ROA Leader, January 2011

Levy and tariff give cause for optimism

The fact that the Levy Board’s three independent members have made some reasonably encouraging recommendations to government must be seen by racing as a positive step. With so much gloom surrounding the industry, this stands out like a good deed in a wicked world.

Racing received its first sign of encouragement with the announcement that in 2011 the government would no longer have any involvement in sorting out levy disputes. There would be an alternative means of adjudication when the racing and betting industries could not agree.

This development would require a change to the underpinning levy legislation and, along with this, so the thinking goes, there would be an opportunity to make other changes to the Act.

This would provide an opportunity to close the most damaging loophole of all – offshore betting operators and bookmakers taking bets on British racing without paying a penny in levy.

In the light of the government decision to withdraw from the procedure in future years, it was not difficult to conclude that the current determination process would also be more influenced by the views of the three government appointed members than in previous years.

It was an assumption that gained further credence when it emerged that these members, the Levy Board Chairman Paul Lee, the Vice-Chairman Penny Boys and Paul Darling, had been asked formally to make a recommendation to the Secretary of State Jeremy Hunt in relation to the 50th levy scheme (2011/12).

The independent members’ submission would clearly influence government thinking and it was therefore with some relief that their views held more comfort for racing than it did for bookmakers.

On the plus side, the independent members’ recommendation was to get rid of the pernicious threshold system that has been so disgracefully exploited by the betting industry in recent years and for a reinstatement of levy on foreign racing.

On the debit side, the recommendation was for the percentage that racing received to reduce from 10% of gross win to 9% – the reduction presumably being seen as a trade off against the two ‘wins’ for racing. The target yield from these moves is estimated to be £75 million to £80m which, although a long way short of racing’s aspirations, represents a move in the right direction.

Racing will obviously kickback on the proposal for a 1% reduction, but the real aim must be to persuade the government of the importance of getting offshore bookmakers to pay levy. Without this, British racing will be increasingly vulnerable.

The route to making this happen may be strewn with all manner of obstacles, many of which are wrapped up with European legislation, but the government holds some enormously valuable cards when it comes to dealing with the likes of William Hill and Ladbrokes who, since going offshore with their internet accounts, represent a substantial part of the problem.

There is, for instance, the small matter of FOBT machines that now contribute so much to the profitability of betting shops. FOBTs represent a very big stick that the government could use to inflict serious harm on betting shops unless they toe the line.

It is common knowledge that these machines are at best borderline when it comes to gambling addiction and there is no shortage of adverse publicity relating to the expansion of betting shops in areas of social deprivation.

The possibilities of a significantly increased levy, combined with the optimism surrounding the soon-to-be-announced Horsemen’s Group Tariff, provides racehorse owners with the hope that 2011 might not be the nadir of British horseracing that has so long been feared.

A happy and successful new year to you all.

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