Dear Owner/Trainer,
We at Betfair are delighted that an agreement was reached in relation to the 51st Levy Scheme and that our guaranteed Levy contribution of £6.5m, a £500,000 increase on our contribution for the 50th Scheme, assisted in the resolution.
Our £6.5m is not a figure plucked from the air but rather an estimate of the amount that we would have to pay if our betting exchange was still licensed in the UK (i.e. 10.75% of gross profits from our revenues from UK customers betting on British horseracing).
It has also been helpful to have an underpinned guarantee of £46m from the betting shop business of the big three bookmakers.
The BHA expressed its disappointment with the projected yield of £72.4m, having argued for a projected yield of between £73.7m and £80.8m. In other words, the projected yield for the 51st Scheme is £1.3m away from the lower end of the acceptable figure for the BHA.
What we can all agree upon is that any way we can protect and, if possible, increase the £72.4m projected yield or reduce costs, particularly legal costs, of the Levy Board, will benefit prize money.
So what does the BHA do to protect the Levy yield, which as you know is the determinative figure upon which prize money levels are based? It partners up with William Hill (whose online business is, lest we forget, Britain’s largest non-Levy paying bookmaker) and, on the last day when it was legally possible to do so, emerged from its bunker to launch a judicial challenge against the Levy Board decision arising from its exhaustive consultation on customers of betting exchanges.
Betfair’s costs estimate (as an “interested party” in this litigation) for the first stage of the litigation is £1.7m. As an unanticipated business expense, we have to fund that from monies which had been earmarked for charitable initiatives within the sport as well as direct contributions to racecourses (similar to the direct £1m contribution to assist prize money over the last two years). These contributions are separate to our Levy payments. We estimate that the legal costs of the Levy Board and BHA will, in total, come to a similar amount which means there will be little, if any, change out of £3.5m.
And where does the vast majority of this obscene amount of money come from? The answer is simple: funds that could otherwise be spent on prize money. In other words the BHA are engaging on a path which will see the legal profession benefit to the tune of a sum that is at least twice as great than that which would have made the 51st Scheme acceptable to sport’s regulator.
In the event the BHA and its new best friend, William Hill, are successful at the first hearing and the appeals that would then be certain to follow, we all just revert to the position that existed before the Consultation and there still is not a penny benefit to the Levy. In any event when all of this is over in 3 or 4 years’ time there will, in all probability,be a commercial replacement to the Levy.
In the event that the BHA and William Hill are not successful, we will be seeking a costs order against them. So the BHA is risking even more millions that could be spent on prize money.
It is important that owners (of which I am one), trainers and others within the sport are aware that the BHA, the sport’s regulator, is in this unholy alliance with William Hill that will cost the industry over £3m in possible prize money at a time when we all know prize money levels are under severe pressure.
It may well be that William Hill can easily pay these sickeningly large legal fees as it avoids its responsibility to the sport by refusing to pay a penny in Levy from the tens of millions in profit it makes from its online business, but the Levy Board (who have no choice but to defend the action) and the BHA cannot. In our view, it is a disgrace for the BHA to hide beneath the apron of the Company that owns Britain’s largest non-Levy paying bookmaker in this way.
No doubt Racing’s representatives on the BHA Board continue to believe the Chairman of the BHA knows what he is doing. It is our view that time will demonstrate the Board’s confidence in its Chairman, at least in respect of this matter, to be misplaced.
I am more than happy to publically debate any issue and the litigation with the BHA at a place and time of its choosing.
Thank you for your kind attention.
Yours,
Martin Cruddace
Chief Legal and Regulatory Affairs Officer
