Adapting to Changing Environment Francesco Ruffo Scaletta Delegated Director ASSI - Temporary Management General Assembly & 46 th International Conference IFHA - Paris, 8 October 2012

1 Gambling market in Italy.....The opening-up of the market to sports betting and other kinds of gambling (Superenalotto, scratchcards, and subsequently slot machines and Video lotteries) caused an unstoppable decline in revenues from horseracing and led to the resultant grave economic and financial crisis in the entire Italian horse racing system due to the progressive reduction in funds for the industry. In 2011, slot machines and video lotteries accounted for more than 56% of the entire market revenue, while horse racing bets were just under 2% of total recorded revenue (Table 1 and Picture 1)....

Table Gambling market in Italy (Source: AAMS, 2012, except for Horse betting) GAMESBETTING TURNOVER (millions of Euros) MARKET SHARE (%) Horse betting1, Lotto6, Totalisator Games (SuperEnalotto, Win for Life, Superstar) 2, Lotteries10, Sport betting3, Bingo1, Slot machines of which Video lotteries 44,896 14, Skill games2, Card games and other games6, TOTAL79,

Picture Gambling market in Italy

2 Commercial transformation of gambling …..In view of the process of converting betting shops into "mini casinos", the figures on New Slot and VLT revenues, which have been instituted in the horseracing betting shops and agencies, have taken on a particular significance since 2004 (Table 2)….

Table 2 - Slot Machines, VLT and Horse Betting Machines (number) Franchesees (number) Betting turnover (millions of Euros) Slot Machines377,96944,896 VLT45,01614,865 Horseracing betting (horse shops + sport shops + corners) 33,2631,372

3 Sporting, employees, stud-books …..Under this new system, the commitment will continue to safeguard the great sporting (Tables 3.1 and 3.2) and agricultural heritage of the Italian horseracing industry, whose social and economic importance can be gauged from the estimated 50,000 employees in the sector. In addition to this figure there are also the supply chain activities (ranging from professional to craft activities, feed production, transporting horses, treating horses, manufacturing harnesses, accessories etc.), employing an estimated 20,000 people (Table 4). The number of horses on the stud-books kept by ASSI total 294,207, which is 45,46% of Italy's national horse population of 647,200 units (Table 5).

Table Horseracing Activity Trotting racecourses Gallop racecourses Total* Trotting racing meetings Gallop racing meetings Total 1, ,932 Trotting races Gallop races *a.a.*, a.a, a.a.o., p.s.a. and other races Total 10,902 4, ,232 Trotting starts Gallop starts *a.a.*, a.a, a.a.o., p.s.a. and other races Total 116,773 37,189 1, ,671

Table Horseracing Activity Trotting Prize money Euros) Gallop Prize money (Euros) and *a.a.*, a.a, a.a.o., p.s.a. and other breeds Prize money (Euros) Total (Euros) 112,956,709 71,763, ,719,758 On track betting (Euros) Off track betting (Euros) Total (Euros) of which online betting 60,383,082 1,312,025,064 1,372,408,146 68,567,768** *Some racecourses are counted twice as they dispute both trotting and gallop races. ** Betting online represents the 5.00% of total horseracing betting and 0.007% of total Italian online betting.

Table 4 – Employees in the horseracing system Number of employees50,000 Number of employees in the supply chain sector (manufacturing harnesses, transporting horses,...) 20,000

Table 5 – Italy’s horse population Number of horses on the stud- books kept by ASSI 294,207 National horse population (units)647,200 Percentage of horses on the stud-books kept by ASSI respect to national horse population %

4 Land, horse breeding and horse feed About 610,000 ha of land (Table 6) are dedicated to horse breeding and the production of horse feed, of which over 280,000 ha are used directly for breeding. To appreciate the magnitude of this phenomenon and its importance to Italian agriculture one only has to compare these figures with (Picture 2), for example, the hectares dedicated to olive groves (1,191,000 ha), vineyards (777,000), orchards (437,000 ha) or tomatoes (113,000 ha)…..

Table 6 – Some comparative data (hectares) Olive groves1,191,000 Vineyards777,000 Orchards437,000 Horse feed (estimated)330,000 Horse breeding (estimated)280,000 Tomatoes113,000

Picture 2 - Some comparative data

5 The Italian breeding …..The high levels of horse breeding excellence attained in these years has been the result of a widespread commitment, despite the difficult economic situation, to implement comprehensive multi-year programmes to support horse breeding which, in addition to the investments made by individual operators, have made it possible to enhance the quality and increase the quantity of Italy's horse breeding output (Table 7)…..

Table Italian Breeding* StallionsMaresBirths Trotting1943,8363,980 Galop1151,3501,150 *a.a.*, a.a, a.a.o., p.s.a ,345 * Provisional data.

6 Horseracing betting and deductions The comparison with some European countries shows that the system of deductions, and in particular the percentages of deductions, is different from each other (Table 8).

Table 8. Horseracing betting and deductions in some European countries in 2011 (Source: IFHA, 2012) CountryBetting turnover (millions of Euros) Return to Customers (%) Received by Government (%) Retained by Wagering Operators and Other Deductions (%) Returned to Racing (%) France9, Germany Italy1, Sweden1,

THANKS FOR YOUR ATTENTION !