2Description of the draft Order
8.Horseracing is the second largest sport in Great Britain, in terms of attendance, revenue generated, and the number of people employed in the industry.11 The industry supports more than 17,000 jobs in the economy, primarily in rural areas, and generates more than £300 million in tax revenue.12 The Government describes the UK’s position in the sport as ‘world-leading’13 and acknowledges the estimated £3.45 billion contribution the sport makes to the wider economy, with more than £1.1 billion of direct expenditure recorded in 2013.14
9.The Horseracing Betting Levy Board was established by the Betting Levy Act 1961 and continues to operate under the terms of the Betting, Gaming and Lotteries Act 1963 (‘the 1963 Act). It has a statutory duty to collect a levy from bookmakers engaged in the horseracing industry, and to apply the funds in pursuit of one or more of the following causes:
- the improvement of breeds of horses;
- the advancement or encouragement of veterinary science or veterinary education;
- the improvement of horseracing.15
Around 90 per cent of Levy funds are used for the improvement of horseracing, of which 70 per cent is used to contribute to prize money for horseracing (£48.43 million in 2016/17).16
10.The Horseracing Betting Levy Regulations 2017 (‘the 2017 regulations’) established a fixed levy of 10 per cent of leviable bet profits which exceed £500,000, ending the previous annual setting of the Levy via a Bookmakers’ Committee or by the Secretary of State when agreement between the Bookmakers’ Committee and the Levy Board could not be reached. The 2017 regulations also extended the coverage of the Levy to include bookmakers based offshore, who were not covered by the 1963 Act and had grown significantly since the advent of online gambling.17 In its explanatory memorandum to the 2017 regulations the Government confirmed these changes were the first phase of reform of the Levy and that abolition of the Board was intended to be enacted through a Legislative Reform Order.18
11.The draft Order proposes to transfer responsibility for the assessment, collection and enforcement of the Levy from the Levy Board to the Gambling Commission, a non-departmental public body also sponsored by the Department. The Commission is the statutory regulator for gambling across the United Kingdom.19 In making the case for this policy change and for the pursuance of a Legislative Reform Order, the Government argues the transfer of responsibility to the Gambling Commission will reduce administrative burdens on those businesses who currently pay and provide information to both the Levy Board and the Commission.20 The Government has not provided any assessment of potential financial savings that will be made as a result of this administrative change in either the explanatory document or the De Minimis Assessment, but claims that “[d]ue to the inherently uncertain nature of forecasts it is difficult to accurately predict exactly what the difference will be between [the Levy Board]’s annual cost and the annual cost for the Gambling Commission.”21
12.The draft Order proposes to remove responsibility for the expenditure and distribution of the Levy (described by the Government as ‘administering’) from the Levy Board and grant the Secretary of State powers to designate a new body for such a purpose. The draft Order will also grant the Secretary of State powers to suspend payments to the body, review its status and ultimately to remove its designation and appoint a new body if required. The designated body is required to represent one or more of the following groups:
i)persons involved in horse racing;
ii)persons involved in veterinary science;
iii)persons involved in veterinary education;
iv)persons involved in the breeding of horses;
and to command the confidence of all those groups.22 The Secretary of State may, but is not required to, consult these groups in their designation decision.23 The Government has indicated it is minded to designate a body being established by the racing industry,24 the Racing Authority.25 The Racing Authority currently exists in a shadow form, with a Chair and Members appointed by the industry.26 The existing Levy Board comprises two appointees of the Secretary of State, three appointees of the Jockey Club (currently held by the three members of the tripartite British racing group) and an appointee of the Association of British Bookmakers and Remote Gambling Association.27 Should the draft Order be made and the Racing Authority be designated, Government appointees and an appointee from the gambling industry would no longer be formally represented. This issue is considered later in the Committee’s report.28 As with the transfer of powers to the Gambling Commission, the Government has been unable to provide an accurate estimate of the difference in costs between the Levy Board and the new designated authority; however, a combination of the estimated costs for both the Gambling Commission and the Racing Authority gives an estimated annual saving of £240,000.29
13.If approved, the proposed reforms will take effect in April 2019. This would involve the closure of the Levy Board, the Horserace Betting Levy Appeal Tribunal for England and Wales and the Horserace Betting Levy Appeal Tribunal for Scotland, and remove Government involvement from decisions in relation to Levy application decisions.
11 Written evidence to the House of Lords Delegated Powers and Regulatory Reform Committee from the British Horseracing Authority, Racecourse Association and the Horsemen’s Group, Draft Legislative Reform (Horseracing Betting Levy) Order 2018, Thirty-Eighth Report of the Delegated Powers and Regulatory Reform Committee, Session 2017–19, p1. The Horseracing Betting Levy does not extend to Northern Ireland.
12 Q28 [Mims Davies MP], and Written evidence to the House of Lords Delegated Powers and Regulatory Reform Committee from the British Horseracing Authority, Racecourse Association and the Horsemen’s Group as above.
13 Q28 [Mims Davies MP], and Explanatory Document for the draft Legislative Reform (Horseracing Betting Levy) Order 2018, p4
14 Deloitte, Economic impact of British Racing for the British Horseracing Authority (11 June 2013), pp 1–2
15 Horseracing Betting Levy Board, Background and Statutory Responsibilities (accessed 26 October 2018)
16 Explanatory Document, p11 and Horseracing Betting Levy Board, Annual Report and Accounts 2016 - 17, HC 98, p13
20 As above.
23 As above.
24 Represented by the tripartite structure of the British Horseracing Authority, the Racecourse Association and the Horsemen’s Group.
25 Explanatory Document pp 7–8
26 “Racing Authority agreed by the sports’ leaders”, British Horseracing Authority Press Notice, 8 June 2018
27 Horseracing Betting Levy Board, Board Members (accessed 26 October 2018)
28 See Chapter 3, criterion F
Published: 7 December 2018