Wednesday 2nd November 2011

Statement by Government Appointed Members on Agreement of Levy Scheme for 2012/13

The three Government Appointed Members (GAMs) of the Horserace Betting Levy Board – Paul Lee, Paul Darling and Paul Bolt – today released a statement commenting on the agreement of the terms of the 51st Levy Scheme (1st April 2012 to 31st March 2013). Recommendations from the Bookmakers’ Committee were approved by the Board by a majority vote.

A separate press release issued by the Levy Board yesterday set out the details of the 51st Levy Scheme, which is estimated by the Bookmakers’ Committee to yield £65.9m. The three largest bookmakers - William Hill, Ladbrokes and Gala Coral - have agreed to guarantee that their combined contribution in the 51st Levy Scheme period will be not less than £45m. In addition, Betfair has undertaken to provide £6.5m. Hence, the Bookmakers’ Committee’s aggregate estimated yield of the 51st Levy Scheme is £72.4m.

It is estimated by the Bookmakers’ Committee that, on latest assumptions, the current (50th) Levy Scheme will yield £65.4m. In addition, Betfair has already paid £6m to the Levy Board. Hence, the Bookmakers’ Committee’s aggregate estimated yield of the 50th Levy Scheme is £71.4m.

Statement by the GAMs

1. The total yield in the 51st Levy Scheme period is estimated by the Bookmakers’ Committee to show a 22% increase compared to the 49th Scheme’s £59.5m. The terms of the 51st Levy Scheme also build on the progress made in the 50th Levy Scheme. We believe that this deal is fair to Racing and Betting at a time of significantly enhanced revenues through the sale of media rights.

2. An additional benefit of the agreement is that the risks to the Board’s income are much reduced because of the undertakings provided by the three biggest bookmakers and by Betfair, which together guarantee £51.5m. The effect of these undertakings is to transfer the burden of risk to those betting operators. It is the first time that this has occurred.

3. The further changes to thresholds relief for operators with 100 or fewer Licensed Betting Offices are another example of the modernisation that is taking place within the Levy.

4. At a time of uncertainty in Racing, and given that Judicial Review proceedings are underway in respect of the Board’s decision on whether users of betting exchanges are leviable, the avoidance of an unwelcome referral for Determination to the Secretary of State also prevents potentially hundreds of thousands of pounds being spent by the Levy Board, Racing and bookmakers on the costs of a determination process, which can now instead be allocated to prize money.

5. Levy Board expenditure of some £65m in 2012, compared to £60m in 2011, should ensure that the Fixture List can now be settled speedily and contain a total number of fixtures, in the most mutually beneficial slots, which promote Levy generation and improve the quality of racing.

6. The sum that the Board will provide to prize money in 2012 will be greater than the £34m in 2011, and about £10m more than the amount to which the Board could have committed at this stage if the Scheme had been referred to Government for determination. The Board’s contribution to prize money could increase by up to 20% in 2012.

7. We consider that the recommendations of the Bookmakers’ Committee, assessed as a whole package, represent a reasonable balance between Racing’s needs and bookmakers’ capacity to pay. Taking into account current circumstances affecting both industries, and considering those anticipated in the future, the agreement will provide increased certainty for all parties, which is particularly welcome.

8. The deal as a whole represents a yield estimated by the Bookmakers’ Committee to exceed that which would be generated by a rollover of the 50th Scheme. All in all, we consider that the deal is fair and provides real benefits to all sides.