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Government set to confirm annual Levy contribution at £80m 15/02/2011
Chris Cook
• Figure is compromise between sport and bookmakers • Fewer bookmakers to be exempt from paying Levy

The government is expected to rubber stamp the recommendation of the Levy board on Wednesday that racing should receive between £75m and £80m from the 2011-12 settlement. It will also signal a wide ranging shake-up of the relationship between the racing industry and bookmakers.

Following a long-running impasse between racing and the bookmakers, the independent directors on the Levy board recommended a figure of between £75m and £80m as an annual settlement.

The culture secretary, Jeremy Hunt, is also expected to remove the threshold regulations that exempt shops with gross profits of less than £50,000 from paying the Levy, buying racing's argument that the proliferation of large chains has allowed many of their shops to escape the Levy.

It will only be retained for small independent operators. Hunt was also considering whether to include bets on overseas races that are screened in British shops for the first time, although the government may yet decide that such a move would be too risky legally.

Depending on the approach taken, the Levy – currently set at 10% of gross profits – could be adjusted down or up to arrive at the projected final figure of close to £80m. Racing had argued for up to £130m, with bookmakers lobbying for a figure of around £50m.

The racing industry is expected to argue that up to £80m, plus a promise to legislate on some of the other structural issues that have long troubled the sport is a satisfactory outcome.

Hunt is keen to remove government from the annual Levy determination process and replace it with a commercial negotiation between racing and the bookmakers.

Racing will argue for a "betting right" that would allow it to charge bookmakers for the right to offer odds and the debate is likely to evolve into whether that should encompass all sports, a move that would be bitterly resisted by the gambling lobby.

A decision is expected on whether overseas bookmakers are to be licensed through the Gambling Commission, in the wake of a consultation process kickstarted more than a year ago by the previous Labour government, before the end of next month.

Such a move would require an amendment to the Gambling Act and is likely to be considered alongside the other issues facing racing, including how betting exchanges contribute to the sport.