Rust welcomes European approval for new central funding system
British racing is just a few days away from the holy grail of a new central funding system after the European Commission gave its approval to the government's plan to reform the levy.
BHA chief executive Nick Rust said British racing wanted to build "an exciting future" for both the sport and the betting industry after the commission endorsed the reforms as in line with state aid rules.
The commission said it had approved the measure because "it recognises it is essential for the improvement of horse breeding and horseracing without giving rise to undue distortions of competition".
The news means one of the final hurdles for implementation of the changes to the levy system has been passed, although it must still be signed into law by sports minister Tracey Crouch, which may not happen until early next week.
Under the reformed system, betting operators who had previously fallen outside of the levy net because they were based offshore must now contribute to British racing's funding from betting on the sport.
Operators must pay ten per cent of gross profits on betting on British racing above a £500,000 threshold.
The news will delight racing's leadership, who believe the sport has been missing out on income estimated at between £30-40 million per year because of the offshore loophole.
There is broad consensus for the lower and middle tiers of racing to benefit from extra prize-money as a result of the increase in funding, although not all of the increase will be available as the Levy Board has been spending more than it has received from bookmakers for some time.
Rust said: "With the final, outstanding approval now secured from the European Commission, today marks one of the last few steps in the process of securing a fair return from all betting on our sport.
"We look forward to receiving confirmation shortly from government of when the new legislation will take effect."
The Authorised Betting Partners (ABP) scheme will cease operation from the commencement date of the new levy, as all betting operators will be paying on a statutory basis.
Rust added: "We look forward to working closely with bookmakers to build an exciting future for both our industries.
"The new levy has the potential to put an end to unnecessary divisions between racing and betting as it creates a level playing field, removes the need for annual negotiations on the rate and provides long-term certainty for both parties."
The Levy Board will continue to carry out its functions of collecting and distributing funds until the new year, when the Gambling Commission is set to take over collection and a new Racing Authority will decide on spending.
Bookmakers have voiced concern they will not have any representation on that authority, as they do now on the Levy Board.
Reacting to the news, William Hill's Ciaran O’Brien said: "As one of the major contributors to the levy we would hope that multichannel betting representation will form part of any new distribution body.
"It surely makes sense for both industries to have an input into how the funds are invested, otherwise this move represents an increase in taxation alongside a removal of representation."
The new system could still be subject to a legal challenge, either domestically through a judicial review or in Europe.
There has been no indication a challenge is planned by any of the major betting operators in the British market, with Ladbrokes Coral saying recently they would "pay any legally set rate".
What the European Commission said
The European Commission has endorsed a reform of the existing UK Horserace Betting Levy scheme as in line with EU state aid rules. The reform will subject off-shore bookmakers to the levy whereas currently only bookmakers based in the UK contribute to the financing of horseracing.
It will establish a ten per cent levy on the Gross Gambling Yield (GGY) applied to all betting operators for their part of the GGY above a de minimis threshold of £500,000/year. The Commission has approved the measure because it recognises that it is essential for the improvement of horse breeding and horseracing without giving rise to undue distortions of competition.
The measure also creates a level playing field among betting operators, while at the same time supporting entry of new operators and the development of competition between betting operators, thanks to the de minimis threshold. This Commission decision will apply until the UK ceases to be a member of the EU.