24th of February 2011 Author: Johnny Karp
No agreement between parties requires government's intervention
A final touch has been added to the long-lasting debate between UK bookies and the horseracing industry regarding the size of the levy to be paid - and the final word in this case had the government, thanks to the fact that the two above mentioned parties failed to reach a mutual understanding.
Therefore, the Culture Secretary Jeremy Hunt this week announced the terms of the 50th Horserace Betting Levy Scheme for the year 2011/12, expressing belief that the reasonable estimated yield should be in the range of GBP73.7 million to GBP80.8 million, as the government-appointed members of the Horserace Betting Levy Board recommended.
Hunt also pointed out to the submissions he took into account - those made by the racing and bookmakers' representatives, along with advice from the members of the Horserace Betting Levy Board.
To make this viable, the 49th Scheme will have to go through various changes, including an increase of the headline rate of levy from 10 to 10.75 percent (this will apply to telephone and internet betting operators (including betting exchanges) as well as Licensed Betting Offices), and a drop of the threshold level under which betting shops pay a reduced rate of levy from GBP88,740 to GBP50,000. On the other hand, no changes will be made in regards to foreign racing, since the Levy supports British horseracing. Therefore, the regulation said that it will be only collected for bets on races that are held in England, Scotland and Wales.
In a criticism of the two parties' inability to reach an agreement independently, Hunt stated: 'It is really disappointing that two important industries have been unable to come to a sensible commercial agreement. I have tried to be fair by listening to the advice of the independent members of the Levy Board and I will continue to be guided by their advice in future years until what should be a straightforward commercial negotiation can be taken permanently out of the hands of Ministers.
"I am grateful to the Government-Appointed Members of the Horserace Betting Levy Board and both interested parties for their submissions. I have now asked the Horserace Betting Levy Board to finalise the operational details of the scheme as a matter of urgency'.
The annual scheme is a levy on the profits of bookmakers from betting on British horseracing, for the purpose of funding horseracing - for instance through integrity services, veterinary science, prize money, training initiatives and breeding programs.
It has also been specified that the levy will be 2.15 percent (of gross profit) for the bookmakers who derive their gross profit from spread betting businesses, where it comes from British horseracing. On the other side, for those who take bets at the racecourse, the flat rate annual fee will increase in line with RPI to GBP210, whereas the bookmakers who only stand at point-to-point, harness racing or trotting events will see a new fee of GBP166.
Paul Roy, chairman of the British Horseracing Authority, said: 'Racing welcomes today's decision by Secretary of State Jeremy Hunt as a major step in dealing with long-standing failings of the current system. It will halt the severe decline in the Levy, and the damage this is doing to the sport.
'The Coalition Government could not right all the wrongs in the current system with this decision, but they have addressed issues with traditional LBOs, and have signalled fundamental reform to come. The next stage has to deliver what is due from remote betting, particularly offshore operators and betting exchanges.
'The range this decision sets is therefore short of the full amount the entire betting industry should be contributing, but today's announcement is an important shift in achieving Racing United's goals.
'The rise in the headline rate is significant, as is the major reduction in the threshold level, and shows that nothing is set in stone.
'We believe that it is only through major reform that full and fair return, and the environment for real and constructive negotiation, on a level playing field, can be achieved. As we told the Secretary of State in November, we will devote our energies in the coming months to working with Government on this."
The government is expected to announce its separate plans for longer-term reform of the Levy soon.
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