The endless series of debates about the validity and cost of the UK’s Horserace Betting Levy continues. Search the Racing Post for the last two months this is what you will find.
• Howard Wright reported on 27 January 2016 that the Levy Board prize-money contributions would fall from £ 57 million last year to just £ 12 million by 2020, if nothing was done about funding from betting operators.
• Coral Levy offer unrealistic (14 January 2016)
• ABP continues to occupy the betting industry (10 January 2016)
• Government announces Levy rollover (3 December 2015)
Government would be entitled to be fed up with the whole process. The continual wrangling and when both sides do not agree the problem is dumped back to the Government to determine the outcome. A decision from the Minister rarely pleases one side and may upset both.
However, it is a problem of Government’s own making and one that needs to be resolved if the DCMS is going to maintain any credibility in the management of sport and gambling. The Levy has been in existence for 55 years. It’s a headache for the Government, horseracing and bookmakers alike.
The UK’s Conservative Government since taking office has had to make some tough decisions, especially those made by the Chancellor George Osborne. Something he is used to doing, even against his own personal standing in the country. Nevertheless he stuck to his guns and the economy came through. On occasions you have to do what is right rather than what is expedient.
When it comes to the Levy tough decisions are not being made. A solution was sought by the previous Minister John Penrose who came up with a convoluted scheme whereby horseracing would not lose out during the arrangements. It failed and now in a recent budget the Chancellor has said he wanted to introduce a racing right, whereby bookmakers pay for the privilege of taking a bet on UK horse racing.
Racing is upset that bookmakers based in Gibraltar pay no Levy at all, although some do pay a voluntary contribution. They are within the law, just as Google is with its tax arrangements. A racing right would supposedly solve the problem. But that does not mean to say it would not be challenged under law. Yet again another headache for Government.
In the meantime the value of televised picture rights both for the media and betting shops have exploded. ITV recently captured the racing rights from Channel 4 at £30 million.
With media as an enhanced source of income is this the way forward for racing?
If so the question then arises as to how Government should deal with it.
Let us first of all consider the politics of it all. First of all the betting punter is not interested in how racing is funded. He could not care less. Why should he be? He has enough on his mind without having to consider whether prize money is enough and if the horses were not to race he will bet on something else. Apologies to the racing purists, this is just how it is. Political risk of losing votes from the public – low
There are 60 racecourses and, of course, they are located where some Members of Parliament run for office. However, racing on grass on a UK racecourse is not a frequent event. If horseracing did not exist it would be missed for a short period of time but race goers would travel to other courses, as they do now. Racecourses have closed in the UK already. Birmingham had a racecourse and presently has none and the current site of Gatwick Airport was once a racecourse.
The political risk would be on a constituency basis rather than a national event. So which constituencies would momentarily be hit the hardest? West Suffolk has Newmarket in its electoral constituency. The residing MP is Matthew Hancock. At the last election he captured 52% of the vote and has a majority of 14,984.
According to the Office for National Statistics 200 people are employed in the horse racing business in Forest Heath and 100 in All Saints, 300 in total for the Newmarket training area. It seems to me a low figure and I have questioned it but ONS says it is reliable. So even in the remote possibility of the entire Newmarket racing business closing down Matthew Hancock would lose at most 1,000 votes after adding in all the ancillary supply services that would suffer.
The point of this exercise is to understand that where racecourses are located, the economies are diverse and quite vibrant and not dependent on the racecourse industry. In fact Suffolk County Council states that horseracing in Newmarket is a large sector but small gross added value compared to others.
So the political risk in an absolute worst case scenario of ending the Levy from a voter’s perspective is not even measurable.
So why after 55 years are we still arguing about something that should have been dumped long ago? The answer is that racing places a value on its product that bookmakers cannot agree to. Government for its part wants an orderly hand over but so long as both sides disagree it isn’t going to happen.
The answer is that the referee in the middle, Government, has to step up and make a tough decision, just as it did with the bedroom tax, child allowances and taxation. Give a firm date when the Levy will end, say two years, and then walk away.
What would be the outcome of that? Bookmakers and racing would have to talk, you have a willing buyer and a willing seller and a negotiated settlement through media rights would take place. What would follow from that would be a real partnership where bookmakers would promote racing and vice versa. The sport would grow and Government could proclaim that after 55 years it had introduced a free market mechanism that actually works.