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Welcome to the News desk.
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Will this new initiative end Levy war between bookmakers and
racing? |
07/12/2010 |
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Greg Wood |
There have been times over the last few
months when the bitter squabbling over the worth to racing of the next Levy
scheme resembled nothing so much as a gang of parrots endlessly shrieking the
same old phrases in the hope that someone will pay them some attention. So we
should be thankful for Paul Lee, the Levy Board chairman, and the two
independent board members, whose recommendations to the Government on the best
way forward were published last week, effectively throwing a blanket over the
cage and bringing us all some blessed peace.
There is common sense on every page of their
report, which can be found on the department for culture, media and sport
website, and it will be a considerable surprise if Jeremy Hunt, the secretary
of state who will determine how much racing should receive from the off-course
betting industry, does not implement its recommendations without a second
thought. That would suggest a return of between £75m and £80m from
the bookmakers next year, way below the minimum of £130m that racing
repeatedly insisted it "needed", but well ahead of the figure that the
bookmakers brought to the table.
As the report points out, both the
"needs of racing" and the "bookmakers' ability to pay" are supposed to be key
components of the process of thrashing out a Levy scheme, yet neither concept
has anything like enough definition to make it useful. As a result, Lee and his
colleagues simply ignored them both, and put their heads together to come up
with a reasonable figure and a way to make it happen.
Racing suggested four possible routes to increase
Levy yield next year, two of which clawing back Levy lost through
bookies going offshore, and changes to the way exchanges are taxed and
regulated were hopeless causes since they lie outside the board's remit.
On the other two, though the abolition of thresholds, which are
a little like the tax-free allowance on income, and the re-introduction of Levy
on foreign racing the sport got a result. The gap between what it will
get and what it claimed to need may be huge, but even so, racing can claim a
score draw.
By far the most interesting part of the report, though, is
that it suggests Levy yield can be increased while the actual slice of bookies'
gross profits that goes to fund it is reduced. A drop from 10% of gross profits
to nine may seem relatively minor, but in terms of principle, it is highly
significant.
The response of some in racing has been that if the
"headline" rate of tax can go down, it can also go up, so next time the sport
can bang the begging bowl even harder. But that misses the point. If the figure
is flexible, then in the long term, it is also negotiable.
We are still
a long way away from a true commercial relationship between racing and its two
main customers, the owners and the punters. If sanity ever prevails, though,
bookmakers will no longer need to be seen as enemies of racing, which is the
role into which the statutory Levy system tends to force them. Instead, they
will be the middlemen between racing and its betting customers, licensed to
collect betting profits and retain a slice for their trouble.
The size
of that slice will be open to negotiation, and most importantly of all,
business common sense should set it at a level that allows both racing and
bookmakers to grow.
A cut in the headline rate for Levy payments is a
small step, but it does suggest some interesting possibilities. There is even a
glimpse, perhaps, of a time when bookmakers make payments to racing not because
they are legally forced to do so, but because they are happy, or at any rate
more than willing, to do so.
Why? For the best possible reason in a
commercial world. Because it's good for business. |
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