• British Racing will introduce Authorised Betting Partners from 1 January 2016
• Betting operators will be rewarded for having a mutually beneficial funding relationship with British Racing
• British Racing is taking action to stop Levy haemorrhage
• ARC and Jockey Club Racecourses have independently decided that no new commercial deals will be entered into with non-Levy paying betting operators
Today British Racing is setting out to establish a new and more viable relationship with betting operators in a move which addresses the need to create a sustainable method of transferring funds and value between the racing and betting industries.
British Racing’s leaders, through the Members’ Committee which is the focal point of the forthcoming tripartite agreement between the sport’s governing body the British Horseracing Authority (“BHA”), the Racecourse Association (“RCA”) and the Horsemen’s Group, supports the initiation of a policy that will reward betting operators who pay an agreed contribution to the Horserace Betting Levy (“the Levy”) for their digital businesses or who have a commercial funding deal in place which sees them pay an agreed equivalent sum to British Racing.
Currently, British Racing is losing out on an estimated sum of at least £30 million a year in Levy or equivalent payments. Over the last decade the Levy will have dropped from over £105 million in 2004-05 to a forecasted £53 million by 2017-18 if no action is taken, despite the sport remaining a highly desirable and seven-days-a-week betting product. This is because the majority of betting operators generating profits from taking bets on British Racing do not pay Levy on their digital businesses, which are based offshore and thus not covered by the Levy legislation. The Levy will continue to haemorrhage unless urgent measures are put in place.
The British Government recognises the importance of the British Racing industry, which directly employs over 17,000 people, and supports over 85,000 throughout the country, many in rural areas where it is a vital source of employment. The industry generates over £3.4 billion annually for the British economy, and is the second highest spectator sport in the country. It has committed to introducing legislation in the current Parliament to support the industry and close the loophole in the current Levy legislation through the introduction of a Horserace Betting Right, which is restricted to betting on racing, preserves the VAT advantages to Racing and to betting operators, and which can be delivered within EU rules on state aid.
However, given that the legislation may take several years to implement, given the current haemorrhaging of Levy, key stakeholders in British Racing are establishing a new arrangement for betting operators who pay the Levy, or an agreed contribution, on their digital businesses to acknowledge and reward their partnership approach.
Betting operators who have a fair and mutually sustainable funding relationship with the sport will receive the official designation, ‘Authorised Betting Partner’, and will be able to fully utilise British Racing to promote and grow their own businesses. A full package of benefits setting out how Authorised Betting Partners will be able to utilise their relationship with British Racing is now being finalised in consultation with betting operators.
While these discussions are underway, Arena Racing Company (“ARC”) and Jockey Club Racecourses, the two largest racecourse groups in Great Britain with half of the racecourses in the country and operating nearly 60% of the racing fixtures, have chosen to independently support the process. Neither racecourse group will enter into any new commercial arrangements, including race sponsorship, with betting operators who currently neither pay an agreed contribution in respect of their digital businesses, nor have a commercial deal in place to pay the equivalent sum.
The current standstill period will be in place until 31 December 2015 by which time discussions with betting operators to agree the most suitable package of benefits that Authorised Betting Partners will benefit from should be concluded. All existing deals will be honoured but not renewed. Any new commercial deals with betting operators will contain a break clause to be triggered should they cease to be an Authorised Betting Partner at any point during the duration of a deal.
Currently 32Red, bet365 and Betfair are deemed Authorised Betting Partners given they pay the Levy voluntarily on their digital businesses, or in the case of Betfair have a commercial funding deal in place which sees them pay an equivalent sum. The four leading high street operators Betfred, Coral, Ladbrokes and William Hill have made an additional voluntary contribution of £4.5 million over the last year. Future commitments that meet the required criteria will result in these major betting firms becoming Authorised Betting Partners.
Nick Rust, Chief Executive of the British Horseracing Authority, said:
“British Racing offers world-class sport, gives enjoyment to millions of people a year, employs over 85,000 people and contributes £3.4 billion a year to the economy. But we are underfunded and loopholes in the Horserace Betting Levy system, allowing the majority of betting operators to make no contribution from profits made on British Racing through their digital businesses, continue to play a large part in that.
“We welcome the leading stance being taken by ARC and Jockey Club Racecourses. The concept of British Racing working in a sustainable manner with betting operators is an important one. Every stakeholder in the sport must understand and take on their responsibly for the creation of the right structure to support the funding of our sport.
“This platform should help the Government to complete its commitments to British Racing to resolve the problems of the outdated Levy legislation with the introduction of a Racing Right to ensure a fair and equitable funding mechanism between the racing and betting industries.”
Maggie Carver, Chairman of the Racecourse Association, said:
“The RCA is working with our colleagues across racing and betting towards the introduction of a Racing Right. Despite the Government’s welcome commitment to this policy it will take some time and the development of this new relationship with betting operators is an important step in the right direction.
“The RCA and its members value all aspects of our commercial interaction with betting operators which brings benefits for all parties. However, it is right that the relationship is based on a fair contribution being made by all betting operators, wherever they are based, towards the existing Levy or any future funding model. The initiative being shown by ARC and Jockey Club Racecourses is entirely consistent with these principles and has our support.”
Philip Freedman, Chairman of the Horsemen’s Group, said:
“The Horsemen’s Group fully supports the stance being taken by ARC and Jockey Club Racecourses, and welcomes the lead they have taken on this issue. Indeed, we see it as essential as we await the forthcoming Horserace Betting Right. While horsemen are free to compete in races of their choosing, we will ensure they are aware of sponsorship of races by non-Levy paying betting operators in order that they can factor this into their decision-making. The Horsemen’s Group remains committed to working with the BHA and all stakeholders to ensure British Racing has a fair and equitable funding mechanism in place in the years ahead.”
Martin Cruddace, Chief Executive of Arena Racing Company, said:
“It is simply not an option to allow the status quo to continue. We understand that our own long term growth and success can only be guaranteed if the whole of British Racing grows and succeeds. This is a substantial undertaking involving significant short term consequences but it is a necessary one if we are to ensure the sport has a sound basis on which to move forward in the years ahead. We are pleased to be able to work alongside the BHA, Jockey Club Racecourses and the Horsemen’s Group in progressing the plans. Today’s announcement will protect and improve the industry which will benefit all stakeholders, including betting operators whose businesses require British Racing to grow and succeed in the future.”
Simon Bazalgette, Group Chief Executive of The Jockey Club and Chairman of Jockey Club Racecourses, said:
“This is an important moment for British Racing and in the creation of a level-playing field for betting operators who take bets on our sport and are some of our most important partners. Between now and the end of this year we will be working with betting firms to agree both the criteria and benefits for becoming Authorised Betting Partners. The time has come to make our symbiotic relationship a sustainable one too for the long-term.
