Racing syndicates: the legal essentials

The racing industry leads the way in the largely unregulated world of equestrian sport, particularly when it comes to joint ownership schemes such as syndicates and racing clubs. These schemes are well established in the racing industry, but did you know they are regulated and have specific legal requirements?

Perhaps you are setting up a new scheme or thinking of joining one? Or perhaps you already run a scheme and want to check if you’re up to speed on the legal essentials? Look no further than this handy, bite-sized guide to the legal and regulatory requirements of joint racehorse ownership schemes!

Step 1: Establish whether it is a syndicate or a racing club

The British Horseracing Authority (BHA) has guidance on each type of scheme, but to an outsider, the distinction may not be immediately obvious. Understanding the distinction is important because the BHA forbids calling a racing club a syndicate, and vice versa. In the simplest of terms, a syndicate is where every single member owns a share in the ownership of a horse (no matter how big or small); a racing club is when the club owns (or leases) the horse, and club members are simply that: members of a club who enjoy certain club benefits, which often include a share in any prize money won by club-owned horses. Racing club members do not own a share in the horse(s).

Step 2: Check the (correct) Code of Conduct and what it requires of you

The BHA has a separate code of conduct for each type of scheme. Compliance is mandatory where the syndicator / club manager is paid for their role or the method of attracting participation includes invitations to the public.

Both Codes have been updated in recent years. Code requirements mostly apply to syndicators or those who run the racing clubs but there are also provisions in there that affect members, so everyone should be familiar with these regulations. The Codes also come in handy as a first-stage checklist of things to include in the contract between the syndicator (or club manager) and its members.

Step 3: Consider whether any special laws apply and how that plays in to the contractual terms

Top tip: consumer law will always apply if you are selling shares to people who are acting outside the course of a business. English consumer law contains some strict requirements. For example, if you will be selling / buying shares or membership online, you’ll need to check that you’re complying with all the rules and regulations for online selling to consumers (there are a lot!). Consumer law affects the purchasing process as well as the contract, so you’ll need to be sure you’re compliant at every step. Equally, if you’re advertising, you’ll need to ensure you’re complying with the relevant advertising regulations, and don’t forget about influencer marketing / celebrity endorsement guidelines! In short, it’s a minefield, so buckle up.

Step 4: Plan ahead

A contract lawyer’s job is to try to foresee what could happen, both good and bad, so let’s examine one possibility from each camp:

• good: imagine the dream scenario where a syndicate horse becomes so successful that it is retired to stud / as a broodmare. What happens to the shares in that horse and how is any revenue to be distributed amongst the syndicator / club manager / members? There are lots of options here, so anyone setting up a syndicate / racing club should consider how to deal with this in the contract with their members.
• bad: what if a syndicate horse sustains an injury and needs extensive medical treatment? As a syndicator, will you insure the horse? Will you add the members as beneficiaries? You are required to stipulate this in the contract with syndicate members. As a syndicate member, will you insure your share(s)?

Step 5: Don’t forget about data protection

It may sound dull, but ignoring data protection compliance can come at a hefty price, so make sure you don’t!

If you have any questions, please contact Olivia Mulvany who will be able to assist.