Statement from British Racing regarding the Authorised Betting Partner policy

13 Jan 2016 Financial/Political
  • Statement from the British Horseracing Authority, Horsemen’s Group and Racecourse Association

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Given recent commentary on Racings Authorised Betting Partner (ABP) policy, we thought it would be helpful to provide some important, factual context to the introduction of ABP, to explain our position clearly, our support for ABP policy, and to set out how we believe that Racing and Bookmakers can move forward together, prior to the introduction of a successor to the Levy.

Much of the recent commentary on Racings Authorised Betting Policy (ABP) has focused on issues of disagreement, but one thing that we all agree on is that racing and betting are inextricably linked.

British Racing has, for more than 50 years, developed its racing programme and infrastructure, particularly in the extension of the fixture list, to meet the commercial needs of the British betting industry.

This is a direct consequence of the mutual self-interest of Racing and Betting resulting from the legalisation of off-course, cash betting and the introduction of the Horserace Betting Levy in 1961. This established the principle that there should be a transfer of funding from betting operators to British Racing based on betting activity.

Levy funding remains crucial to the sustainability and long-term growth of a sport in which British Racing and betting share a common interest. The funding continues to be invested disproportionately within the Fixture List to fund the width and depth of racing necessary to deliver a valuable betting product.

While the underlying funding mechanism has, by and large, served the industry well for 45 of its 55 year life, for the last ten years it has clearly not worked as intended. The digital revolution in betting on British Racing (which should be a success for both parties) has turned out to be, in some ways, an ‘achilles heel’ for the sport. Unfortunately, the legislation for the introduction of the Levy in 1961 could not foresee the advent of the Internet. Accordingly, with over 40% of betting activity on British Racing being accepted in offshore locations, such bets remain outside of the scope of the Levy. Within the next two years, it is likely that the Horserace Betting Levy Board will find itself presiding over a fund that is generated from the minority of betting activity on British Racing. This is a situation that the Government* has recognised as being “manifestly unfair.”

The growth in remote betting, fueled in part by a shift away from betting shops, has been a key factor in reducing the amount of funds generated for Racing by the Levy from in excess of £100 million as recently as 2008, to a forecast of less than £50 million by 2017. This has compromised British Racing’s ability to maintain the scale, quality and infrastructure of the grassroots of our sport to meet the needs of the betting industry.

Not only does this compromise the sport as a betting product, it is affecting the livelihood and wellbeing of the sports 17,000 employees and the 85,000 people whose livelihood depends on British Racing. We are seeing both trainers and owners leave the sport because of a reduction in grass roots funding, with British Racing delivering an average of 26p back in each pound spent by owners, compared with nearly 40p in the pound in Ireland and over 50p in the pound in France.

While we acknowledge that revenue from media rights has increased in recent years, this reflects the importance betting operators place on British Racing as a product to attract and retain an important group of customers whose betting repertoire and value goes significantly beyond the value generated from their betting activity on horseracing alone. Possessing media rights is not a prerequisite to accepting bets on British Racing, rather a discretionary decision taken by individual betting operators.

As the Government* has said:

Sponsorship and media rights each constitute a payment for the identifiable and distinct commercial benefit accruing to each betting operator individually… In neither case does the price paid reflect the total value of British horseracing to bookmakers as a betting product.”

A critical issue is, that despite the shift of consumer behaviour to remote betting, we do not currently have publicly-stated acceptance from betting operators that the principle of a value transfer from betting to British Racing extends to all betting, including  remote channels. However, this principle is well-established in almost every other country where horseracing and betting take place. In fact, some betting operators who serve the British market accept and comply with that principle in other countries, including Ireland, where 1% of betting turnover has to be paid to access the market.

For more than ten years, successive Governments have signaled their intention to level the playing field through legislation. Following three consultations in late 2014 and early 2015, the Government has confirmed it will introduce a Horserace Betting Right to deal with the issue in this Parliament.

As it is not anticipated that this will be fully in place for several years, and with Levy expenditure due to fall by as much as £20 million in 2017 (from £70 million to £50 million),  British Racing is taking interim steps to address the issue by, among other things, introducing ABP.  This seeks to recognise operators who are prepared to accept the principle of making a fair and reasonable contribution across all betting activity and provides a framework to give commercial parties, including racecourses, the opportunity to deliver tangible benefits to ABPs.

Far from being draconian, ABP is a voluntary policy, and we hope that all betting operators who see value in British Racing agree to come on board. We already have two of the largest remote betting operators signed-up. But we accept that it is perfectly possible that others might not see the benefits, and it is of course a commercial decision for betting operators to take based on their assessment of value generated from customers who bet on British Racing.

 We note comments from some operators that the value of gross win on British Racing is falling. However, such an assessment does not take into account the fact that people who bet on British Racing are more likely to bet on multiple betting and gaming activities, generating significant additional value, or the fact that indicators suggest that total betting activity is currently increasing.

There have been suggestions of a harmonised rate for retail and remote betting activity. There is absolutely nothing new in this. Indeed, for the fifth year running, the Bookmakers’ Committee, recommended a rate of 10.75% for both retail and remote, as fair and reasonable. This was reaffirmed by the Government on 3 December 2015 in its determination of the Levy.

Coral has suggested a rate of 7.5% for both retail and remote betting activity. However, as Coral themselves acknowledge, this would generate less than the current unsatisfactory arrangements, and is not therefore a realistic starting point for negotiations.

In terms of the future, we will continue to work closely with Government and all of Racings stakeholders, including the betting industry, to make sure that the necessary legislation is put in place to meet all of our needs.

Racings door remains wide open to everyone who wishes to come and talk to us directly to resolve the industrys funding issues for the mutual benefit of Racing, Betting and our customers. We remain firmly of the view that this issue will be best resolved through private rather than public discussion.

Nick Rust, Chief Executive, British Horseracing Authority
Stephen Atkin, Chief Executive, Racecourse Association
Philip Freedman, Chairman, Horsemen’s Group

*Department for Culture, Media and Sport (February 2015), “Horserace Betting Right. A Consultation on Potential Structure and Operation.”