Affordability Checks Debate

Q&A - Affordability Checks Debate – Monday 26th February 2024

 

Does British racing understand the need to protect people at risk of gambling-related harm?

• British racing supports the Government’s ambition to reduce gambling-related harm and make gambling legislation fit for the digital age. Our sport is enjoyed safely and responsibly by the vast majority of bettors.

• We recognise that it is now easier to spend larger amounts of money betting due to advances in technology. Sadly, there are examples of bookmakers not being proactive enough in preventing gambling-related harm.

• But using net loss alone as a measure of someone’s ability to afford betting is too narrow. It must be expanded to include other recognised markers of harm.

• With the proposed thresholds being so low (starting at a spend as little as £1.37 a day for the £500 net loss over a year threshold), we believe operators will struggle to distinguish between those who are genuinely betting at unaffordable levels and those who are betting well within their means. This will see more people impacted by interventions than necessary.

• This one-size-fits-all approach risks failing to identify those who are, or may, experience harm. Interventions by operators should be targeted at an individual and based on betting behaviour.

• Blanket affordability checks could also drive those at risk of harm to unlicensed ‘black market’ operators, with less player protection available to the customer there than in the legal market.

As a major betting product, what is racing doing to prevent gambling-related harm?

• Health Surveys reveal that horserace bettors have consistently been associated with low levels of ‘problem gambling’ – a rate of 2.8% (PGSI and/or DSM-IV) in the 2018 Health Survey for England – a similar level of harm that is associated with National Lottery Products.

• As a game of skill with natural cooling off periods, horseracing is enjoyed responsibly and safely by the vast majority.

• However, we are not complacent and are keen to understand as an industry what more we can do to prevent gambling-related harm.

• We have been taking steps to look at what more we can do as a sport to encourage socially responsible betting. These include prohibiting the cross-sell to online casino products in race titles, working with EPIC Global Solutions on a programme of Lived Experience Gambling workshops for industry employees and encouraging all betting operators (pool betting providers and self-employed bookmakers) to adopt a ‘Think 25’ policy across all betting operators on a racecourse.

• We have supported bookmaker efforts to increase the number of self-help tools available to the remote betting customer, and the inclusion of responsible gambling messages in any gambling advertising. Racing is currently working with other sports’ governing bodies on a Code of Conduct for Gambling Sponsorship, as instructed by Government in the Gambling White Paper.

Can horseracing not generate other income to replace the money lost through affordability checks?

• We have asked DCMS to consider reforming Horserace Betting Levy (our statutory return from betting) to provide an extra £30m in statutory funding, which will provide vital support to the rural economy and help us maintain our international competitiveness.

• This would not come at a cost to HM Treasury as it would be paid for by bookmakers.

• Levy reform, should it be approved by DCMS, will only go some of the way to mitigating the impact of affordability checks, given the impact of the proposed checks is likely to be around £50m per annum.

• British racing is actively working with betting operators to improve our racing product and make it a more attractive betting proposition, with a view to growing revenues for both racing and betting. We have made changes to the 2024 Fixture List including a two-year trial of Premier Racing.

• Racing is operating in a challenging environment where wider economic pressures such as high inflation and tax rises are increasing cost bases for businesses across the industry. For example, average racecourse costs grew by 11% in 12 months from 2022 to 2023 mostly owing to increased energy prices.

• Much of the sponsorship and advertising income that comes into racing is from betting operators, whose income is likely to drop significantly because of the various regulatory changes that have been pursued since the publication of the White Paper.

• Racing’s interdependent relationship with betting means that the sport has often benefitted from sponsorship from the industry. While non-betting related sponsorships have declined in recent years, the racing industry is continuing to work to attract new sponsors to the sport. Major races such as the Grand National are still supported by sponsorship from other sectors.

British racing has been vocal in flagging the potential economic impact of affordability checks. Do you have any estimates as to what they will cost the sport?

• British racing is already seeing the impact of the informal regime of checks that betting operators have introduced in recent years and racing fans are already reducing their betting/engagement with the sport as a result.

• These checks are frustrating and limiting the customer experience for racing bettors given the lack of uniformity between operators. They have already cost racing significant income, with the 2022-23 GC statistics demonstrating a year-on-year drop of £900m in betting turnover on racing. This worrying trend has continued into 2024, with monthly turnover down by 15-20% year on year.

• Modelling undertaken by Regulus Partners has indicated a reasonable worst-case scenario of up to £50m per annum if the proposed affordability checks from Government/Gambling Commission are implemented.

• This impact figure takes into account a severe reduction in income from the Levy by as much as £10-11m per annum. There will also be a resultant loss of value to media rights deals – which are tied to overall GB Betting turnover – and could see the funding from these reduce by 15% (approx. £25-30m). Other impacts will come from general reductions in betting operator investment in racing.

Will there be any impact on jobs and the wider rural economy?

• It is highly unlikely that the British racing industry could sustain itself in its current size with a £50m per annum additional impact on top of the money that has already been lost due to affordability checks.

• Given the unique financial ecosystem of British racing, if prize money decreases as a result of a drop in the sport’s income due to fewer people betting on racing, the money that flows back to racehorse owners and training yards will reduce. This comes at a time when costs for these businesses are at an all-time high.

• This puts jobs at risk at the 500 training yards and 660 stud farms, which collectively employ approximately 10,000 members of staff, as well as jobs in associated supply chains, which operate from within the rural economy.

• British racing is already experiencing issues with its international competitiveness as a result of having the lowest prize money out of any major racing jurisdiction. We’re

• concerned that any reduction in prize money due to affordability may reduce the attractiveness of British racing to international investors and worsen the trend we are already experiencing of horses leaving our industry to compete overseas.

• Such an impact to the rural economy as a direct result of Government pursued regulation would be contrary to the Conservative Government’s ambition to ‘level-up’ rural Britain.

We have heard that affordability checks are unpopular with racing fans. Do you have any facts to back that up?

• In October 2023, British racing ran a ‘Right to Bet’ survey of nearly 15,000 horserace bettors.

• The aim of the survey was to provide clear and quantifiable evidence of racing fans’ opinions on affordability checks that could be shared with the Government, the Gambling Commission and politicians.

• The results of the survey reaffirmed British racing’s grave concern that affordability checks as currently proposed have the potential to severely harm the future of the sport:

  • 1 in 4 bettors have already been forced to undergo affordability checks.

  • More than half will stop betting or bet less if new checks are introduced.

  • 1 in 10 bettors have already used a black-market bookmaker.

  • 4 in 10 are prepared to use the black market if stringent enhanced affordability checks are implemented.

  • 9 in 10 oppose postcodes or job titles being used to determine their ability to bet.

• Several prominent owners, including those with horses performing in top level races, have said they are contemplating leaving the sport because of affordability checks, meaning that their significant investment in the industry is lost.

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