Online betting exchange Betfair has signed a landmark five-year commercial deal with British Racing, which is comprised of the British Horseracing Authority (BHA), the Racecourse Association and the Horsemen's Group.
The deal, which is worth at least £40m to the sport, will see Betfair pay British Racing 10.75% of all revenues on the sport from its UK customers.
The agreement also contains substantial guaranteed minimum payments, "reflecting both parties' confidence in the strength and growth potential of British Racing", the firm said.
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The agreement will replace Betfair's current annual voluntary Horserace Betting Levy payments, with the agreement taking effect from the 51st Levy Scheme covering 2012-13. Betfair has already made upfront Levy payments of £6.5m for 2012-13 which will be offset against payments due under the new commercial agreement.
Martin Cruddace, Chief Legal and Regulatory Officer at Betfair said: "This deal is a genuinely historic moment. For the first time, British Racing and Betfair have proved it is possible for us to work together on a truly commercial basis. Of course it has not been easy but the end result completely justifies all the hard work.
"We hope that this marks a new era and call on other betting operators to adopt similar agreements to help ensure a strong, healthy and vibrant horseracing industry in this country."
The agreement is the first of what could become standard practice for both industries, given that the Department for Culture, Media and Sport (DCMS) has indicated that it intends to consult in 2012 on proposals to reform or replace the Levy, which could include options to require all betting operators licensed in Great Britain that take bets from British customers to enter into their own commercial deals with British Racing.
Betfair's share price fell 1.05% to 752p by 13:02.
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