T he momentous budget statement by George Osborne on levy reform, which followed an unexpected amendment to the Gambling Bill, was the best news British horseracing has received for some time.
Not only did the Chancellor make it clear that he intends to extend the levy to offshore betting but he also signalled there would wider levy reform which would include looking at a ‘racing right’ as the means by which racing will fund the sport.
To my mind, the £20 million that levy income on offshore horseracing bets is said to be worth is an underestimate. It is a growing pot because nearly all online betting goes offshore, along with most telephone betting. As business in betting shops (except on machines) stagnates, so the online market continues to show consistent growth, but racing does not receive one penny from it.
Government is putting its weight behind racing in this fundamental change to the levy
When the government decided to start the process for establishing a point-of-consumption tax on offshore betting – meaning that betting operators would no longer be able to escape paying tax on those online and telephone bets made by punters based in this country – there was a general assumption that, as a first step, the levy could not be part of this. But then, last year, the French enhanced their reputation for being resourceful with European law by getting approval for a similar system to our levy, and we all began to start considering various possibilities.
The betting industry has been very successful in peddling the line that we tamper with levy legislation at our peril. The racing authorities, including the levy leadership, appeared to swallow the line that the statute underpinning the levy exists in the modern world only because it pre-dates European law. They had been reluctant to rock the boat, fearful that any fundamental alteration to levy legislation would cause the scheme to fall foul of state aid law.
These concerns may still exist, but the government is clearly putting its weight behind racing in creating an instrument that will allow the levy system to undergo a fundamental change.
So-called levy replacement schemes have been on the BHA’s table since, more than a decade ago, we all thought racing had cracked it by introducing what turned out to be an ill-fated system for funding based on pre-race data rights. Now, for the first time since those days, we can feel positive about the prospect of racing finding a funding system that not only delivers substantially more money but one that is both enforceable and sustainable.
A levy that includes offshore bets on horseracing will provide our sport with a higher income during the period it takes to establish an entirely new funding system. As we have frequently mentioned in the past, the creation of a horseracing betting right would be the ultimate goal. It would necessitate anybody taking a bet on British horseracing to pay a percentage of that bet to the sport.
As it is, racing has become increasingly dependent on income flowing into racecourses for media rights, based on payments for pictures in betting shops. The annual revenue from this source now exceeds the total amount coming from the levy. However, it depends on the deals agreed between racecourse-owned media rights companies and bookmakers and is therefore a fragile platform on which to place racing’s future – especially as we now look towards 2017, when the current deals are set to be re-negotiated.
The recent surprise announcement in the House of Lords, followed by the Chancellor ‘s statement, shows that our pleas to government are being heeded. The racing industry is a huge employer and economic contributor to UK plc. And for those of us who believe that establishing a racing right through law must be the long-term goal, his words have provided much encouragement.