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Racing Right: new false dawn, or the key to a treasure chest? 23/03/2015
Greg Wood
George Osborne’s Budget surprise of a Racing Right greeted by BHA ecstasy and bookmaker dismay – and its chance of success is in the balance

The announcement by George Osborne in last week’s Budget that the government intends to introduce a Racing Right to replace the Levy system received a predictably ecstatic response from the idea’s long-term supporters, including the British Horseracing Authority and Matthew Hancock, the MP for Newmarket. It is – or will be – “the biggest step forward for racing in a generation” according to Hancock, while the BHA’s chief executive, Nick Rust, who arrived from Ladbrokes in mid-January, described it as a “welcome and tremendous boost”. For at least two decades, possible Levy replacements have trundled out of the hangar and along the runway at regular intervals. Racing seems confident that this one is actually going to fly.

Amid all the euphoria, it was easy to dismiss the suggestion of the Association of British Bookmakers that the scheme is “unworkable” as sour naysaying. There were probably those on terra firma muttering something similar as the Wright brothers made their final checks. After so many years when racing has scraped by on £80m or more via the Levy each year and another £170m or so in media rights payments, the feeling seems to be that the evil bookmakers have been cornered at last. Racing will finally get its hands on the tens – or is it hundreds? – of millions that the big firms have been “bleeding” from the sport for so many years.

And perhaps it is true. Maybe the introduction of a Racing Right really will unlock a treasure chest. As the sport wades knee-deep through cash and into a bright new dawn, it will all seem, in hindsight, embarrassingly straightforward. Simply create a right to accept bets, and give it to racing to sell to betting firms. Did it really take 30 years? Why on earth did nobody think of it before?

Then again, expectation is now sky-high following Wednesday’s announcement. If this idea goes the same way as all the other Levy replacement schemes and returns to earth somewhat earlier than planned, it will do so with an almighty bump. So what, realistically, are its chances?

A good place to start is to look at the form. The Racing Right is at least Plan C when it comes to Levy replacement. The sale of pre-race data was the original plan, but that hit a brick wall in a European court in November 2004. The sale of picture rights was floated as another possibility, until it became clear that live coverage of racing is not as important – and valuable – as the betting it stimulates. It is the icing, not the cake, and in any case, the racecourses own the rights, not the governing body.

The Racing Right might be the life-changing winner that the sport is praying for, but the form book suggests it is not the biggest certainty to poke its nose through a bridle. And if the sport is banking on its new Right eventually delivering a step change – 50%, say? – in the total amount that the bookies pay to racing, a personal view would be that the odds against that could be well into double figures.

What is all but certain is that the Right will face legal challenges both at home and abroad. It will give a combination of racing’s “governing body [BHA], racecourses and horsemen” the ability to name their price for offering bets on British racing, a product on which they have a monopoly. The competition authorities seem certain to take a close interest in how they exploit it.

The monopoly issue becomes more significant if racing attempts to sell itself on an all-or-nothing basis, but might be overcome if it were divided up into separate packages – the big, important stuff and the rest, for instance. In a week when Great British Racing lopped off nearly eight weeks from the Flat’s turf season to create a jockeys’ championship that runs from May to mid-October, that suddenly seems more feasible than it did last month. It might also be possible to vest the Right with individual tracks. That, though, could have significant and negative long-term implications for some courses, not least the small-to-middling turf courses with limited fixtures to sell.

Even if the Racing Right satisfies British competition law, there is Europe to consider too. Racing will be handed its monopoly by the government. Osborne’s announcement was a cause for celebration at the BHA offices in High Holborn but, across the EU, lawyers specialising in state-aid legislation will see it as the moment to rise from their coffins, adjust their capes and polish their big pointy teeth.

The chances are not entirely independent, but even if the Right is a shade of odds-on to survive either challenge, it is probably odds-against to emerge unscathed from both. So does racing really propose to raise and distribute money using the Right, perhaps for several years, when a judge might eventually insist that it must be handed back?

There is a further problem with the Racing Right too, which could also mean that it will struggle to deliver the long-term transformation in the sport’s finances that so many seem to expect.

Even if it ultimately operates as intended, bookmakers will still be passing on money to racing because they must, and not because it is good for their long-term health. There will be no incentive for bookmakers to promote racing to their customers – quite the opposite, in fact. There will be an added financial incentive to steer gamblers towards sports like football, and above all cheap, risk-free gaming products like to betting terminals (FOBTs).

If racing is to realise its full value from the betting public, bookies need to be offering it as a product not because they have to, but because they want to. Unfortunately, it is a difficult point to accept after 50 years of bitter Levy battles, and for as long as racing feels it has the bookies on the retreat, few of its generals will be inclined to try.
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