by Joel Sked
Scottish horseracing has been given a boost after a meeting between Secretary of State for Scotland Michael Moore and representatives of The Friends of Scottish Racing Parliamentary Group (FoSR) at Westminster, over the recent controversy over horseracing levy revenues.
The issue surrounds the Horseracing Levy, a tax bookmakers pay back into racing from their gross profits. But racecourse chiefs are arguing that increasing loopholes in the legislation mean bookmakers are not paying as much as they should be, which is now affecting British horseracing.
The FoSR delegation includes MP Fiona O’Donnell and Musselburgh Racecourse boss Bill Farnsworth. They were encouraged by talks with Michael Moore, who is to raise the issue with colleagues in the government.
The Levy was introduced in 1963 when off-course betting was legalised and betting companies emerged. To make up for the money lost at the racecourses a statutory tax was introduced to give racing a return from the betting industry. Bookmakers are taxed 10% of their gross win which goes back to horseracing.
Loopholes have now materialised on two fronts. First, the rise of betting exchanges such as Betfair, where your average gambler can go online and be their own bookmaker, do not pay the levy but are charged a 3-20% commission on their wins. Betfair then pay a levy on that commission, which is a significant amount less than normal bookmakers.
Bookmakers have now moved their online sites overseas to avoid paying any taxes or the Levy.
The second loophole was made to protect independent and small bookmakers whose turnover was not enough to justify a Levy payment. But now large bookmakers are opening more stores to take advantage of gaming machines, as they are only allowed a maximum of four per store. Because of the increased number of stores it is saturating the market and now 60% of all bookmakers fall below the threshold. It was originally designed to protect only 10%.
It is now forecast that revenue from the Levy will fall to £60 million in 2010-2011. Almost half of the £115 million figure in 2008-2009.
Bill Farnsworth, general manager of Musselburgh Racecourse, is worried the loopholes will have a highly detrimental effect on British horseracing, and Scottish racing in particular.
He said: “Without a strong and fair levy a vicious circle will develop in which prize money drops, the quality of racing declines, racecourses make less money and therefore can’t put up as much money in prizes, and ultimately we will stage fewer fixtures. It is the same as football. Money gets you the best players so we need to make sure British racing, which is the best racing nation, does not become a second rate racing nation.
“Scottish racecourses will feel this most acutely and will be first to suffer. This is because we are more geographically remote from most of the training centres in England and trainers and owners will question the economic viability of racing in Scotland.”
East Lothian MP Fiona O’Donnell wants to make sure horseracing in Scotland progresses as it has done over the last few years, which she believes will not happen if the levy is not maintained.
She said: “The sport has made so much progress in recent years with many improvements to facilities, and none more so than at Musselburgh. Now we need Michael Moore to stand up for Scottish racing and give it a sporting chance to build on that progress.”