Main Menu
Top of Page
  | Home   | Index   | Info   | This Week   | Poker   | News   | Email

Welcome to the News desk.

Will this new initiative end Levy war between bookmakers and racing? 07/12/2010
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.