With the BHA’s ‘Approved Betting Partner’ (ABP) status set to commence next January, the relationship between UK racing and bookmakers has reached its lowest ebb. Scott Longley examines the debate regarding the proposed racing right, and whether any all-round resolution can be reached in 2016
It may be the season of peace and goodwill but it would be a minor miracle if UK racing and large swathes of the bookmaking industry were to be seen sharing a mug of egg nog this year. In fact, you would be hard pressed to find a more rancorous relationship right now than the one that exists between the two.
To give a full picture of how we got to a situation where Fred Done from Betfred has taken to the pages of the racing press to denounce the “high-handed” demands of the racing industry while racing itself has seemingly turned its back on one of its largest sources of sponsorship income would take far longer than this short article.
Suffice it to say, the history of the long and sometimes tetchy partnership between the sport of kings and the betting fraternity would be an epic tome which would feature an awful lot of war and very little peace.
The latest spat is would appear to be particularly ill-timed given the ongoing debate regarding the proposed racing right. Although the government has now officially given the nod for the current levy scheme to continue for another year at the present rate of 10.75% of horseracing gross win revenue, that decision deliberately gave the swerve to the knotty issue of the leakage of potential levy payments due from the offshore operators.
Indeed, the government statement expressed some frustration at having to get involved at all, with the joint statement from the secretary of state for culture John Whittingdale and the minister of sport Tracey Crouch suggesting the government was “disappointed” that the Horserace Betting Levy Board and the bookmakers committee were unable to reach an agreement. If by forcing the issue of the current levy to be adjudicated by the government racing thought it might be able speed the introduction of a racing right, then the somewhat peeved government response would suggest it had the opposite effect.
That many of the firms represented by the committee are also the major high-street firms that do pay a levy on their land-based bookmaking operations is just one of the complexities of the situation. A casual observer might therefore be somewhat bemused that big names such as Ladbrokes, William Hill, Coral and the aforementioned Done’s Betfred are among the list of the missing from the BHA’s new Approved Betting Partner (APB) scheme. And then we come to Paddy Power, also excluded for not agreeing to an offshore levy rate but soon to merge with Betfair which has just signed up as an ABP alongside bet365 and 32Red.
At heart the dispute is all about money, and specifically the amount that racing feels it is due from the bookies, both online and offline, and what the bookies themselves feel is fair. We do at least have a benchmark for the rate that the BHA deems acceptable – it is whatever gross win percentage the three which have so far signed up to the ABP scheme have agreed to. Unfortunately, we have been left guessing as to the actual rate but the deal with Betfair goes through to 2019 and sources suggest this three-year agreement has been done at a reduced rate.
We also know that in the negotiations with the levy board the bookmakers committee made an offer with regard to what they thought would be an acceptable rate for the whole industry to pay on their collective offshore revenues from racing.
So we have two rates, and presumably there is enough of a gap between the two for the BHA to feel that the lower rate doesn’t not go far enough in covering what it believes is a £30m shortfall in funding caused by offshore leakage.
Bookmaker sources suggest that the industry was more than willing to move some way towards racing’s position in the failed levy negotiations, and offered a blended rate based on both land-based and online revenues and which takes account of the escalating cost of media rights payments. The offer was rejected, and hence the referral to the secretary of state.
But if we are to see peace in our time here then there will have to be some movement between the two positions, perhaps with whatever the presumed discount Betfair likely received as some form of guide. Otherwise, we are likely to see more than just some levy leakage as bookmakers seek sponsorship opportunities elsewhere.
Indeed, we now have another shortfall – the gap between what is paid by Betfair and bet365 and what is now possibly lost in sponsorship money (32Red’s payments will be miniscule in comparison). Notably, Coral took the opportunity of the dispute over ABP status to announce a new deal with Leopardstown racecourse in Ireland to sponsor the whole card at a meeting in January. In putting the case for the sponsorship, Coral spokesperson Simon Clare suggested the meeting provided the “perfect platform to promote the… benefits of our online and mobile betting service to Irish racing fans and punters”. It might be a while before UK punters hear Coral say the same thing about them.