The risks to British racing from the government's gambling review, the rising cost of living and concerns about the sport's competitiveness have been highlighted in the Levy Board's annual report published on Feb. 2.
Although the levy yield for the year to the end of March 2022 returned to pre-COVID levels, there was a warning there were more immediate threats to that figure than the potential for it to rise. The board, along with other racing stakeholders, is waiting for the government to publish its long-delayed gambling review white paper, which is expected to contain proposals for affordability checks on punters.
Bookmakers pay a 10% share of their gross profits on British racing to the levy, British racing's central funding system, which would be hit should punters be put off betting or head to the black market due to intrusive affordability checks. The levy yield for 2021-22 came to £97.6 million, a marked increase on the previous year's figure of £82 million when no racing took place for 10 weeks due to COVID.
The 2019-20 yield was £98 million and Levy Board chief executive Alan Delmonte said in his statement it might be assumed that a figure of around £95 million to £100 million could now be considered the norm for the levy.
However, he added: "While this would seem a reasonable assumption, there may be more immediate threats to this figure than opportunities for it to rise. Among these is a deteriorating macroeconomic picture and another is the overall competitiveness of races. There were some well-publicized issues around small field sizes and uncompetitive races in the first quarter of 2022, which continued in the second quarter, and the challenges in solving these problems are uppermost in the minds of racing's key organizations."
Delmonte said the current levy year had received an early boost with the 50-1 success of Noble Yeats in the Grand National but warned: "This has masked weaker results elsewhere that leave underlying concerns about competitiveness."
Levy Board chairman Paul Darling said in his statement that the impact of the gambling review was a further major factor for it to consider. He said: "At the time of writing the paper has not been published. When it is, we will make an assessment of what it could mean for the income available for investment into racing and will convey to the government our views about the potential impact of the proposals."
Darling added: "The cost of living challenges, the gambling review, and ongoing concerns about British racing's competitiveness, including race field sizes are risks for the organization and for the sector more widely."
Total income for the year was £100.6 million, including a £3 million contribution from the Racing Foundation, while total expenditure was £113.9 million, a figure including additional grants for prize money and regulation and integrity made possible by the receipt of a £21.52 million loan under the government's Sport Survival Package. Repayments on that loan start this year.
Delmonte said: "It will be necessary for HBLB to return to break-even budgets in the near future, having incurred deficits of £14.2 million in 2020-21 and £13.6 million in 2021-22. The underlying HBLB financial position at the end of 2021-22, with reserves of £29 million, remained sound."
British racing's leaders are in the midst of work on a long-term strategy for the sport and Darling said it would be likely to affect how the levy is distributed in the future.
He added: "We look forward to seeing the outcomes and indeed in participating in the process where appropriate, respecting the need to get the balance right between being at one level removed from the day-to-day activities of racing and betting but on the other encouraging a strong and involved relationship between the parties."
