The horseracing industry is entitled to a slice of the £800m ($1.2bn) gross profits bookmakers make from gaming machines in their shops, according to an official report on the annual levy paid by betting operators.
But the size of that slice is almost impossible to determine and bookmakers may still have a convincing legal argument that income from gaming machines is unrelated to horseracing, adds the report.
The report by Sir Phillip Otton has been eagerly awaited by horseracing and bookmakers, who have been engaged in a bitter battle over the size of the levy, which benefited racing by £117m in 2007-08.
The statutory levy has been in existence since 1961, an arrangement that ensures bookmakers help to prop up the industry on which it relies for bringing punters into its shops.
But with financial pressures on both sides, they have fallen out, with racing demanding the levy takes into account bookmakers’ fixed-odds betting terminals. Bookmakers in retaliation want the levy reduced by £50m, the sum it claims it pays in rights for Turf TV, the racing industry’s television broadcast from its racecourses.
Sir Phillip’s report, which dismisses the bookmakers’ off-setting demands on television rights, will be considered by the Levy Board and Gerry Sutcliffe, the sports minister. Mr Sutcliffe has tired of the divisions and wants an amicable settlement. But the report’s tone suggests that the issues are too complex for either side to claim any sort of lasting victory and sets the stage for a renewed legal tussle.
In the first part of his report, Sir Phillip said that a government determination of the levy was “likely to take into account gross profits from FoBTs”. But Sir Phillip said Mr Sutcliffe might be reduced to making a “rough guess” on the size of the contribution from machine income.
He added that if bookmakers wanted “to go to the wire on this issue they may bring down the levy scheme entirely”, and it might be in the racing’s industry’s interest to compromise.
The British Horseracing Authority said Sir Phillip’s conclusions were “significant” on issues it had been pressing him to consider. “He has concluded that machine and other betting income can and should be taken into account,” said Nic Coward, BHA chairman.
But Ciaran O’Brien, of Ladbrokes, the bookmaker, said: “The report provides justification of the bookmakers’ arguments on the scale of the additional cost of racing pictures resulting from Turf TV.”