Vaughan Lewis has called for the introduction of a levy on all online gambling – including casino-only operators – to safeguard the future of British horse racing.
Speaking to NEXT.io, the TEISE Advisory founder said: “Racing can and should start the conversation now.”
Currently, the sport is assured 10% of the gross profits over £500,000 that bookmakers generate from domestic races.
But the fate of racing is dependent on the wider gambling ecosystem, beyond just bets on horse racing, and Lewis believes this relationship should now be formalised.
Machine Games Duty
While the racing levy only directly impacts racing revenues, Lewis argues that the de facto funding model is the cross-subsidy of bookmakers selling other products to customers.
For instance, most retail bookmakers also generate revenue via machine games in store, and in many cases they are reliant on these revenues for profitability.
The dependence is such that Regulus Partners estimates more than 4,000 betting shops would close in the UK if the proposed Machine Games Duty (MGD) hike is announced as part of the government’s autumn budget on 28 October.
Greg Knight, MD of Jennings Bet, told NEXT.io his modelling showed that if MGD did rise from 20% to 40%, then 104 of the independent bookmaker’s 212 shops would become unprofitable overnight.
Clearly, this would trickle down to racing and diminish the amount of money the sport receives, which is why Lewis has specified that his proposal should only be taken up after the fight over the budget.
He told NEXT.io: “The immediate priority is stopping a rise that would cost racing £92m a year. A levy reform takes legislation and likely takes years. The shop closures would happen in months.”
Could racing make a trade with Treasury?
Last year, the British Horseracing Authority (BHA) broke ranks with the wider gambling industry to lobby separately for a tax carve-out.
The Betting and Gaming Council (BGC) expressed its disappointment at the time, warning that “carve-outs for one sport are misguided.”
Unlike last year, the racing authority has held firm, and last week – in solidarity with industry and in defence of its own financial interests – urged the government to pass over the MGD hike.
Lewis told NEXT.io that, while the conversation should begin now, under no circumstances should it be offered as a trade.
He said: “Accepting a machine duty rise in return for a promise of future funding reform would be the worst deal racing could make.
“It would lock in the losses straight away, in exchange for a change that may never come. Last year’s carve-out showed what promises are worth once the shops start closing.”
How did last year’s carve-out impact racing?
While racing was successful in lobbying for a carve-out last year, the rise in Remote Gaming Duty (RGD) from 21% to 40% still had an impact on funding.
The latest analysis by the Racing Post suggests horse racing sponsorship has declined by 17% annually in 2026 to date.
Marketing budgets were the first port of call for cuts for many operators in the wake of the reforms announced last autumn.
And with racing perceived to have gone its own way in the lobby last year, it may have been an easy decision to drop those sponsorships first.
How much the RGD hike will impact the level of levy funding remains to be seen. In 2024/25, the levy produced £108.9m, an unexpected 3% increase given that the turnover from racing bets was already trending down.
In June, the Horserace Betting Levy Board (HBLB) projected the 2025/26 yield would marginally surpass that figure, hitting £110m – that’s despite turnover again declining, indicating that profits are still being sustained.
That reporting period brings us up to April, at which point the RGD tax hike became effective, meaning that much of whatever negative impact occurs won’t be measurable until the following year.
Reforming how the money is managed
Lewis is clear that the process could take years and would require legislation – nonetheless, his idea goes further, and he has also called for a change in how the money is managed and distributed.
Since 1961, when the levy was enshrined as part of the Betting Levy Act, the HBLB has collected, managed and distributed the funds.
But the levy isn’t the only source of money, and today, bookmakers pay more money to racing via media and data rights.
These numbers are not public, but the BGC has previously estimated the total cost in 2024 was £315.2m, a projected 10.5% rise year-on-year.
If we assume a rough continuation of that trend, and add in the latest levy projections, the top end of the estimated range for how much bookmakers contribute to the sport annually may be approaching closer to £500m, a figure which still excludes sponsorships.
If those figures seem vague, that is also part of the problem according to Lewis. With the money arriving through various channels and bodies, the issue isn’t bad faith, but it becomes “hard for anyone outside to see what it achieves.”
Growth over stagnation
To increase the levy, he believes racing would need to show how that money is growing the sport, instead of simply propping it up, and for that to happen, there needs to be more accountability.
Lewis told NEXT.io: “There’s a structural issue racing has to face. Some racecourses are run as trusts that reinvest everything in the sport; others are commercial businesses with shareholders to reward. Both have a place.
“But if the government widens a statutory levy, it will rightly ask where public money ends up. The answer has to be conditions that apply to every course whoever owns it: money tied to prize money, integrity, welfare and growth, with published outcomes.”
He calls for three specific steps: the establishment of one independently chaired body accountable for distributing all centrally collected funds, published outcomes detailing how the money is fuelling growth, and a “seat at the table for punters, who fund the sport and currently have little say in it.”
Convincing casino-only operators to pitch in
But why would operators that gain nothing directly from racing agree to contribute?
Lewis says that the pill could be sugared by making the levy revenue neutral, meaning the money is offset against duty.
He also believes that by explaining to operators how racing feeds online gaming revenues, supporting the sport could start to seem like a more attractive proposition for the industry.
There is strength in numbers too, he argues – spread across the whole market, the rate could be lower and still raise more.
He added: “Some won’t be persuaded, and a statutory levy doesn’t need their consent. Neither did the levy for research, prevention and treatment. The 2017 change to the racing levy, which extended it to offshore operators, shows the base can be redrawn when the case is made.”
Making it happen
Regardless, to push any of this through, racing will need political champions, and Lewis believes they are there to be found in MPs with racing constituencies, the cross-party parliamentary group for racing and bloodstock, and DCMS ministers who own both sport and gambling.
Knight of Jennings Bet recently told NEXT.io that for the moment, the reformers have “the ear of government.” So for these potential champions of racing to be effective, Lewis believes common ground must be found.
He pointed out that “both sides should want an independent evaluation of last year’s changes before the next ones. Both should worry about players moving to unlicensed sites.”
In closing, Lewis said: “Racing’s problem is that it argues as an industry asking for money. It needs to argue as a growth story the government wants to back.
“That means 85,000 jobs, the rural economy and a world-leading export, in a sport that is under pressure from policy as much as demand,” he added.
Dingnews.com 09/10/2026