No agreement has been reached this evening on a 55th Levy Scheme for 2016/17, with the matter, therefore, referred to the Secretary of State Department for Culture, Media and Sport for determination.
This is a matter of deep regret for Racing, whose representatives have worked hard – and in a completely united manner – for a number of months to reach an arrangement with the Betting industry on an appropriate contribution from the digital betting market, which currently costs the sport around £30m a year owing to the long-standing deficiencies in our central funding mechanism.
The formal Levy process and the discussions with a number of digital betting operators were this years interlinked, with the sport’s representatives having to take a view on what the combined offer would mean for Levy Board income in the coming years. The proposals were rejected because they would see such crucial income to the sport continuing to decline from an already challengingly low level, despite Racing continuing to provide and represent an important seven-day-a-week betting product.
To assist the process, and in the absence of an offer from betting operators with days remaining until the statutory deadline Racing had this week made its own proposals to betting operators which were entirely fair and reasonable, with the digital element pitched at rates considerably below the current statutory rate for such betting, and the level contributed by Betfair in a commercial agreement, and Bet365 and others on a voluntary basis. We also offered a further discount on these rates to betting operators who signed up in advance of the deadline to try and assist a sensible agreement being reached by 31st October.
These rates, which would be accompanied by Authorised Betting Partner status for those signing up, were as follows:
We had set a number of key principles for an offer from betting operators to be accepted. These were:
- That any deal with a group of digital operators is based on a rate rather than a lump sum payment. A fixed lump sum payment, as initially offered, would have seen the effective rate reduce over the term of the deal.
- There needs to be transparency on what each operator is contributing. This would allow, at an appropriate rate, for Authorised Betting Partner status to be granted to individual participants, and justify a reduction in Betfair’s rate in the final year of its commercial deal, which Racing has been willing to accept as a consequence of such an arrangement.
- The rate would need to progress in the course of any multi-year deal, towards an intended target rate as consumers continue to switch from retail to remote betting. Otherwise, we would see a further decline in income despite betting activity increasing, albeit at lower margins in the digital market.
- No force majeure clauses or significant strings attached that are outside of Racing’s control. These have already punished the sport once with the £4.5m four-year Additional Voluntary Contribution arrangement having been terminated after just one such payment.
- A minimum guarantee underpinning the corresponding and complementary statutory Levy scheme. This has been an integral and critical part of recent Levy agreements.
- The principal discussions have in reality been between different betting operators – rather than directly between two mutually dependent industries – with the result being that the proposals represented the lowest common denominator.
- We do know that there are a number of betting operators interested in supporting the sport from digital betting activity, which we will actively pursue the Authorised Betting Partner model in the coming weeks.
- We appreciate the efforts made by a number of individuals within the betting industry in recent months, in particular, Mike O’Kane as Chairman of the Bookmakers’ Committee who has sought to bring operators together and link the sets of discussions. We would also like to thank Levy Board Chairman Paul Lee for his attempts to broker an agreement. We will continue our dialogue with Government, and hope that John Whittingdale, Secretary of State for Culture, Media and Sport, can help bring the parties together and ensure that its objectives are met.