Lord Risby is the Prime Minister’s Trade Envoy to Algeria
One of the greatest pleasures of having been a Member of Parliament was that my constituency included the town of Newmarket, the historic capital of racing. Racing folk are very equine-centred and not political, but they respond magnificently to those who support them, as my admirable parliamentary successor Matthew Hancock does with genuine enthusiasm.
Successive governments have generally tried to be supportive too. Having part-owned two race horses previously, I was surprised on arriving in the Commons that the then reputation of racing was not good, being viewed by many as a curious mixture of belted earls and spivvy punters. Much loved trainers like Henry Cecil changed perceptions. The engagingly extrovert jockey Frankie Dettori helped hugely to popularise the sport. On one occasion, I was the bearer of a note from the irrepressible Frankie to David Cameron, then Leader of the Opposition, which read “David, Be a winner – like me, Frankie”. In the past 20 years, both the governance of racing and the consumer and family-friendly attractiveness of racecourses have played a huge part in increasing race attendance, now at six million annually. Horseracing is Britain’s second largest sport, with a turnover of £3.5 billion, employing 100, 000 people.
The finances of racing, and prize money, specifically are based on a system which nobody likes, the Levy system. The Levy has shrunk form a high point of £115 million in 2007/8 to the current anaemic £74 million. By contrast, the French state owned Tote monopoly returns £700 million to the industry body and, even in Australia, a total of £280 million is returned to racing from betting.
Whilst high quality bloodstock has recently reached staggering prices, prize money derived from the Levy is pathetically inadequate here, and today there are serious concerns about the consequent fall in foal production, the best bloodstock leaving the country, and the drop in the number of horses in training, not least because of the cost to owners. The imbalances are obvious.
Legislation is in currently in progress which takes us in the direction of a resolution of racing’s dilemmas. When the Gaming Act was introduced in 2005, it was hoped that rapidly growing online gambling would remain in the UK with all its economic benefits. It was a terrible error by Gordon Brown, the then Chancellor of the Exchequer, to try to buck the market and gain additional revenue by imposing a tax and regulatory regime that inevitably drove almost every operator off-shore. At the heart of the current Gambling (Licensing and Advertising) Bill lies the objective of securing a level playing field between on-shore and off-shore gambling by making the point of consumption the focal point of the system, and to introduce enhanced consumer protection and the monitoring of possible illegal gambling activity. This Bill has been welcomed across the party political divide, and has been endorsed by the Select Committee for Culture, Media and Sport.
This legislation may increase the size of the Levy. If indeed that proves to be the case, and the prize money situation improves, it will be very welcome. However, the history of contact and agreement between the governing bodies of racing and the bookmakers has been all too often fractious and unproductive. Of course, the hope is that this legislation may help to encourage off-shore betting activity to return home, after being licensed by the Gambling Commission. The Government had expressed the fear that the introduction of a point of Consumption Levy would breach EU state aid rules, but the French have been given a green light by the EU Commission to operate their Parafiscal Levy, and this brings real hope that we can emulate them.
Nevertheless, without doubt the Levy is unsustainable over the long run as the basis for financing racing in this country. Bookmakers and other racing interests are never likely to see eye to eye, and the Government now is examining real change, to get racing’s finances sustainable and enhanced, and to avoid unwilling Ministers from having to intervene to determine the annual Levy figure.
Modern technology and changing consumer habits and practice offer this possibility. We need to look seriously at a sporting right which would give organisers of potentially many sports fixtures the property rights over the outcomes of the event, the product on which bets are placed. This product would be licensable so that any operator offering or accepting bets on the sport would need prior authorisation and pay a fair return accordingly. This would promote a commercial relationship between dependent industries, allowing the value of the products to be determined by a market rather than by government, creating a level playing field and unlocking funding for horse racing and other sports, particularly at the grass roots level. This approach has essentially been adopted in France and Australia, and it is now being examined here.
Replacing the Levy with a true sporting right would represent a major advance. Sport governing bodies could determine the market value of their product in line with the move to bring taxation and regulation of remote gambling on-shore, as per this Bill. It would also recognise the interdependent relationship between the sports and gambling industries, and force them to negotiate in good faith on commercial lines.
Racing gives pleasure to millions, it is part of our history, we do it brilliantly, but the time is ripe to change comprehensively a system which is now patently undermining its long term viability. We simply cannot afford to wait any longer for long overdue fundamental reform.