Why horse racing is funded by betting

Horse racing and betting grew up together. In the 17th and 18th centuries, Britain’s early “match races” were literally private challenges between owners, usually run over Newmarket Heath, with hefty wagers laid down and the rules agreed in advance. Monarchs and nobles bet on their own runners; Charles II even rode and set out rules for the Town Plate at Newmarket in the 1660s. From the outset, racing wasn’t just a spectacle—it was a wagered contest designed to be bet on.

As the sport formalised, so did the breed and the money. The Thoroughbred was codified around a handful of foundation sires, and the stud book system emerged to record pedigrees—partly so bettors and owners knew exactly what they were backing. Institutions followed: the Jockey Club coalesced to standardise rules and steward fairness; Tattersalls became the commercial hub for bloodstock—and a natural clearing house for settling turf wagers.

By the late 1700s and early 1800s, iconic fixtures like the Derby and St Leger were already major betting events. The on-course “ring” created live prices, the Starting Price system settled off-course bets, and bookmakers’ money underwrote prize funds and programmes. There was no broadcast income and limited gate revenue to sustain a national sport; betting turned uncertainty into liquidity, brought crowds, and paid the bills.

That tight coupling is why, when governments later intervened, they generally chose to harness betting for the sport’s benefit—first through on-course regulation, then via the Tote, and later the statutory Levy. Racing was built as a bettable product; funding it from betting wasn’t an accident, it was the model.

A centuries-old pact: racing thrives when betting is allowed and regulated

Racing’s business model has always been intertwined with betting. When the government created the Tote via the Racecourse Betting Act 1928, it did so specifically to channel betting proceeds back into the sport and improve racing.

1961: off-course betting shops and the birth of the Levy

Legalising off-course betting in 1961 transformed how fans placed bets—and threatened racecourse income. Parliament’s answer was the Horserace Betting Levy: a statutory mechanism to recycle a slice of bookmakers’ profits from British racing back into the sport to replace lost on-course revenues. That core logic still underpins funding today.

How the money flows today

In simple terms, modern British racing is funded by three main betting-linked streams:

• Horserace Betting Levy – currently a 10% charge on bookmakers’ gross profits from British racing above £500,000 per year; Levy receipts reached about £105 million in 2023/24. This supports prize money, integrity services and industry development. (House of Commons Library, TDN)
• Media & data rights – racecourses sell live pictures and data to bookmakers for shop and online use. Racecourse Media Group alone paid £113 million to its shareholder tracks in 2024. (racecoursemediagroup.com)
• Sponsorship and marketing by bookmakers – when combined with Levy and media rights, bookmaker contributions are widely estimated at ~£350 million per year into British racing. (BloodHorse)

Take any one of these legs away, and the stool wobbles. Damage two at the same time—and the sport feels it quickly in field sizes, prize money, fixtures and investment.

What “affordability checks” actually mean

Following the 2023 Gambling White Paper, the Gambling Commission has rolled out and consulted on two levels of checks:

• Light-touch financial vulnerability checks at £125 net loss in 30 days or £500 in a year (policy intent), alongside a staged introduction of deposit-based checks at £500 per month from August 2024, falling to £150 per month from February 2025.
• Enhanced financial risk assessments at £1,000 net loss in 24 hours or £2,000 in 90 days (with halved thresholds for under-25s). The Commission has been piloting “frictionless” versions of these checks with credit reference agencies.

The real-world impact on racing

Even before full implementation, checks have already suppressed turnover on racing. An All-Party Parliamentary Group report (with BHA support) estimates £1.6 billion less online betting turnover on racing over two years—directly eroding Levy and media-rights income that depend on betting activity. 

Lower turnover → lower gross profits → smaller Levy; less betting and streaming → weaker media-rights value; and punters blocked or nudged away from racing → fewer customers, lower liquidity, worse prices and a poorer product. Independent analysis suggests a substantial share of UK bettors now trigger checks (especially at the £150 monthly threshold), amplifying this effect. (iGB)

And now—higher betting taxes?

The Treasury is consulting on harmonising remote gambling taxes into a single duty. Today, general betting duty on sports is 15% of gross profits, while remote gaming duty (online casino/slots) is 21%. Aligning sports betting to the higher rate would materially raise costs on a lower-margin product that already pays a separate 10% Levy to racing. (GOV.UK)

The industry has warned of the consequences, and racing has even announced a one-day strike (10 September 2025) in protest at the planned rise to a 21% betting tax, citing the risk of operators shifting focus towards higher-margin gaming and away from racing.

Anti-gambling groups are keen to add more tax to gambling. Gordon brown highlighted it as a way to reduce child poverty, though he cynically forgot to mention that he was talking about ‘relative poverty’, not actual poverty.

The problem with making tax punitive is that it drives revenue offshore for the tax man, but also operators drive customers to worse betting products.

This isn’t rocket science, it’s just classic behavioural science. Something that seems lost on regulators, campaigners, and the taxman.

Why this double squeeze is uniquely damaging

• Sports betting margins are thin compared with online casino. Increase the tax take and operators rationally promote casino over racing or limit racing markets, hitting both Levy and media rights.
• Checks reduce betting activity, sometimes for safe, solvent customers—shrinking the base from which the Levy and media rights are generated. The £1.6bn turnover drop is already feeding through to racing’s income. 
• Punters migrate: if checks are clunky or intrusive, more betting leaks to unregulated or offshore channels, where no Levy is paid and consumer protection is weaker. Regulators themselves stress checks should be frictionless to avoid this.

Counter-arguments—and why they fall short

• “It only affects problem gamblers.” In practice, thresholds and implementation have captured many recreational racing bettors, especially at the £150 monthly deposit stage. (Gambling Commission, The Guardian)
• “Racing can make it up elsewhere.” The sport already relies on a narrow trio of Levy, media rights and sponsorship. International comparisons show Britain is struggling to keep pace on prize money and investment; squeezing the betting channel narrows options further. 

Bottom line

Horse racing is meant to be funded by betting—that’s been the social contract since 1928 and the statutory framework since 1961.

Blunt affordability checks and higher betting taxes tear at the very fabric of that deal. Get consumer protection right and set taxes that reflect product economics, and you protect both punters and the future of British racing.

Get them wrong—and the sport loses the funding base it was designed to share with betting in the first place. Gambling gets pushed offshore, punters get pushed to worse products, and the tax man loses revenue over the long term, for a short-term bonus.

It doesn’t make any sense.