March 23, 2016

On 3 March 2016, the Government announced new funding arrangements for British racing, which will, the Government says, “create a level playing field for British based and offshore gambling operators, and ensure a fair return from all gambling operators to racing”.

The Government has now published further detail of the new funding system and provided a summary of responses to three consultations on the future of the Horserace Betting Levy that were conducted in 2014/15.

The Government’s paper, entitled “Implementing the replacement for the Horserace Betting Levy”, explains that currently, gambling operators who are based offshore are not liable to pay the statutory Levy, although some do make voluntary contributions.  Given the introduction and subsequent rapid growth in remote gambling in recent years, this has created a two-tier system, which puts British-based operators at a competitive disadvantage, and has resulted in lower Levy receipts than would have been the case had offshore operators been required to contribute.  The Government’s aim with the new funding arrangements, it says, is “to restore to racing a fair contribution from all operators, which has been lost to racing simply because of the shift towards offshore remote betting”.

Between June 2014 and March 2015 the Government ran three consultations on the future of the Horserace Betting Levy and operator contributions to racing.  These consultations explored, respectively: extension, modernisation and replacement of the current Levy.  Responses to these consultations included representatives of racing, betting, trade associations, veterinary groups and individuals.  The Government says that the views expressed, and the further discussions it subsequently held with the betting and racing industries, informed the Government’s proposals for the new funding arrangements.

The Government explains that the new scheme will apply to all classes of operators who take bets on British racing.  All operators, no matter where they are based, that benefit from British racing will be required to contribute to the industry.

However, the Government says that it is aware that on-course operators have “a distinct and unique position in the betting and racing sphere”.  It explains that under the current system, on-course operators pay a de minimis flat fee per year as a contribution to the Levy, alongside the fees they pay to individual racecourses if they want to take up a pitch for a specified time period.  This arrangement recognises, the Government says, “the vital and long standing role that on-course operators play in providing betting services for customers at the racecourse”.  The Government says that it is considering how best to factor that into the new arrangements and says that it will “engage further with the on-course sector on this issue”.

As for the level of contributions from gambling operators, the Government explains that the amount payable will “reflect the degree of mutual interest between betting and racing”.  Over the next few months the Government will, it says, hold discussions with the betting and racing industries, and draw on the expertise of the Horserace Betting Levy Board, to inform a decision on the rate payable.

As for administration, at present the Horserace Betting Levy Board approves the annual Levy scheme, collects the Levy from operators and applies the funds raised to one or more of the three Levy purposes set in legislation.  Under the new arrangements the only function of the Levy Board that will continue is the collection of the funds, including responsibility for enforcement, i.e. ensuring that operators pay the amounts due. The Government believes that these arrangements will “continue to be effective when extended to cover offshore operators”.

Once the funds have been collected they will be passed to a racing authority, which will be responsible for making decisions on spending in line with the overall purposes of the scheme, and with an appropriate reporting mechanism.

The necessary legislative changes will be made by secondary legislation using powers in s 2 of the Gambling (Licensing and Advertising) Act 2014.

The Government is also legislating to give racing new rights to funding from bets taken on British racing and is proposing to seek State aid approval for these new funding arrangements.

As for the timetable to implementation, the Government says that it will hold a period of consultation to inform the level of contributions from betting in Spring 2016 and it will begin the State aid notification process with the European Commission in Summer/Autumn 2016.  At the end of 2016, the Government aims to publish a statutory Instrument and full impact assessment.  The new funding model will come into force in April 2017.  To read the Government’s paper in full, click here.