In the United Kingdom, as with many countries around the world, horse racing is an incredibly popular sport. From races like the Grand National and the Cheltenham Gold Cup through to meetings like Royal Ascot and Glorious Goodwood, people turn up at the various racecourses around the country hoping to watch some world-class racing.
The problem is that that might not be the case for much longer, given the extent to which horse racing as an industry has a funding problem. Whilst the biggest races and meetings are likely to do ok, there are plenty of the smaller ones that might start to struggle. The question is: why?
How Racing Gets its Funding
As part of the Betting Levy Act of 1961, the Horserace Betting Levy Board was formed. The Board operates in accordance with the provisions that were set out in the Betting, Gaming and Lotteries Act of 1963. This non-departmental public body is sponsored by the Department for Culture, Media and Sport. Whereas some non-departmental public bodies recieve funding from the government, that Is not the case with the Horserace Betting Levy Board. Instead, it is required by the Act that formed it to collect a statutory levy from the bookmakers that take bets on the Horse racing business, both at the courses and online.
The Horse and Greyhound Racing Fund is funded by the Bookmaker’s Levy (ie Betting Tax). It is NOT funded from general taxation.
If you complain of “our taxes” going to horse and greyhound racing and you’re not a bookmaker, then you are spreading misinformation.
— Conor Power (@SuirThing) December 4, 2019
This Levy represents the largest form of income that the Horserace Betting Levy Board, and by extension horse racing itself, receives. The majority of that income comes from off-course betting, being collected from bookmakers as a percentage of their gross profits from horse racing bets. The vast majority of that money is then sent straight back into horse racing, in direct support of the industry. On that front, the Horserace Betting Levy Board is one of the most important contributors of finances to horse racing as an industry. The Board has statutory objectives to raise funds in order to help with the following:
- -Improving breeds of horses
- -Advancing veterinary science and education
- -Improve horse racing overall
The British horse racing industry’s income is known as a three stream model. Around 35% of the funding comes from the Levy, including the likes of the Tote and fixed-odds betting. The next 15% is made up of entry fees paid by owners, with the remaining 50% offered by racecourses as executive contributions.
They are funded by race goers, who pay around half of a track’s income through ticket prices and buying the likes of food and drink, whilst media rights and sponsorships make up the rest of the income from racecourses. There is a frustration within the industry about the lack of transparency around the income from courses.
Why is There a Problem?
Each year, about 90% of the Levy is distributed for the improvement of horse racing as a sport. Only football is more popular than horse racing in the United Kingdom, both in terms of attendance and the revenues that it generates. That being said, the attendance figures are declining and it is causing issues for the sport.
In 2019, around 5.6 million people attended more than 1,500 individual race meetings around the UK. The sport was estimated to have generated around £4.1 billion in income, both direct and indirect. Much of that was believed to be in rural areas, with about 20,000 people employed thanks to the world of horse racing.
@raceday.rtv How much does it cost for a bookmakers ‘pitch’ at the races? 💰 🐴 #Raceday #GoodwoodRaces #HorseRacing
The simple fact of the matter is that horse racing gets the vast majority of its funding from betting. As the government looks to impose things on the betting industry that is going to limit how much people can bet, owing to the likes of Affordability Checks, that will have an impact on the horse racing industry.
The Tory government of Boris Johnson intimated that the explosion of the likes of mobile phones and tablets and the associated ability to place bets anytime and anywhere meant that the temptation had moved past a ‘popular pastime’ for some and has instead become an addiction that was dangerous for many.
Poor Prize Money Means Lower Quality Races
When a sport is as dependent on the gambling industry as horse racing is, you need to be able to give the people that are going to do the gambling some high-quality racing. Unfortunately, Britain is being left behind the rest of the world in terms of the prize money that it is offering.
In 2019, for example, expenditure by owners amounted to £621 million, according to the Racecourse Association, whilst the prize money on offer was just £161 million in total. It meant that returns would have to increase severely in order to simply cover the costs that the owners are putting into the industry in the training and keeping of the horses.
The result, somewhat inevitably, was that owners have started to scale back their investments and trainers, jockeys and breeders have started to look further afield. Project Enable, a commercial review of horse racing as a sport, discovered that the average prize money in Britain was lower than in Ireland, Japan, Australia, France, Hong Kong and the United States of America.
The fact that prize money in Ireland is significantly more than the UK is particularly problematic, given the close proximity of the country. The Irish government gives money to thr industry, resulting in an increase in victories for Irish horses and trainers.
What Next?
One of the biggest issues facing the horse racing industry in terms of funding is that there are numerous obstacles in the way to stop the industry in the United Kingdom benefitting from the same sort of funding that is seen in other countries. Some of them are legal roadblocks, whilst others are political.
If the government began to give money to horse racing, for example, then other sports would no doubt demand similar payments. Meanwhile, counties like Australia and France see the horse racing industry benefit hugely from Tote payments, but the betting industry in the UK doesn’t work in a way that could see that happen.
Lisa Nandy MP @lisanandy has been appointed Secretary of State for Culture, Media and Sport @DCMS. pic.twitter.com/aQdf8CuNQF
— UK Prime Minister (@10DowningStreet) July 5, 2024
That being said, Lisa Nandy is the new Culture Secretary under Keir Starmer’s Labour government and is from Wigan. Wigan, of course, is the home of the Tote, with Nandy reportedly being sympathetic to the horse racing industry and keen to ensure its improvement. When her appointment to the DCMS was confirmed, both the racing and the betting industry were united in their praise of the decision to give her the role.
Given the fact that she will make decisions that will impact both racing and gambling, it is perhaps not all that surprising that the industries that she is most sympathetic towards are happy to see she will have some influence.