The latest instalment in the series that is ‘things that could really damage horse racing’ is seemingly the proposal to introduce a higher tax on sports betting, which includes horse racing.

Thinking behind this has come on the back of a consultation by the UK Government, looking at how the entire betting industry is currently taxed.

For those not familiar with all of this, racing and other sports betting are currently taxed in the UK at 15%. This is a lower rate than the rest of the gambling industry, with others, including casino gaming, all taxed at 21%.

The idea that will be looked at by the UK Government is to bring everything into line and put it all at the higher rate of 21%.

Previously, we’ve seen signs from the government that they wanted racing and bookmakers to agree a new levy deal, but now it seems that’s on hold, with tax being looked at first as a quicker way for the government to make money.

Based on current rates and projections forward, should the rise of 6% happen, and operators pay 21% in tax on their horse racing earnings, it would cost the industry around £66 million. Of course, with how racing is taxed and how the funding works with the sport, this is money that would be going to pay taxes to the government, rather than being pumped back into racing.

The Circle of Racing Would be Pushed to the Limit

The way in which the horse racing industry works is different to other sports. There’s not a huge abundance of companies looking to sponsor races or put money into racing in other ways.

The BHA have been quick to urge the government to reconsider the 21% idea that’s currently being discussed.

When you look at the major meetings and races we have, the vast majority are sponsored by bookmakers. I’d guess that if they were to pay an additional £66 million in tax collectively, sponsorship would be the first thing to go.

Next? We’d be looking at operators cutting their costs, increasing their margins, or both. With an additional £66 million needing to be paid, I think we can kiss goodbye to things such as best odds guaranteed, first past the post, and any other offers you get.

This would then move to prices. If bookmakers decide the best way to move forward is to take a larger cut, then odds margins would be further in their favour, and the deal for punters would be worse.

When you put all of this together, it clearly shows that the relationship between betting and horse racing, from a financial point of view, is so unique. If football betting were taxed at 21%, you might not even notice.

Some brands would cut promotions or increase margins, but the change to the finances of football would be almost non-existent. But with racing, the changes could be catastrophic.

It’s now when racing has to come together. Everyone has their own individual interests, from courses looking to make money, to TV rights deals, broadcasters and of course, those who work in racing.

But the fractions we have cannot look after themselves. Instead, everyone must pull in the same direction and do all they can to explain just how different racing is and what a unique situation this is.

Do this, and racing has a chance to either keep things at 15% or create a deal specific for racing, which is something I’ve thought about for a long time. The answer is complex, so let’s build something that showcases this. We’re not talking about a one-size-fits-all taxation system, as that cannot work.

Given the U-turns we’ve seen this year from the government, it’s only a matter of time before they pull the plug on something in order to bank some much-needed income. Let’s make sure that’s not racing-related at all.