ARC cuts prize fund contribution ahead of FOBT changes

17 December 2018

The Arena Racing Company (ARC) will cut its executive contribution to prize money for the UK horse racing industry in 2019.

The move is being taken in preparation for the anticipated mass closure of betting shops, as a result of maximum fixed odds betting terminal (FOBT) stakes being cut to £2 from April 2019.

The initial prize budget is now set at £15.3m for next year, down 13% on 2018's £17.5m, and the racetrack operator warned that further reductions cannot be ruled out. The ARC, which owns and operates 16 racecourses across the UK, said that the changes will come into effect from February 11, 2019, and impact 3,406 races across its portfolio.

It said that racetracks are likely to earn less revenue from retail betting media rights, due to a reduction in the number of betting shops across the UK. It estimated around 1,000 licensed betting offices will close as a result of the cut in maximum FOBT stakes.

From April 2019 FOBT stakes are to be cut to £2, with Remote Gaming Duty to rise from 15% of revenue to 21%. The UK government initially set out plans to implement the changes from October next year, but later opted to bring this date forward following mass criticism from MPs and campaign groups. 

Martin Cruddace, chief executive of the ARC, said the UK horse racing industry found itself in a much different place in 2018 than when its most recent funding review took place in 2017.

“We fully understand the importance of prize money across the industry, and do not take such a decision lightly,” Cruddace said. “The well-publicised impact of betting shop closures on racecourses’ media rights income has already started to take effect, and will only increase in the months and years to come.

“As a result of this, ARC simply cannot continue to support our current levels of executive contribution to prize money and unlock all qualifying races, as was the case throughout 2018.

“It is for this reason that we are working with the whole industry to review funding and the allocation of the substantial and hard won increased Levy income to support the prize money levels for grassroots racing that we have, until now, been able to provide.”

Despite this, Cruddace said he accepted the rationale behind the Government’s decision to make changes to FOBT regulations, adding that the ARC will continue to pursue a strategy to reflect the industry's shift from retail to online.

By increasing its executive contribution for 2019, ARC would have 'unlocked' additional prize money from the Race Incentive Fund (RIF) and the Appearance Money Scheme (AMS). Each entity would have been required to pay out additonal prize money had the ARC upped its contribution, per a 2017 agreement between the British Horseracing Authority, Racecourse Association and the Horsemen’s Group. 

Racecourse Association chairman Maggie Carver also outlined the organisation’s commitment to supporting members in challenging financial times for the UK racing industry.

"The RCA and its members will continue to work with Horsemen and the BHA to try to mitigate the situation as the funding environment evolves," she said.

Image: Max Pixel