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Monday, 17 December, 2018

European Commission reveals why it has approved levy reforms

BHA executive director Will Lambe
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The European Commission has revealed the reasoning behind its decision to give state aid approval to the government's reform of the levy system, a ruling described by the BHA as "unequivocal" in its acceptance of the UK's case.

European approval of the reforms, which for the first time extend the levy to overseas operators, came in April and led to the changes in the system being enacted.

The commission said it had received two complaints about the reforms, one from the Remote Gambling Association (RGA) and one from an anonymous source.

The RGA claimed the measures did not meet common interest objectives and were not proportional.

'Two market failures'

However, on common interest the commission concluded the reforms dealt with "two market failures . . . The fact that betting operators benefit from horse races without having to contribute to the costs of organising them; and . . . the fact that offshore operators placing bets on British horseracing and on-course operators are currently not subject to the levy".

It also concluded the measure was proportionate "since the UK authorities have designed the levy in such a way as to minimise the possible amount of state aid involved and to minimise the distortions of competition arising from the measure".

While there were complaints the reformed levy's ten per cent rate would over-compensate racing, the commission said: "The levy has been in place since 1961 and since 2002 it has slightly varied from ten per cent to 10.75 per cent.

"Given the betting market managed to grow under these conditions it seems unlikely the new levy of ten per cent of GGY [gross gambling yield] can have a particularly negative impact on the betting market."

'British racing grateful'

Welcoming the commission's explanation, BHA executive director Will Lambe said: "The full state aid ruling on the new levy is comprehensive, and unequivocal in its acceptance and recognition of the key arguments being put forward by the UK authorities.

"The whole of British racing remains grateful to all those involved in getting us to this point.

"Our absolute priority is now to move on with the betting industry and forge a new partnership entirely in line with the mutual interest referred to throughout the ruling, notwithstanding that there may be some who seek to encourage a legal challenge for their own ends."

The clock has not yet started ticking on any legal challenge to the commission's decision as that cannot happen until it has been published in the European Commission's journal.

When it is, there is a two-month period in which a challenge can be lodged.

The full state aid ruling on the new levy is comprehensive, and unequivocal in its acceptance and recognition of the key arguments
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