Racing hit with a financial hammer blow as the government REJECTS request to review gambling levy

Racing suffered another significant financial setback on Thursday with the government rejecting the industry’s request to launch a formal review of the gambling levy this year. 

In a letter to the Chair of the British Horseracing Association Annamarie Phelps, which has been seen by Sportsmail, sports minister Nigel Huddleston makes it clear that increasing the rate of the levy above the 10 per cent of profits which bookmakers are currently obliged pay to racing will not form part of the government’s current review of the 2005 Gambling Act.

The government have considered these requests, but concluded there is no case for a review of the Levy at this stage, with Huddleston seeking to clarify their position in a letter to the BHA. The timing of the next review could still be brought forward from 2024, but the government have not committed to that at this stage. 

Racing has had a setback with the government rejecting a request to review the gambling levy

Sports minister Nigel Huddleston wrote a letter to BHA’s Annamarie Phelps detailing the government’s current review of the 2005 Gambling Act

The demand for an early review of the levy, which was not due to be considered until 2024, was a key part of racing’s Covid-19 Recovery Plan published in August. The BHA and racecourses are calling for gambling operators pay a levy on turnover rather than profits, and also want a cut of bets placed on overseas races for the first time. 

The sport had projected losses of over £300m due to Covid-19 before the second wave of the pandemic, which has since exacerbated their financial suffering. 

The government have considered these requests, but concluded there is no case for a review of the Levy at this stage, with Huddleston seeking to clarify their position in a letter to the BHA sent on Thursday. Huddleston’s candid intervention comes as a surprise, as just last month the BHA praised the government for launching a review.

‘I am aware that some stakeholders have reported that, during the statement, I made a commitment to review the rate of the levy itself in 2021,’ Huddleston wrote to Phelps. ‘To clarify, we intend at some point this year to look again at whether there is a case for bringing forward the timetable for the review of the levy due in 2024. We did not feel there was such a case on the basis of the evidence you put forward last year.

‘I know you have regular discussions with my officials and any new evidence which you are able to provide will be relevant for any reconsideration of your previous request for an early review, and for the review of the rate whenever this takes place. We will continue to work with you on the return of spectators.’

In an earlier letter from Huddleston to Phelps sent last year, which has not previously been reported, the government outlined their reasons for opposing levy reform, arguing that with a yield of £97m in 2019/20 the betting pool was generating far more income for racing than had been forecast. 

The sport had projected losses of £300m before the second wave of the pandemic

Even allowing for the impact of Covid-19 and last year’s three-month sporting shutdown the levy yield is forecast to be £80m for 2020-21 due to the fact that betting revenues remain strong.

‘We reformed the levy in 2017, fixing the rate at 10% and including overseas operators for the first time,’ Huddleston wrote to Phelps. ‘We have considered your requests very carefully, but the evidence suggests that the 2017 reforms do not need to be revisited at this point.

‘The levy performed very well against expectations last year and is forecast to hold up well this year in spite of two months without racing. Levy yield in 2019/20 was £97m, higher than the upper estimate of £92m, and the forecast for 2020/21 is £80m, with racing being able to resume a month earlier than originally expected.’