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STALEMATE FOR UK HORSE RACING LEVY SCHEME
Government to step in and determine 50th Levy scheme
Secretary of State at the Department of Culture, Media and Sport, Jeremy Hunt, will now have to intervene and determine the 50th Levy scheme, which will run from April 1, 2011 to March 31, 2012, after bookmakers and the horseracing industry failed to reach an agreement by the Sunday 31 October 2010’s midnight deadline.
British racecourses have two main sources of income: live broadcast rights (which the courses sell to bookmakers, for a total of GBP 75 million) and Levy money – ten percent of bookmakers’ predicted profits for the year ahead, which they pay to the Horserace Betting Levy Board to distribute around courses. This amount has fallen dramatically in the past three years. Not only have bookmakers such as Ladbrokes and William Hill moved their operations offshore to avoid tax, but gamblers are turning away from racing to bet on football, golf and tennis. Whereas racing was once 80 per cent of a bookmaker’s business, it now comprises only 40 per cent.
The horseracing industry says that offshore companies betting on UK horseracing need to pay the Levy too, and that certain users of betting exchanges should pay a bigger contribution to the Levy as they are running betting businesses through exchanges. They are asking in the region of GBP 140 million from the bookmaking industry.
"The reason the Levy has declined is that horse-race betting has declined. Secondly, the payments bookmakers pay for media rights have ballooned to a degree that more than offsets lack of income from the Levy, says Tom Kenny of the Association of British Bookmakers.
Levy Board chairman Paul Lee said: "It is very disappointing that it has not proved possible to reach agreement on the 50th scheme."
One things for sure, Jeremy Hunt is going to have a difficult time keeping all parties happy.
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