HBLB Levy Sizing: How Bookmaker Profits Fund British Racing

HBLB Levy Yield Breakdowns: Funding British Racecourse Budgets

The first time someone asks me to explain the Horserace Betting Levy Board, I usually start with a question. Why does prize money at British racecourses sit so close to what it does, rather than collapsing or doubling? The answer to that question runs through a body most punters have never heard of, funded by a tax most bookmakers do not advertise, sustaining a sport most readers have never connected to the mechanism. The levy is the quiet plumbing under British racing. When it works, nobody notices. When it fails, prize money falls, the breeding industry contracts, and the tracks that depend on a healthy fixture list start to wobble.

The Horserace Betting Levy Board collected £108.9 million in statutory levy during 2024-25, up from £105.3 million the previous year – the highest yield since the 2017 reform of the levy mechanism. Total HBLB income reached £113 million. The board pledged £93 million towards prize money and regulatory-integrity functions across the same year, approving roughly £11 million of new grants. Reserves grew to £58.7 million by year-end. The board forecasts a £103 million yield for 2025-26.

This is the working manual. How the levy is calculated, who pays it, where it goes, and how the figures stack up against the rest of British racing’s economic picture.

The 10% mechanic and the £500,000 threshold

The levy formula is one of the simplest in regulated gambling. Bookmakers pay 10% of their gross profit on UK horse racing to the HBLB. The 10% applies above a per-operator annual threshold of £500,000 of UK racing gross profit. Operators below the threshold pay nothing. Operators above pay 10% on the portion of profit that exceeds £500,000.

The threshold matters more than it might first appear. It exempts small bookmakers – independent shops, small online operators, niche specialists – from contributing while ensuring the major books, where the bulk of UK racing turnover sits, do contribute. For an operator generating £20 million of UK racing gross profit, the £500,000 threshold is essentially noise. They pay 10% on £19.5 million, contributing £1.95 million per year. For a small operator generating £400,000 of UK racing gross profit, they pay nothing. The structure is progressive in operator scale but flat in marginal rate.

The gross profit calculation is bookmaker-friendly in one respect – it is gross profit, not turnover. A bookmaker turning over £100 million on UK racing at a 7% gross margin records £7 million of profit, of which £6.5 million is subject to the levy, generating a £650,000 contribution. The same operator turning over £200 million at a 5% gross margin records £10 million of profit, of which £9.5 million is subject to the levy, generating a £950,000 contribution. The structure rewards operators that drive turnover even at lower margins, which historically has been the operator strategy for capturing UK racing market share.

Exchanges sit inside the same framework but are calculated differently. Betting exchanges pay levy on their commission revenue from UK racing rather than on a notional gross profit. The mechanics differ but the principle is the same – a share of revenue earned on UK racing flows back into the sport.

The 2024-25 yield breakdown

The £108.9 million collected in 2024-25 was the highest yield since the 2017 reform, but it sat against a backdrop of declining betting turnover on UK racing. Total betting turnover on British racing dropped 9% year on year in early 2025. Average turnover per fixture fell 14.4% on core fixtures. The Q3 2025 racing report from the British Horseracing Authority showed year-to-date turnover down 4.2% on 2024 and 12.8% on 2023.

The reason the levy yield held up despite the turnover decline is that the bookmaker margin on UK racing has been creeping higher in compensation. As turnover fell, operators tightened pricing – wider overrounds, fewer BOG cap-free races, reduced extra-place generosity – to maintain profit. Gross profit on UK racing across the licensed industry fell less than turnover did, and the levy is keyed to profit rather than turnover. The mechanic insulates the HBLB partly from the volume cycle.

The split of the £108.9 million by operator size is not published in detail, but industry estimates suggest the top five operators contribute somewhere between 60% and 75% of the total. Bet365 alone is widely believed to be the single largest contributor. The remaining operators with UK licences split the balance, with the long tail of small operators below the £500,000 threshold contributing nothing.

Total HBLB income, at £113 million, includes the levy plus interest earnings on reserves, voluntary contributions from certain operators, and a small share from international racing markets covered by the levy structure. The voluntary contribution segment is smaller than it once was – most operators that historically made voluntary contributions have either been absorbed into the statutory framework or have stopped paying as competition has tightened.

Where the levy is spent

The £93 million pledged towards prize money and regulatory-integrity functions in 2024-25 is the headline use of HBLB funds, but the detailed allocation is more granular. Prize money funding flows through the Racecourse Association and ends up at individual tracks, where it supplements race-by-race prize money funded by entry fees, sponsorship and racecourse contributions.

The integrity and welfare spend covers veterinary services, doping controls, racecourse safety improvements and rider welfare programmes. The administrative cost of the levy itself is a small share of the total – the HBLB operates with relatively low overhead, partly because the collection mechanism is automated and partly because the spending decisions are made by a small panel rather than through a layered bureaucracy.

Research and education funding, which covers thoroughbred genetics research, training scheme grants and the broader stable-staff workforce, is another segment of HBLB spend. The amount is smaller than prize money but the impact on long-term industry health is meaningful. The British thoroughbred breeding industry generates roughly £375 million of gross value added and supports around 21,000 jobs, according to industry-commissioned analysis. The levy contribution to that ecosystem is a measurable share of its underlying R&D capacity.

The newly approved grants in 2024-25, totalling roughly £11 million, included targeted spending on issues the board identified as priorities for the coming cycle. The grant programme is one of the more flexible parts of HBLB activity because it allows the board to respond to emerging challenges rather than locking funding into the existing prize money allocation. The board has been measured about how much of its annual budget flows through new grants versus how much sustains the prize money pipeline, with the bulk of spend on the prize money side reflecting the principle that the levy’s primary role is to flow money from punters via bookmakers back into the racing sport that generated the betting in the first place.

Reserves, the 2025-26 forecast, and the tax-rise shadow

HBLB reserves grew to £58.7 million by the end of 2024-25, up from previous years. The reserve growth is a deliberate prudential decision – the board has consistently aimed to maintain a financial cushion against a sudden levy yield decline, and the 2024-25 surplus reflects the policy of building reserves during the years when collection exceeded outgoing pledges.

The HBLB’s own forecast for 2025-26 is £103 million in levy yield, slightly below the 2024-25 figure. The decline reflects the continuing pressure on UK racing turnover and the affordability check effect on punter behaviour. The board’s modelling assumes the regulatory environment remains stable through 2025-26 and that no further structural shifts occur in operator behaviour. The £103 million forecast is therefore the optimistic case under stable conditions.

The shadow over the forecast is the duty rise scheduled for April 2026 (RGD from 21% to 40%) and April 2027 (RBD from 15% to 25%). The Office for Budget Responsibility’s central estimate that the duty changes could shrink licensed industry gross gaming yield by approximately one third has direct implications for the levy. A one-third reduction in operator profitability on UK racing would translate to a one-third reduction in levy yield, dropping the annual figure from £103 million to roughly £69 million. The HBLB’s reserves position is the immediate cushion against that scenario, but the cushion lasts a finite number of years before structural cost reductions in prize money and other programmes become necessary.

The board has been measured in public about the duty-rise scenario, partly because the political process around the duty changes is still active and partly because formal forecasts under the new regime depend on operator behaviour that has not yet been observed. The internal preparedness, based on conversations with industry sources, includes scenario plans for a meaningful drop in levy yield from 2027-28 onwards. The size of British racing’s prize money pool – at a record £194.7 million across 2025 according to the BHA’s annual racing report – depends substantially on whether the levy can hold near its current level. The flagship meetings sit at the centre of that calculation because they generate the bulk of betting turnover, and stake volumes at the Grand National and Cheltenham Festival are the single largest determinant of where the levy yield lands each year.

Written by the editors at High-Stakes Horse Racing Betting.