Racing and breeding is now a global business. Ideas are exchanged between countries determined to embrace international racing, hence the need for major jurisdictions to adopt a uniform policy on medication. These jurisdictions also share the same desire to stage a financially vibrant sport. Yet while others have taken successful measures to ensure a fair betting return from their product, we in Britain have been kicked into the long grass by government – and not for the first time.
Nevertheless, recent developments at the European Commission give rise to renewed optimism that racing can be successful in its efforts to secure levy payments from offshore bookmakers. In May the EC approved a French proposal for a levy on online bets placed on French racing, irrespective of the point of consumption. Its purpose is to “improve the bloodline and promote horse breeding”, which sounds remarkably similar to the general remit of our Levy Board.
The ruling’s mechanics remain sketchy, since details have yet to be published. But it appears the French succeeded where our government dares not tread as the commission accepted that improving bloodlines and promoting horse breeding amounted to a Service of General Economic Interest.
The EC determined it was in the PMU and competing online operators’ interests that assistance was provided to the horseracing sector, and that, under a treaty introduced to “facilitate the development of certain economic activities”, the levy was both legitimate and free of state aid implications – the latter a concept that seems to paralyse our government from tackling the issue head-on.
Interestingly, the commission also accepted that the operators’ contribution to the “cost in the common interest” of organising racing in France should be set at 5.8% of turnover. A similar ruling in respect of British racing would transform the sport’s finances overnight.
The French funding model is very different to ours, of course, but this ruling provides food for thought. It is also similar to progress made in Australia, where the New South Wales government introduced legislation obliging out-of-state operators to pay a levy of between 1.5 and 2% of turnover. This legislation is underpinned by the introduction of a bill rendering the avoidance of levy payments a criminal offence. It has focused minds to the extent that NSW horsemen, who drove the push for legislation, have benefited from payments of A$266 million since the scheme’s introduction five years ago.
The threat to NSW’s racing finances from out-of-state operators was removed at a stroke by a government prepared to recognise the injustice of ‘levy avoidance’ within a rapidly-changing environment, and was prepared to legislate for it. That legislation proved sufficiently robust to withstand legal challenge in Australia’s High Court.
It also ensured that owners attracted to the sport can expect healthy prize-money returns. In Britain, owners contributed £369m in costs last year but their return from prize-money was £21 for every £100 spent. In France it was £54 – that’s without the benefits of the EC ruling.
With governments around the world securing payments for the provision of racing’s product from bookmakers irrespective of their location, it is not surprising British firms are so anxious to maintain the status quo. The suspicion has long been that they do very well out of it. It also allows them to retain key information on offshore turnover, making it impossible for racing to establish what its product is worth within the commercial arrangements now advocated by government.
These are frustrating times. No sooner does a position arise where British racing can be optimistic, then it recedes, often for political expediency. The French have proved adept in negotiating the EC minefield. It appears they have done so again, to potentially lucrative effect.
Our government recognises vast benefits would arise from taxing offshore bookmakers at the point of consumption. Our industry is both a significant employer and a substantial source of revenue. The time has come for racing and government to resolve this damaging issue as a matter of urgency.