Industry figures have once again warned of the structural crisis facing UK horse racing – as well as the ever-growing unregulated market.

As industry veteran Vaughan Lewis warned, there are very few scenarios in which the black market could become more attractive than it already is for horse racing bettors.

The sport has been inundated with regulatory pressure and declining engagement combining to threaten its long-term future. This, now combined with the looming threat of the unregulated market’s boom, leaves horse racing in an untenable position 

Speaking at Deal Me Out’s Illegal Gambling Prevention Summit in Manchester, Lewis, the former Chief Strategy Officer of evoke commented: “If we were to think of a scenario where we could make the black market more attractive, I’d struggle to come up with much more that we could do.

“All of these sweeping changes over the last five years have just made a huge difference to the industry – affordability, banning credit cards, limits on VIPs, limits on auto spins and now the tax changes.

“There has to be a proper evaluation and assessment, and if the impact of these has been wrong, then it has to be addressed and reversed.”

‘Between a rock and a hard place’

Simon French, Director of Orange County Services, described horse racing as being “between a rock and a hard place”, arguing that the sport had isolated itself in wider regulatory discussions, such as the #AxeTheTax movement, without fully understanding the consequences.

He pointed to tangible impacts already being felt within horse racing, such as sponsorship withdrawals, reduced visibility of racing content and fewer markets being priced by operators.

He also addressed an alarming concern for bookmakers and government alike – punters are not bothered whether they are betting with a licensed or an unlicensed bookmaker.

“Fundamentally, racing is not profitable for most bookmakers,” he continued. 

“If you’re a punter, all you care about is getting paid – you don’t worry about anything else. I was chatting to a taxi driver on my way to the station this morning and he had no idea of the difference between regulated, licensed sites and unregulated, unlicensed sites. 

“There’s this idea that someone’s going to scroll through a website to try and find a kite mark to tell them that they’re betting with somebody who’s licensed and regulated. Well, all that means is you’re not going to get your bet on, and it’s going to take longer to get paid if you get your documents approved. 

“So fundamentally, how does horse racing survive in that position?”

Black market getting competitive 

Another emerging issue for the market is that unregulated operators are becoming more sophisticated and competitive.

Operators are benefitting from avoiding costs such as tax, levy payments and media rights fees, allowing them to offer more generous products. 

The proliferation of brand names such as Stake and Rainbet on streaming platforms like Kick has already introduced a unique concept of marketing for firms without a UK Gambling Commission (UKGC) license. 

The black market as a whole also covers a wide range of models, from sites that closely resemble regulated operators to crypto-first platforms, offshore bookmakers and informal betting networks (syndicates). 

Faster payments and a lack of restrictions are just a couple of the factors which are enticing the average punter, who may be betting on horse racing or other sports alike.

Affordability and friction

The discussion in Manchester also highlighted affordability checks and compliance requirements as key drivers pushing customers away from regulated markets.

Lewis pointed to cases where gambling winnings cannot be accepted as a valid source of funds, creating barriers for professional bettors, the likes of which are very prominent in horse racing.

“As an operator, you can’t accept, on its own, that a customer’s source of income is gambling winnings. There has to be an original source of income from before that,” he noted. 

“So if you’ve been a professional punter for the last 10 years, you’ve essentially got no chance. There’s no way that you can justify your source of funds from non gambling, because then your source of funds is gambling.”

French added that the issue is not only customers leaving, but the difficulty of bringing them back.

He said: “Affordability is the biggest issue, but my biggest concern is not that it’s driving people away – it’s how do you get them back?

“Even if you were to just do away with all noise around affordability checks and frictionless and whatever else, the horse has already bolted and now we’re trying to shut the stable door.”

A lack of buzz for horse racing

Panellists also raised concerns about horse racing’s broader appeal and competitiveness as a betting product.

Lewis argued that horse racing has failed to modernise its promotion compared to other sports, saying that attention and engagement have shifted elsewhere.

“All of that buzz has gone to these other sports which are just much better promoted,” he said. 

“Look at other sports and how they’ve developed – football, Formula 1, UFC, darts. Even look at streaming platforms like Kick and prediction markets in the US.

“Now, some of this stuff is not very nice, but it’s relevant to younger demographics and it’s all around that kind of betting content and building excitement around it. 

“Racing’s gone the other way.”

French added: “It may come as a shock to some people in the industry, but you are not going to see sustainable growth in media rights for horse racing, particularly, dare I say it, for UK horse racing.

“Because guess what? We haven’t got the best horses running here, because the prize money isn’t good enough. 

“It’s a vicious spiral downwards, and can only really be addressed through a complete reset, not by tinkering around the edges.”

Governance issues

Panellist Paddy Desmond, Chief Revenue Officer at The Tote, pointed to governance challenges within British horse racing, highlighting fragmentation between racecourses and competing interests as barriers to progress.

Racing is overseen by the British Horseracing Authority (BHA), but it gets much more fragmented when ownership is factored in. The majority of racetracks are run by the Arena Racecourse Company (ARC), while the likes of Cheltenham, Aintree and Epsom are owned and operated by The Jockey Club.

“I think a lot of it has to come down to the governance of racing,” said Desmond.

“There’s too much power in British racing with the race courses, and because you have four separate race course bodies, they’re not always going to be aligned and they’re not always going to relinquish power. 

“So (it’s tough) getting behind an overarching promotion of the sport, and then getting the trainers and jockeys to play a role as well. 

“Then there’s media rights. I sat in the commercial committee for two years listening to the infighting and it’s just not a good setup.”

A complete reset

The panel as a whole pointed to a need for more fundamental reform across horse racing’s structure, regulation and positioning within the wider betting ecosystem.

French put damningly, that without significant change, the sport faces a seriously tough future.

He warned: “Unless prize money improves, racing’s on a very difficult path.”