Funding of horse racing is too closely aligned with gambling profits Who would have thought that an analogy about chaos theory: “If a butterfly flaps its wings in the Amazonian rain forest, it can change the weather half a world away” would resonate so well with the situation horse racing finds itself in today? Last week the British Government announced a rather modest 5% hike in the tax rate on slot machines. It turns out that this apparently insignificant budget measure is predicted to have a dramatic impact on the future finances of horse racing, not only across Britain, but also in Ireland. This increase in tax on one element of the vast suite of gambling products available is expected to tip a large percentage of betting offices across Britain into the red. British betting shops apparently rely so heavily on this one income stream, that this additional 5% tax could render up to 1,000 of the shops unviable. If that does happen it will have a massive impact on horse racing. Each of these betting shops pay around £25,000 annually for TV pictures of horse racing and much of this money flows back into the sport on both sides of the Irish Sea through Media Rights deals with the picture providers. The British horse racing industry is also heavily reliant on the Horserace Betting Levy payments made by bookmakers on their profits. These payments not only fund the regulatory functions of the sport, but also contribute significantly to race prize money. If a high number of betting shops close, or are trading at a loss, it will inevitably reduce the size of the Betting Levy paid by the bookmakers. Over the past thirty years horse racing has become increasingly dependent on gambling related revenues and the sport will struggle to make ends meet if that source of income reduces. The bookies have been providing easy money for horse racing. Not just through Media Rights and the Betting Levy in Britain, but also through major sponsorship deals with Racecourses and equally lucrative sponsorship arrangements with many racehorse trainers and jockeys. Almost everyone working within racing has been benefitting in some way or another from the profits the bookies are making. In order to keep this tap flowing over the years horse racing has changed its focus. There was a time when racecourse attendances were the tracks’ primary source of income and number one priority. Nowadays the paying public is a secondary consideration at best. Quantity over quality has been the catchword for race planners in recent decades as the fixture lists have swelled beyond recognition. Everything from the so called ‘industry days’ to the proliferation of low-grade all weather fixtures are simply about feeding the insatiable appetite of the betting operators and have nothing to do with attracting an audience. Through Media Rights payments Racecourses can make handsome profits without a single paying customer turning up. Even the new all-weather facility being built at Tipperary is an example of how little interest there is in attracting a physical audience. This track is being strategically placed in a region to attract runners rather than racegoers. “Within a 90-minute drive of 60% of Ireland’s horse trainers.” The current Media Rights deal in Ireland runs up to the end of 2028. It is now hard to envisage a scenario whereby the current level of payments coming into the sport will be maintained beyond that point. The big questions then will be how many racecourses will be willing to stage potentially loss-making fixtures? Or will prize money levels have to be slashed to keep the show on the road? Less fixtures will inevitably mean less gambling related revenue coming back in the sport. Lower prize money would see fewer horses in training. Either way the future doesn’t look particularly bright under the current funding model. Finally, my blog last week about the Foal Levy appears to have struck a chord with many small breeders up and down the country. I was inundated with calls and messages from individual breeders either unhappy with the mechanics of the Levy or querying how the money collected is then allocated and spent. It has been fifteen years since the Government last looked at the statutory instrument of the Foal Levy. Perhaps the time has come for them to have another look?
