The betting levy that bookmakers pay to the horseracing industry should have been put out to grass long ago. Dating back more than 40 years, the system is a clapped-out nag, sired by Nanny State out of Faute de Mieux. Now the dispute between racing and betting over the level of the annual payment has become so bitter that the government has had to intervene.

When the levy was introduced back in 1961 the bookies at race meetings, with their sharp suits, camelhair coats and flash watches, symbolised the interdependence of horseracing and betting.

Both sides have changed. Betting has found plenty of opportunities in other activities, from football to politics. Meanwhile the racing industry has moved closer to behaving like the multi-million-pound global sport that it is. Last summer the Jockey Club, which began life around 1750 and used to run British racing, handed over the last of its governance duties to the British Horseracing Authority, to focus on running its racecourses more professionally.

The current impasse reflects racing’s change of attitude. After some years when the sport meekly accepted what the bookmakers offered – £85m last season – it has shown more initiative. Instead of letting the leading bookmakers carry on their own operations to show races in betting shops, the racecourses got together to set up Turf TV as a new service providing the pictures, for which bookies say they are charging £50m. No wonder a gentlemen’s agreement on the levy proved impossible this year.

Bringing government into commercial negotiations between two sectors who should be able to look after themselves highlights how opaque and outdated the regime is. Ministers should use the powerful weapons at their disposal to persuade both sides to adopt a more productive partnership. For the bookmakers, government can raise the prospect of curbs on lucrative fixed-odds betting terminals. For the racing industry, there is the promise of half the proceeds – expected to be about £200m – from the sale of the Tote, the anachronistically state-owned betting business.

The betting levy has bred a mutual distrust, which obscures the two sides’ shared interests. Common sense suggests that both should be backing the same horse: a flourishing racing industry with enough money to invest in improving facilities and building on record attendances. Past form suggests that bookmakers and racecourse owners will find the shift from feud to friendship hard going, but unless they can make it, all bets are off.

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