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British Racing Levy Standoff Continues

Published: November 1, 2010 12:17 pm ET

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The ongoing saga regarding the British Horseracing Authority (BHA), the Association of British Bookmakers (ABB), and the British horse racing levy took another turn this past weekend. In light of the news, online gaming giant Betfair announced that it could be taking action of its own.

The BHA and ABB have been at odds over what will be the 50th horse racing levy 'scheme,' which will run from April 1, 2011 to March 31, 2012. The levy, a payment made by bookmakers for betting on UK horse racing, is the main funding mechanism for racing in Britain.

According to the United Kingdom Press Association, the deadline for a new deal between the BHA and the online bookmakers was Sunday, October 31, 2010 at midnight. A deal was not reached, and thus Jeremy Hunt, the government's Secretary of State for Culture, Olympics, Media and Sport, will determine a settlement.

The Financial Times has reported that for the 50th levy scheme, the BHA is seeking a payment of at least £130 million from the bookmaking industry and offshore companies wagering on United Kingdom horse racing. The BHA also states that certain users of betting exchanges –- mainly Betfair -– should pay a greater contribution to the Levy on the basis that they are effectively running a betting business through the exchanges.

The Financial Times article also cites ABB Chief Executive Patrick Nixon as saying that the racing industry's demand for a subsidy of at least £130 million was “wholly unrealistic” and that “racing has to move from its dependency on income support to a proper free-market commercial relationship with the betting industry, as it has with those others to whom it supplies its product." Nixon went on to say, “the levy is not a commercial mechanism and thus cannot attribute a commercial value to horseracing, a prerequisite for defining what the ‘fair return’ claimed by racing’s rulers actually means.”

In light of the deadline passing with no deal, City A.M. has reported that Betfair could leave the UK over the matter.

The City A.M. report cites Betfair Chief Executive David Yu as saying that he feels his company has been singled out by the BHA and that his company is "happy to be licensed and to pay sensible tax, but if we don’t see movement we’d have to consider what’s right for the business over the long term.”

The City A.M. article also explains that in the last couple of months two of Betfair’s biggest rivals, William Hill and Ladbrokes, have moved their online operations offshore where the horseracing levy doesn’t apply and where the gross profits tax, currently levied at 15 per cent, that all gambling firms are required to pay is also much lower.

(With files from United Kingdom Press Association, Financial Times and City A.M.)

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