The UK racing industry is in full freakout mode on news that their annual kickback from the betting industry will be £17m lower than expected.
On Friday, the Horseracing Betting Levy Board (HBLB) announced that the expected Levy income for the fiscal year ending March 31 will total around £78m. This sum is “materially below expectations,” based on the £95m racing collected the previous year, the first year that the new 10% Levy was applied to UK betting operators’ online operations.
HBLB chair Paul Lee said that, based on UK bookie reports at the end of 2018, the racing sector’s latest annual handout was expected to come in around £89m. However, more recent submissions from bookmakers revealed that race bettors took the bookies to the cleaners in February and March, resulting in “very substantially less profitable” returns to close out the fiscal year.
Should that £78m forecast prove accurate, the HBLB says it will incur a £5m budget deficit. The HBLB had already agreed on an expenditure budget of £99m for the 2019-20 fiscal year, but this will now be cut by £5m, with additional cuts possible before the fiscal year is through.
The majority of HBLB’s spending goes toward prize purses, and so the majority of the spending cuts are expected to come from prize money. The HBLB membership, which consists of the Racecourse Association, The Horsemen’s Group and the British Horseracing Authority, are currently brainstorming on how to minimize the fallout.
But the HBLB also declared that “the issue isn’t the popularity of racing as a betting product, but rather its potential profitability. As the Levy is based on those betting profits, that is clearly concerning for all in racing.”
As such, the HBLB said it would huddle with both bookmakers and the government as to “whether any systemic issues are emerging that need to be addressed.” The implication is that the HBLB may pursue tweaks to the new Levy formula, because God knows we can’t have racing sharing the bookmakers’ pain.
NEW ZEALAND SCRAPS RACING LEVY
On the other side of the world, New Zealand’s Racing Minister Winston Peters announced Thursday that the government was repealing the betting levy the racing industry pays the government.
Peters said the levy, a 4% cut of betting profits that totaled nearly NZ$14m in 2018, would be phased out over a three-year period, with the funds redistributed to the racing and sports sectors, as well as responsible gambling programs.
Scrapping the levy was a longheld goal of the Kiwi racing industry, and was one of the recommendations of last year’s Messara Report, which also called for outsourcing all of the New Zealand Racing Board’s “domestic wagering, broadcast and gaming operations.”
The Report justified its recommendations based on its belief that Kiwi racing, similar to the racing sectors in virtually all other jurisdictions, is ‘in a state of serious malaise.” But hey, that’s nothing that yet another round of artificial financial backstops won’t fix, right?