Horse Racing: British Horse Racing dealt another blow; William Hill moves operations offshore
It’s been tough for British Horse racing lately. The Horseracing Betting Levy has been registering a regular fall in funds which constitutes the first link in a chain that threatens the sport in the UK. The drop in levy translates into dropping purses, which makes it more difficult to attract a larger field, which in turn fails to attract interest from fans.
At the heart of the problem are offshore telebetting operators. Outside the jurisdiction of British authorities, offshore betting competes with local bookmakers but enjoys distinct advantages. Firstly, they exist in a much more relaxed tax culture as compared to British bookmakers and they also don’t have to pay the levy. William Hill was among the many British bookmakers who have been asking authorities repeatedly to level the playing field. They have made it clear that they have no hopes of competing with offshore bookmakers. Offshore bookmakers have significantly lower costs and can give higher returns to their customers. Appeals from British bookmakers fell on deaf ears and William Hill has finally given up.
William Hill, the largest Bookmakers in the United Kingdom, announced that it would be closing its telebetting operation in the UK and moving it to Gibraltar to cut costs. In the year 2009, it paid £265 million in UK taxes and Levies. Following the move, William Hill would face around 3% tax on profit instead of the 15% tax, in addition to 10% levy, they were paying until now.
The British Horseracing Authority this year announced that 250 fixtures would be cut to compensate dropping levy funds. They also postponed the release of the fixture list in wake of insecurity concerning levy funds. William Hill’s decision to take its telebetting operations offshore further reduces the funds available with the levy board by an estimated £2 - £3 million. The BHA’s Chairman, Paul Roy, criticized William Hill in the strongest words. “It shows a total disregard for racing and the levy process that has been agreed by all parties,” he said.
William Hill defended the move, saying that they have been paying more in levies and taxes than the profits they have been making. William Hill’s chief executive, Ralph Topping, said that the betting exchanged based outside the jurisdiction of British Authorities had fundamentally altered the nature of betting in UK, and the British government had failed to register a timely response to the changing situation. He reiterated William Hill’s long standing demand that the authorities extract levies from offshore bookmakers who are competing in British markets and taking bets on British races. “Do we have to close shops before others accept that our UK business is under unfair pressure?”
Legislators appear helpless, and the only hope for horse racing would be self regulation. What that means is that if horse racing it to survive, one would have to see counter intuitive business practices. If bettors opt for British based exchanges over offshore exchanges even though they could get more return on their money from offshore exchanges, horse racing could see a rise in levies. Racecourses, too, need to look beyond the immediate. By accepting sponsorships from offshore exchanges, the racecourses help steer customers away from Levy paying bookmakers. In the long run, the cash they receive would cost them a lot more than what they get.
There are limited possibilities. Either legislators somehow stop offshore bookmakers from taking bets on British Racing, and punters place their money in exchanges that pay the Levy, or Horse Racing in Britain slowly fades away. The present levy-based system is simply unsustainable.
William Hill’s Chairman joined the list of prominent horse racing figures to express his distrust of levy based horse racing. He said that all parties involved in horse racing should have been made to pay the levies, adding, “This doesn't change the fact that the Levy system is no longer fit for purpose and must be replaced by a realistic commercial relationship between betting and racing.”
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