Britain Announces Proposed Levy Legislation for Horse Racing

Written By Janice Doughtrey

According to several sources, the UK government has announced a draft version of proposed regulations entitled “The Horserace Betting Levy Regulations 2017.” It is expected that the new rules will supplant the current framework in several months. The new law was written by the government and does not need to be passed as primary legislation. However, in order for the new rules to take effect, both the House of Commons and Lords must agree.

The new legislation is intended to curb offshore remote horse-race betting operations, which make up the majority of British betting sites and which continue to operate outside of government jurisdiction. The new regulations are expected to result in an increase of up to £40 million in levy revenue. It is thought that the sport will receive approximately £90 million annually from betting proceeds in the foreseeable future. The money will come from a flat 10% charge on gross profits derived from wagers for sportsbooks with £500,000 or more in revenue.

The new system is the resolution of a decade’s old conflict between the betting industry and horse racing over the fairness of the current levy system, which dates to the 1960’s and which was established decades before the existence of the Internet. Moreover, the new system will be administered by the UK Gambling Commission, which will establish a levy authority to collect the proceeds, and be responsible for providing funds to the Racing Authority.

The UK government has taken steps to advise the European Union of the changes in accordance with EU policy. The government will need to await the EU’s decision on whether the new rules comply with EU policy on competition and subsidies. While the government would like to have the levy framework in effect by the beginning of April, the current levy plan is to remain in effect until parliamentary approval is finalized. Once adopted, the new rules cannot be changed for seven years.

Once EU and parliamentary approvals are secured, the law will go into effect. However, it is still possible for betting companies to challenge the law in the European courts. The appeal would only be able to request that the European Union set aside its decision to approve the proposals in view of EU state aid rules. However, it could be possible for gambling operators to recover funds paid into the new system should an appeal be granted in the future.