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Battle for financial viability of British horse racing

By: Rolf Johnson   February 1 , 2024
   

Time was when any debates on, or indeed matters relating to India cleared the House of Commons as quickly as when Members of Parliament shot off to Epsom for the Derby. The world could wait while the politicians indulged themselves on Epsom Downs. The British Parliament left India to be governed by the people on the spot.

If only that were the case with racing. When the Jockey Club first met in Newmarket in 1752, they – the men in the know – ruled unhindered. Unfortunately for the Jockey Club, much like the British in India, ‘the men in the know` didn`t move with the times. In 2006 the Jockey Club fell on its sword. The Horse Racing Authority (HRA) took over, since when we have had the British Horseracing Board (BHB) and currently, British Horseracing Authority (BHA): and endless wars between them and other interests such as the Racecourse Association (RCA).

Now we`re catching up with India – or at least on February 23rd there will be a debate in Parliament about the future funding of British racing – whether it has a future because if the proposal to make punter`s betting subject to controls, the whole structure of British racing will be undermined. It`s as dangerous as that.

Gandhi was no lover of racing because the sport depended, then as now on gambling which depended on a small number of winners and a large number of losers. The number of successful bookmakers and the number of punters ruined, drummed home the fact – especially to politicians – that here were votes to be plucked – without having to offer any ‘sweeteners` such as lower taxes. The headline cost to the economy of reduced betting, set against the votes garnered for such a ‘noble cause` – saving souls – meant the number crunchers have had a field day. Racing was to become a cow to be milked – dry.

In India racing has been beaten into submission, since Gandhi`s condemnation. The whip, beating horses to run faster, provokes universal controversy. Gambling losses are the rod with which to beat the sport worldwide. Supreme Courts, including India`s have decreed gambling on horses to be a game of skill as opposed to mindless ways of getting rid of your money – roulette for example. The perception remains though that those ‘in the know` in racing have an unfair advantage - chicanery rules. Naturally, racing`s participants want to portray themselves as ‘ahead of the game`; in the process they have left the realpolitik of votes against gambling behind.

More MPs are likely to attend the debate on gambling in the ‘Mother of Parliaments` than would turn up to decide the fate of the Empire. If “Affordability Checks”, buzz words of the Gambling Review restricting punter`s liberty to ‘apply their skill`, become law then the umbilical cord, the ‘symbiotic` mutually beneficial relationship (admittedly not for all) of gambling which ensures racing`s income, will be broken.

And where does it stop? Are affordability checks going to be confined uniquely to racing or do they presage ever increasing government intrusion into our everyday lives?

Increasingly seductive bookmaker adverts tantalize punters into fields where the layers have already factored in increased profits. Such inducements are far more toxic to the gullible than the hoary old strictures against ‘chasing one`s losses`, ‘don`t back odds on`, ‘if you only see one magpie on the way to the races then that`s unlucky`. Trivializing people losing money they, and their families, can`t afford is no solution to what is undoubtedly a mounting social problem. This was recognised when the stakes on FOBTs (whose serried ranks in betting offices reminded one of the silent Chinese Terra Cotta Army) were reduced in 2018 by government decree, from infinity to £2 a go.

The amount bet on racing is declining. There are a number of factors. When betting offices were legalized in 1961 they were dubbed “a licence to print money” – the punter`s money. The implication was that it was one-way traffic, over the counter – except that bookmakers recognised that to continue ‘skinning` punters they had to allow a little skin to survive so that it could grow and punters could be skinned again.

Last year`s first bookmaker-backed Epsom Derby – (imagine such a horror in India) suggested that only those who are making money from racing itself calculated there was a profit in supporting one of the countries great institutions.

The great debate on the survival of British racing – and such talk isn`t overblown - was triggered by the 100,000-plus petition calling on the government to abandon its plans. If this seems a large figure one only has to look at photos of crowds in former times when the Downs would be covered by racegoers on Derby day. Today though the crowds stay away and the fault is not just the change from Wednesday to Saturday – and a starting time to allow fans to watch the great race and get to their football matches later in the afternoon.

In this devoutly populist age even the mass media shuns the sport. True, high days and holidays get coverage but the appetite for humdrum wall to wall day in day out racing diminishes every season. Of the various proposals contained in the government`s gambling white paper, aching years in preparation, affordability checks have the ugliest head. The regulator`s consultation on the subject closed, after three years, last October, since when the Gambling Commission has been in purdah.

The initial consultation mandated that bookmakers must assess customer affordability – as if they never had before! But crucially transactions had to be transparent: the result will be for betting to go underground; and the opposite effect will emerge: transparency will go out the window. Bookmakers have always had their own ‘affordability` sanctions – whether they could afford to indulge a regular winning punter. I know one bettor who papered a small room in his house with letters closing his (profitable) accounts. Many former racing punters (losing) punters have exercised similar rights – they`ve stopped betting.

The most obvious manifestation of changes in habits is that the ‘Ring`, Britain`s racecourse bookmakers from whom starting prices were recorded, no longer exists. Stephen Little, former leading independent bookmaker, in his recent biography wrote: “In no other field of commerce are there so many businesses in a confined space all trying to sell the same thing”. That`s history: now the collapse in bookmaker`s and spectator`s numbers often mean the only people they are betting with are the off course exchanges – the ‘machine` where the real money goes and from where starting prices are now cobbled together.

The economic crisis has had its impact; the old saw about betting rising during the Depression in the 1930s, has never been completely quashed (hard evidence was not as accessible as today). Turnover on the sport fell by £900 million in 2022-23 according to the Gambling Commission`s own statistics. That trend has continued, with racing estimating further falls of 15 to 20 per cent year on year. Even leading bookmaker Bet 365`s Denise Coates, who headlines tax paying for her family firm, dropped down the list of contributors to the Exchequer in 2023.

The freedom or penance, depending on your point of view, of betting is something the Government would rather take away. Bookmakers purpose is to take punter`s money in order to stay in business but there is a finite amount a punter can lose before destitution takes over. And in the current economic climate that finite amount is continually reducing even though bookmaker`s appetites haven`t and the big fish have gobbled up smaller fry. And they encourage betting on a multiplicity of other attractions.

“Frictionless” has been the Government`s watchword `. Where there is no friction there is no brake so it is a contradiction in terms to state, still less legislate, that carrying out ‘enhanced affordability checks` can be done without at least one of the parties screeching – like a well-worn brake drum. Most punters don`t shout about their betting – much beyond when their horse has either just ‘got done` or just ‘got up`.

The government has already understood its affordability proposals will hit the sport`s finances, although its figure appears to be a gross underestimation of the true impact. British racing has always cried more, like Charles Dickens`s hungry orphan (there`s an online casino game called Oliver Twist). And Dickens himself wrote in the mid-nineteenth century, “There is a dense crowd; outside the betting rooms it is like a great struggle at a theatre door”. And in his The Old Curiosity Shop (1840) Little Nell reflects at the races “how strange it was that horses who were such fine honest creatures should seem to make vagabonds of all the men they drew about them.”

Talks between parties have been a slog – frictionless would be the most inappropriate word to describe the consultations. Bookmakers are reluctant to accept British racing`s calls for an extra £30m in levy payments per year. Ministers have been happy, since they launched the Review, to leave ‘interested parties` - the Gambling Commission, bookmakers, racing`s leadership to try to come up with solutions. The petition of ordinary racing folk has helped concentrate minds. Every year bookmakers provide around £350 million to the sport`s finances through media rights payments, the horserace betting levy and sponsorship to help support 59 racecourses, over 500 trainers, 18,000 thoroughbreds and 85,000 jobs.

The checks on punter`s accounts would kick in at a net spend of just £125 over 30 days or £500 in a year. A second enhanced `financial risk` assessment would occur if a punter ran up a net loss of £1,000 in 24 hours or £2,000 within 90 days. I ask myself, do I really want my bookmaker (to say nothing of the Government) to know as much as my wife about my finances?

The Government has acknowledged these checks must impact the economic health of British racing. It has estimated they could reduce the sport`s income by £8.4m to £14.9m per year because customers would `fail` the affordability check or refuse to provide the required information. The actual sum is probably nearer £50m - equivalent to more than 25 per cent of the total racing prize-money. The Gambling Commission`s own statistics for 2022-23 showed a year-on-year drop of £900m in betting turnover on racing. British racing continues to fall further behind its international rivals in prize money – and prestige.

Nearly one in ten punters have used non-regulated black market betting sites while four in ten respondents were prepared to switch to the black market if faced with affordability checks that took away their control. The UK can learn lessons from the way India has taken to black market betting. I began by commenting that our politicians in Empire days ignored events in India so long as the money kept coming in. It`s time to take more notice and a lesson from happenings in current racing in what was once ‘the Jewel in the Crown`.

 
 
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