Robert Hughes CBE, the Levy Board Chairman, reveals in the 2002 Annual Report of the Horserace Betting Levy Board, issued today, Thursday, July 18, that the Levy will both benefit and lose out after April 1, 2003, from the new commercial agreements in racing.
From April 1, 2002, to March 31, 2003, the commercial data rights agreement between the British Horseracing Board and Bookmaking Industry will simply mirror the Levy, while in future years the reverse is true.
Hughes, who is awaiting a Levy submission from the Bookmakers’ Committee for the 42nd Levy Scheme which comes into operation from April 1, 2003, states: ‘I understand that the submission will include a negotiated reduction in the threshold at which the full 10% of gross profits is paid, which should add about £10 million to the Levy next year.
‘However, the downside is that the commercial deal makes no allowance for payments by British bookmakers on bets taken on overseas horseracing. For the first time, this money will therefore be lost to the Levy. Not only is it worth about £5 million a year but it has always provided a source of alternative income during periods of lengthy abandonments.
‘If you add to this the decision to base the sale of pictures to betting shops on a per-race basis (concluded in an agreement between the 49 non-GG Racecourses and the Bookmakers earlier in the year), with no payments for abandonments, then it will inevitably lead to less financial stability in Levy income, with a consequent knock-on effect for racing.’
Robert Hughes then explains, in view of the above, why the Levy Board believes the replacement of the racing surface at Lingfield Park with the ‘state of the art’ Polytrack to have been such an important event last year.
‘So-called ‘all-weather’ racing has become increasingly important to the Levy in recent years, so the Board was very pleased to be able to make a substantial contribution, in the form of an interest free loan, in order to ensure that the replacement surface was ‘state of the art’.
‘I believe that Polytrack has transformed all weather racing. I would like to see a similar surface at one or two other racecourses.’
Rodney Brack, in his Chief Executive’s Review of the Year, details the financial impact last year of the abolition of General Betting Duty (GBD), which assisted the Levy increase of more than a fifth compared with the previous 12 months.
‘The 40th Levy Scheme agreement between the Levy Board and the Bookmakers’ Committee had anticipated the possibility of GBD being abolished during 2001/02, and provided for a fixed 1% levy rate on horserace betting turnover after a bookmakers’ levy yield of £61m had been achieved.
‘The extent to which betting turnover actually grew after October 6, 2001, is evidenced by the fact that the total yield for the year (to March 31, 2002) was some £67m. This reflected a 21.4% increase over the £55.2m achieved in the previous year.
‘The Tote contributed a further £5.9m, which was 15.0% up on 2000/01.’
Later in his review, Rodney Brack outlines how the current Levy Scheme, the 41st, which was determined by the DCMS Secretary of State, will yield even more.
‘Under the 2002/03 Scheme, bookmakers’ gross profits on horserace betting business will be levied at 10%, with those licenced betting offices with gross profits of less than £150,000 attracting a proportionately reduced rate.
‘In view of the uncertainties in the market place during 2002/03, the Secretary of State…forecast a yield in the range of £90m to £105m, including the Tote’s contribution.
‘For budgetary planning purposes, the Board has decided to adopt a mid-point assumption of a yield from bookmakers of £90m plus a £7m contribution from the Tote.’
The Levy Board’s Policy Statement for 2002/03 is published in the 84-page annual report which contains full details of the statutory body’s wide range of work.
The Levy Board, which is due to be abolished at some stage, has revised its plans for closure from September, 2003, to September, 2005, after Government advice.
For further information please contact:
Rodney Brack
T: 020 7333 0043