Government confirms plans for reform of the levy from April 1
British racing has had the news it was waiting for as the government on Friday confirmed plans to ensure all gambling operators taking bets on the sport contribute to its finances from April 1 through a reformed levy system.
As was first reported by the Racing Post in October, it is planned that any operator taking bets on British racing from customers based in Britain will pay ten per cent of their gross profits on that business, above the first £500,000 they make, to support the sport.
The news was warmly welcomed by the BHA. However, before the new system is introduced the proposals must receive state aid approval from Europe, a hurdle pointedly noted by representatives of the bookmaking industry.
Under the current levy system, first introduced in 1961, online betting operators based offshore who take bets on British racing are under no statutory obligation to contribute financially to the sport, although some make contributions through the authorised betting partner policy.
The new system would close the offshore loophole, taking the return to the sport to around £90 million. In contrast, the last statutory levy scheme raised £54.5m.
Sports minister Tracey Crouch said: "This move will help secure the future of horseracing in Britain by making sure gambling firms pay a fair return to support the sport.
'A strong heritage'
"Horseracing has a strong heritage in Britain, employing thousands of people, and is enjoyed by many almost every day of the year.
"This new approach to the Horserace Betting Levy will help sustain and develop the sport."
Responding to the news, BHA chief executive Nick Rust said: "I welcome today’s announcement from government regarding the implementation of the levy replacement that will restore to racing a return from all betting on our sport at a fair and proportionate rate. This is critical to the future health of British racing.
"Once the new system is implemented in April 2017, we will see a significant uplift in the sport’s central funding that will benefit our participants and the many local communities that racing supports across all corners of the country."
Rust thanked Crouch and the Department for Culture, Media and Sport on behalf of the sport for their efforts.
He added: “British racing is committed to working closely with our partners in the British betting industry to make a success of this new environment, and grow what is the most natural, exciting betting product to the future advantage of both our industries and the wider economy.”
The initial response from bookmakers to the announcement was frosty.
William Hill spokesman Ciaran O’Brien said: "We note the reference to the need for state aid approval given the resulting increase in income to racing from the proposed levy changes.
"This follows a decade of significant increases in media rights income from the betting industry and William Hill will input to the process as appropriate."
Rate remains an issue
A spokesman for Ladbrokes-Coral said they had agreed to the principle of paying on their offshore business "some time ago", but that the rate remained an issue.
"On its own, people may think it looks fair but in the round, with cost escalation in the levy, shop pictures, streaming rights and advertising, the sport is in danger of pricing itself out of friends," he added.
The levy scheme, which will be enacted through a statutory instrument rather than new legislation, will apply to all operators including betting exchanges, on-course bookmakers and operators involved in pool betting and spread betting.
That will mean a change for on-course bookmakers who have previously paid a flat £240 fee.
While only a handful exceed the £500,000 gross profit level it is understood racing hopes to discuss the implications of reforms with on-course bookmaker representatives.
As had also been reported by the Racing Post, the Levy Board is set to continue until early 2018, after which responsibility for collecting the levy will pass to the Gambling Commission, while a newly-formed Racing Authority will distribute the funds raised.
The government said it will lay a 'Legislative Reform Order' to effect the transfer of those responsibilities and would consult affected stakeholders on the detail of the proposals shortly.
The sports minister will also review the rate set within seven years of the legislation coming into force "to ensure that it reflects any future changes in the market".
Comment: Another step forward but there is still work to do
There can be little doubt the government's announcement is good new for racing in Britain.
Most of the details contained within the announcement had emerged over the course of the last few months, including the proposed ten per cent rate for the new system, but now sports minister Tracey Crouch has confirmed them.
Possibly the most important detail, though, is that the government still intends to bring in the reforms from April 1.
So in just 11 weeks a new system will be in place that should result in the sport being several million pounds better off.
However, it is that timeframe that means it is not quite the moment yet to put out the bunting to celebrate the dawn of a new era.
There is a lot to do in that 11-week period and there is still a lot of detail to emerge about how exactly the new system will work.
The statutory instrument process needed to enact the new system will have to start by late February to be ready in time for April.
And there is not much margin for delay in gaining the necessary state aid approval from Europe.
Neither is it clear what will happen if that approval is challenged by a gambling operator.
Levy reform has moved another major step forward but there is still work to do before it is over the line.