Levy Board targets bookmakers over payment for money-back bet offers

In a move that could have far-reaching consequences for the funding of British racing, the Levy Board has written to bookmakers in pursuit of money it may be owed in connection with cash-back concessions and which could have contributed to the sharp fall in levy yield.

The letter raises the question whether bookmakers have treated those offers correctly in terms of levy payments and could set them on a collision course with the Levy Board that would raise the possibility of legal action.

In May it emerged that income from the levy – the sport's central funding system – had fallen unexpectedly by £17 million to £78m in the last financial year.

Among the possible reasons suggested for the fall were some of the bookmaker offers made during the Cheltenham Festival in March.

Last week the Levy Board issued a short statement in which it said it had "continued to investigate the reasons" for the fall in levy yield, "as part of carrying out its formal end-of-year processes with bookmakers".

It added: "More generally, following legal advice, the board has recently asked all levy-paying bookmakers for further information on certain bet types offered during the year. In the light of the confidential responses, the board will consider the next steps."

Deadline set

The letter to bookmakers, a copy of which has been seen by the Racing Post, asks them whether they had offered promotions in which stakes placed on a losing British horseracing bet were refunded and whether they were refunded "as cash and without conditionality".

It goes on to say the Levy Board has received legal advice that operators should not class those cash refunds as customer "winnings", i.e. money that would reduce a bookmaker's gross profit on racing and therefore the amount of levy paid.

Those operators who have not acted in accordance with that legal advice have been told to inform the Levy Board, after which their declaration forms for the 2018-19 levy year will be reopened.

Bookmakers have been given until August 23 to respond and it is not yet clear whether any bookmakers have acted contrary to the Levy Board's legal advice.

A Levy Board spokesperson said its statement had referred to the confidentiality of discussions with bookmakers and that it had no further comment to make.

Klassical Dream wins the 2019 Supreme Novices' Hurdle, the opening race of this year's Cheltenham FestivalCredit: Patrick McCann

Sky Bet offered a cash refund during the Cheltenham Festival, with customers who backed a loser in the opening event on each of the four days of the meeting being given money back as cash on all losing bets up to £20 or €20. They ran another cash-back offer at Glorious Goodwood.

The Cheltenham offer was hugely successful for Sky Bet in acquiring customers. Parent company The Stars Group said in May that Sky Bet's active customers rose by more than a third over the four days of the meeting while stakes were up by more than 60 per cent.

The offer did increase Sky Bet's costs and betting revenues fell by 37 per cent over the first quarter of the year.

However, last week The Stars Group said the new customers had helped boost betting revenues by nine per cent in the second quarter.

Sky Bet have been approached for comment by the Racing Post but have yet to respond.

Levy threat

There are fears within racing that other operators will try to replicate Sky Bet's success around the sport's major events by creating offers that potentially reduce the profits made on British racing and therefore the levy, using it as a loss leader to funnel customers to other sports and products.

Those fears would be multiplied should an operator challenge the Levy Board's legal advice successfully.

It would also increase the calls within the sport – such as those voiced by Racehorse Owners Association president Nicholas Cooper in July – for the government to switch from the current gross profits levy model to one based on turnover while strengthening demands for the government to widen the levy net to include money bet on international races.

The government has so far said it would wait to see how the reforms to the levy it introduced in 2017 had bedded in before it revisited the subject, although it has said it would bring forward a review in the event of "significant market changes".

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