UK Government following French lead for racing funding changes

cheltenham2016The UK Government will be applying for State Aid exemption to extend the horseracing betting levy to online bookmakers. The plans, revealed in today’s budget, show that rather than replacing the Levy Scheme, the DCMS is to attempt to alter it, following the line ploughed by the French authorities to introduce betting rights to sports.

In a document responding to last year’s three consultations on the subject and published today, the Government revealed its intentions: “The Government is legislating to give racing new rights to funding from bets taken on British racing. We have noted the principles established in the French parafiscal Levy which secured State aid approval, and consider that approval provides certainty for all parties. We propose to seek State aid approval for these new funding arrangements.”

The key aspect of all this is the rate. The Government said: “The amount payable by operators will reflect the degree of mutual interest between betting and racing. This is similar to the approach adopted in the French parafiscal levy on online horserace betting, where payments are based on common interest costs.

“Through the consultation process it was argued that there should be more in-depth research, economic modelling and analysis to define and quantify the value of the common interest between betting and racing. The Government agreed the importance of ensuring a robust analysis, and in August 2015 commissioned an independent report of the funding of horseracing, which is due to report to Government later this month.

“Over the next few months the Government will hold discussions with the betting and racing industries, and draw on the expertise of the Horserace Betting Levy Board, to inform a decision on the rate payable.”

One of the key arguments of the betting industry is that an extension of scope should not mean an increased quantum going to racing. Bookmakers, particularly retail bookmakers, argue that the Levy can’t be taken into isolation when the industry funds the sport through many channels, most notably of late via media rights for showing racing in betting shops.

The Government will have to make sure that bookmakers are all on board with this change in order to meet the ambitious timetable for implementation. It will only take one objection on the State Aid expemtion for this to be stuck in the European legal mire for some time

Government’s proposed timetable

  • Spring 2016 – period of consultation with betting and racing industries to inform the level of contributions from betting.
  • Summer/ autumn 2016 – State aid notification process with the European Commission.
  • End 2016 – Statutory Instrument and full impact assessment published.
  • April 2017 – new funding model comes into force.

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