Viscount Astor
Main Page: Viscount Astor (Conservative - Excepted Hereditary)
Viscount Astor
To ask Her Majesty’s Government what progress has been made towards the introduction of the Horserace Betting Right.
Viscount Astor (Con)
My Lords, since I put down this Question for Short Debate, events have moved on and the Government have proposed an extension of the levy rather than their original proposed racing right. Much has to be done to succeed finally in bringing a long-term funding solution for racing but it is worth reminding your Lordships that a year ago, the Government proposed the racing right. It was, if one can call it this in Civil Service terms, a bold move which almost immediately ran into opposition from the entire betting industry.
The scene had been set earlier when my noble friend Lord Gardiner of Kimble accepted my amendment to the Gambling (Licensing and Advertising) Act 2014—an amendment originally blocked in the Commons when it was moved there—to extend the right to claim levy payments from bookmakers who had moved their operations overseas. Racing was set to lose about £33 million a year in levy payments but the Government have not yet used this power. As I said, their proposal ran into almost total opposition mainly because the bookmakers feared that if the principle was accepted, other sports would want the same treatment. The Government had to think again and in March announced a new levy scheme.
One cannot blame the bookmakers for inventing the most tax-efficient and profitable system for themselves but to protect the punters and problem gamblers betting on UK racing, it has to be regulated in this country. While the levy is only a small share of the overall turnover of racing—less than 7%—it is a vital part of racing’s income. The levy was running at about £70 million a year, down from the highs of about £100 million, but was forecast to fall to under £50 million. It is fair to ask, as the bookmakers have asked, why this could not be made up by increasing media rights payments. The answer is actually quite simple: most online operators, in what is after all the fastest-growing sector of the market, do not provide television coverage for their customers.
Racing has often been divided in the past but it has come together and the majority of the major courses have agreed an authorised betting partner status, whereby bookmakers who do not contribute to the levy from their overseas operations are not allowed to sponsor races. Racing UK, the television subscription channel, followed suit and announced that it would not renew contracts for on-screen advertising and sponsorship for those firms which had not signed up to the betting partner scheme. Critics prophesied that Cheltenham would be without a major sponsor but that did not happen. New sponsors were found and the festival was a great success. The bookmaking industry complained only because too many favourites won. Of course, when this new plan is implemented this will not be necessary, as under it, all will contribute. Racing has always had the power to influence events. I suppose that an even simpler solution would be for owners and trainers not to enter their horses in races sponsored by bookmakers who do not contribute, but that is probably too much to expect.
There are, if one can use a racing analogy, a number of hurdles to jump and questions that need to be answered. I am sure that the Minister will provide some detail this evening. All British bookmakers betting on British racing, based onshore or offshore, will be part of the scheme and it will no longer be worthwhile to export bookmaking jobs abroad. More importantly, a fair return will need to be put in place from all gambling operators who take bets on British racing. Will that include bets taken by remote operators on British racing but put on from somewhere totally different in the world? There will have to be a separate system, as there is now, for on-course operators. The big questions that bookmakers and those in racing want to know the answers to are: how will the payable rate be set, and how will it be enforced on overseas operators? Will it be subject to an annual negotiation or set for a number of years? How will a fair return be assessed? Will it be on turnover rather than a share of the bookmakers’ gross profits? How will the proposed VAT be set and what will it include? Will it, for example, include advertising?
The money under this new scheme will go to the Horserace Betting Levy Board and then be passed to a new racing authority, which will be responsible for decisions on how the money will be spent. Can my noble friend the Minister say how this body will be set up? Will it be statutory or an entirely independent body? I understand that to bring in the new scheme, the changes required will need secondary legislation to the Gambling Act 2014. Perhaps my noble friend can give your Lordships some details of what will be required. What role, if any, will the bookmakers’ committee have in the future, particularly on multiplatform betting?
The next hurdle will be the European Commission. The new scheme, although based on an existing scheme, will require state aid approval as was done for the French levy. The levy has not been subject to an assessment so far under state aid, as it originated prior to this country joining the EU. Perhaps my noble friend the Minister can explain why it is necessary when what is proposed is really only a variation on the present levy scheme. Why is legislation and approval from the EU necessary? If approval is required and there are no issues, responses could be given in two months but I am sure there will be objections from some remote gambling operators. That would then extend the process, while the European Commission’s final decision is subject to review by the European courts. Some bookmakers have produced legal advice, which I know we will hear of this evening, saying that this cannot succeed. Others differ but, as those of us involved in debating the issues around racing know, if they are paid enough lawyers can produce almost any review that the bookmakers or anybody else wish to have. They will satisfy any criteria if they try hard enough.
One should congratulate the Government. This proposal will benefit racing, protect punters, stop the flow of jobs and tax revenue going abroad and, in the long term, be good for the whole industry. Racing is a major industry, providing work for more than 86,000 people, contributing £3.5 billion to the economy and generating £10 billion in betting income. So what is missing from the Government’s proposal? Perhaps they will consider this: racing needs to ensure that standard betting data are available for all. We also need to know what the dispute mechanism will be. As we have seen in the press, internet bookmakers are quite prone to cancelling winning bets.
The racing industry and the bookmaking industry are a partnership—not always a happy partnership, but a necessary one—and I am glad that the Association of British Bookmakers has welcomed the Government’s announcement. It is a major step forward for the industry and racing to work together going ahead. However, betting is not just about racing, as it allows bookmakers to cross-sell other products. Each cannot survive without the other, and these reforms can benefit both. I look forward to my noble friend the Minister’s response.