The £3 billion black hole: calls for urgent action on affordability checks as online betting turnover on racing crashes

The financial crisis facing British racing has been laid bare after new figures revealed a £3 billion fall in online betting turnover on the sport in real terms over the last two years, equivalent to a decline of more than 25 per cent.

The numbers prompted calls for urgent action on affordability checks from both MP Nick Timothy and the Betting and Gaming Council.

Statistics released by the Gambling Commission showed that online turnover on racing had fallen to £8.37bn in the year to the end of March, compared to around £10bn two years previously.

However, had turnover grown in line with inflation over the period covered it would now be close to £11.5bn, meaning the loss of vital funding from betting-associated revenue streams such as media rights and the levy is far worse than it appears on paper.

The stark decline in betting turnover is compounded by the fact racing has seen its costs rise rapidly over the same period, with inflationary price increases, wage rises and the hike in National Insurance affecting every part of the industry.

The commission's figures demonstrate not only the impact of affordability checks and other stricter regulations on the gambling industry, but also illustrate the disproportionate effect the checks have had on horseracing betting, which features larger staking customers than other products.

While horserace betting turnover has fallen by 16.3 per cent over the last two years before inflation is taken into account, turnover on greyhounds was down by 12.9 per cent and football by only seven per cent over the same period, while online slots turnover was flat over the same period.

Both the Levy Board and the BHA have warned the trend for falling turnover has continued since the end of the period covered by the Gambling Commission statistics, with the BHA revealing that year-to-date betting turnover was down in total by 9.5 per cent at the end of August.

Timothy, the Conservative MP whose West Suffolk constituency includes Newmarket, last week asked ministers in parliament about progress on the levy and affordability checks, although he did not receive an answer on the latter point.

He said on Tuesday: "These statistics show exactly why so many are worrying about the effects of disproportionate affordability checks on horseracing. I’ve raised this problem – along with the need to reform the levy – repeatedly since I was elected and while the words have been warm ministers are yet to come forward with solutions. The decline in betting on horseracing shows how urgent this is."

A spokesperson for the Betting and Gaming Council said it had "repeatedly" warned that racing faced a double-digit decline in betting turnover as a result of the measures in last year's white paper.

They added: "Urgent action is needed now to deliver genuinely frictionless, targeted spending checks, and a new anti-money laundering code, to prevent unnecessary intrusion on customers who are not at risk of harm. 

"This drop in turnover has come despite significant investment in racing by our members of £350 million a year, including three consecutive years of increased levy contributions, plus media rights and sponsorship deals to promote the sport. Our members are racing fans, we want the sport to thrive, and look forward to working with the government and racing stakeholders to try to achieve that."

BHA director of communications and corporate affairs Greg Swift said racing continued to raise the issue with both the Department for Culture, Media and Sport (DCMS) and others in government and officials had recently asked for additional information on the impact on bettors from the current regime of checks, which was provided with help from the Horseracing Bettors Forum.

The Gambling Commission is in the midst of a trial of what it claims will be "frictionless" affordability checks on punters, but Swift said racing has been calling for the pilot's results to be independently reviewed.

He added: "One of the things we have made clear to the commission is the need to work closely with DCMS, betting operators, bettors, ourselves and wider stakeholders to make sure the results of phase one of the pilot tests are independently reviewed. They must be subject to really rigorous independent evaluation to fully understand the potential implications of these checks.

"I think failure to do so would only lead to a significant lack of confidence across the sport and the industry in those provisional findings. That is absolutely crucial."

In May the commission and the Betting and Gaming Council announced the introduction of a voluntary code on customer checks which would come into force until a frictionless solution was found. However, progress on a similar code for anti-money laundering checks to prevent ordinary bettors being unnecessarily caught up has been negligible.

Swift said: "The other piece of the jigsaw that still needs to be resolved is the anti-money laundering code which again we've raised repeatedly with the Gambling Commission, with operators and DCMS to make sure the the benefits of the voluntary code on interim checks can be fully felt by bettors as soon as possible."

Asked what racing was doing to reverse the fall in turnover, Swift said the sport's industry strategy and innovations such as Premier racing were designed to address that. He added: "You will have seen there are some positive moves in some of those metrics and that will remain an ongoing piece of work."

The promotion of Premier racing has been the subject of criticism and Swift said that one of the aspects of an agreement on levy reform halted by this year's general election was to ring fence an increase in levy for a growth and marketing fund for the sport.

"We absolutely recognise that that will be vitally important as we progress plans to grow the sport in the future," he added.

BHA officials are set to meet with BGC counterparts next week in an attempt to resurrect those talks, with the governing body expecting to report back to gambling minister Baroness Twycross before Christmas.

Read these next:

The three key takeouts from betting statistics for the year ending March 2024 published by the Gambling Commission  

Comment: time is running out for British racing to halt its decline 

Plummeting betting turnover leaves British racing in a precarious state - whatever the sales numbers might suggest  

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