Wednesday, 30 October 2013

Horseracing's Pocket Money System

Imagine that you have 58 children. I know, you’ll either be full of horror at the thought of the chaos or immersing yourself in the parental bliss that only comes from the love of a small human; but stay with me – there is a serious analogy to be made here... 

You decide to pay them all pocket money, so you split your finances into several pots. You decide to incentivise the kids to take up activities – so you use one pot to match-fund their own contributions: the more money they put in, the more you’ll give them. The problem is, Johnny and Ian have so much money already that you can’t afford to match-fund them penny for penny, so you give them a bit less than they might have been entitled to. 

All of the kids help around the house, but Anthony generates more cash than some of the others; so you have a separate pot which pays each child a proportion of what they generate for the household. Richard and Claire prefer winter activities, but the majority of days that they can attend are cold, wet, miserable, Mondays – so you give them a few extra quid for their effort.

Simon and Charles perform at a higher level; you therefore have another pot which rewards them for playing better quality games. In the meantime, you are keen to ensure that everyone plays nice and fairly, so you keep yet another pot of money to give to the referees and adjudicators.  

All of the children think that the division of pocket money is unfair, which confirms in your mind that you’ve probably got it about right. That, in a nut-shell, is the way in which revenue from the off-course betting industry is distributed by the Horserace Betting Levy Board to racecourses. 

Most racecourse managers believe that their track deserves a greater proportion of Levy funding and I am no exception. In particular, Cartmel receives funding for just five race-days in total – even though a new racecourse could quickly build up funding for fourteen or more days. In effect, the HBLB are saying that children will only be rewarded for taking on extra activities if they are less than 10 years old. I know a few parents who wouldn’t stand for that one! 

The good news, for all racecourses (including Wetherby where Tony McCoy could score his easiest ever victory on At Fishers Cross this Saturday - and Ayr, where Plus Jamais could make an interesting first appearance in a handicap for Jim Goldie), is that the racing and betting industries have recently agreed an historic four-year deal with regard to base levy income.

In a rapidly changing world, particularly where on-line and off-shore betting is involved, this brief period of stability will permit both parties to work on a revision of the commercial mechanisms operating between horse-racing and betting. 

More fascinating still, the bookmakers have agreed to put an additional £4.5 million into a new levy-pot – now we’ve just got to decide how it will be split between the children.

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