It’s no secret that racing in Britain has been on the decline for some time now, both in field sizes and also prize money. It doesn’t look like it will be getting better anytime soon, either. The Department for Digital, Culture, Media, and Sport (DCMS) launched a review of the 2005 Gambling Act in December 2020, with the aim of publishing a white paper by the end of 2021. Now in May, we are still waiting…
There is good reason for conducting such checks, with more prominence in the modern-day than ever before, to combat addiction. The potential impact of this on the racing industry, however, could be damaging. Let’s take a closer look…
The government’s gambling review has been described as “a bullet between the eyes” for British racing by four-time champion trainer John Gosden. The review could see stringent action taken regarding advertising and sponsorship, potentially costing the British racing industry upwards of £100 million per year. Affordability checks for customers losing £100 or more a month could also have a detrimental effect on racing’s annual income. Gosden said: “The problem with our racing now is we have become a nursery for horses to go elsewhere in the world. Anything rated 95-plus is bid on or gone right after Ascot. They're not there the following year...”
More must be done to entice owners to keep their emerging talent at home, rather than selling abroad. Without internationalising the betting industry, talent will be lost to jurisdictions with better prize money and will leave British racing in danger of, as John Gosden put it: "withering on the vine".
Many are not interested in gambling, but without it, the racing industry would not exist. The DCMS must consider the health of racing's finances during their review, as any rash decisions could deliver a knockout blow to the industry.
One shining light, however, is the World Pool. The World Pool is a collaboration between global totes in which bettors from all over the world can bet into a single pool. Fans from countries such as Hong Kong, France, the USA, and the UK can all bet into the same pool, resulting in a significantly bigger prize pot being offered. 17 World Pool days were held at British and Irish race meetings in 2021, in particular on all Royal Ascot racedays, with the Cazoo Oaks day at Epsom being added for 2022. This commingling provides stability and smaller fluctuations in odds, with a much larger potential return. It also aids the racecourses, who take a percentage cut of betting turnover, with the 2022 Cazoo Derby Festival being run for more money this year than was the case pre-pandemic. Each World Pool day generates between £20 and £30 million.
Despite this, competitive races with a minimum of seven, but ideally 10-12 or more runners, are essential, an area that British racing is struggling in currently. Top trainer William Haggas has backed the push to internationalise the betting industry, stating: “There's no doubt that British racing is sliding. I can't think of anything more exciting happening in the latter stages of my training career than this (the World Pool), and I think it's essential that we all get behind it. These pools are going to be fantastic, and the more money that is in there, the more we will all benefit."
There is no wonder that owners are looking beyond Britain, either. According to figures from the Racecourse Association, owner expenditure was £621 million in 2019, with only £161 million in total prize money on offer. This means returns have to increase drastically just to cover costs. Unless the sport takes urgent action to increase its appeal to prospective owners, this spiral of decline will continue.
Prize-money comparisons compiled as part of Project Enable, a commercial review of the sport, highlighted that Australia, Hong Kong, Ireland, France, and the US all offered more prize money per race than the UK. The figure stooped as low as £15,970 per race in 2019, before dropping to £11,980 as a result of the Covid-19 pandemic, compared to the likes of France (£24,000), Ireland (£22,000), and Japan (£53,000). Racecourses have missed out on an estimated £400 million in revenue since March 2020.
So how is prize money in Britain funded? Well, there are three major sources: funding from the levy, owners' entry fees, and racecourse contributions. In 2019, funding from the levy (tax on bookmaker racing profits) provided 35% of prize money; owners’ entry fees provided 15%, while the remaining 50% was from the racecourses (funded by spectators and sponsorship/media rights payments). The Tote agreed to pay racing at least £50 million over seven years when it was acquired by the UK Tote Group in 2019.
The Levy Board has also committed to increasing prize-money totals in May and June, alongside increased racecourse contributions, and will increase their overall contribution by 50%. This will see the return of minimum prize-money figures to pre-pandemic levels.
More needs to be done, however, to save British racing. Despite the industry already taking some steps to reduce the size of the problem, attention should be turned to how racing in Britain is funded.
Rates at which betting turnover is returned to racing are much higher across the rest of the world, compared to Britain's measly 0.6%. This highlights a key issue within the structure of British racing, and taking a more direct approach, even on a small scale, could see prize-money increase tenfold. Jurisdictions such as Japan, France, and Hong Kong reap the rewards of Tote betting, but the gambling environment differs from Britain, so would require a complete overhaul of the betting industry to recreate it.
Extending the levy to cover bets placed on overseas racing could raise more than £30 million in extra annual income. Currently, the Levy only covers any gambling operators offering bets on racing in Britain, but they could bring the reform forward to re-work this, providing extra funds that could be returned to racing. The basis of the levy could also be altered, changing it from bookmaker profits to something such as annual turnover, or even a hybrid model. This again would open up the opportunity to raise tens of millions of pounds.
Whatever steps British racing takes, more needs to be done, and fast. Keeping with the same model will see racing in Britain fall even further behind its competitors. This would not only damage the reputation and global standing of the sport, but would drive both existing and potential new owners away. The racing industry and its fans alike eagerly await the publication of the government’s gambling review; with fingers crossed that action will be taken to solve British racing’s problems before it’s too late!