Culture Secretary Jeremy Hunt has today set the terms of the Horserace Betting Levy Scheme for 2011/12.
The Government is responsible for determining the 50th Levy Scheme after the parties involved failed to reach agreement by the end of October last year.
Mr Hunt believes that the reasonable estimated yield should be in the range of £73.7 million to £80.8 million in line with the Government-Appointed Members of the Horserace Betting Levy Board’s options. To achieve this, a number of changes will be made from the terms of the 49th Scheme - the headline rate of levy will increase from 10 to 10.75 per cent, and the threshold level under which betting shops pay a reduced rate of levy will come down from £88,740 to £50,000.
Despite a suggestion by the Government-appointed Members, there will be no change to the scheme in relation to foreign racing. As the Levy supports British horseracing it has been decided to collect it only in relation to bets on those races that take place in England, Scotland and Wales.
Mr Hunt’s decision takes account of submissions from both the racing and bookmaking industries together with advice from the Government-Appointed Members of the Horserace Betting Levy Board.
Jeremy Hunt said: “It is really disappointing that two important industries have been unable to come to a sensible commercial agreement. I have tried to be fair by listening to the advice of the Independent members of the Levy Board and I will continue to be guided by their advice in future years until what should be a straightforward commercial negotiation can be taken permanently out of the hands of Ministers.
“I am grateful to the Government-Appointed Members of the Horserace Betting Levy Board and both interested parties for their submissions. I have now asked the Horserace Betting Levy Board to finalise the operational details of the scheme as a matter of urgency”.
The annual scheme is a levy on the profits of bookmakers from betting on British horseracing, and goes towards funding horseracing - for instance through integrity services, veterinary science, prize money, training initiatives and breeding programmes.
The increase in headline rate to 10.75 per cent will apply to telephone and internet betting operators (including betting exchanges) as well as Licensed Betting Offices.
For bookmakers who derive their gross profit from spread betting businesses the levy will be set at 2.15 per cent of such gross profit where it arises from British horseracing. For bookmakers taking bets at the racecourse the flat rate annual fee will increase in line with RPI to £210, whereas for those bookmakers who solely stand at point-to-point, harness racing or trotting events the new fee will be £166.
Notes to Editors
The process was as follows:
* The Secretary of State wrote to the Government Appointed Members (GAMs) of the Levy Board on 10 November asking for their independent recommendation by the end of November as to what the terms of the 50th Levy Scheme should be, having taken into account all relevant submissions from the parties. * The Bookmakers' Committee and the Levy Board members representing British Horseracing were then given until the beginning of January to provide the Secretary of State with their own submissions. These submissions, as well as the recommendation of the GAMs, have been published on the DCMS website. * The Secretary of State considered the parties' submissions alongside that of the GAMs before making his determination.
The Secretary of State is writing to the GAMs, British Horseracing Authority and the Bookmakers Committee to thank them for their submissions and to explain his decision in more detail.
John Penrose, Minister for Tourism and Heritage with responsibility for horse racing has had no role in the decision making process to determine the 50th Levy scheme in order to avoid a conflict of interest.
The Government’s separate plans for longer-term reform of the Levy will be announced soon.
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