Remote operators face £20m UK horse racing levy
UK Government will use final reading of Gambling Bill to insert new amendment for extension of levy
Offshore remote gambling operators could be hit with a £20m levy on their UK horse racing profits after the Government signalled it would use the final reading of the Gambling Bill to “level the playing field”.
At present, only UK land-based bookies are subject to pay around 10% of gross profits from racing bets to the Horserace Betting Levy Board (HBLB), which then distributes the cash to support the industry. Levy rates are subject to change from year to year.
However, following increased pressure from both members of Parliament and the House of Lords, it is expected that the levy will be extended to include offshore remote operators, a move which could generate as much as £20m for the sport.
The news comes after peers in the House of Lords yesterday withdrew an amendment at the report stage of the Bill which called for such an extension after the Government said it would address the issue at the Lord’s third reading, scheduled to take place on 18 March.
“We agree with the view that while we have a statutory levy, it should be fairly applied,” Government minister Lord Gardiner said during yesterday’s debate.
“We will therefore bring forward a Government amendment at the third reading which will remedy your lordships’ concern about a level playing field between on and offshore betting operators in terms of the levy,” he added.
It is expected that the amendment will be passed with cross-party approval giving power to the secretary of state to effect the change, however any application of the new law will depend on its compliance with European state aid rules.
The announcement is something of a U-turn from the government which had batted away previous attempts to amend the levy. In October, sports minister Helen Grant told the Commons that the Government did “not intend to use the Bill to reform the levy”.
Julian Harris, senior partner at law firm Harris Hagan, said the news will come as a blow to operators currently preparing for the introduction of the point of consumption tax.
“It will no doubt disappoint that at a time when the industry is hoping to negotiate down the level of online tax from 15%, the government has announced a proposal that will in effect result in more tax being payable,” Harris said.
As part of a voluntary arrangement, some online operators do currently contribute towards the levy. In 2012, Betfair agreed to donate 10.75% of profits to the HBLB for a period of five-years.
Last year, William Hill, Ladbrokes, Coral and Betfred all agreed to make additional voluntary payments of £4.5m to the HBLB, a move which drew the ire of Betfair as it accused operators of ‘hiding’ their online operations.