Bookies in line for tax victory

Betting shop 'tax' looks certain to drop to nine per cent.
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The Independent Online
It was supposed to be jungle warfare, a long and bitter hand-to- hand struggle, but the battle over the Chancellor's one per cent duty handout now seems close to resolution before Tristram Ricketts has even had the chance to knot his bandana. The cut in betting duty announced in last month's budget is now expected to be passed on to punters via a reduction in betting "tax" from 10 to nine per cent, a significant success both for those who place bets and those who lay them.

When Kenneth Clarke announced his reduction in betting duty from 7.75 to 6.75 per cent, he added the slightly mischievous rider that the benefit should be spread between the bookmakers and horse and greyhound racing. The turf's administrators, led by Ricketts, the chief executive of the British Horseracing Board, swiftly let it be known that they anticipated a direct increase in prize money, paid for by higher Levy payments which bookies collect from punters.

The bookies, however, argued that a cut in deductions would stimulate turnover to the benefit of all sectors of the industry, and their view seems, crucially, to have been supported by the government. All that now remains to be haggled over is a sum estimated at between pounds 5m and pounds 8m, which should be available even after the cut to a nine per cent deduction has been implemented. The arithmetic is complicated and the exact figure will depend on such factors as how many punters pay their tax up front, but racing will surely demand a reasonable share.

Some punters see little reason why a small cut in betting deductions - tax on a pounds 10 bet will now be 90p instead of pounds 1 - should stimulate betting turnover significantly. This, however, is to misunderstand the difference between betting and turnover. Average punters can expect a return of around 80 per cent on their overall betting, but since winnings are usually recycled, it will require several bets in order to actually lose - or in the bookies' telling phrase, "bet to extinction" - any given sum.

Thus the betting to extinction of pounds 10 may generate, say, pounds 45 of actual turnover, but a reduction in the betting tax, giving the punter a little extra to play with, might then be expected to generate perhaps pounds 47 worth of turnover. Since the Levy is payable on turnover rather than a punter's actual "spend", any cut in deductions should provide a little extra money for racing.

The bookmakers may have won the battle of the one per cent, but another issue has apparently been resolved less successfully for the layers. The 1996 fixture list, criticised by bookies for being "punter-unfriendly", seems unlikely to be subject to any major changes.

Off-course bookies do not much care for evening or Sunday meetings, which attract few backers into shops. Tracks, by contrast, cannot get enough of these fixtures which, particularly in high summer, all but guarantee huge attendances. The increasing practice of tracks seeking to move fixtures from afternoons to evenings or Sundays has prompted complaints from bookies that turnover was being hit. The layers seems to be supported in this view by the Levy Board, which supervises the collection and distribution of the Levy, but Ricketts is expected to tell a racing industry forum today that, except for a little tinkering with the early-season evening programme, the 1996 fixture list will go ahead as planned.