The foal and the fruit machine

Racing was built on betting, the bookmaker is showing his best customer the door, and the foal stands at the far end of a very long queue for whatever is left.

FOLLOW ANY YEARLING in the Newmarket ring back far enough and you will find a punter. He is not in the catalogue and the consignor would not know him in a crowd, which is a pity, because the pound he staked on a wet Tuesday at Wolverhampton went into the Levy and the pictures deal, then into the prize fund, and from there into the only argument that justifies paying real money for a colt with a good walk and a better pedigree. The argument is that the horse can earn.

It starts at a bookmaker’s counter or on a phone screen, with somebody backing an opinion, and reaches the stud farm, if it reaches it at all, after every other creditor has been to the window.

A declaration, as one should before a sermon and certainly before a bet: I sit on the committee of the Horserace Bettors Forum, have owned racehorses and use Proform data, so weigh what follows accordingly.

Where I am inferring rather than reporting I shall say so.

Racing was built on betting

That is history and not a figure of speech. Parliament created the Tote in 1928 as a state alternative to the illegal street bookmaker, licensed betting shops opened on May 1, 1961 and brought the street corner indoors, and the Betting Levy Act of that year set up the Levy Board to take a slice for the sport.

The Levy and the high-street shop are therefore the same age, which makes racing’s funding model 65 years old and, like the shops, overdue for a refit.

Betfred bought the Tote in 2011 for £265 million and now sponsors the Classics, which a historian would call continuity and an accountant a concentration risk.

The money, and who keeps it

British prize-money reached a record £194.7 million in 2025, with racecourses supplying £103.3 million and owners £26.8 million in entry fees, which means that in effect owners pay for 14 per cent of their own party.

Racing is said to draw about £350 million a year from the betting industry (sponsorship, media rights and betting levy), a family heirloom of a figure, traced to a 2021 estimate commissioned by the Betting and Gaming Council, never audited; the usual condition of an heirloom.

The Levy is charged on bookmakers’ gross profit and not on turnover, and online racing turnover in 2025-26 was £7.85 billion, down 0.4 per cent, while the gross profit made on it rose to £769.3 million, a margin of about 9.8 per cent by my arithmetic.

Record takings from a thinning crowd is the sort of result a landlord announces shortly before the pub changes hands.

The shop window and the till

Racing was once the whole shop. EGR (news publisher for the online gaming industry) reported in 2018 that racing had accounted for around 85 per cent of betting revenues in the 1980s, and for less than a third by then.

In the year to March 2026 online gambling in Britain yielded £8.3 billion, of which slots alone supplied £4.79 billion, while racing yielded £769.3 million, which is about nine per cent of the online total and about a sixth of what slots earn.

Racing, in this telling, was the gateway. The punter came in for the Saturday handicap and stayed for the roulette, and the Grand National became a very large advertisement for something with flashing lights.

That is my reading, and Vaughan Lewis of TEISE Advisory (Strategic Advisory for the Gambling and Gaming Industry), a former bookmaker executive who is candid about his own conflict, argues it is unproven, since a customer who buys two products has not necessarily been steered from one to the other.

Fair enough, but the result is in the accounts, where the guest invited to start the party is sitting in the corner while the machines do the dancing.

The window is coming down.

The Racing Post reported on October 6 that bookmaker sponsorship of British racing is down 17 per cent since last year’s Budget, that bet365 has 77 per cent fewer race sponsorships, and that Betfred has warned it will pull its Classics sponsorship if machine games duty rises, which would leave the Classics in the unfamiliar position of having to introduce themselves.

None of this is a complaint about casinos, which pay a great deal of tax.

It needs a betting market in which turnover grows and the customer who knows the game is accommodated and not managed.

The customer who was shown the door

Racing’s selling point, the thing that set it apart from a roulette wheel, was that it was a puzzle with a price on it in which the better student could expect to do better.

The customer it was built for was the skilled bettor.

The Gambling Commission asked the larger online operators in about 2024: of

14,923,840 active accounts, 643,779 had been restricted, and 46.78 per cent of those were in lifetime profit against 25.42 per cent of all active accounts.

By my arithmetic a winning account was about two and a half times as likely to be restricted as a losing one.

The caveats are the Commission’s own. Accounts are not people, profit is not proof of skill, and operators also restrict for fraud, bonus abuse and affordability. Managing risk is the polite description of the practice, and any other business would call it declining to serve the one customer who has read the menu.

Affordability check, n.: a searching conversation about your finances, held by a company whose own finances are not up for discussion.

The exchange, or what is left of it

The one place a winner was supposed to be able to go was the exchange. Betfair was founded in June 2000 by Andrew Black and Edward Wray on the idea that punters should bet against each other and leave the price to those with an opinion.

After a Premium Charge from 2008, the Expert Fee arrived in January 2025: 20 per cent on rolling 52-week gross profit of £25,000 to £100,000 and 40 per cent above, which Betfair said only a very small number of the most profitable customers would pay. To be called an expert and charged up to 40 per cent for it is a distinction otherwise available only to consultants. The market has thinned.

An independent analysis by Maurice Berk found volumes on British racing win markets in 2024 at about 75 per cent of the 2022 level, and in early 2026 pre-off volume below 70 per cent and in-play below 60 per cent. It is one analysis, not peer reviewed,

but a market that charges its biggest winners up to 40 per cent of their profit will be a smaller market.

In my view the exchange has become a shadow of what it was, and the breeder should mind because it was where the sport’s most honest prices were made.

What the breeder can take from the punter

Breeders can borrow one habit from betting, which is keeping score.

Stallions are judged on winners and earnings, which flatter whoever is sent the best mares, whereas the bettor’s yardstick is actual against expected: a sire’s winners set against the wins implied by his runners’ starting prices once the margin is taken out.

Nobody has shown in peer-reviewed form that this beats pedigree and ratings, so it is a hypothesis.

Ratings say how good a horse was and Proform’s sectional data, which I use, show how it was run, but I have not found a sires’ table published against starting-price expectation.

Breeders are paid last

Britain registered 3,670 live foals in returns to 30 September 2026, down seven per cent from 2025, while the number of mares has fallen by three per cent.

Philip Newton, its chairman, said in July 2025 that “three out of four yearlings fail to make a return on their costs”, a trade claim and not an audited one.

Betting income reaches the breeder thinly. The Great British Bonus has paid £25 million to connections of 1,441 fillies and mares since June 2020, which is about two per cent of the prize fund.

Running out of time

By the time you read this the Budget of October 28 will have decided what became of machine games duty.

If the doubling from 20 to 40 per cent went ahead, Regulus Partners estimate that about 1,500 of the 5,617 betting shops would be trading in three years and racing would lose £92 million a year.

More than 600 shops have closed since last year’s Budget, costing racing about £17 million in media rights and Levy income, according to Arc’s CEO, Martin Cruddace.

Simon Cox, who became BHA chair on October 1, calls the governance “not optimal” and the problems “solvable”, and locates them in coordination, which is a courteous way of describing a sport in which a great many able people stand in a great many separate rooms.

That makes four clocks and no alarm: shops closing in months, legislation taking years, a margin cushion the Levy Board said might not last, and racecourse rights extended to 2033 that secure the asset and not the buyer, who is the bookmaker and has views.

Build a charter for the bettor and the breeder

At present racing does not fund itself. It lives on a slice of someone else’s profit, by statute through the Levy and by contract through the rights, which is a business model in the sense that a lodger has a housing policy.

The practical answer is a betting charter – a short public set of commitments that ensures racing bettors will be accepted on published terms, that their money will be protected, that any financial checks will be made at the point of deposit and not after a win, and that racing will be treated as a product distinct from the machines and the casino.

From the breeding side I would ask for four things: a charter of this kind, racing-specific restriction data from the Gambling Commission, growth in turnover as a stated aim of the sport, and a reserved share of any new Levy for the foal.

The 2017 reform that brought offshore bookmakers into the Levy lifted its income from £65.1 million to £94.7 million in a year, so the sport can move quickly when somebody else has done the paperwork.

Somewhere in the autumn sales a vendor will lead out a yearling and watch the figure climb, and neither the colt nor the room will know that his first real price was set by a stranger with a form book, in a shop that may not be there by the time he runs.