The British Horseracing Authority (BHA) has defended its ‘Axe the Racing Tax’ campaign, an initiative which is driving a wedge between its traditional ally in the regulated betting industry.

On 10 September the BHA took the unprecedented action of holding a strike, cancelling scheduled meetings across the country with the support of other horse racing organisations.

The cancellations were condemned by the Betting and Gaming Council (BGC), the trade and standards body for British regulated betting, as well as some of Britain’s biggest bookmakers.

Operators were largely discontent with not being consulted ahead of the strike action, which will have had an impact on betting turnover, particularly in betting shops where horse racing remains a core product.

The debate around taxation includes multiple contenders – racing, operators, suppliers to the industry, politicians on various sides of the party and ideological spectrum, former Prime Ministers, and various reform advocacy groups.

“It is important against that noisy backdrop to be crystal clear about one thing,” read a BHA statement written by Greg Swift, its Director of Communications and Corporate Affairs.

“Our Axe The Racing Tax campaign has only one focus: to protect the sport of horse racing by calling for the sport to be taxed at a different, lower rate.”

Racing vs gambling’s taxation tug of war

The catalyst of the racing strike and the wider debate gripping the gaming sector at the moment was the launch of a HM Treasury consultation into a restructuring of the gambling tax framework.

Betting is currently taxed via three different types – Remote Gaming Duty of 21% on online operators, General Betting Duty of 15% on all operators, and pool betting duty of 15% on horse racing and football pools.

HM Treasury has been consulting on whether to merge all three forms of duty to 21%, increasing general betting duty and pool duty, the two which affect horse racing the most, in the process.

This has prompted criticism and backlash from both gambling and racing, though the Treasury itself states that nothing is concrete while condemning ‘speculation’ of an imminent tax hike as ‘irresponsible’.

Though gambling and racing are both opposed, their opposition has hit a crossroads. Racing in particular has argued that it should be taxed differently to casino products, citing its status as British sport, a mainstay of the country’s culture, and having less connections to problem gambling than products like slots.

Further ostracising the sport from its traditional allies in the betting sector is the BHA’s attendance at a roundtable hosted by the Social Market Foundation (SMF), one of the biggest advocates of gambling reform in the UK with the financial backing of prominent campaigner, fundraiser, and former pro-gambler Derek Webb.

The SMF has notably called for an increase in general betting duty to 25%. Its reports were referenced by Gordon Brown, former Prime Minister and a key architect of the UK gambling tax framework back in the early 2000s, when he called for a gambling tax hike in August this year – though his main reference was the Institute for Public Policy Research (IPPR)

Facing criticism for working with the SMF – whose relationship with the industry can often be described as hostile in a mild sense – the BHA is asserting that its ‘Axe the Racing Tax’ campaign is not aligned with the gambling reform lobby.

“This is why suggestions the sport is working closely with the anti-gambling lobby are simply inaccurate,” Swift remarked in the BHA’s statement.

“The BHA – along with other racing stakeholders – attended one roundtable organised by the SMF in the spring which explored racing’s views on the Treasury proposals.

“With the SMF being an independent think tank well-respected by those in government, it would be remiss of any industry to refuse to share its own insights with an organisation that regularly makes recommendations to those in power, even if there is not support from said industry for every recommendation made.”

Getting political

There are various political voices weighing in on the gambling tax debate. Firstly, the aforementioned Gordon Brown is arguing for a tax hike to offset the financial costs of the government cutting the two-child benefit cap.

Brown has been joined by Lucy Powell, MP for Manchester Central and a rising figure in the party. Proponents of the betting duty merger believe that by using it to pay for cutting the two-child cap the government could significantly alleviate childhood poverty, which is estimated to affect up to a third of British children.

On the opposition benches, the Conservative Party seems to be siding up to horse racing, with party leader Kemi Badenoch and Shadow DCMS Minister Louie French both expressing this viewpoint – though the party is not necessarily on the same side as operators.

The Liberal Democrats, the third largest party in the House of Commons and a potential coalition partner in a future election, have now cast their vote firmly in favour of tax raises – unveiling policies around gambling over the weekend including a doubling of remote gaming duty to 42%.

Finally, there is the Reform UK party to consider, a minority party in the Commons but one which is enjoying huge support according to polling data. Much of the discourse coming from Nigel Farage’s party tends to focus on immigration and cultural issues, but there is a general strand of libertarianism and fiscal conservatism underpinning its ideology which would likely shy away from tax hikes in general.

Amidst all this debate, the BHA’s discourse around betting and gaming taxation is not without merit – various studies have shown that different gambling products carry different levels of harm, as well as generate varying levels of revenue.

Rachel Reeves, Chancellor of the Exchequer, is due to announce the Autumn Budget on 26 November, and both racing and betting risk its often repeated arguments becoming a bit of a broken record.

The BHA itself noted that some of the people who attended its ‘Racing’s Cancelled Day’ event on 10 September were ‘sceptical about whether the Axe the Racing Tax campaign was compelling or cutting through to politicians and the public’.

With budget day a couple of months away, the industry may benefit from changing its approach and suggesting new alternatives to the tax regime, as argued by SBC Media’s Editor-at-Large, Ted Menmuir, on the iGaming Daily podcast this week.

“I don’t understand why no one in the industry or any kind of stakeholders has said ‘look, the real issue here has always been slots or higher risk games and how you categorise them, and could you maybe tax them at a higher rate?’

“Should they be the point of reflection, for generating more cash out of the industry? That could be tabled.”