Betting Levy & British Racing Funding — Where the Money Goes

The horserace betting levy is the financial mechanism that connects betting activity on British racing to the funding of the sport itself. In 2024/25, the Levy yield reached almost £109 million — the fourth consecutive year of increase and the highest figure since the collection reforms of 2017. That money flows from bookmakers’ gross profits into a statutory body, the Horserace Betting Levy Board, which then distributes it across prize money, regulatory services, horse welfare and a range of other programmes that keep British racing operational.

For anyone interested in where the money behind Southwell’s Class 6 handicaps actually comes from — and why the amounts are what they are — the Levy is the starting point. Every pound staked on a race at Southwell contributes to the gross win that generates the Levy, and the Levy in turn funds the prize money, integrity services and infrastructure that make the next meeting possible. It is a circular system, and understanding it explains both the sport’s financial resilience and its vulnerabilities.

How the Levy Is Calculated and Collected

The Levy is not a tax on bettors. It is a charge levied on licensed bookmakers, calculated as a percentage of their gross profits from bets placed on British horseracing. The current arrangement, established by the Horserace Betting Levy Regulations 2017, sets the rate at ten per cent of a bookmaker’s gross profits on British racing — defined as the amount staked minus the amount paid out in winnings.

The collection mechanism works through the Gambling Commission and HMRC. Licensed operators — both high-street bookmakers and online platforms — report their gross profits on British racing quarterly, and the corresponding Levy payments are remitted to the HBLB. The Board itself does not set the Levy rate; that is established by regulation. What the Board does is manage the income once it arrives, allocating it according to its statutory objectives.

The HBLB’s 2024/25 annual report confirmed the £109 million yield figure. For much of the year, the Board had expected income of around £100 million; the final two months — February and March 2025 — produced bookmaker gross profits well above recent norms, with March’s outturn boosted by particularly bookmaker-friendly results at the Cheltenham Festival. The unpredictability of major festivals means that the Levy yield is inherently volatile from year to year, which is why the Board maintains reserves of between £25 million and £35 million to smooth out fluctuations.

The ten per cent gross-profit mechanism replaced an older system based on betting turnover, which had become unworkable as the industry moved online and betting patterns changed. The 2017 reforms also brought offshore operators into scope for the first time, closing a loophole that had allowed some bookmakers to avoid contributing to the Levy by basing their operations outside the UK. The result has been a more stable and broadly growing revenue stream — though the word “growing” requires a significant caveat, as the next section explains. The Board’s target reserves range of £25 million to £35 million, revised upward from £21 million to £31 million in April 2024, provides a buffer against the inherent year-to-year volatility of a yield that can be swung by the results at a single major festival.

Where the Money Goes: Prize Money, Integrity, Welfare

The HBLB allocates Levy income across three statutory objectives: the improvement of horseracing, the advancement of veterinary science and education, and the improvement of horse breeds. In practice, the first of these absorbs the vast majority of the budget, and within it, prize money is the single largest line item.

HBLB Interim Chair Anne Lambert set out the 2024/25 position directly: “Racing is facing significant challenges so I am delighted to report that in 2024/25 the Board’s expenditure supporting Racing was £94.3m, a 4% increase on the previous year.” Of that £94.3 million, £67 million went to prize money — the contributions that flow to racecourses and are distributed to connections through the race-by-race purses that appear on every racecard. A further £19.4 million funded raceday services: the veterinary officers, stewards, integrity teams and operational infrastructure that every meeting requires. The remaining allocation covered horse welfare programmes, training initiatives, grassroots participation and specific grants such as the £3.62 million awarded in February 2025 for a national marketing campaign.

The prize money allocation reaches Southwell through the fixture funding formula. Racecourses receive Levy contributions based on the class of racing they stage and the number of fixtures in their programme. Because Southwell operates predominantly at Class 5 and 6 level, its per-fixture Levy contribution is modest compared with premier venues — but the sheer volume of fifty-plus meetings a year means the cumulative total is significant. Without Levy funding, the prize money at Southwell’s lower-class meetings would be insufficient to attract the declarations needed for competitive racing.

The Turnover Challenge and Future of the Levy

The headline yield of £109 million masks a structural concern that the Board has been highlighting for several years: betting turnover on British horseracing is falling. Average turnover per race dropped by approximately eight per cent in 2024/25 compared with the previous year — a decline that extended a multi-year trend representing a fifteen per cent fall from 2022/23 and a nineteen per cent fall from 2021/22.

How can the Levy yield be rising while turnover is falling? The explanation lies in gross profit margins. Bookmakers have increased their gross win percentage — the proportion of stakes they retain as profit — through changes to trading strategies, customer acquisition practices and the types of bets offered. Additionally, affordability checks introduced by the Gambling Commission have reduced the volume of high-staking bets, which has disproportionately affected turnover without a corresponding impact on gross profit. The result is a paradox: less money is being bet on British racing, but the bookmakers are keeping a larger share of what remains, and the ten per cent Levy on gross profit therefore produces a higher yield even as the underlying activity shrinks.

Anne Lambert addressed this tension explicitly in the 2024/25 annual report: “This positive news cannot hide that the amounts bet on British horseracing continue to fall, posing a challenge to the sustainability of this level of Levy income.” The concern is that the current favourable gross-profit dynamics may not persist indefinitely. If bookmaker margins normalise, or if turnover continues to decline at the current rate, the Levy yield could plateau or fall — and with it, the funding that supports prize money, integrity and welfare across the sport.

For Southwell, the implications are direct. A sustained decline in Levy income would squeeze the funding available for lower-class fixtures first, because the sport’s instinct is to protect its showcase events at the expense of its grassroots programme. The BHA’s 2024 fixture-list reforms already reallocated some funding from Core fixtures to Premier Racedays, and further compression at the bottom end is a real possibility if the Levy does not hold. The future of the betting levy is, in this sense, inseparable from the future of racing at venues like Southwell — and anyone who follows the track’s results should have at least a passing familiarity with the funding mechanism that makes those results possible.