DCMS notified of ‘going concern’ on racing levy’s post-covid recovery

The Horseracing Betting Levy Board (HBLB) has issued a ‘going concern’ notice on the funding scheme’s ability to continue after it published a troubling set of financial results today. 

This morning, HBLB declared its annual report and accounts for 2020/2021 to DCMS, revealing that betting levy receipts taken for the year ending March 2021 had fallen to £82 million (2019/2020: £98m).

The £15.7 million downturn was predominantly due to the COVID-19 pandemic that saw UK racing shut down for all of April and May 2020, and with betting shop and on-course LBO restrictions applied when the sport restarted during the summer. 

During the reporting period, HBLB stated that UK racing had become more dependent on remote betting platforms than ever before.

Supporting racing stakeholders, the board approved several pandemic measures, including the granting of £200,00 per racecourse to ‘assist with liquidity challenges’, providing ‘advanced payments’ on racecourse grants and reimbursing venue costs of up to £75,000.

Implementing its safeguards, the HBLB saw its funding reserves decline from £58 million in 2020 to £43.5 million by the end of March 2021 as the board incurred a negative cash-flow of £17 million.

For its 2021/22 budget, the board forecasted a levy income recovering to pre-pandemic levels, in a range of £91 million to £105 million.

However, based on the assumption that the forecasted levy income generates £95 million, the HBLB anticipates that its 2021/2022 expenditure will come in at £116 million – reporting a deficit of £17.7 million.

HBLB has agreed to make an additional £15 million in grant funds available for racing stakeholders recovering from pandemic impacts

In light of continued year-on-year deficits, it projects that by the end of 2022 its funds will stand at £26 million with an available  cash balance sheet of £55 million.

It noted: “The significant difference between the 2021/22 forecast reserves and cash balance is due to the board taking on a £21.52m loan under the Government’s Sports Winter Survival Package during the 2021/22 financial year.”

HBLB Chairman Paul Darling OBE and Chief Executive Alan Delmonte, have undertaken a joint review of the levy’s funding structures and cost controls.   

Meanwhile, the 2020/2021 report saw HBLB outline key objectives to ‘generate interest in UK racing’, helping increase funds beyond betting revenues. These included increasing crowd numbers at racecourses, improving viewing figures, improving terms for ownership and improving race day schedules.

The board commented: “As part of the enhancement of its operation since Government’s plans for the board’s abolition were withdrawn, the board also continued to address the process for the assessment of expenditure projects, designing and issuing detailed guidance for non-fixture project applications.

“The board has concluded that it has a reasonable expectation that the board will continue to operate and meet its liabilities, as they fall due, for the next 12 months from the date of this report. Accordingly, the board continues to adopt and considers appropriate the going concern basis in preparing the 2020/21 Annual Report and Accounts.”

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