The bitter debate between UK bookies and the horseracing industry regarding the size of the levy to be paid has been settled by a government minister due to the inability of the parties to reach a compromise.
In a statement (available at http://www.culture.gov.uk/news/media_releases/7859.aspx), Culture Secretary Jeremy Hunt set the terms of the Horserace Betting Levy Scheme for the year 2011- 2012, noting that government is responsible for determining the 50th Levy Scheme. This happened after the parties involved failed to reach an agreement last year.
Hunt believes that the reasonable estimated yield should be in the range of £73.7 million to £80.8 million in line with the recommendations of the government-appointed members of the Horserace Betting Levy Board.
To achieve this, a number of changes will be made from the terms of the 49th Scheme - the headline rate of levy will increase from 10 to 10.75%, and the threshold level under which betting shops pay a reduced rate of levy will come down from £88,740 to £50,000.
There will be no change to the scheme in relation to foreign racing; the Levy supports British horseracing and the minister has decided to collect it only in relation to bets on those races that take place in England, Scotland and Wales.
The Culture Secretary emphasised that he had taken into account submissions from both the racing and bookmaking industries together with advice from the members of the Horserace Betting Levy Board.
Hunt made a point of commenting on the inability of the warring parties to come to an agreement without his intervention, saying: "It is really disappointing that two important industries have been unable to come to a sensible commercial agreement. I have tried to be fair by listening to the advice of the independent members of the Levy Board and I will continue to be guided by their advice in future years until what should be a straightforward commercial negotiation can be taken permanently out of the hands of Ministers.
"I am grateful to the Government-Appointed Members of the Horserace Betting Levy Board and both interested parties for their submissions. I have now asked the Horserace Betting Levy Board to finalise the operational details of the scheme as a matter of urgency".
The annual scheme is a levy on the profits of bookmakers from betting on British horseracing, and goes towards funding horseracing - for instance through integrity services, veterinary science, prize money, training initiatives and breeding programmes.
The increase in headline rate to 10.75% will apply to telephone and internet betting operators (including betting exchanges) as well as Licensed Betting Offices.
For bookmakers who derive their gross profit from spread betting businesses the levy will be set at 2.15% of such gross profit where it arises from British horseracing. For bookmakers taking bets at the racecourse the flat rate annual fee will increase in line with RPI to £210, whereas for those bookmakers who solely stand at point-to-point, harness racing or trotting events the new fee will be £166.
The government's separate plans for longer-term reform of the Levy will be announced soon.
Paul Roy, chairman of the British Horseracing Authority, said: "Racing welcomes today's decision by Secretary of State Jeremy Hunt as a major step in dealing with long-standing failings of the current system. It will halt the severe decline in the Levy, and the damage this is doing to the sport.
"The Coalition Government could not right all the wrongs in the current system with this decision, but they have addressed issues with traditional LBOs, and have signalled fundamental reform to come. The next stage has to deliver what is due from remote betting, particularly offshore operators and betting exchanges.
"The range this decision sets is therefore short of the full amount the entire betting industry should be contributing, but today's announcement is an important shift in achieving Racing United's goals.
"The rise in the headline rate is significant, as is the major reduction in the threshold level, and shows that nothing is set in stone.
"We believe that it is only through major reform that full and fair return, and the environment for real and constructive negotiation, on a level playing field, can be achieved. As we told the Secretary of State in November, we will devote our energies in the coming months to working with Government on this."
Source: InfoPowa News