Matthew Hancock is proving to be a very good friend to horseracing. He is one of a growing number of MPs who are increasingly supportive of racing’s cause.
It was only last year that Hancock became MP for the constituent of West Suffolk yet he has already won much admiration from the racing fraternity. Favourable early impressions were enhanced by his well-attended and stimulating Commons debate on the levy in January, while his recent adjournment debate showed that his actions may prove even more effective than his words.
It was following the most recent debate that his colleague, John Penrose, announced the government’s intention to introduce legislation that required those overseas betting operators who take bets from British-based punters to hold a Gambling Commission licence. It is an initiative that may well prove to be the first building block of the legislative process that we hope will lead to a funding system based on a horseracing betting right to replace the levy.
Although the proposal may be driven by concerns for consumer protection, the new legislation will surely lead to a situation where overseas-based bookmakers must pay the same level of tax and levy as home-based bookmakers when taking bets from
A horseracing betting right would, of course, require primary legislation with all that entails. It would also have to stand up to parliamentary scrutiny as the powerful bookmaker lobby got to work in creating numerous barriers before the new legislation found its way onto the statute book. The fact that bookmakers are proposing that payments to racecourses for media rights and payments under a legislative system should be lumped together is enough to raise warnings of what’s to come.
The scheme would see a level playing field between onshore and offshore bookmakers
We can, however, move forward in stages. First, we need the Gambling Commission licence to require offshore bookmakers to pay tax and levy as well as providing consumer protection. This would quickly translate into money coming back to British racing.
But it is not just the fact that offshore bookmakers are not paying tax and levy. Even more significant is the competitive edge that this has given them. If your costs are much lower than those of your rivals, then you can, of course, offer your customers much better value.
Such is the escalation of ‘offshoring’ within the betting industry in recent years that it has got to the stage where all major bookmakers have been virtually forced to move offshore with the online part of their businesses because of the advantage held by those rivals already there.
The consequence of this has been a general driving down of betting margins – great for the punter, perhaps, but a disaster for British racing whose income is of course set on the basis of a percentage of gross profits. Add this to the exponential growth of betting exchanges and it is clear why the gross profits system – while quite possibly attractive when first implemented 11 years ago – has in recent years driven down income for British racing in line with plummeting margins.
The establishment of a horseracing betting right to replace the levy would mean that every time a bet is placed on British horseracing there will be a legal obligation for the purveyor of that bet to pay a form of royalty charge to racing.
The attraction of such a scheme is that, not only would it at once create the desired level playing field between both onshore and offshore bookmakers, but it would also create a completely different perspective on the current dispute relating to exchange users acting as quasi bookmakers without paying tax and levy.
Of course, there can be no disguising the fact that, within this apparently simple concept, there lies myriad complexities and legal ramifications. But, right now, we should rejoice in the fact that the first step along this difficult road has been taken. And for that we particularly have Matthew Hancock to thank.