2010o Returns its whole profit to its members

→ PMU’s activity is closely supervised by the State

PMU is run by a Board of Directors which gathers :o PMU’s Chairman & CEO and PMU’s Managing Director, o 4 representatives from State Departments (2 for

Finance and 2 for Agriculture)o 4 representatives of the Horseracing Authorities (2 for

France Galop and 2 for SECF).

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

668

694

727736

731

791

876865

854

614

PMU net income / return to the industry (M€)

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N°1 Horserace betting operator in EuropeN°2 Horserace betting operator worldwide

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€ 854 million paid to the horseracing sector in 2013

75.7% punters9.2% State

5.8% PMU’s opera-ting costs

8.2% Net profit paid to horserace associa-

tions

1.1% foreign pro-viders

€ 10.4 billion handle in 2013

PMU’s Offer

Horserace bettingo Retail network o Online on PMU.fro Abroad in common pool

Sports bettingo Online on PMU.fr

Pokero Online on PMU.fr

• €9,6 bn stakes (-1.8%) in 2013 • 15,371 races in 2013• Export : + 94%• 85% market share

• €199 million stakes (+22.4%)• 24% market share• 30+ sports • Live betting : 47% of stakes

• Cashgame et tournaments• €569,9 million stakes (+ 10%)• N°3 operator• 9% market share

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Cross selling is key to attract new customers

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PMU’s retail network

12, 200 retail outlets in France and overseas territories

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Mainly in cafés, bars, tobacco shops, restaurants Diversification : Newsagent’s, gas stations, local shops… and fully

owned Betting shops (« PMU City »)

PMU.fr

PMU.fr is the N°1 betting site in France

44% market share, €1 billion turnover

N°1 for horserace betting with 83.6% market share (Gross Product)

35% of sports bets are registered through mobile

Cash game available 24/7 for poker players

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International activity

Foreign races offered to French punters to supplement national

racing offer

2,585 foreign races from 27 countries in 2013

€ 549 million handle (+12%)

31 contracts for betting on French races in PMU’s Pool : €638 million handle in 2013 (+94%)

Contracts for separate pool betting in 37 countries (>€ 1 Bn handle)

French races offered to foreign punters

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Separate pool

CP & SP

Common pool *

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* Import

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PMU’s international contracts

Digital innovation is at the core of PMU’s activity

PMU.FR websiteEnhanced user-friendly design

PMU.FR appAdapted layout for smartphones, IOS and

Android tablets

INFO.PMU.FR websiteHorse racing information website for offline bettors

MYPMU appSpecially designed app for offline bettors with

all horse racing information

Touch screensDisplaying live

information in points of sale

Touch tablesTo learn with the« Play for fun » option or to bet for

real at PMU events

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Powerful IT solutions

IT accounts for 40% of PMU’s operating costs 2500 transactions per second, among which 90% come from

PMU’s 12,200 retail outlets

50% of turnover comes from bets registered in the last 10 minutes before the start of each race

EASY Project over 5 years, budget > € 50M− Reduce the Time to Market from 18 to 9 months to launch

a new bet − Make it possible to operate 24/7

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Corporate social responsibility

Trai

ning

of P

MU’

s

empl

oyee

s and

reta

ilers

Prevention among

the general public

and customers o

n

internet and points

of sales

Funding of medical research

Best practice

sharing with other

operators and

dialogue with civil

society stakeholders

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PMU vision for 2020

PMU 2020

Retail & outletsCAGR : +1 % through new retail formats

Digital60% of the growth in France

through digital channels

International10 % of net margin outside France

Offer & productsCompetitive positioning on every authorized segment to become a reference actor of the gambling market

Customers15 % of the French people will be PMU customers

People & cultureChange into an agile and attractive organization, turned towards innovation

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Is horse racing really

a dying business?

Revenue sources of major sports

Global Sport Market

European Soccer Leagues (top 5)

British Rugby Union

NFL (USA) Horse Racing

4130 36 38

5

22 4523

44

5

3725

41

185

20

65

Owners Wagering Commercial Broadcasting Ticketing18

Competition trend : sports betting surpasses horse betting in 2014

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20170

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Horse Racing Sports Betting Lotteries

CAGR 2009/2013 : 0.8%

CAGR 2009/2013 : 4.3%

CAGR 2009/2013 : 5.5%

CAGR 2013/2017 : 1.2%

CAGR 2013/2017 : 7.5%

CAGR 2013/2017 : 3.3%

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A broad range of issues to renew horse racing

Customer

Pattern racing

Wagering

Major events

Social media

Laboratory accreditati

onPopular culture

BreedingIntegrity

Big Data

Environmental sustainibility

Jockey & horse safety

Anti-doping

Industry vocational training

Media

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benoit.cornu@pmu.fr

@benoitcornu