How Brexit could alter plans for industry funding of horseracing

How Brexit could alter plans for industry funding of horseracing

Monday, June 27, 2016 Posted by Andy McCarron
Brexit could change plans for way the betting industry funds horseracing

The way the betting industry funds horseracing in Britain could be up in the air again after last week’s momentous ‘Brexit’ vote, which saw the UK populace vote in favour of leaving the European Union.

For the last 55 years, the mechanism by which the betting industry funded horseracing was via the Horseracing Betting Levy Scheme, a compulsory levy that bookmakers have to pay at a rate which is determined every year, usually around 10% of profits garnered from British horseracing.

However the Levy has been showing its age for some time now. Back in 2001, the then Labour government made scrapping the Levy Scheme one of its manifesto commitments, along with the selling off of the nationally-owned Tote Organisation. While the latter finally happened with a sale to Betfred in 2011, the Levy trundled on.

All efforts to replace the Levy fell foul at the European level as the commercial alternatives didn’t stand up to legal scrutiny. The Levy structure itself was also resistant to any grand changes as, essentially it was regarded as ‘State Aid’, ie a Member State giving one of its businesses (in this case horseracing) an artificial leg-up on its European competition; a big no-no for the European ideal.

This year though, there appeared to have been a breakthrough, not that the bookmakers were that happy with the development. The UK government, and chancellor George Osborne in particular, found itself embracing the sport’s push for a horseracing betting right, a mechanism that would also encapsulate online betting hitherto excluded from the legal remit of the Levy (although some online bookmakers voluntarily donated to the sport).

Bookmakers argued that the introduction of this betting right would open the door for other sports to press for their own right, rather than just racing with its symbiotic attachment to bookmaking. However the government said that wouldn’t happen and pressed on, with an implementation date of April 2017.

But a Brexit vote might change things now, especially as Prime Minister David Cameron has resigned and Osborne himself is on dodgy ground.

The British Horseracing Authority (BHA) has been quick to press the case for the plans to go ahead regardless of the turmoil elsewhere. Director of Corporate Affairs Will Lambe said: “DCMS are continuing to work towards the replacement of the Levy by April 2017.

“This work is at an advanced stage in a number of areas, with significant groundwork already laid, and the key piece of domestic and primary legislation which provides for an income stream for British Racing from all forms of betting activity, including that through offshore remote betting operators, has already been passed. It is likely that there will still be a requirement for some degree of European clearance but this will still be based on the clear precedent in France.

“The replacement of the Levy was and is a Government commitment, with full cross-party backing and support right across the Conservative Party. There is strong, and still growing, recognition of the sport’s economic, cultural and social importance right across the country.”

But Europe are not in any particular rush to deal with UK details at the moment and there is great potential for the right to be kicked into the long grass now, with funding once again defaulting to the Levy Scheme.

However Racing, under the leadership of former Ladbrokes man Nick Rust, has at least improved its position with the introduction of the Authorised Betting Partner (ABP) designation, where any bookmaker not deemed to make adequate contributions to the sport are refused the opportunity to advertise and sponsor around races.

While the levels of funding required to gain ABP status are extremely opaque, with the major retail bookmakers refusing to play ball, Rust has managed to get the sport’s different factions to co-operate on the matter, which is no mean feat. With the Brexit upheaval, the ABP scheme could well be around for longer than anticipated.

Totally Gaming Says: “The Brexit vote could have come at just the wrong time for racing’s ambitions for a betting right. The sport was nearly over the line, with a sympathetic government toeing the line. But with George Osborne likely to be gone by October, there’s a possibility that any changes to the funding mechanism will now be carried out by changes to the seemingly indestructible Levy Scheme and not the introduction of a new right after all.”

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