The horse racing industry is odd in many ways. Though individual racecourses make money from the tickets sold to people attending the races as well as the sale of food and alcohol, horse racing as a whole doesn’t see much, if any, of that. Similarly, the companies that broadcast the races from the different courses around the country have to pay the racecourses for the rights, whilst advertising can be charged for at a decent rate without much of the money going into the industry directly. As a result, racing needs to find money from elsewhere.
Generally speaking, that money comes from the levy that is charged to bookmakers. The levy was brought in in 1961, which is the year that bookies were allowed to move off the course and onto the high street. It sees a percentage of money that is taken by bookmakers paid back into the racing industry, with the idea being that it would cover any drop off in attendance that would occur when punters didn’t have to turn up at tracks in order to place their bets. It is still in place today, so how much money does racing make from it?
What Is The Levy?
As part of the decision to allow bookmakers to open high street shops, the Betting Levy Act of 1961 was signed into law. That included the launch of the Horserace Betting Levy Board, which is usually referred to simply by the shortened term of the Levy Board. Though its remit was altered slightly by the Betting, Gaming and Lotteries Act of 1963, it has remained mostly unchanged in nature since it was launched. Nowadays, the levy is the responsibility of the Department for Digital, Culture, Media and Sport, coming under the DCMS’ jurisdiction.
Whereas some non-departmental public bodies will receive some grant-in-aid from the central government or an amount of National Lottery funding, that is not the case with the Levy Board. Rather, the Act requires that it collects a statutory levy from bookmakers that is based around the business it makes from bets on horse racing. That levy is then distributed around horse racing, mainly on the improvement of the sport in general as well as breeding, in addition to the advancement of education around horse racing and veterinary science, both of which are crucial to the future of the sport.
The levy is charged at a rate 0f 10% of betting companies profits on leviable wagers over £500,000.
Objectives Of The Horserace Betting Levy Board
According to the Horserace Betting Levy Board Annual Report, which was published on the 12th of May 2020, the Horse Racing Levy Board has six general objectives that it agreed to. The first of these is to support the provision of horse racing at a high standard country-wide and year-round. This needs to be ‘as cost effective as possible’, as well as being something that is attractive to racegoers, off-course punters and owners of race horses all at the same time, as well as ensuring that the sport’s integrity is maintained.
The second objective is to place an emphasis on generating betting on horse races, which will in turn lead to larger gross profits. This will then enhance the levy, meaning that the funds available for pursuing the objectives it has set itself will be possible. All of this will be the case whilst also taking account of the interests of racegoers, stakeholders and the horse population. This works alongside the third objective, which is to ensure that the financial support of the levy is cost-effective and value for money, as well as being carefully monitored at all times.
Funds will be applied at an appropriate level for the improvement of horse breeds, as well as the development of veterinary science and education. Another of the levy’s objectives is to ensure that the net assists it has available to it are managed and monitored appropriately. This will allow for the maintenance of adequate cash balances. The final objective is to liaise with the betting and racing industries in order to promote a trusted and strong working relationship at all times. This will obvious be to the commercial benefit of all concerned, which is crucial for the industry’s long-term health.
How Much The Levy Takes In
The fact that the levy is charged on the gross profit that bookmakers make from bets on horse racing means that how much it is worth will differ from year to year. As you might imagine, the global health crisis that came to the fore in 2020 resulted in less money being made by the Levy Board during that time. The good news is that the surplus reserves that the Levy Board has in place allowed it to cope with the losses across the industry at this time. Indeed, the £1.7 million surprise for 2018-2019 added to the £20.9 million surplus from the year before to offer an overall surplus of £48 million by March 31st 2019.
In 2017, the government extended the levy in order to include bets placed on horse racing by companies that operate overseas. Given that the levy had fallen below £50 million for the first time, it was seen as a necessary change in order to ensure the levy’s long-term future and to benefit horse racing as a whole. Here is a look at how much the levy brought in in the 13 years before the change was brought in:
You can see that, with a few exceptions of when the levy amount went up, the money taken in by the levy was steadily decreasing year on year. 2007-2008 was something of a standout season precisely because of how much the levy took in when compared to the years around it and the years that follows. That is why the decision was taken to include money taken on bets with overseas-based operators.
The forecast was that the changed levy would bring in around £85 million, but in the end it actually saw £94.7 million taken into the coffers. In 2018-2019, however, that unexpectedly dropped by around £17 million, with the levy bringing in £78 million. It came on the back of the industry already facing a cut in media rights on account of the fact that betting shops closed after the government’s maximum stake for Fixed Odds Betting Terminals. It might seem as if such a decision only affects one area of the industry, but there are knock-on effects.
Things That Can Affect The Levy
As you might imagine, there are numerous things that can have an affect on the income of the levy. In February of 2019, for example, an outbreak of equine flu caused racing to be shut down for six days. The year before, the racing calendar was disrupted by the Beast From The East, a storm that saw numerous race meetings cancelled. When racing was cancelled because of the global health situation in 2020 and 2021, this obviously made a huge difference to how much money the levy was able to bring in, which causes issues for the sport.
For the first two months of 2021, racing was suspended entirely. Even once it got back underway, licensed betting offices were closed or restricted. Though punters were able to place bets online during this time and television audiences actually increases, the reality was that racing suffered tremendously because of what happened. The reaction of the Levy Board was to reduce the prize money on offer for races, but this then made said races less appealing to owners and trainers, which made them less popular with bettors.
What The Levy Is Used For
We have already mentioned education and improvements to veterinary practices as part of the levy’s expenditure, but what else is the money spent on? The most obvious answer is prize money, with many of the races around the United Kingdom benefiting from prize money awarded courtesy of the Levy Board. The likes of race day services at some courses are paid for by the levy, whilst industry recruitment and training also comes under the auspices of the Levy Board. The promotion of racing and customer growth also comes down to money from it.
Equine welfare is constantly being improved upon, thanks in no small part to money from the Levy Board. Encouraging people to become owners happens thanks to money from the levy, as does the world of point-to-point, which is lesser-known to some racegoers. There is also the fact that the Board encounters administration costs, with £1.9 million being spent on this for the 2018-2019 season. In short, if there is something in the horse racing industry that needs to be paid for then there is a good chance the Levy Board will be asked for some money.