Israeli Government Reaches $6.7 Million Settlement with GBI Racing
Posted on: January 6, 2018, 09:07h.
Last updated on: January 6, 2018, 09:07h.
The Israeli government has agreed to pay a settlement of 23 million shekels ($6.7 million) to GBI Racing following the implementation of a ban on betting on horse racing that came into effect last week.
The settlement provides GBI with compensation for the remainder of their contract, which was initially set to expire this coming August.
Israel had only begun allowing betting on racing in 2013. But GBI Racing, which is a joint venture between Racing UK and At The Races, quickly established itself in the country and made Israel one of its major markets.
According to a report in the Racing Post, GBI was believed to be making about £4 million ($5.4 million) in revenues from Israel each year.
Ban is Part of Campaign Against State-Sponsored Gambling
However, Israel’s parliament approved legislation last year to ban horse racing betting. It was part of a campaign by Finance Minister Moshe Kahlon to eliminate state-sponsored betting, which he described as “tainted money.”
When that decision was announced in July, the Israeli treasury made it clear that they were prepared to negotiate terms to get out of the remaining contract. Earlier, GBI officials had warned that they might pursue legal action both in Israel and international courts should the contract be ended prematurely.
In the end, it appears that both sides were willing to negotiate. Details of how the parties came to their agreement were not made public, though it’s likely GBI was compensated not only for lost revenues, but also for the substantial investment the company made in the country, including the installation of betting shop terminals that offered racing content translated into Hebrew.
GBI Laments Loss of Valuable Market
For GBI, the settlement marked a disappointing end to what the company saw as a successful venture.
“The closure is a shame, given the giant strides GBI Racing has made in the four and a half years of trading in Israel,” a GBI spokesperson said. “The country had no history of horseracing, no infrastructure to facilitate betting on horseracing, and had no real affiliation with a uniquely British product.”
The spokesperson went on to describe Israel as a “key market,” saying that they believed the arrangement had been good both for Israel and for tracks back in the British Isles.
“It’s a partnership that has delivered substantial revenues and funding to UK and Irish racecourses, as well as for sports and government good causes in Israel, but we have accepted the ministry’s decision and the political will to close the operation,” the spokesperson said. “We believe it is a fair settlement, given the circumstances.”
According to the spokesperson, GBI Racing will look to make up for the lost revenues by expanding operations in new and emerging markets, including in Africa and Italy.
Horse racing was not the only target of Kahlon’s gambling crackdown. The Mifal Hapayis national lottery was also forced to shut down more than 600 electronic gaming machines last week, after the lottery failed to reach an agreement with the Finance Ministry.
“Eighteen months ago I said there would no longer be slot machines in Israel, and I am very happy that from today, there aren’t any more,” Kahlon said.
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