The panel discussion began with an introduction from David Zeffman, Head of Gambling and Sport at CMS, who summarised the history of horseracing funding.
In particular, David explained that horseracing is still, as far as the UK and Irish betting markets are concerned, the most important type of gambling in betting shops, and is exceeded only by football in the online market.
David then ran through the background to horseracing funding, focusing on the horserace betting levy and on media rights. Currently, both the levy and media rights revenues are under threat partly due to the fact that many betting shops are closing down. To try and combat this and to increase the revenue from media rights, one collection of racecourses is seeking to get major bookmakers to switch from a “bet and watch” pay-per-stream model to a turnover-based arrangement so that bookmakers will have to pay a percentage of their turnover, meaning they could show all races irrespective of whether bets had been placed on them.
In light of this, David began by asking the panel for their thoughts on moving towards a turnover-based arrangement.
Simon Bazalgette, former Group Chief Executive of The Jockey Club, said that such a change was part of what needs to happen but stressed that betting and racing go together and have a symbiotic relationship, meaning they both need to support each other and work towards a more robust model that will last more than a couple of years. Alastair Warwick, Chief Operating Officer at Ascot Racecourse, agreed and described the relationship as a triangle, along with the horsemen. Alastair explained that without the levy, the prize money drops and the quality of racing declines, which in turn impacts on the betting industry.
Alan Delmonte, Chief Executive of the Horserace Betting Levy Board, pointed out that the government has been of the view for many years that for so long as the gambling tax is based on gross profit, the levy should mimic that because doing so reflects the drivers in the business.
Richard Ames, Chief Executive of Sports Information Services, warned that turnover-based tax can sometimes be a blunt instrument. He cited the situation in Australia, which is largely driven by a turnover-share model. Recently, bookmakers in Australia have been increasing their gross margin and profitability but turnover has gone down, which has led to a funding problem for horseracing. Richard suggested that a better option is ongoing and greater alignment between horseracing funding and the ability for bookmakers to generate that funding, including internationally.
Phil Siers, Chief Commercial Officer at Betfred disagreed with the concept of turnover tax and argued that it was regressive. He stressed that horseracing products simply make less money, and that in any retail situation, poorly performing products will be replaced with more popular products. Phil suggested that perhaps too many racecourses receive the levy, and that not all racecourses are equal in terms of the amount of money they generate in media payments or in revenue from the turnover.
As a racing fan, David said that he regularly saw participants argue about how they could all share a shrinking pie, but wondered what could be done to increase the size of that pie. He asked the panellists for their thoughts.
Simon was clear that the economic structure needs aligning, and a more efficient pricing model is required to avoid smaller shops paying the same as larger shops. He said that better efficiency would mean bookmakers could provide better value, which in turn would lead to more people placing bets.
The conversation then turned to what racing can do to help the gambling sector. Alan commented that racing had been successful in weathering the storm of a huge expansion in the gambling market, and said that there was a lot to be optimistic about given the quality of the product. He also pointed out that in terms of responsible gambling, racing provides something different from the gambling that is most often in the public domain and that causes problems. The fact that racing is not rapid-play and that the odds are not the same each time means that racing can differentiate itself as a unique product.
Phil suggested that allowing more races per day would be helpful in ensuring the industry could take advantage of the economies of scale that this would offer.
Copyright © LawInSport Limited 2010 - 2021. These pages contain general information only. Nothing in these pages constitutes legal advice. You should consult a suitably qualified lawyer on any specific legal problem or matter. The information provided here was accurate as of the day it was posted; however, the law may have changed since that date. This information is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. LawInSport is not responsible for any actions taken or not taken on the basis of this information. Please refer to the full terms and conditions on our website.