By Keith Weir
LONDON Oct 24 (Reuters) - Gambling companies will pay some 73 million pounds ($116.4 million) to fund British horse racing next year after agreeing to maintain the terms of an annual levy now seen as outdated and needing reform.
The levy was established more than 50 years ago and was designed to ensure that bookmakers helped to support the sport and reward horse owners with adequate prize money.
Its value peaked at over 100 million pounds but has declined in recent years because many bookmakers now base their online operations overseas and are not obliged to pay it.
Under the terms of the deal for 2013/14, bookmakers will hand over 10.75 percent of their gross profits from British racing.
Britain's three largest high street bookmakers - William Hill, Ladbrokes and Gala Coral - have agreed to contribute at least 45 million pounds to the total levy.
The sum also includes an estimated 7 million pounds from betting exchange operator Betfair plus contributions from smaller betting firms.
"This will provide further stability and make possible significant additional expenditure on prize money in 2013," Levy Board Chairman Paul Lee said.
The racing and gambling industries are looking to move to a more conventional commercial model whereby bookmakers agree to provide multi-year funding in return for a guaranteed number of races to be staged and agreed numbers of runners.
That could be modelled on a deal done with Betfair this year and which is counted as part of the levy money.
Horse racing remains Britain's second most popular spectator sport after soccer. The flat season ended with a flourish last weekend when Frankel, the world's top-rated horse, won the Champions Stakes at a packed Ascot to maintain his unbeaten record in his last appearance.
However, many owners say times are tough for everyone but those at the very top of the sport and are calling for more prize money to be made available across racing.
The government has to step in if the levy terms cannot be settled by the end of October. It is unusual for agreement to come with a few days to spare and the horse racing industry saw that as a sign of an improved relationship with bookmakers.
"The flaws in the existing Levy mechanism do remain, and its collection base is far too narrow for the way in which British punters now bet," said Paul Bittar, chief executive of the British Horseracing Authority.
"We look forward to government progressing its proposals for a long-term, enforceable replacement for the Levy in line with its commitments, and a modern framework for the relationship between the two industries."