New horseracing levy on the home straight following EU approval
New tax structure could boost payments to racing to around £90m a year
The European Commission has approved the UK government’s plan to reform the Horserace Betting Levy, removing the last major obstacle to the new tax.
The plan calls for a 10% tax on racing GGR above a £500,000 threshold, with all operators accepting bets on UK racing obliged to pay, rather than solely UK-based bookmakers.
“The Commission has approved the measure because it recognises that it is essential for the improvement of horse breeding and horseracing without giving rise to undue distortions of competition,” the EC said in a statement.
“The measure also creates a level playing field among betting operators while at the same time supporting entry of new operators and the development of competition between betting operators, thanks to the minimum threshold.”
The British Horseracing Association (BHA) said it is now waiting to hear from the UK government as to when the new legislation will take effect, and expects to hear “in the next few days”.
“We look forward to working closely with bookmakers to build an exciting future for both our industries,” said BHA chief executive Nick Rust.
“The new Levy has the potential to put an end to unnecessary divisions between racing and betting as it creates a level playing field, removes the need for annual negotiations on the rate and provides long-term certainty for both parties.”
The new system will also end the Authorised Betting Partner scheme.
The Levy Board will continue to carry out its functions of collecting and distributing funds until 2018, when the Gambling Commission will assume collection responsibilities, and a new Racing Authority will decide on spending.
However William Hill voiced concern that bookmakers would not be represented on that authority, with the firm’s communications director Ciaran O’Brien saying: “It surely makes sense for both industries to have an input into how the funds are invested, otherwise this move represents an increase in taxation alongside a removal of representation.”
Ladbrokes’ Donal McCabe added: “We had the principle of paying on offshore bets last year when we included it in our levy offer. So this is not a surprise and we have always maintained we will pay what we legally have to. The hope is that we can now move on and start working together to tackle the challenges ahead for the sport and for the betting industry.”
Paul Leyland at Regulus Partners said the reformed Levy could lead to a significantly increased pot of funds for racing of around £90m a year.
“This is obviously good for racing, but it can be good for bookmakers too,” Leyland said in an analysts note.
“The dysfunctional relationship between betting and racing has led to racing content becoming less appealing as a betting product despite its overall cost to bookmakers increasing (especially re competitiveness).
“In this context, racing’s resilience is testament to real underlying customer engagement, which points to an opportunity. Bookmakers should therefore see this as a content fee (with concomitant expectations) rather than a tax.”