Revealed: the real cost of the huge fall in racing betting turnover

Online betting turnover on horseracing fell by the equivalent of £1.75 billion in the last financial year, wiping tens of millions from media rights deals with bookmakers and illustrating the scale of the sport's funding black hole, analysis by the Racing Post has revealed. 

The latest Gambling Commission statistics showed online turnover on racing in 2022-23 was £9.12bn, a fall of around £900 million on the previous 12 months. However, when inflation is taken into account, which betting on the sport had previously closely tracked, turnover would have been expected to hit £10.87bn, £1.75bn higher than the actual figure. 

The sharp fall in turnover on racing coincided with the widespread introduction of affordability checks by bookmakers acting under Gambling Commission pressure and before the implementation of measures included in the government's gambling white paper, which include 'financial risk checks' the sport fears will result in a further decline in betting turnover as punters facing checks stop betting  or turn to the black market.

In contrast to the sharp decline in turnover, gross gambling yield (GGY), the profit retained by bookmakers after winnings have been paid out, rose in line with inflation in 2022-23, indicating that operators increased their margins to maintain profitability despite falling turnover. This resulted in the levy yield remaining stable, but means less money is returned to those betting on the sport, raising concerns that racing is becoming a less appealing product.

BHA chair Joe Saumarez Smith said there was a "strong argument" that turnover on racing would be expected to have gone up almost in line with inflation.

He said: "The impact of financial risk checks is £900m in actual terms but in real terms is greater, given you would expect to see an increase in turnover slightly below the rate of inflation.

"Given the demographics of people who are now betting you might expect it to go up at a little less than the rate of inflation because of the cost of living crisis. If inflation was running at eight per cent you would probably expect it to rise by, say, six per cent. You couldn't say with huge confidence that it [the fall] is all down to checks but clearly they are a big part of it."

Saumarez Smith also acknowledged the lure of the black market for some horseracing punters.

"Some of the activity will have gone to the black market but by the very nature of the black market it is hard to know what it is," he said. "But anecdotally we know that some of the big punters who have been restricted have been betting with the black market because they tell us they are.

"It would be naive to think that those people who have been restricted by regulated bookmakers in the UK because they either don't want to provide their bank statements or the bookmakers feel their licences would be at risk for servicing those customers, have simply stopped betting."

Arena Racing Company chief executive Martin Cruddace said the fall in British racing's income was widening the funding gap with rivals. 

He said: "The simple fact is our online turnover is still around 20 per cent down on January 2020. Any online business could reasonably expect CPI growth as a minimum so, of course, in real terms we have simply fallen further and further behind other racing jurisdictions.

"The Gambling Commission has provided zero evidence that any of that lost turnover is gambling-harm related, hardly surprising because there is not any. Our industry needs clarification and certainty as to our key income line or the funding gap with jurisdictions such as France and Ireland will simply grow and, I fear, exponentially so."

Martin Cruddace: "Our industry needs clarification and certainty"

A recent business plan update from the Levy Board described a "consistent and clear downward trend" for betting turnover on horseracing, with average turnover per race dropping below £1m but noted that had not been reflected in GGY terms.

It added: "Gross win is performing strongly and currently compensating for turnover reductions. This may not be sustainable."

Saumarez Smith also noted the long-term threat to British racing from the current situation.

He said: "If you look at why GGY has held up, bookmakers have increased margin on racing, and in fact on most betting products. In racing if you look at the reduction of improved place terms and promotions such as price boosts, the reduction of those promotions has meant the margin on racing has gone up.

"That has obviously protected levy yields but it has been bad for media rights, because online media rights are largely based on turnover. The media rights companies have definitely seen a hit from it and the levy hasn't, but in the long-term it's not good for racing that bookmakers are doing less promotion and marketing activity using price boosts and extra places.

"You want customers to be rewarded for betting on racing."

Conservative peer Lord Herbert, who has criticised the government's white paper proposals for affordability checks, voiced his concern about the situation.

He said: "These are deeply worrying figures and they underline the need to rein back affordability checks immediately. It’s not clear what has caused this loss of revenue but clumsy and unnecessary affordability checks can only have added to the damage. 

"At a time when the sport faces a major challenge to regain its global competitiveness the government should be backing British racing, not penalising it.”

Read these next:

Senior figures take racing's concerns over affordability checks and levy to 10 Downing Street 

Gambling minister Stuart Andrew promises not to sign off affordability checks until he is sure they work 

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