Lawyers warn UK horseracing levy changes not a done deal

Lawyers warn UK horseracing levy changes not a done deal

Monday, January 16, 2017 Posted by Andy McCarron
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Lawyers have warned the UK racing industry to hold off celebrating the sport’s apparent victory in persuading the government to press ahead with plans for a reformed betting levy suggesting there could be legal obstacles to be overcome if the April start date is to be hit.

The betting and gaming team at Olswang issued their warning after sports minister Tracey Crouch announced on Saturday the government’s plans to launch the reformed levy in April. The measures will see onshore and offshore bookmakers alike pay 10 percent of gross profits to racing.

The government also announced that the administration of the levy will move from the Horserace Levy Board to the Gambling Commission.

Crouch said the proposals would “help secure the future of horseracing in Britain by making sure that gambling firms pay a fair return to support the sport.” Observers suggested the move implemented as planned would see the amount raised by the levy move back to the £100m level after years of decline as the offshore bookmakers effectively swerved payments.

However, the legal eagles at Olswang said the plans remained “problematic.” Not least, the team suggested the proposals could fall foul of EU state-aid rulings.

The government asserts precedent from a ruling by the European Commission with regard to the French horseracing levy. But the Olswang team point out there are “major differences” between the UK and French examples, not least because the French proposals were part of a package of measures that opened up the French marketplace.

Moreover, Olswang contend the UK proposals, unlike the French levy, apply to overseas bookmakers “and there are serious questions as to whether the levy is compatible with the right to free provision of services.”

The government has said it is awaiting state-aid approval, but the Olswang team said approval “may not be forthcoming” and even if it were to be granted, it “might be subject to challenge.”

Olswang also state that there may be a case for suggesting that the plan to transfer the administration of the levy to the Commission might go beyond the scope of the regulator’s remit. “It is not at all clear how any of (the Commission’s licensing objectives) allows the collection of the levy… And in any event, even if the legal basis did exist to confer these collection powers on the Commission, is it right for tax collection and regulation to be undertaken by the same entity?”

The DCMS insists that the new levy can be up and running – and been given an EU sign off -  by early April but Olswang make the point that this might be an optimistic timetable. They suggest that committees in both the House of Commons and the House of Lords which have responsibility for scrutinising the type of secondary legislation needed to enact the new levy might well each throw a spanner in the works. “If so, any ensuing delay may well take us beyond 1 April,” the Olswang team warn.

The lawyers round off their summation of the state of play with a bleak warning for racing suggesting that even if the levy comes into force it is open to question as to whether the industry will enjoy the benefits. “This further addition to the ever-increasing cost of the racing product for bookmakers may well accelerate the steady decline in racing’s share of the betting pound,” they caution, pointing to the other pressures currently facing UK bookmakers including the Triennial Review; the current absence of televised racing in Ladbrokes, Coral and Betfred betting shops and the rift with the major high-street bookmakers caused by the British Horseracing Authority’s approved bookmaking partner (APB) scheme.

Totally Gaming says: The Olswang summation is in danger of over-egging the pessimism about racing’s future. You don’t have to be a convinced fan of the turf to see that it remains a vital element of any bookmaker’s product mix. Moreover, as others have pointed out, the extension of the levy to offshore operators actually lessens the burden on the retail estates whose levy cost falls to 7 percent. While the UK remains (for now) part of the EU, all eyes now turn to Brussels to see what the Commission makes of the new proposals. Only after they have had their deliberations will racing have a clearer picture of the future funding landscape.

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