On Friday 4th July, the Newmarket Racing Industry representatives - trainers, jockeys, vets, animal transport companies and the Jockey Club - came together at Tattersalls to meet with the Leader of the Opposition, the Rt. Hon. Kemi Badenoch MP, to discuss the challenges the industry faces under this Labour administration. Many people spoke about the additional employment costs be that NI increases or Minimum Wage increases, which, together with increases in food and bedding costs and general cost of living increases, is putting a huge strain on the industry.
Nick Timothy MP CBE is the Co-chair of the All Party Committee on Horse Racing and he arranged this event to enable those in the industry to express the concerns they have, which he is aware of, not just through being the MP for Newmarket but also, through the work of the All Party Committee. The concerns in Newmarket, are the concerns in all the centres of racing in the UK. Owners are leaving the UK because the current Government does not welcome them. As they leave, associated businesses are affected too - feed suppliers, bedding manufacturers, stable hands, horse box manufacturers - and the wider world is very keen to take up what we are throwing out. The UK is still the No1 place for racing but the USA and others are pressing hard.
Kemi took lots of questions and encouraged those attending to keep giving her and her team real stories and facts so that they may use them when challenging Government policies. She and her Shadow team, whatever the sector, need to know what those working in different sectors are experiencing. Only through that knowledge can she hope to affect change.
After Kemi left for her next engagement, the meeting continued to discuss a very serious concern in the industry - the Government's proposed blanket tax on betting. Nick Timothy said -
I do not support the principle behind this proposal. Horseracing is a major economic and heritage asset to this country but introducing the Remote Betting & Gaming Duty (RBGD) would put it at extreme risk.
With five million fans a year visiting 59 courses, racing is Britain’s second most popular spectator sport after football. We have the best horses, the best trainers, and four of the top ten races in the world.
The industry contributes £4.1 billion to the economy and £300 million a year to the Treasury, and it keeps 100,000 people in work, including in our betting industry, supporting rural and semi-rural communities – including West Suffolk, which I represent in parliament. It is fundamentally different from online gaming.
The differences between the two should be obvious. Online gaming requires no skill or knowledge and can be played over and over again at all hours. Casino online gambling is known to be extremely addictive. In contrast, betting on racing is limited by the number of races and requires information and judgment. For these reasons, the principle behind harmonising these taxes is wrong.
It also goes against how horseracing in this country is funded and operated. British horseracing depends on revenue from media rights, entry fees and executive contributions. But a third of its income comes from the Horserace Betting Levy, a statutory payment collected from bookmakers based on their profits from betting on British racing.
The RBGD would have a profound impact on the horseracing industry with a range of unintended consequences. The online gaming duty currently stands at 21 per cent, compared with the 15 per cent general betting duty which applies to horse racing. Combining the taxes into a single 21 per cent rate would cost racing £40 million a year. Increasing tax on horseracing will damage profits for the industry and reduce revenue for the Treasury.
The RBGD would also have a counterintuitive impact on problem gambling, which is about as common among people betting on horse racing as it is among those buying National Lottery scratch cards. Yet thanks to the Gambling Commission’s campaign against gambling addiction – which is mostly down to gaming and gambling online – the government is risking the financial health of the entire racing industry.
The introduction of affordability checks means that since 2020, those betting on racing at a certain level have been required to go through credit reference agency vetting, submitting bank statements and payslips to prove they can afford the stake. In February, the threshold for triggering these checks was lowered to anyone betting more than £150 on racing within 30 days. There is evidence that these checks are turning customers away from racing — at a cost of £3 billion in lost turnover in just two years.
Taxing bets on racing at the same rate as online gaming will reinforce the failure of affordability checks, driving more people towards the betting black market. The Gambling Commission admits that it cannot control the rapid growth of black-market sites, which give no protection to the gambler and zero revenue to the government.
Indeed, this is not really equalisation because the tax and the levy combined would put betting on racing at a competitive disadvantage versus online gaming.
The introduction of RBGD would certainly affect the horseracing business operating model. Although the trade in bloodstock is worth millions of pounds, profit margins are tight for breeders and trainers. They do not necessarily see a return on what they invest. We are breeding fewer thoroughbred horses, and the British racing industry is in danger of falling behind global competitors. Every 20 horses in training is worth about £1 million in direct and indirect expenditure, supporting a range of different careers and professions.
Much of this comes down to how the sport is funded. In Australia, Ireland and France, there is more government support for horse racing, through direct grants or betting taxes. More private investment is available in Japan and the United States. Prize money, upon which our breeders and trainers depend for their income, is more modest here than in other countries. The Queen Anne Stakes at Ascot, for example, carries rewards worth £750,000. But prize money can go as high as £3.7 million in the Dubai Turf and £2.3 million in the Hong Kong’s Champions Mile. The burden of RBGD would force horse breeders and trainers to cut back costs to the detriment of the whole industry.
This scope and design of RBGD should not be used as it is too sweeping and would not address the funding challenges in British horseracing. Instead, the current online gambling tax system should continue, and the Government should recognise that the Horserace Betting Levy needs to be reformed. The loss of income from the imposition of affordability checks makes this change more urgent. We could apply the levy to bookies’ total turnover rather than just their profits, for example. We could apply it to bets on races overseas so long as the bets are placed with bookmakers here. The rate could be increased above the current 10 per cent, as Italy has done. Ministers should act, rather than waiting for the racing and the gambling industries to find a solution.
