Bookmakers Profit From Sport, Shouldn’t They Help Pay For It?
What are the principal sports on which betting takes place?
Betting takes place on a wide variety of sports, but apart from horseracing, greyhound racing and football, markets are small with the above named sports being the mainstay of the betting shop.
Does sport benefit from sports betting?
In the UK, betting operators have to pay a statutory levy based on their gross profits on British horseracing (normally 10%) to the Levy Board which then distributes the money to racing. The original purpose of this statutory scheme, which has operated since the 1960s, was to compensate racecourses for the loss of racecourse customers due to the legalisation of off course betting shops. This year the levy will yield some £77 million to racing, but the government is keen for the betting and racing industries to find a commercial replacement as the levy is seen as an anachronism in a modern market economy.
Bookmakers also make around £10 million of voluntary payments to the greyhound industry and the industry has entered into commercial arrangements with Football Data Co who act on behalf of the major football leagues for the use of data for coupons and screen displays etc. The betting industry also makes very significant sponsorship payments to a wide range of sports and to individual clubs. For instance, six of the 20 teams in the Premier League last season had betting firms as their main shirt sponsor.
Will holding the Olympic Games in London in 2012 be good for bookmakers?
Turnover and profit on Olympic sports markets has traditionally been very small. Even with the Games taking place in London, bookmakers have no expectation that this will change.
Shouldn’t bookmakers be funding grass roots sport?
There is no relationship between betting and grass roots sport and the industry would be heavily criticised if it funded youth sport. Sport England’s figures show that through a combination of National Lottery and DCMS funding, sports governing bodies and the sports they represent will benefit to the tune of £213 million in 2009/10, with sport in Scotland receiving a further £133 million over 2 years. The total funding for sports governing bodies from 2009-2013 is estimated by Sport England to be £470 million, excluding such additional commercial revenues as the individual sports may generate.
While we accept that funding of the Olympics has put central budgets under pressure, there is simply no convincing intellectual argument that shortfalls should be met by bookmakers. Many sports governing bodies already benefit from strong commercial revenues, but have chosen not to divert a significant percentage of revenues from elite sport to fund their own grass roots.
Is sport getting a “fair return” from the betting industry?
Obtaining a “fair return” from betting is the mantra of the sports governing bodies and particularly their lobbying body the Sports Rights Owners Coalition (SROC). The concept of a fair return as presented by sport is a misnomer, as it determines from the outset that sports are not receiving the appropriate level of fiscal benefits from the licensed gambling industry. It is worth noting that the latter provides €3.4bn per annum to EU sport alone, with €2.1bn (62%) contributed by private gambling companies.
Surely bookmakers could afford to donate more of their profits to sport?
Those who take this view simply do not understand the bookmaker’s business model. The high street betting industry is a high turnover, low margin retail business with companies owing duties to shareholders, investors and other stakeholders - particularly employees. Any rise in costs in the form of hypothecated tax in a difficult retail trading environment would result in betting shop closures and job losses.
The betting industry already pays more in tax than it makes in profit and provides significant tax yield for the Treasury. Whilst there are synergies between betting and sport (which mutually benefit both industries), bookmaking is a separate commercial enterprise. We simply do not see why the betting industry (which is already separately regulated) should have its profits sequestrated to make up for perceived funding shortfalls in another commercial sector. If government were minded to either create additional state aid for sport or to attempt to invest sport with additional intellectual property rights to the detriment of the betting industry, they could expect a sustained level of legal challenge.
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