Page last updated at 14:13 GMT, Tuesday, 29 September 2009 15:13 UK

Dispute over horse race bet cash

By Bill Wilson
Business reporter, BBC News

Runners and riders at the Cheltenham Festival
Horse racing faces a 'significant challenge' says the Deloitte report

A disagreement has broken out between the horse racing and gambling industries about how much bookmakers should contribute to the sport.

The British Horseracing Authority says racing in other nations gets a greater share of money gambled on the sport.

But the bookmakers' body, the ABB, says it will only pay a "fair value for the racing product, not an enhanced value".

It comes as a Deloitte report says that British horse racing was worth more than £3.7bn to the economy in 2008.

Deloitte also says racing retained its position as the second-biggest sport in Britain after football, in terms of revenue generation and attendances.

But the industry has also been hit in some areas by the economic downturn, such as in reduced bloodstock sales.

'Significant contributor'

The British Horseracing Authority (BHA), which commissioned the Deloitte report, is the governing and regulatory body for British Horseracing.

Racing industry statistics

The BHA says Britain was second only to Japan in the total amount bet on horse racing, with £12.1bn wagered in the country against just under £14bn wagered in Japan.

But it said that while the return to the racing industry in Japan was £741m - or 5.3% of the amount wagered on races - in Britain it was just £118m, or 1% of the total amount wagered.

And in both the USA and France 8% of money wagered was returned to racing (£589m and £531m respectively).

"Deloitte's study reiterates that British horseracing, as the second biggest sporting activity in Britain, is a significant contributor to the leisure, agricultural and rural economies in Britain," said Nic Coward, chief executive of the BHA.

"It also highlights the disparity regarding the returns to the sport from betting compared to other major racing nations.

"If further demonstration of our broken system was needed, we have the second highest betting turnover of the major racing nations yet the lowest return by far from the betting industry to our sport."

The racing industry argues that it does not receive "an adequate or fair return from the betting industry given the value of its product".

'Huge differential'

The BHA says one reason for the decline in the return from betting to the horse racing industry is that several former British-based internet gambling operators have moved these online operations offshore.

They have thus ceased paying the gambling levy that formerly went to horseracing when these activities were based onshore.

Racecourse bookmakers at Newmarket meeting 2008
There is a disagreement between the horse racing and betting industries

"The major reason for the huge differential for the return to racing from betting between here and other countries is because they've set-up their betting to maximise the return to racing - which betting is there to support - whereas here that's not the case in Britain," said a BHA spokesman.

"We aren't calling for a Tote monopoly like they have in other countries - we wouldn't want to decrease the choice that those wanting to bet have in this country, which helps to make British racing as exciting and diverse as it is.

"What we are asking for is a fair return to racing from betting, whether traditional bookmakers or exchanges, based onshore but particular based offshore, who can currently bet on racing without ever paying a penny back."

'Economic reality'

But the bookmakers' organisation, the Association of British Bookmakers (ABB), said the figures quoted by the BHA represented "racing's view of the world and their take on the respective relationship between bookmakers and the racing industry".

It added: "Racing and betting are plainly linked, but they are separate industries which should co-exist in a commercial relationship driven by the market.

"Racing adopts the betting industry when it suits and denigrates us when it does not."

And the ABB said that systems in France and other countries for funding racing did not provide the same value for the betting public as "a proper commercial betting market".

It also said that bookmakers "subsidised racing to the tune of £90m to £100m per year, and were also paying increasing sums for TV rights".

"At a time when racing is becoming less popular with the gambling public and more income is flowing from bookmakers to racing, racing must adopt a sense of economic reality and not look to be further bailed out by the bookmakers," the ABB said.

"Bookmakers will pay a fair value for the racing product, but not an enhanced value that moves us closer to, rather than away from a state subsidised system."

'Bounce back'

Other findings of the Deloitte report into the sport and its economy include the fact that over £100m was generated by horse racing in 2008 from media channels.

Generated expenditure of £3.4bn in 2008, or £3.7bn including capital expenditure
Contributed £325m in tax in 2008
Tax total over five years of more than £1.5bn
18,600 full-time jobs in its core industry
52,000 full-time jobs in onshore betting industry
Racecourses generated £361m in 2008
Horse owners' gross expenditure totalled £367m
Expenditure of breeding industry estimated at £207m
Racing had four of the top eight attended sports events in 2008
Total attendances of 5.7 million last year
Source: BHA/Deloitte

That was achieved primarily by broadcasting through terrestrial services, racing's two dedicated horseracing TV channels and picture [TV image]sales to licensed betting offices.

However, the problems in the wider economy are also hitting the sport.

"Like all sports, racing faces a significant challenge as a result of the economic downturn," says Alan Switzer, director in the Sports Business Group at Deloitte.

He warned that many of the figures quoted in the report were likely to experience declines in 2009, "but we are confident the sport has the ability to bounce back once economic conditions improve".

He also said that the tougher times meant there had been a "flight to quality", and that racing was fortunate in having a number of events - with attendances at the top festivals in 2009 "generally holding up well".

However, that meant that a key challenge for racing was to find ways of increasing the profile of the next tier of fixtures.

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