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Happy New Year

So, 14th January. Not a bad effort, really. My New Year’s resolution lasted longer than yours, I’ll bet. Good first week in the gym? Go on, admit it: you know you’ve given up already.

I, meanwhile, had found it easy to stick to mine up til now. I spent the first ten days of 2011 in Sydney, either enjoying the sunshine, catching up with old friends, or – where was it now? Oh yes… Reclining at the SCG as Ali Cook piled on the runs and England re-secured the Ashes. A hard life, I hear you say. Indeed it was. The beer glasses in Australia aren’t much bigger than the urn, but that gave ample opportunity to keep bringing the little receptacle up.

On that basis, it wasn’t difficult to keep to my NYRs while you were wilfully breaking yours. But my self-made commitments are now out of the window: I had to sneak a quick look at the Betfair share price yesterday to check that I could still pay the school fees; and now my aim to keep out of any racing debates in 2011 is about to crumble as well.

I didn’t comment when the BHA issued a press release at the beginning of December, describing a proposal to reintroduce Levy on foreign racing as an “important step towards modernising the Levy”, but privately I shook my head in disbelief.  How an argument that you be paid a fair price for your own product can then be supported by demanding that you are paid for someone else’s as well is anyone’s guess. If a bookmaker covers racing in an overseas jurisdiction and pays that jurisdiction for the privilege, on what basis they should also pay the BHA has me scratching my head. It’s like Kellogg’s insisting that they get the money for someone buying Tesco’s Own Cornflakes; or, perhaps, Tesco insisting that they get paid if someone decides to buy the same Kellogg’s Cornflakes as they stock, from Waitrose – such that, either way, the customer has to pay for the packet twice.

But it’s clear that the claim wasn’t being made tongue in cheek, because it’s come up again in the BHA’s more recent submission to DCMS ahead of the Government’s Levy determination. In that submission, the matter of whether foreign racing should be subject to Levy is included under the heading “Addressing the Loopholes”.  Get that: on the basis that a decade or so ago, British horseracing benefited from a Levy paid by UK betting operators on foreign racing, the fact that they are no longer, in the modern world, entitled to a share in profits for a sport run by someone else is termed a “loophole”. Surely it should be abundantly clear that it was the removal of that bizarre payment ten years ago that saw a loophole being closed.

The BHA has been arguing that the Levy is antiquated and needs to be replaced by a commercial mechanism which provides Racing with a “fair” return from betting. Ignoring again what “fair” might actually mean, the basis of the argument sounds to me to be a proposal to modernise the sport’s funding – an objective which is quite clearly completely inconsistent with getting paid for a sport put on by someone else.  I don’t know how many bookmakers out there are paying foreign racing jurisdictions for their product, but I know at least one which does because I was involved in the conversations which set the payments up; and I know, too, that racing bodies around the world are insisting that payments for their product be made to them. Racing is therefore arguing in favour of double taxation, and describing it as “modernisation” – an irony that will surely not be lost on anyone who takes a second to understand what is happening.

“Loopholes” it would seem, are the BHA’s subject of the moment. The other claim that jumped out at me from their submission was that the “severe” decline in the Levy since 2008 has been caused by various of them.

Forget for a moment the disingenuousness of this frequent repetition about a ‘severe decline’, even though the Levy Board is itself on record as stating that the exceptional 2007-08 Levy yield of £115m, was “a one off….as a result of some high rollers”. Citing the £115m number (as the BHA repeatedly does) as the benchmark against which all subsequent Levy yields are measured might be deemed to be playing with numbers, but we can ignore it for the moment. So, too, can we push aside the thought that that year’s sunny number should have been used, to steal the Chancellor’s phrase, to fix the roof. I’ve written about that in reply to a comment on a previous post.

Instead, let’s address what the reasons might be for this “severe” decline, because there are plenty of them: the disappearance of the high rollers referred to by the Levy Board (or indeed the fact that they may have won some of their money back); the impact of the recession, which has seen all sorts of numbers falling by 20% and more, which is a greater decline than this year’s Levy number is from the non-high-roller mean of around £95m; and the general decline in horseracing as a betting medium (as is true all over the world) would all be relevant factors – arguably, indeed, the most relevant factors of all.

But in the BHA’s world, none of them gets a look in. How could they, when they don’t allow the blame to be laid at the betting industry’s door? Far better for the BHA to cite its four Levy “loopholes” as the cause – all of which, of course, can: thresholds in betting shops; betting exchanges; offshore operators; and foreign racing. How wonderfully convenient! Except, M. Poirot, that nothing has changed since 2008 for three of these hypotheses: in 2008 thresholds existed, and both exchange customers and foreign racing were outside the Levy net.

Racing says that it “asks for no protection against the effects of the recession”. But at the same time it fails to recognise that the recession may have had an impact on consumer betting spend; and it blunders through the levy debate while completely ignoring the global trend of declining betting on horseracing and offering no modern solutions to address it. Worse than that, it looks for the reinstatement of something which was abolished a decade ago, and which will have no place in a commercial replacement to the Levy, and it calls it ‘modernisation’.  As we move into 2011, welcome to the BHA’s world.

Posted in Betfair, Betting industry, Regulation.

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Continuing the Discussion

  1. Tweets that mention Happy New Year | Mark Davies -- linked to this post on January 14, 2011

    […] This post was mentioned on Twitter by Paul Struthers, Mark Davies. Mark Davies said: New Year resolution broken. Welcome to the modern world, BHA style. Let's hope 2011 is less backward-looking generally. […]

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