Yes, it’s happened! This government, having long recognised the gross unfairness of racing’s funding system, is now going to do something about it.
So in April of next year – earlier than we dared hope – a new system will be introduced to replace the outmoded levy. Crucially, it will address the so-called ‘leakage’ problem, so that all bets struck on British racing by UK-based punters, including online, will generate income for racing.
When the digital revolution took hold it was inevitable the balance would increasingly tilt away from betting shops and towards betting through mobiles and laptops. This in itself was not a bad thing for racing, but when almost all betting operators moved offshore, and therefore outside of the levy’s jurisdiction, the dire consequences for racing became apparent.
Such was the growth of online betting, predictions of the levy ‘falling off a cliff’ next year were no exaggeration, with only about half of betting activity on horseracing now being accounted for by the levy. The loss to racing is estimated to be £30 million annually and growing.
It is unclear what the exact mechanism for funding will be under the new legislation. We are also unclear how this will circumvent European state aid legislation, but this is a matter best left to the politicians and their experts.
However, we do know the new legislation will account for bets channelled through offshore operators; we also know the sole function of a much-truncated Levy Board will be to collect funds from betting operators according to a newly established formula; and we can be reasonably sure that when all this is done and dusted, the government will extract itself from the process.
A vital part of the changed system will be the establishment of a new body representing the racing industry, incorporating, among others, the Horsemen’s Group. Its role will be to distribute those funds collected by the levy.
An important next step towards extending the legislation will be the creation of a formula for establishing how much the betting industry will pay to racing annually. This must exclude deals relating to media rights and sponsorship because they are based purely on commercial decisions.
In recent years payments to racing through the levy have been based on 10.75% of bookmakers’ gross profits. It is, however, an imperfect system, in that racing is entirely at the mercy of bookmaker margins on horseracing bets. These margins are invariably very tight on the digital side of the business, but at least now racing should be able to apply proper audit procedures to get a more accurate picture of what actually constitutes gross profits.
It is, however, an imperfect system, in that racing is entirely at the mercy of bookmaker margins on horseracing bets
Bookmakers like to peddle the line that horseracing is less and less important to them but we know the truth is different – why else are they so intent on keeping racing pictures in their shops? The nature of horseracing lends itself to betting in a sensible and measured way. Whether a punter has a bet simply because of the name of the horse, or the jockey’s colours, or, at the other end of the scale, the study of form is treated as an intellectual exercise, the fact is there is nothing quite as good as racing as a betting medium.
Racing and betting are interdependent so that when a bet is struck, wherever that bet might be processed, there must be a fair, enforceable and sustainable system for collecting a small percentage on it for the funding and welfare of the sport. The government has accepted this principle which, soon, every betting operator must also accept. So, at last, there is optimism that the squabbling will stop and racing and betting will work together to their mutual benefit.
It is rare to extend gratitude to governments, but, given this legislation goes through next April, British racing should certainly give its heartfelt thanks to this administration and all the people who have played a part in making it happen.