Levy yield higher than forecast at £99 million but fall in turnover sparks warning over affordability checks

British Horseracing Authority (BHA) chief executive Julie Harrington welcomed the highest levy yield of her tenure but warned affordability checks still posed a major threat to the sport's finances if they are not implemented fairly.

Harrington's comments came in the wake of good news for British racing on Wednesday when it was announced the levy yield for 2022-23 is set to be around £99 million, higher than the £90m to £95m the Levy Board had previously anticipated.

However, while the board said gross profits had "significantly increased" in the last two months of the levy year with margins "markedly above average" in February and March, it also reported that turnover had fallen "notably" on the same months in 2022. It also said bookmaker estimates for yield in the current levy period were "materially lower" than last year.

Their warnings were picked up on by the sport's leader, who emphasised the need for affordability checks to be "as frictionless as possible" to stop them having a negative impact on the sport's long-term finances.

Harrington said: "We welcome the publication by the Horserace Betting Levy Board of an anticipated levy yield for 2022-23 of approximately £99m. While this represents an increase on the previous five years’ yield, this must be set in the context of a wider challenging economic climate – with double-digit inflation and an industry still recovering from the substantial financial impact of the Covid-19 pandemic.

"This is why a review, and uplift in the quantum of, the levy is critical. As part of the recently launched review of the levy, British racing will continue to make the case to government that our international competitiveness relies on our ability to generate the maximum statutory funding possible. We will be making detailed representations to that process.

"More generally, ensuring betting turnover is strong is vital to racing’s financial wellbeing and this demonstrates the need for the industry strategy to shape the racing product in a way that maximises the opportunity for betting customer engagement, work that is now at an advanced stage. 

"It also exemplifies why proposed financial vulnerability and affordability checks must be proportionate, as frictionless as possible, and targeted at individuals and their specific circumstances."

Paul Darling: Levy Board chairman spoke of fall in turnover

The BHA is considering a number of changes to try and boost racing's return from bookmakers, including the culling of some meetings and the 'premierisation' of others in an attempt to maximise revenue, as well as lobbying for the levy to be changed to a turnover-based system from gross profits and extending it to betting on overseas racing by British punters. 

As recently as November the Levy Board said it had budgeted to contribute £66m to prize-money in 2023, but warned it might have to revise that figure due to economic conditions, as well as data provided by major bookmakers showing a fall in horseracing betting turnover and gross win.

Speaking on Wednesday, Levy Board chairman Paul Darling said: "The board will be making decisions on prize-money for the September to December period at its meeting next month and this likely outturn provides additional clarity in coming to those decisions.

"Although overall yield looks to be similar to or slightly up on last year, total turnover and race-by-race turnover are down overall, and were consistently down from July to the end of the levy year. The board will need to consider carefully what assumptions to make about future yield given this trend. Bookmakers’ collective initial estimates for 2023-24 are for a materially lower yield than in 2022-23."

The government announced it had started a review of the levy system when it published its gambling white paper in April.

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