The bookmakers and the racing industry have been at loggerheads with each over what will replace the current levy arrangements which sees bookmakers pay 1.5 percent of their turnover to the British Horseracing Board (BHB).
In addition to this, bookies also pay about £13million ($18.3m/EUR21.2m) a year to the racecourses for live pictures into betting shops.
The racing industry's plan is now to combine a one percent payment for live data with a 1.5 percent turnover charge for live pictures, charging bookmakers one payment (about three percent of total turover after the addition of VAT) to one body - the BHB who would then distribute out to the Racecourse Association (RCA). The BHB is seeking up to two-and-a-half percent of betting turnover.
But the bookmakers have argued that a levy/picture/data composite fee higher than two percent would be passed on to the customer through a surcharge, thus ending tax-free betting which was introduced on October 6, 2001.
Instead, they call for a fee based only on gross profits. Bookmakers also argue that it is against European laws for the BHB to receive a levy and try to introduce a commercial agreement elsewhere.
Jowell has imposed a temporary nine percent gross profits tax on bookmakers for one year from April 1, after which the bookies and the racing industry must come up with an arrangement. Under the temporary arrangements, bookmakers are contributing slightly more to the industry than before but nothing near the amount demanded by the BHB.
But the nine percent tax is only based on data. What is of greater concern to the industry is the price which will have to be paid to racing for live pictures - speculation suggests a near three-fold increase in annual payments.
"If a satisfactory arrangement is not in place by that stage, a stand-off between both parties could see betting shops with a much-reduced UK horseracing output," said Andrew Burnett, a sports analyst at investment bank Merrill Lynch.
