Chancellor George Osborne has seemingly given the go-ahead for the long-standing Horseracing Levy to be replaced by a ‘betting right’ – presumably meaning that bookmakers will have to pay racing for the privilege of taking bets on the sport.
In today’s Budget announcement, Osborne said that the Government was ‘introducing a horseracing betting right’ , although there was scant other detail available. The Government has only recently finished a third consultation on the funding of horseracing and it appears that it was rushed through in order for the Chancellor to make this announcement in a pre-election budget.
Conservative MP Matthew Hancock was one of the first to applaud the move, claiming that the DCMS has made the decision to replace the current levy with a Racing Right which will be administrated directly by the racing industry. He commented: “We have made great progress in the last few years securing the long term finances behind horseracing. The Chancellor’s announcement today is the biggest step forward in a generation for Racing. I have long argued that a Racing Right is vital to putting the finances of Britain’s second most popular sport on a sustainable footing, and now we will have it.
“I fully support this announcement not least because racing supports 1000s of jobs in Newmarket and across the country as a whole. This is a once in a generation transformation which will trigger significant growth, jobs and international investment. I now look forward to seeing the details of the legislation and to a more secure future for our golden sport.”
However it does not have full support within Parliament. Shipley MP Philip Davies and Labour peer Lord Lispey recently told the Government that the Racing Right in this form was the ‘Cheshire Cat’s Grin’. In a joint submission, they commented: “This is not competition and the free market being put into place. It is, rather, monopoly by statute, with racing as the sole seller of racing product, able to extract what it will from punters’ pockets to divert it to rich owners, trainers and a profitable racing industry.”
They added: “The monopoly envisaged is a deliberate attempt to increase the revenue, with the present yield of the levy stated to be a low estimate with the high estimate nearly five times as high. What precisely would be the effect of such an outcome is hard to predict, but it would certainly be likely to include the mass closure of betting shops (particularly if it coincided with a crackdown on FOBTs) and likely a switch from betting on horse racing to bets on other sport.”
The closure of betting shops was one thing highlighted at this week’s Association of British Bookmakers (ABB) AGM. Given that the recent raise of Machine Games Duty to 25% from 20% has tipped 1,500 of the country’s 9,000 betting shops into unprofitability at a time when the betting industry’s return to racing via the Levy and media rights combined is higher than ever, any increase in the already expensive racing product will actually see the sport get less money from the industry as there would be fewer bookmakers to pay.
Having said that, the abolishment of the Levy was a manifesto pledge by Labour in 2001 and it’s still in situ 14 years later. So the writing isn’t exactly on the wall just yet. And there could well be a new Chancellor in two months’ time.
Check out Olswang’s Dan Tench’s analysis of the recent consultation here.
He concluded: “So the betting right seems to solve few of the problems with the levy whilst creating a host of new uncertainties and issues . As a result, it seems likely that the levy system (which the Government announced it would abolish in March 2000) will nevertheless continue for several years to come.”