Online bookies to pay levy on racing bets from next year

Online bookies will have to pay a levy on profits derived from British racing from next year after the UK Government announced plans to extend the current Levy system to include offshore operators.

Following a parliamentary question lodged by Chris Green MP, Secretary of State for Culture, Media and Sport, John Whittingdale MP this morning said it was the Governement’s intention to introduce a new funding arrangement for the sport by April 2017.

“We will create a level playing field for British-based and offshore gambling operators and ensure a fair return from all bookmakers to racing, including those based offshore,” Whittingdale said.

The Secretary of State added that an extension of the Levy, which is currently set at 10.75% of profits generated by Britain-based bookies, would see the Government deliver on its 2015 Budget commitment.

Any changes to the current Levy system could well be challenged by the remote industry, however Whittingdale said he was “confident” his plans would receive the necessary green-light form the European Commission.

“We understand that any new legislation to replace the Levy, whether taking a primary or secondary legislative route, will require state aid approval,” Whittingdale told the Commons.

“We are confident that this will be achieved as the European Commission has already set a precedent in approving the French parafiscal levy in 2013,” he added.

Whittingdale said there was an ongoing analysis of racing and the level of funding it would require before the Government would make a judgement on the rate a new Levy would be set at, but expected there would be further announcements on the rate “in due course”.

Speaking to eGaming Review, David Williams, Ladbrokes director of media said the firm would “work with Government to ensure they fully understand the net flow of funds from the betting industry to Racing, not least through escalating media rights and streaming costs”.

Williams also said the firm was in support of a Levy on offshore bets but indicated the rate at which that Levy will be set would be crucial.

“We established the principle of payments on offshore betting with an offer last October which Racing rejected; this move appears to enshrine that principle but the devil will be in the detail and many questions remain yet to be answered,” he said.

The British Horseracing Authority (BHA) this morning welcomed the Levy extension plans, a move its chief executive Nick Rust said could be “truly historic”.

“The new funding model will ensure a fair transfer of funding to British Racing based on all betting activity on the sport – a link that was first established in law in 1961,” Rust said.

“It meets all of Racing’s requirements for a new funding model and can bear fruit in 2017, which is crucial given the significant Levy cliff we face,” he added.

Last year British Racing developed an Authorised Betting Partner (ABP) scheme in order to “plug the funding gap” while the Government looked for a longer-term solution.

The new Levy will supersede the ABP scheme, however, the BHA said it remained dedicated to building its current crop of ABP partners until the new Levy was in place.