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Saturday, 19 January, 2019

Approval expected soon for reformed levy

The House of Lords debated racing's funding on Wednesday night
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Both the government and BHA expect state aid approval to arrive within days rather than weeks for the planned reform of the levy system.

Racing's new funding mechanism became law on Wednesday night but will not be in place for Saturday's target date.

Although the UK's law regarding the levy changed on Wednesday to bring operators based offshore into the funding net, the replacement system cannot come into force until approval is received from Europe.

The news means racing remains tantalisingly close to achieving its aim of closing the loophole that allows betting operators based offshore to avoid contributing financially to the sport through the levy.

Hoping change comes in time for Grand National

With the Randox Health Grand National – the biggest betting race of the year – little more than a week away, racing will be hoping state aid approval comes in time to capture online betting on the event for the levy for the first time.

The government had hoped the new system would be operational from April 1 but minister Lord Ashton of Hyde told the House of Lords on Wednesday night that it had been informed by the European Commission that approval would not be received in time and so the reformed levy would therefore not be in place by that date.

He added: "However, we are confident that clearance will be received shortly."

That confidence was underlined on Thursday by a spokesperson for the Department for Culture, Media and Sport, who said: "Payments to racing under the current levy scheme will continue until that happens, ensuring the flow of funding to the racing industry is not interrupted."

The sport's leaders believe the new system should bring in between £30 million and £40m extra per year.

A significant step closer

BHA director of corporate affairs Will Lambe said: "We note and share the government’s confidence that state aid approval for the new legislation will be received soon."

Reacting to events in the Lords, Lambe said British racing had moved a "significant step" closer to a fair, enforceable and sustainable return from all betting activity on the sport.

He added: “We now await the anticipated European Commission clearance as the final formal step in the process and which will secure the new levy and have a transformative effect on our sport, in particular its grassroots and our tens of thousands of employees."

The Lords debate was the final stage of the parliamentary process required to enact the secondary legislation which will bring in the new system, if and when state aid approval is received.

Lord Ashton told the Lords: "As we approach the final furlong towards these much-needed reforms, the government believe that resolving the unfairness in the current system will enable betting and racing to move forward and to work together to grow both industries in the mutual benefit of a sustainable and vibrant racing product."

The statutory instrument, entitled The Horserace Betting Levy Regulations 2017, received cross-party support, just as it did from MPs earlier in the week.

Legal challenge looms

However, not every peer supported the government's plans.

Lord Lipsey, who has been a long-term opponent of the levy, said he believed "with total confidence" the levy replacement system would be subject to legal challenge.

He concluded: "Far from providing certainty to racing, this order promises prolonged uncertainty.

"Long term there is every chance this half-baked legislative scheme will collapse at the hands of the courts."

As a trade body, the Remote Gambling Association cannot make a challenge in Europe but the organisation's chief executive Clive Hawkswood said he believed one would emerge.

He said: "It remains to be seen whether anyone might pursue a legal challenge against the new legislation but, for example, it is more likely than not that an appeal would be lodged against the European Commission if it grants state aid clearance for the planned reforms."

The news means the 56th levy scheme will come into force from Saturday until approval is received and the new system can begin.

The Levy Board will continue to operate until next year and chief executive Alan Delmonte said on Thursday: "The board has agreed its April and May expenditure and will look at the position in mid April in regard to what it wants to do from June onwards."

When 66-1 shot Auroras Encore won the 2013 National it boosted the levy yield by about £3m

Q&A: One last hurdle to overcome 

Q: What happened in parliament on Wednesday evening?
A: The House of Lords gave its approval to the government's plans to replace the levy with a new system capturing a share of betting with bookmakers based offshore, changing the law.

Q: That's good news for racing isn't it?
A: It is, but there is still one last hurdle to overcome as the scheme requires approval from Europe on state aid grounds.

Q: When will that happen?
A: Both government and racing had hoped it would happen this week to allow the system to start on the target date of April 1 but that will not happen now. However, the message from both was that they believed it would arrive shortly, hopefully in days rather than weeks.

Q: How much will the delay cost racing?
A: It depends on how long the wait is but the sport will be anxious for approval to come before the biggest betting race of them all, next Saturday's Grand National. When Aurora's Encore won the race at 66-1 in 2013 it helped boost the levy yield by around £3 million.

Q: What happens in the meantime?
A: The old levy system will continue until state aid approval arrives.

Q: What about authorised betting partners?
A: The firms who signed up to be ABPs and contribute a percentage of their online profits on horseracing back to the sport will continue to do so until the new levy system starts.

We note and share the government’s confidence that state aid approval for the new legislation will be received soon
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