SBC News Voice of the Sports Betting Industry
Nicholas Cooper has called upon the industry to consider shifting the horse racing levy from the current gross profits system towards a betting turnover-focused system.
As part of his speech at the Racehorse Owners Association’s (ROA) annual meeting in London, the ROA president said that a turnover-based levy would “provide a much truer reflection of racing’s continuing worth to the betting industry.”
He commented: “I can see why in 2001 it was attractive for racing to agree with government and the betting industry to switch the levy to 10 per cent of gross profits. It had the enormous attraction of no-tax betting for the punter, but in those days the betting world was a very different place.
“The betting exchanges were barely on the horizon and few could have predicted the extent to which this brilliant concept would become so central to the whole betting system in this country or how in the intervening years they would drive down the profit margins to which bookmakers bet.
“By continuing with this system, the levy is likely to suffer. Betting is steadily moving from shops to online. Betting shop margins are better for bookmakers, whereas online punters as a group are shrewder and are more inclined to shop around for the best price.”
Following a government reform to the levy back in 2017, there was an initial boost to levy yield of £95m. The most recent figures, however, have shown that the most recent levy cycle yield has dropped to £78m, a fall of £17m from last year.
Cooper added: “Annual horserace betting is currently around £12billion. Even as little as 1% of turnover would produce a levy of £120m, which would be the highest-ever figure, and over £40m more than the most recent levy yield.
“All of which says to me we have to do our best to persuade the government of the day that our existing central funding system needs attention.”
The yield for 2018/19 was initially projected to reach £89m following the third quarterly results. However, end of year submissions from bookmakers later confirmed that contributions had dropped considerably.
In order to support the horse racing levy, Cooper suggested that the 50 per cent of the income generated from media rights should be ‘injected’ into the levy pot, in a move to support the continuation of the sector.
He continued: “By constantly pressing these arguments while showing that racing is vulnerable not only to the effects of betting shop closures, brought about by the new FOBTs legislation, but also to a fluctuating and diminishing source of income from the levy can we hope to get the changes made that would allow us to rejuvenate levels of prize-money while injecting funds into self-help schemes throughout the industry.
“The enormous growth of income from media rights over the last decade has been a wonderful thing for racecourses and racing in general. Without this source of income we would certainly be in a sorry state. But there is a tiny problem here. The money – now thought to be in the region of £150m annually – flows directly to racecourses and the rest of us don’t really know how much it is and have little or no control over how it is spent.
“Owners and the horsemen believe it would be fair and just if 50% of this money went into prize-money and appearance money because it is our horses, our trainers, our jockeys and our stable staff which allow racecourses to earn these impressive sums of money.”
