Operators face 10% online racing levy contribution

Operators taking bets on British horseracing may have to pay a 10% levy on profits, with news of the rate coming just days ahead of a planned meeting between government and representatives from the racing and betting industries.

The Racing Post yesterday reported that sports minister Tracey Crouch had informed both betting and racing of the intended rate, which would be applied to both retail and online bets and replace the current retail-only Horserace Betting Levy.

At present, land-based bookies contribute 10.75% of profits to horseracing, however, racing has long argued that the boom in online betting had seen those contributions reduce significantly over the last decade.

In 2005-06, contributions totalled £99.3m, however, last year just £54.5m was paid in levies and racing has been keen to see a return to approximately £100m in contributions.

The new system, which was announced in March and is expected to come into effect on 1 April 2017, is expected to yield around £90m but is also likely to face fierce opposition from the betting industry.

According to estimates released by analyst Goodbody, a 10% levy would cost Paddy Power Betfair circa £10 per annum, William Hill £6m and the combined Ladbrokes Coral £5m.

Operators argue that while the levies payments have been reduced, the firms contribute significant amounts to racing through media rights, TV advertising, streaming and sponsorship fees, which must be factored into the new levy rate.

Representatives from the racing and betting industries are due to meet with government officials from the Department of Culture Media and Sport on Wednesday, while both have been given until 4 November to submit their written opinions.

However, a spokesperson for the DCMS this morning told EGR that no decision had been made on a rate of 10%.

“No final decision has been made on the rate of the new funding system planned to replace the Horserace Betting Levy. We are still in discussions with stakeholders on the matter and will make an announcement in due course.”

Any changes to the levy would need to be ratified by the European Commission under state aid rules, which could give the remote industry the opportunity to challenge the legislation.

A spokesperson for William Hill this morning said: “We note the recommendation of 10% and will input into the consultation process before it moves to the European approvals stage.”

The new levy system would also bring to an end the Authorised Betting Partner scheme which was introduced by British Racing as a stop-gap to help fund racing until the new levy was in place.

The ABP rate is set at 7.5% of online profits, however, land-based giants such as William Hill, Ladbrokes and Coral, all refused to join the scheme.

Gala Coral CEO Carl Leaver had previously offered to pay a flat rate of 7.5% across both retail and online.