Lee Richardson, CEO at Gaming Economics, has looked at the tired old Levy Scheme and thinks its time that a modern industry found a modern solution.
Gaming Economics thinks it’s time for the British horseracing industry to stop relying on Levy funding under its current guise.
The Horserace Betting Levy is a statutory instrument which essentially transfers money from those who bet on horseracing to the racing industry; it’s collected by bookmakers and distributed by the Levy Board, a non-departmental public body of the Department of Culture, Media and Sport (DCMS).
The system has been with us since 1961, when betting shops were legalised, and was initially designed to compensate the racing industry from the loss of income from punters who no longer needed to attend the races in order to bet. Today, the Levy is primarily used to help fund prize-money, but also helps underwrite racecourse improvements, integrity services, industry training, education and veterinary science.
More than 50 years on, the DCMS launched two consultations on the future of the Levy earlier this year, with the most recent being two months ago, posing a ‘reform or replace’ question; that consultation period closes today, Nov 5th 2014.
For various reasons, horseracing should be compelled to further boost its commercial focus.
Betting on horseracing by domestic punters is in decline, and has been for almost two decades; just ten years ago, its share of UK retail betting gross-win was 50%. It’s now down to 23% and still falling.
According to Deloitte, who undertook an economic impact study for the industry in 2013, horseracing now receives less than 12% of its industry income from the Levy, down from 22% in 2006.
Whilst these market-forces have reduced British horseracing’s reliance on the Levy in recent years, the industry has seen success in improving other revenue streams, including media rights and sponsorship income; since 2006, total income has risen almost 24%.
Now is the time to finally replace the Levy with a modern, fair, sustainable and enforceable commercial model to further that process. There should be no further involvement from government from 2015.
British horseracing should be better off with a model which challenges it to constantly improve or re-design its product in order to hold onto its share of the British betting pound, and thus help maintain its role as an important part of British sporting heritage and a vital component of the rural economy.
Gaming Economics hopes the DCMS can ensure that this outmoded sports-funding system begins its final chapter early in the New Year.
Lee Richardson is a General Motors-trained engineer and held senior marketing and commercial roles with the Hertz Corporation in both UK and Europe. Former marketing director, British Horseracing Board, Lee has also held senior CEO/COO roles over the past 15 years with Tote Direct, Coral-Eurobet plc, Chartwell Games International, Boylesports and ONEworks. MBA from University of Strathclyde (Glasgow), Lee is a Chartered Marketer and a Fellow of the UK Chartered Institute of Marketing. Currently CEO of Gaming Economics, an international e-gaming consultancy and advisory business. He is also an advisor/mentor with Bright Ideas Trust, an award-winning charity that provides start-up finance and business advice to young entrepreneurs.
This article was originally published on LinkedIN.