Labour conference fringe event may be turning point for racing’s fortunes

Almost three months on from the general election campaign which swept Labour into power – and also included an unexpected rash of betting-related headlines – the new government’s ideas for regulation of the gambling industry, an issue which also has significant implications for the racing industry, remain opaque.

That is likely to change on Tuesday, however, when Baroness Twycross, the minister for gambling, will be a speaker at a fringe event at the Labour conference, organised by the cross-party think-tank, the Social Market Foundation (SMF), entitled “Bad Money: the Economics of Gambling Harm”.

That might not sound like a session which offers much for racing and betting to feel optimistic about. It is at least faintly possible, though, that this might one day be seen as the moment when the gambling industry’s passionate 25-year love affair with gaming products rather than traditional sports betting started to turn sour.

It remains to be seen how much light Baroness Twycross will shed on the government’s immediate plans. Tuesday’s event, though, is being chaired by Dr James Noyes, a senior fellow of the SMF with a long-standing interest in gambling issues, who believes that a significant hike in in Remote Gaming Duty (RGD), the tax levied on gaming profits from products such as online slot machines, is long overdue.

When you live (and gamble) in the racing bubble, it is easily overlooked, but as the veteran campaigner Brian Chappell, the founder of Justice4Punters, pointed out in a recent blog post, the rise of online slots – widely seen as one of the most potentially harmful and addictive forms of online gambling – in recent years has been extraordinary.

The number of active players on online slots has more than doubled in five years, from around 2m to nearly 4.5m – around one in ten of the adult population. Between April 2022 and March 2023, gross gambling yield (GGY) from online gaming products as a whole was £4bn, of which £3.2bn, or 80%, derived from slots.

It was pointed out in this column a couple of months ago that any move to increase the tax differential between betting and gaming products would be a positive one for racing, not least because it would reduce the incentive for operators to use sports betting as a loss leader to attract new customers before pushing as many as possible towards their gaming products.

Duty on betting profits is currently 15%, while the rate for gaming products is 21%. Noyes and the SMF, though, point out that many of the global gambling conglomerates that now dominate the UK market pay much higher rates to access overseas gaming markets. In a report due to be published before the budget on 30 October, it will argue that RGD should be at least 42%, ie. double the current rate.

That would be a very positive development for betting and, by extension, for racing too. And while some will suggest that betting duty would soon follow suit, Noyes recently made it clear that the SMF’s focus is squarely on gaming. “Racing should be untied … from other sectors when it comes to the debate over regulation and taxation,” he said on Twitter/X. “Online slots should be limited but racing should be supported.”

The principal reason that racing has become “tied” to the gaming sector in recent decades is that the multinational gambling operators, having long since swallowed up the “bookies” of yesteryear, have been busily conflating betting with gaming at every opportunity. Racing, for the most part, has stood back and watched it happen, not least during the extended scandal of £100-a-spin roulette machines in betting shops.

The Betting and Gaming Council (BGC), the industry main lobby group, is also keen to blur the boundaries. The clue, as they say, is in the name, and it seems safe to predict that its response to the SMF’s proposal when it is published next month will be volcanic.

But the BGC’s attempt to ride two horses at once may finally be running out of road. Racing’s fortunes are closely tied to betting, not gaming, and if influential critics of online slots like the SMF are keen to untie one from the other, it is very much in the sport’s long-term interests to stop spectating and actively lend its support.