The Horse Racing (Charges on Bookmakers) Order (Northern Ireland) 2016: Review and Consultation Process

03 August 2015

P_guzhar

Minister for Agriculture Michelle O’Neill has launched a public consultation on the rate of charges paid by bookmakers into the Horse Racing Fund (HRF). It will run until the 2nd October 2015, and seeks to ensure that any upcoming changes to this regime in Northern Ireland are fair and proportionate.  

Background

The Horse Racing (Northern Ireland) Order 1990 provides for a charge to be levied on bookmakers and paid into the HRF. These funds are subsequently used to support Northern Ireland’s two racecourses at Downpatrick and Down Royal, the rationale being that as bookmakers are profiting from the horse racing industry, they should thus make some financial contribution towards its continuance and development.

As per the 1990 Order, the charge is to be determined by the Department of Agriculture and Rural Development (DARD) with the approval of the Department of Finance and Personnel (DFP) and after consultation with stakeholders who represent the interests of bookmakers.

The Horse Racing (Charges on Bookmakers) Order (Northern Ireland) 2010 set the charge at £2000 up to 31 December 2014, with a reversion to £1,123 on 1 January 2015 (i.e. the charge set in the 2007 Charges on Bookmakers Order). The charge for those bookmakers applying for an on-course license remained unchanged at £99. Notably, on-course bookmakers must also pay a fee to the racecourses; the fees for Down Royal in 2016, for instance, will be set at £1000.

Recently, the Northern Ireland Horse Racing Group (NIHRG) – which represents the two local racecourses – has made representation to DARD that these charges of £1,123 and £99 are insufficient to meet their current requirements. They therefore have asked that the HRF charge be reviewed, and it is on this basis that the Public Consultation has been launched.  

The Racecourses’ View

On behalf of the two local racecourses, NIHRG make the following points:

  • The charge in Britain is presently much higher than in Northern Ireland.
  • If the HRF made increased prize money available to racecourses, this would improve the quality of racing and lead to increased attendance.
  • There are a number of improvements which could be made to Down Royal, bringing it into line with the 1990 Order. These include improvements to the stable yard and resurfacing the unsaddling enclosure.
  • Improvements could also be made to Downpatrick, most notably with regard to a widening of the track. The existing track is regarded as narrow, meaning the number of horses per race is restricted by comparison to Down Royal.

The Bookmakers’ View

It should be noted that bookmakers are represented by two organisations. Off-course bookmakers are represented by the Northern Ireland Turf Guardians Association (NITGA). Meanwhile, on-course bookmakers are represented by the Northern Ireland On-Course Bookmakers Association (NIOCBA).

On behalf of off-course bookmakers, the NITHGA makes the following points:

  • The amount of money paid by bookmakers has increased in recent years through the payment for media rights of £30k per shop. This is the largest single income stream for both racecourses.
  • Northern Irish bookmakers are operating under gambling legislation which is less favourable than the legal framework operating in Britain. For example, they cannot open on a Sunday, they are restricted in the operation of certain gaming machines, and the planning rules in Britain are more advantageous in regards to the opening and location of new bookmakers’ premises.
  • Bookmakers provide significant employment and bring substantial economic benefits to Northern Ireland
  • Currently there are 325 betting shops in the region, with approximately 1,500 employed and an estimated £29 million added to the local economy each year.
  • Bookmakers have had to consider cuts in expenditure or increases in funding from other sources in recent years due to the challenging financial climate, and would expect commensurate action by the racecourses.
  • Attendances have increased by an average of 5% at Downpatrick and decreased by an average of 2% at Down Royal over the period 2010 to 2014. At the same time, the income from sponsorship has fallen, while spending on facilities and prize money had continued to increase.
On behalf of on-course bookmakers, the NIOCBA makes the following additional points:

  • On-course bookmakers play an important role in mitigation against the manipulation of prices and effectively set the odds for both the Tote and the off-course bookmakers.
  • On-course bookmakers are already paying fees directly to racecourses. As such, it would not be appropriate for them to pay an increase in the charge and, in fact, a reduction should be considered.

DARD Proposals

In view of the above, DARD, in its Consultation Paper, has laid out several suggestions.

A.  On-Course Bookmakers

It is noted that a charge is mandated within in 1990 Order and cannot be waived. However, DARD considers it appropriate to reduce this charge to reflect the fact that on-course bookmakers also pay fees directly to the racecourses.

A £50 charge is therefore posited for on-course bookmakers, down from the current rate of £99. This would result in around 5k, down from 10k, becoming available to be divided between the two racecourses annually.

B.  Off-Course Bookmakers

DARD explores three potential options here.

1.  Status Quo with an Increase for Inflation (£1,450)

Whilst HRF charges have risen substantially on some occasions in the past, increases prior to 2010 were generally made at the rate of inflation only. The current rate of £1,123 was originally set in 2007. Applying a nominal inflationary increase to take account increased costs from 2007 to 2016 would result in an amount approaching £1,450.

Under this option £475k would be divided between the two racecourses annually. Looking at expenditure over recent years, DARD considers this to be adequate for the racecourses to continue to operate on a similar basis. However, it may constrict future development of the courses.

2.  Running Costs and a Separate Development Amount (£2,350)

This figure was arrived at using the £1,450 calculated above, plus an additional £900 per year for a five year period to allow for some development of racecourses.

Under this option, around 475k would be divided between the two racecourses annually, leaving £285k specifically for future development. DARD considers that this should not overburden bookmakers and would provide a level of funding that will allow for capital works to proceed. Notably, at the conclusion of the five year period, the additional £900 would be withdrawn and the rate would revert; allowing for inflationary increases, in year six it is predicted that the rate should be £1,650. 

3.  NIHRG Proposal (£4,374)

On behalf of the racecourses, the NIHRG has suggested an increased to £4,374, to be index linked. This would provide annual funding of £780k for Down Royal and £650k to Downpatrick racecourse.

DARD notes that this represents an increase which is approximately four times the current rate, and queries whether this amount is in fact required by the racecourses.

Conclusion

DARD expresses a preference for option 2 of the proposals outlined above in respect of off-course bookmakers, together with the reduction as noted for on-course bookmakers.

However, before final decisions are made, it now seeks comments from interested parties on any aspect of the Consultation document. It is then expected that DARD and DFP will bring forward any legislation required to the Assembly in early 2016, to be implemented for the new year’s collection of bookmakers’ contributions.   

You may have already received a copy of the Consultation document directly from the Department of Agriculture and Rural Development or, alternatively, you can access it online at http://www.dardni.gov.uk/horse-racing-fund-consultation.htm.

If you are interested in submitting a response, please direct this to:

Department of Agriculture and Rural Development

Room 919 Dundonald House

Upper Newtownards Road

Ballymiscaw

Belfast

BT4 3SB

E-Mail: [email protected]

Should you require any guidance on any of the proposals raised above, or indeed, any other aspect of the Consultation document, please contact Peter Guzhar.

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