At some point, you may have tried to solve that classic brainteaser of the fox, the chicken and the grain – you’ve got to get them across the river, but you can only take one of them at a time, leaving the two left behind at each other’s mercy.
What would you do?
It’s the kind of mental gymnastics that dogs horse racing and the betting industry. They both need each other, and yet in a way they’d probably like to exist without one another – the sport simply cannot finance itself without the contributions of the gambling levy, while bookmakers like to be able to profit from racing punters without having to hand over a slice of their profit margin in levy payments.
There was an interesting post this week at SBC from Michael Dugher, the head of the Betting and Gaming Council (BGC), who queried whether UK horse racing would even be able to exist without the help of the gambling sector.
All told, Dugher estimates that BGC members funnelled £455 million to horse racing in 2022 alone, which was paid towards prize money, marketing and media rights. But with takings down at some operators, levy contributions could fall – leaving a financial gap for racing to overcome.
“BGC members in the regulated betting industry are now paying more towards British horseracing than ever before, despite a 10.3% reduction in betting turnover on racing in the last five years,” Dugher confirmed, before adding that ‘betting continues to bankroll the sport but it is not a bottomless pit.’
So if horse racing is the chicken and the betting sector is the grain, who will be the fox in this flimsy analogy?
There may be an added complication on the horizon.
One of the recommendations in the governmental white paper as to the regulatory state of the betting industry is the possible imposition of a mandatory levy, which would be paid by operators into a fund that would be used to pay for research, education and treatment of problem gambling behaviours.
That proposed levy, which would be statutory in nature, would require betting firms to pay a decent slice of their annual revenue into the fund – although a specific amount or percentage is yet to be put forward.
Either way, it would likely put a squeeze on the contributions to the Horserace Betting Levy Board (HBLB), which in turn is one of the most sizable contributors to horse racing as a sporting entity.
There is something of an irony that the HBLB was founded back in the 1960s to compensate for the legalisation of high street betting shops in the UK, which led to many punters swapping the betting ring for a shop in their local town – affecting the gate revenue taken by racecourses.
Now, six decades later, betting shops are being closed in their droves due to the popularity of online punting – a sector that the government is clamping down on via their legislative changes.
In both cases, the biggest existential threat is to horse racing….
The Future of Horse Racing
If racing’s major revenue stream, for want of a better word, is taken away from it, how can the sport remain financially viable? How can it pay for the increased prize money that owners, trainers and connections are asking for – an increase that is the only thing preventing many smaller yards from shutting down?
One idea would be to try and run racing as a commercial entity, welcoming private equity investment and allowing them to take a cut of any profits – not that there would be a great deal of those forthcoming.
Another area for possible expansion would be to welcome sponsors beyond bookmakers to take the title rights for big races – firms like Cinch and Cazoo have sponsored major tournaments in snooker and darts in the past year, for example. Handing over the naming rights to the Cheltenham Festival, Grand National meeting and, heaven forbid, Royal Ascot might be another way to generate investment from outside the betting fraternity.
Proposed affordability checks, which have now gone to public consultation, could see millions in betting revenue lost to the black market – hitting both bookmakers and horse racing hard, so all parties involved in this tawdry relationship need to extract their heads from their rear ends and find satisfactory solutions that work for everyone.
If they can’t, the future for UK horse racing looks bleak indeed.