British racing not off the hook after Reeves' latest budget

British racing gave a sigh of relief after the much-vaunted budget threat to its financing didn't materialize today, but the sport is not out of the woods yet. As commentators commended the government for listening to the sport's concerns, the future of the high street betting shop, a brilliant shop window for the sport, is far from certain.

A keen draught is already blowing through several European racing jurisdictions as racing competes for its place among leisure pursuits. Horseracing in Britain, so often held up as a world leader for the quality and standard of its bloodstock, is something of a curate's egg.

UK Prize money lags behind many jurisdictions around the world, notably the Far East, Australian metropolitan tracks, the world anomaly that is the United States, and the emerging Middle Eastern nations, whose prize money defies any logical commercial model. Closer to home, France, itself in a betting downturn this year, still offers more attractive returns to owners and breeders.

And yet spectator footfall in the UK, whilst a million short of its peak in the early years of this millennium, is the envy of many other countries, where horseracing struggles for cut-through. Some 5m visited the 1,300 fixtures in 2024, with similar figures estimated for this year. This is 3m more than in France, despite prize funds a third greater on average.

Lower prize money is a price Britain pays for a model in which the sport is irretrievably in partnership with the betting industry, through a business model not of its own choosing. The betting industry is a key driver to interest in the sport, and its presence on the high street. But wherever that business model is impacted by wider economic circumstances, racing is likely to suffer.

A discussion in HM Treasury about raising taxes on gambling appeared a relatively easy win; after all, bookmakers are always the bad guys. A proposal to harmonize betting duty rates, set at 15% on horseracing, but 21% on other betting, was met by dismay in the racing corridors of power, and set off a rare campaign of unity within the sport to protect our relationship with betting, and the income that stems from it through media rights and betting turnover.

Doomsayers among the betting fraternity told of the end of the high street betting shop, where margins are modest. That end may yet come, as remote gambling is cheaper than bricks and mortar premises. The good news is that General Betting Tax (GBT) is set to remain the same in shops, as applied to slots, horseracing and other sports betting. However, this doesn't quite tell the full story.

First, high street shops are due to see a rise in business rates, which in itself may be enough to trim the number of shops still further.

Second, GBT , applied to sports other than horseracing, is due to increase to 25% from April 2027. In theory, this sways the pendulum back in favour of racing, but the sport is already wrong-footed with gamblers, who have reduced their turnover this past year on racing by 6%. Racing is heading for a single figure share of the total betting market, having enjoyed over 90% little more than 30 years ago.

Third, Remote Gaming Duty, which covers online casino games like roulette, slot games and so on, is set to incur a hefty rise in taxation from 21% to 40% from next year.

All of which is to say that bookmakers, a rare beacon of economic enterprise in the UK economy, will be paying more tax, and without growth in the economy, will be seeking to reduce their exposure. This could happen in several ways.

Most obviously, their expenditure on marketing the sport may become more subdued. There will be plenty of sponsorships looking vulnerable, since a glance at the winter Saturday coverage on ITV shows an almost exclusively bookmaker-driven sponsorship portfolio. But second, they may seek to increase their margins on each book made, which is going to result in less attractive pricing for gamblers. QED: they may find other routes to enjoy a flutter, or reduce betting spend all told. Third, increased costs on shops may still continue to reduce their presence in the British retail sector, which in turn reduces racing's return from media rights.

Horseracing in Holland has been recently adjudged a classic example of over-taxation, pushing rates through the Laffer Curve into unlicensed betting and reducing the take to racing, and it follows a similar instance in India too. In truth, no-one knows where that tipping point is, where the sport is so highly taxed that the tax take reduces absolutely, but anyone expecting the next few years to be a growth sector in European racing is playing Walter Mitty.

It's a stark contrast to some US states, where racing has benefited from an enlightened approach to casino and slot machines, insisting on a set share returned to racing. In Kentucky, the 10 day Kentucky Downs turf fixture advertised $35m in prize funds this September: that's an average of $500k per race. Small wonder a growing cadre of European horses is making its way there, highlighted by James Owen's Wimbledon Hawkeye's Nashville Derby victory, and they're not alone.

None of the European racing authorities can sit back on their laurels, sure that the money will keep rolling in. There are other sports and players emerging that continue to erode our place in the betting hierarchy, and work is keenly needed to put racing centre stage once again.