New funding system to replace levy moves big step forward

Replacement of the levy system moved an important step closer on Wednesday when the government published The Horserace Betting Levy Regulations 2017, the draft legislation which will lead to the replacement of the levy system from April.

Replacement of the levy does not require primary legislation and is being done through a statutory instrument, although that must get the consent of both houses of parliament.

The new system will extend the levy to remote betting operators based offshore who have so far been outside the levy net. The sport expects the new system to bring in an extra £30-£40 million per year.

BHA director of corporate affairs Will Lambe said: "The publication of the legislation capturing offshore betting activity is the most important step yet towards British racing securing an enforceable and sustainable funding mechanism that will make such a difference to the grassroots of our sport, and those working within it.

"We greatly appreciate the efforts of a significant number of people that have contributed towards us reaching this stage. There is still work to be done, of course, and we await the necessary clearance from the European Commission.

Will Lambe welcomed 'an important step' towards a new funding system

"Overall, it's vital that we establish a new partnership with all forms of betting operator in line – as the government documents accompanying the legislation explicitly state – with the mutual interest racing and betting share in a thriving racing industry."

The instrument confirms earlier guidance from government that the rate for the new system will be ten per cent, applied to gross profits on British horseracing betting above £500,000 per year.

The explanatory memorandum published alongside the regulations said: "The government considered the betting industry’s commercial payments to the racing industry, including media rights, in arriving at the rate."

The new system must gain state aid approval from Europe, with the government having notified the European Commission of its plans on January 13.

While the plan remains for the new regulations to start on April 1, they will not come into force until that approval is obtained. Should there be a delay, the 56th levy scheme will run from the start of April until the new system is in place.

However, the fact that the government has published the regulations and has quoted the ten per cent rate are being regarded as a positive in terms of European approval.

The regulations also make provision for the rate to be reviewed after seven years, although that does "not prevent the minister reviewing the rate if necessary before seven years".

While the Levy Board is set to continue to collect and distribute funds from the new system this year, the Gambling Commission will take over its collection duties in 2018 with a new Racing Authority responsible for spending decisions. Those changes will be enacted by way of a 'legislative reform order' later this year.

Bookmakers were largely keeping their counsel over the announcement, with William Hill saying they would await news from Europe.