Bookmaker input is key to boost revenue
I have lost count of the number of times that British racing is looked at through comparison with other jurisdictions. Often these comparisons are meaningless given the different laws around bookmaking, tax, ownership and access. However, one element does drive all the industries and that is revenue generated by betting on the product. Ticket sales, fan engagement, hospitality and sponsorship obviously form a major part of the industry’s profit and loss account, but at the heart of the business it’s the medium of betting that drives the worldwide revenues.
In Australia, so often quoted as the model to be envious of, two very interesting developments have recently taken place. A fall in gambling revenues, following the post Covid spike, has led Racing Victoria to announce significant prize-money cuts. What is interesting is that the cuts have been aimed at the so-called better end of the racing calendar. Group 1 races have been targeted to reduce their prize pots significantly, as have a series of lesser Group races. The so-called grassroots have been largely left alone.
Even more intriguing is the proposal to add a tenth race to fixtures; it is forecast that this extra race will add $5 million to net gambling revenues and provide extra prize-money to compensate for some of the planned reductions.
What is interesting is that the two main pillars of the British racing strategy – focusing on fewer fixtures and targeting the better meetings with more funding – is at odds with the approach being taken by Racing Victoria
in its own efforts to tackle a financial crisis. The strategy work carried out by the new Commercial Committee has been heavily influenced by betting data and bookmaker input, so we can be fairly confident that the right buttons are going to be pressed, but it does pose a question that will not be answered until the two- year trial has been concluded.
British racing’s own finances are firmly linked to the levy. A better than forecast outcome for the financial year just ended of £99 million is obviously welcome, however in real terms with inflation running at 10% the levy return since 2017 has not met expectations. As part of the process around the publication of the gambling white paper, the government has made a series of welcome commitments to the levy review, which is due to take place next year.
Whilst calling for responses from the industry and bookmakers within a very short timeframe, having pretty much done nothing for three years, we now, as the industry, have the chance to make a significant and long-lasting change to a fundamental financing tool.
There has been much talk over the last few years of a possible switch in the way the levy is collected from gross win to turnover. The subject is complex but what is vital is that we have a levy mechanism that is in line with the trends in betting habits. We also need to close the overseas betting hole that currently means that we lose something in the region of £25m on bets placed on overseas racing. There is a lot of work to be done in a short space of time to ensure that what we submit to government has the best chance of making it into law before the next election.
One of the issues facing racing participants and the BHA is that whilst the bookmakers invest and pay for our product in different ways through media right payments, sponsorship and of course levy contributions, racing itself only really has a say on the levy finances. This age-old issue will again come into focus when the industry unites behind a view of what we want the new levy system to look like.
Royal Ascot was a quite brilliant success and congratulations to everyone at the racecourse for putting on such a wonderful week. The weather held, there were no disruptions, the 35 races were won by 25 individual trainers, King Charles had a winner, as did sole owners and syndicates, and of course Frankie Dettori was at his brilliant best in his final ever appearance at the Royal meeting. The BHA data pack continues to offer encouragement and with the summer in full swing we can, and should, afford ourselves some optimism.
Bookmaker input key in bid to boost revenue
“It is vital that we have a levy mechanism that is in line with the trends in