The British Horseracing Board is to recommend to Government that the current turnover-based 40th Levy Scheme (2001/02) should be repeated for the 41st Scheme (2002/03).
BHB, however, will recommend the removal of the reduced cash rate of 1% currently paid by a bookmaker when a certain yield threshold is reached, a mechanism which proved difficult to implement. This reduced rate was accepted explicitly for one year only in order to present a united front with the bookmakers while Government reviewed the betting taxation structure.
BHB estimates that this proposal will generate just over £90 million, based on early indications that LBO turnover is increasing by 30% under GPT, which will lead to significant improvement in bookmaker profitability. This compares to an estimated £62 million this year. BHB is making this proposal in anticipation of the introduction of a commercial mechanism.
BHB is committed to a policy that bookmakers should not duplicate payments to the Levy and to BHB once a commercial contract is in place. BHB is therefore willing to ensure appropriate offsets to avoid this.
BHB believes that its recommendation has a number of benefits:
1. It provides a year-long Levy Scheme rather than the unacceptable one-month proposal from the betting industry.
2. A repeat of the current Levy Scheme is easily understood by all parties and requires no change in the method of administration by the Levy Board.
3. Maintaining a turnover-based Levy Scheme enables a more seamless transition to a commercial mechanism given that BHB’s royalties are based on turnover and not gross profits.
Tristram Ricketts, BHB Secretary-General and Levy Board member, said: “We are keen to make the Secretary of State’s task of determining the levy as simple as possible. There is nothing more simple than repeating the current Levy Scheme next year, with the removal of the rate cap which, given the anticipated substantial increase in bookmaker profitability, is no longer justified.
“BHB’s commitment to offsets will both help in the determination process and reassure Government that we are continuing to make progress towards the introduction of a fair commercial mechanism which it wants to see replace the Levy as soon as possible.”
For further information please contact BHB Communications Manager Alan Delmonte on 020 7343 3318