A ruling in the British Court Of Appeal against the British Horseracing Board has finally sunk the financial strategy being pursued by racing's rulers since 2000.
Three Appeal Court judges, sitting in London, turned down an appeal by the BHB from the European Court Of Justice against a ruling in favor of bookmaker William Hill.
The BHB put a brave face on the situation but it is notable setback.
Martin Broughton, the BHB chairman, said: "It is a black day for British racing because the court's decision prevents lift-off for a number of the sport's plans to further increase its income. However, it should not be described as a crisis for BHB or for racing. There will be no immediate damaging impact, and British bookmakers will continue to make payments through the statutory levy, which has recently been extended until 2009. Contracts between BHB and others -- including bookmakers in Ireland -- remain in force. These contracts are for the use of British racing's data, which has been and continues to be supplied."
However, these Irish contracts, which provide a significant part of the BHB's current income, are also under legal challenge. Bookmakers overall paid the BHB £17 million last year.
The BHB's strategy had been to try and charge British bookmakers for data rights which would replace the longstanding statutory levy which bookmakers now pay as a charge on gross profits rather than on betting turnover.
It was thought this would provide a sharp boost to British racing's income but the court has now blocked the route, at a cost of £1.5 million in legal fees.
Broughton warned the repercussions may be felt around the world: "For the future funding of British racing as a whole, winning the case would have meant serious progress. Instead, we now look to Lord Donoughue's future funding of racing review group with a greater sense of urgency.
"We have long believed that a commercial mechanism is the appropriate vehicle for funding British racing. It remains right for us to have exploited and commercialised our product in recent years, which has resulted in substantial additional income for all the sport's constituents.
"The court's finding in favor of William Hill will affect all racing jurisdictions around the world, who were looking to us for a precedent. We will be seeking clarity as to why our database, which involves substantial investment in the obtaining and verification of information, is not protected. It would appear that most existing databases, and the protection they receive under law, have been neutered by the judgment."
Greg Nichols, the BHB chief executive, added: "I am not trying to preempt the work of Lord Donoughue's group, but every other racing jurisdiction in the world receives statutory support. That group now has to accept that the database is not the solution, and work to find an alternative commercial route. We were trailblazers, if you like. And I believe it was right for us to look to exploit the rights we believed we had in order to make the bookmakers pay a fair amount. There has still got to be a commercial agreement. British racing, the best racing in the world, is worth £750 million gross a year to British bookmakers. That tells me there is something there, something of substance, to sell.
"If we are going to be criticized," Nichols continued, "then we would prefer it to be for doing something rather than for sitting on our hands. Extending the revenue stream to racing was a noble ambition, but we weren't vindicated."
