Gambling, which funds racing, is likely to lose around £1.6 billion a year from 2027
It turns out that you really can fool all the people, all the time — if those people run British horseracing.
In yesterday’s Budget, Rachel Reeves spared racing from the increase in general betting duty and remote gaming duty which she imposed on gambling firms. The former, which covers online casino games like roulette, was nearly doubled from 21 per cent from next April to 40 per cent. As for the latter, it will stay at 15 per cent in betting shops and for bets on racing placed online. But for other sports, such as football, it will increase to 25 per cent from April 2027 for online bets.
The exemption of racing from these rises has been hailed by the British Horseracing Authority as a triumph for its “Axe the Racing Tax” lobbying campaign. The editor of the Racing Post writes today that racing has “dodged a bullet”. But a more accurate description would be that instead of being shot in the front of the head, racing has been shot in the back. Yesterday was no sort of triumph. It was a dark day for racing.
In my Turf Account columns in The Critic I have sought to highlight and explain the pincer movement that has been coming after racing. On one side has been a coalition of those who see gambling (and thus racing) as immoral and those who view it as a pathology. To the latter, gambling is a public health harm which needs to be treated — in other words, destroyed. The other side of this pincer movement comprises the likes of Gordon Brown, who have campaigned for taxes on gambling to be hiked in order to fund higher welfare payments. The former PM argued that extra revenue from such a hike should be used to pay for scrapping the two-child benefit, which is what Reeves announced yesterday.
Because racing has been exempted from direct increases in tax, the powers that be in the sport think they have won and that their lobbying worked. They are deluded. What yesterday actually marked was — unless there are dramatic changes, imminently, the beginning of the end for racing.
Racing is funded by betting, and thus by gambling firms. The Office of Budget Responsibility (OBR) report yesterday predicts that the increase in gambling taxes will raise £1.1 billion by 2029-30. Overall, the industry is likely to lose around £1.6 billion a year from 2027 (the balance is accounted for by reduced demand and betting moving to the black market). This is of immediate and direct concern to racing. The Betting Levy (taken from gambling firms’ profits) contributes £108 million to the sport. In total betting companies contribute some £350 million a year to racing in Levy, media rights and sponsorship deals.
Racing is about to enter its own version of the wider economic doom loop brought about by the government. As firms have to pay more tax they will immediately start to scale back on sponsorship, which will make racing less attractive, so there will be even smaller fields than there are now (this is already a big problem) and so betting will become less attractive. As the OBR puts it: “We estimate that operators will seek to pass through around 90 per cent of the duty increases by increasing prices or reducing payouts, leading to a reduction in consumer demand.” Add to that a contraction in the number of high street betting shops and the less competitive odds that will also follow and there will be fewer bets — which means the levy contribution will fall, which will make racing a less attractive proposition, and so on…
To make this even worse, the already rising share of the betting market taken by unregulated black market bookies which, of course, pay no tax and make no contribution to the Levy, will be turbocharged as they will be able to offer far more competitive odds and bets than licensed companies.
For all Reeves’ claims to be protecting racing, yesterday she fired the starting gun on the collapse of a sport which employs over 85,000 people and contributes £4 billion a year to the economy. It’s over.
