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Method or madness?

I’m not sure whether to laugh or cry at the follow-up to the Fontwell Park race name story which I blogged about yesterday.

Yesterday, the reason for us not being able to call one of our sponsored races the “Betfair pays £7m in levy maiden hurdle” was that it was a “political message”. But a further response given to Fontwell by the BHA today states that the reason is actually that they don’t want us to include the part that we pay on our international business. They say that (as I explained in yesterday’s post) we actually pay £6.2million in statutory levy, and the additional £1m (and change) is a voluntary donation which they are not happy to refer to as levy. So we can call the race the “Betfair pays £6.2m in levy maiden hurdle” but we can’t call it the “Betfair pays £7m in levy maiden hurdle”.

Is it just me, or is that just plain weird? The reason our international contribution is a voluntary donation is that there is no statutory mechanism by which it comes as levy. The BHA is, sensibly, anxious to get levy on bets placed on British horseracing, wherever the bet happens to be placed: the non-statutory nature of the international portion is therefore doubtless a frustration for them, and you would think that they would do everything they could to imply that it is money they are entitled to, rather than because we believe it right that we should pay it, so that other betting operators might follow suit in giving it.

Instead, they have fallen over themselves to point out that it is nothing more than a donation, which just emphasizes that it should be passed around on an annual basis to whatever the donor thinks is the most deserving cause.

I’d be fascinated to know the logic by which that is thought to be the most sensible approach.

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8 Responses

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  1. ilarilovefilm says

    Mark – I would be interested to know if there was any truth in the story printed in the Racing Post on 16th December 2009, by Grahme Green:

    "BETFAIR on Tuesday reacted angrily to what they perceive to be the BHA joining forces with fixed-odds bookmakers to gang up on them over their financial contribution to British horseracing.

    The world's dominant betting exchange last year paid a voluntary levy of about £1.3 million to the sport, but a senior Betfair source told the Racing Post on Tuesday night: "If British racing is going to jump into bed with our competitors to seek an outcome that is ultimately damaging to our business, we have to question whether continuing to pay the voluntary levy is commercially sensible."

    The story continued…"

    If that statement made by a senior Betfair source is true, it would seem to be at odds to what you state:

    "…we believe it right that we should pay it, so that other betting operators might follow suit in giving it"

    Or is the payment made for 'politcal' reasons as it would seem from the source quoted in the Racing Post story?

  2. leonthefixer says

    Hi Mark,

    To be fair to the BHA they are correct in asking you not to refer to Betfair's voluntary payment as a levy as the payment is not imposed upon you. You have a choice as to whether or not to pay it and therefore it does not fit the definition of a Levy.

    However, as you are well aware something needs to be done to make it compulsory for all betting operators to pay the Levy amount on bets accepted on UK racing when they are based abroad. The current situation is unworkable long term. Racing can not rely upon voluntary payments to fund it. The biggest mistake was during the agreement on a method of gross profits tax that no legal requirement was made of the operators to remain onshore and if they moved offshore that they would have to continue to make the Levy payment.

    However, we are in the situation that we are in and perhaps some leadership from those in racing is required and that they start to look at the long term future of the sport rather than short term gains. It is not possible for the government to ban the offshore operators from advertising as I understand, however, there is nothing to stop racing having a carpet ban on offshore operators who do not pay the voluntary 'levy'.

    The problem seems to me that there is a distinct lack of leader and thinking at the BHA and racing continues to be its own worse enemy by accepting short term gain in the form of advertising payments which long term are damaging the sport.

    Everyday you see race courses and racing media advertising the offshore telephone numbers and websites of the betting organisations that contribute nothing to the levy. This is bleeding the industry dry slowly but surely and it seems no one is willing to do anything about it.

    For example, this evening's card is sponsored by Digibet which as far as I am aware are based offshore and as such contribute no Levy, though I may not be correct.

    So Kempton receives it small amount of advertising money however we lose yet more punters to offshore operators. Likewise on the inside of the course there is advertising board after advertising board suggesting people bet online with William Hill who to my knowledge base their online business offshore and as such do not make a levy payment on bets struck in this manner.

    Or perhaps I am wrong and racing should continue to tell those i.e. the punter, to bet offshore so that they receive much less Levy as the advertising earns them a lot more than the potential Levy payments would and the advertising that the bookmakers would no doubt want back once they moved back onshore or agreed to make a Levy contribution.

    As far as I can tell, contrary to what Paul Roy said, about shouting the names of operators who make a voluntary payments from the roof tops, racing is in fact doing the opposite and shouting the names of those who do not!

  3. MD says

    ilarilovefilm – the answer is that we have always held to the principle that we want to pay for the racing that we cover.

    That principle isn't limited to the UK: we wrote to the Australian Racing Board before we started to cover Australian racing, saying that we understood that we had not agreed a deal by which we should pay them and we would backdate any subsequent agreement to the first day we started to cover it, because of it. And we were paying a voluntary contribution to Irish racing, in line with what we pay in the UK (10% of our gross profits on their racing), again for the same reason, until HRI suddenly demanded that we double the payment.

    But these things have a limit. I am a godparent, and I agree in principle that I should buy my godchildren Christmas and birthday presents. But if I never get any thanks for them, then I will forego that principle, because I think that there have to be two sides to the relationship. It is an option: a right, but not an obligation.

    We have made a point of paying British racing, as if all our business came through the UK. In exchange, what has happened? You will have your own view, but we feel that we have continually been hit on the head for our trouble. And yes, that gets wearing.

    So, we have, to date, held to the principle by which we set out our stall many years ago, when we first approached the Levy Board and told them we felt we should be included in their calculations. (It's amusing to remember that originally, back in 2000, they disagreed: they thought we were going to be an administrative hassle and we were only asking them because it would give us credibility and put us on the map.) I hope we continue to do so, and I think if we got anything approaching support out of the partnership, it would not be in doubt. But equally, you have to remember that it is, as leonthefixer points out after you, a voluntary contribution. We give it despite there being no statutory mechanism by which we should, and we are, as far as I am aware, the only betting operator in the world which does so. It's a lot of money to give away when in return you get only on-going, aggressive, opposition. And yes, it is fair to say that a great many people within the business believe that we owe more to other stakeholders who support us (or at least don't actively attack us), to whom there is no statutory mechanism to make a return either but who in principle we would be happy to support. We could, for example, add significantly to our already large sponsorship in horseracing, and pay money directly to horseracing partners who don't actively lobby against us.

  4. MD says

    leonthefixer

    Strictly speaking, I would say that it does not count as STATUTORY levy, rather than levy at all. The whole gambling industry funds the GREaT foundation by what is called a voluntary levy. It's still a levy. But I understand your basic point about the difficulties that arise as a result of it being voluntary.

    If I genuinely believed that the reason for the objection was the statutory/voluntary differential, I would therefore say "fair enough"; and we could get on to your main point about sponsorship and partnership, which you may have heard me agree with before.

    In reality, though, I don't believe that that was the reason. Indeed, I know perfectly well what the first reason given was, because we were told it yesterday; and there was no mention made of the difference between one payment and another.

    So, personally, I find it exceptionally unlikely that the Fontwell debate would have been had if it had been another operator's sponsorship rather than Betfair's, for the reasons laid out in the thread entitled 'racing dinners'. You may argue to the contrary, perhaps; but I would maintain that there is a decent-sized body of evidence that supports the theory that when ever the name Betfair is mentioned, otherwise sensible people suddenly can't see the wood for the trees.

  5. The Geek says

    If levy is the word they disagree with, perhaps a slight re-wording, using the word "contruibutes" instead. Or perhaps…..

    "Betfair paid BHA £7.Xm in 2009 maiden hurdle"

  6. MD says

    TG – interesting point. From our side, though, if it's contributes, we think the number is a lot higher: for example, we fund the Jockeys' doctor; we have a significant sponsorship programme which sees us travel to every racecourse in the country in a two-year cycle (a programme which I can assure you is not justifiable on a commercial basis), and various other additional contributions which we feel would fall under the wider definition. One good example is that we funded the research into frost covers which go some way to helping mitigate the cold weather.

  7. The Geek says

    If the BHA are playing on words, I’m sure you will come up with a similar statement that hammers the message home to the intended audience.

    To the average Joe like me who isn't aware of the industry in any great detail, whether the figure is 6m, 7.2m or greater will make little difference when I am made aware of the race name. Notwithstanding this conversation, and a few bits I picked up on in the research of Betfair over time, I wouldn't have a clue what it meant, and probably wouldn’t care if I did.

    So the message I suspect is well & truly aimed at those with a much greater knowledge of the industry than I, and it seems quite clear you are wanting to make a strong political statement of fact to that segment of the audience. Personally { If I had more than a £10 advertising budget } I wouldn’t waste my money on it, as I think it would be better spent on attracting the wider audience. But then I know little of the industry at that level & even less about race sponsorship

    Whatever the name on the day, I will spare a smile for it.

Continuing the Discussion

  1. The Ministry of Silly Walks | Mark Davies linked to this post on October 7, 2010

    […] offshore punters as Levy, the BHA told them in no uncertain terms that it was not Levy at all. I blogged about it at length at the time, and suggested that the BHA were ill-advised to insist it wasn’t Levy. […]

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