The UK racing industry is panicking because of the levy funding falling short this year. The annual kickback from the betting operators fell short by £17 million. The Horseracing Betting Levy Board (HBLB) announced on Friday that the total expected levy income for the fiscal ending March 31 would only be £78 million.
The board said that the sum is “materially below expectations” since it collected £95 million last year. It was the first year since the new 10% levy applied on online operations of UK betting operators. HBLB chair Paul Lee also said that the profit figures would be substantially low this year. He noted that the UK bookie reports at the end of 2018 suggested that the annual handout should be expected at £89 million. However, because of the latest submissions from the bookmakers, which shows that race bettors had a hard time in February and March, the overall fiscal year figure will be much less exciting.
If the board’s £78 million forecast is accurate, they will incur a £5 million budget deficit for the year. The board has already agreed to a spending budget of £99 million for 2019-20 fiscal. Now, they will have to cut their spending by £5 million. Additional cuts could be possible before the fiscal year ends.
A majority of the board’s spending is dedicated to prize purses. As it has to cut its spending, the most cuts are expected to happen in this category. The members of the board- British Horseracing Authority, The Horsemen’s Group, and the Racecourse Association are mulling over measures that could minimize the fallout for them.
The HBLB has noted that the problem isn’t related to the popularity of racing as a betting product, but the profitability of this option. As the levy is charged directly in profit, falling levy income should be a cause for concern in the racing sector. The board wants to connect with the government as well as the bookmakers to find if there are any systemic issues in the sector that need addressing. The most likely outcome of this exercise would be a change to the levy formula.
While UK racing is busy finding the reasons behind falling levy income, New Zealand is getting rid of the betting levy altogether. The country’s racing minister Winston Peters announced on Thursday that they are removing the betting levy on the racing industry altogether. The levy sought a 4% cut on betting profits and brought a total of NZ$14 million to the government coffers in 2018. The levy will be phased out over a period of three years. The funds will be redistributed to responsible gaming programs and the racing and sports sectors.