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Betfair and British Horseracing Authority sign landmark funding deal 04/07/2012
Will Hayler
• Profit-sharing will guarantee sport £40m over next five years
• Betting exchange to have influence on racing's fixture list

A truce between the British Horseracing Authority and betting exchange Betfair has led to the completion of a new profit-sharing deal that will guarantee racing £40m over the next five years. .

The agreement will see the sport work with Betfair on shaping the future programme, with confidential agreements having already been reached over the "size and nature of the fixture list", but importantly is also likely to apply pressure on fixed-odds bookmakers who have relocated their business offshore in order to make tax savings and avoid payments to racing through the Levy agreement, whereby a percentage of profits from off-course bookmakers is paid to contribute to the funding of the sport.

News of the deal came minutes after an announcement that the BHA had pulled out of a High Court judicial review launched jointly with bookmakers William Hill over a Levy Board ruling that concluded individual betting exchange users were exempt from Levy payments.

The decision to abandon their alliance with Hill's and conclude a deal that will see Betfair hand over a minimum of 10.75% of their profits on British racing from UK customers still leaves a substantial hole in the sport's funding compared to previous golden years. However, it brings to an end the uncomfortable uncertainty that was seeing the exchange make only 'voluntary payments' to racing.

The move also appeared to find favour with the government, who recently introduced a 15% 'point of consumption' tax on offshore gambling operators.

John Penrose MP, who has made clear his desire to extricate the department of culture, media and sport from involvement in the relationship between racing and bookmakers, said: "The government has always believed there should be a commercial relationship between British racing and betting operators. Betfair's willingness to be the first operator to do a deal is impressive and admirable. I hope others will follow swiftly in their wake."

With the Horsemens Group and the Racecourse Association having already given their support to the agreement, BHA chief executive Paul Bittar – who led the talks having hinted at his discomfort over the judicial proceedings, initiated before his arrival – was celebrating the prospect of an improved business relationship between the sport and one of the biggest players in the betting market.

"We are delighted that we have been able to reach an agreement with Betfair, one which represents a landmark for both the racing and betting industries," he said. "We hope that similar arrangements with other betting operators will follow. In parallel British racing also seeks long-term deals such as this to assist in the transition to a wholly commercial future."

Recent attempts at redrawing the fixture list have proved largely unsuccessful due to the number of conflicting interests involved. While swamped punters might point to the slipping horse population in the hope of finding some respite from a diet of frequently poor quality racing, bookmakers have generally preferred a stack 'em high approach.

But the prospect of Betfair using data as to which races are the most popular with their customers could effectively allow those who like a bet to influence the future direction of the programme book.

Meanwhile, the trainer Sir Michael Stoute was left with some explaining to do after the Queen's Carlton House, along with a stablemate, was accidentally entered for a big handicap at Goodwood next month. A stable spokeswoman blamed "trainer error".

Last year's Derby third was put in the Betfred Mile at the track, in which he would have had to carry 10st 5lb, rather than the similarly titled Betfair Celebration Mile, one of the horse's possible targets later in the month. The blunder will cost Her Majesty the £150 entry fee.

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