It was announced that the UK racing officials have rejected a levy offer, put forward by four leading bookmakers – William Hill, Coral, Ladbrokes and Betfred. The offer was related to their online and land-based business contracts that are due to expire in 2019.
All four operators have refused to give their consent to the authorised betting partner policy. According to the clauses it contains, operators are eligible for different privileges if they agree to provide financial aid to the racing industry. However, the funds they contribute should be generated from their offshore online operations that are currently not subject to taxes.
Back in the fall of 2015, bookmakers offered to contribute 5% of their offshore revenue, but the racing authorities were unwilling to accept these terms and the negotiations were brought to a standstill.
In February 2016, the debates were resumed, but a few weeks later, the government announced the upcoming changes in the levy system, so the negotiations collapsed once again.
However, last month the four bookmakers proposed an offer with a three-year validity. They offered a 5% of their offshore gross profits along with 10.75% from retail in 2016-2017. Then, the percentage for the next two years is decreased to a contribution of 7.5% from both online and retail businesses.
According to the bookmakers’ representatives, if racing authorities had accepted the offer, that would have provided the sector and the Levy Board with the sought stability as UK government might not be able to meet the deadline for levy replacement.
Mike O’Kane, a Ladbrokes’ Business Director, commented on the matter and confirmed that the timetable set by the government was really ambitious and added that the bookmaker’s aim was to aid transition, especially at a time when so many legislative issues are yet to be resolved.
Will Lambe, British Horseracing Authority Director of Corporate Affairs, also expressed his opinion and said that no public discussions were to be held. Yet, he reassured all affected parties that BHA members were committed to achieving interim arrangements before the new levy regulations come into force.
He also added that BHA was pleased to work in collaboration with three of the most prominent betting operators that realize the mutual benefits of that partnership. In conclusion, he said that the government position about the levy replacement was clear and the soon-to-be-implemented changes were aimed at restoring the funds that have been lost due to offshore activities.
