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Offshore betting tax and levy bill introduced in the Commons

A long-touted, but never developed until now, Bill to bring offshore betting from UK residents into line has been introduced in the Commons by @matthancockmp. The crux of the plan is to stop the big High St bookies skiving offshore and avoiding paying tax and levy on wagers which pass through their servers in havens like Gibraltar with a much kinder tax rate. Almost all the big betting firms now run their online and/or telephone betting operations outside of the UK, paying tax and levy only on their High St operations, although some volunteer to pay the horse racing Levy at least as if they were based here.

Running offshore to minimise tax is not a new thing and it's certainly not confined to just the betting industry. But like all businesses who operate in the UK and then run their taxes through another country with no benefit other than profit maximisation, it costs jobs, tax revenue and the flow-on economic impact from those salaries not being paid in the UK. And then there's the issue of the racing industry whose funding seems to only be heading one way. Bookies claim on one hand to not need racing as it's no longer their biggest sport, then as soon as there are cancelled meetings, it's a crisis and more meetings need to be held to make up the shortfall. Let's have the cake and eat it too boys!

What does the Bill entail? Hard to tell for sure as I haven't seen a draft of it, but the MP behind it has made several comments on Twitter. Sounds to me that the bill is too grandiose and idealistic to achieve its goals. The lauded example is France, with sites not having a licence blocked and major firms giving up in respect of the legislation. But the UK has never had a harsh policy on law enforcement, in fact it's constantly slated for being soft. Do you honestly expect the UK government to be able to force banks to block payments going to offshore betting firms? Not a chance, they can't even get them to admit the tiniest bit of guilt in the global financial crisis. Big bookies here have regularly taken the racing industry and government to court or to task over taxes and restrictions, and have a strike rate almost as good as Black Caviar and Frankel. Expect a messy fight, particularly if the proposed tax rate doesn't encourage firms to come home.

The step too far part of the Bill could be the demand for exchange layers to pay Levy themselves. Time and again this has been defeated in government reviews - surely this would mean Betfair then shouldn't have to pay Levy as a company? It would become double charging for the same item. This part of the Bill has obviously been sponsored by a bitter bookmaker, or the William Hill/BHA combo currently trying their luck yet again. High St bookies allegedly don't care about racing - once again, they are having their cake and trying to eat it too with their hypocritical arguments.

If the Bill is drafted properly, then a big plus for punters should be having the vast majority of bets placed from the UK all coming under the same regulatory body. The farce of having a regulatory body in Gibraltar which is prepared to make judgment calls on the integrity of British racing should not be allowed to continue. The racing industry should be empowered to take action on rogues like Barney Curley and any other trainer who accumulates duck eggs next to a horse's name before a miraculous return to form when every man and his dog knows about it, after Barney and his clan have gotten set. The black marks on the integrity of the sport there are just as big as any case involving a horse being hooked. Outsiders, those mysterious folk whom racing administrators are prepared to do anything to get on course, think the only possible way you can win on the sport is by being in the know. If they perceive it's not a fair contest, they'll find better things to do. And don't give me that crap about Curley being a great humanitarian with his charity work.... most mafia bosses and drug barons gain favour in their local communities by supporting the battlers, giving away gifts to the kids etc, all so they stand up for them whenever the cops want to bust them - "He was such a generous man, handing out fivers to all the kids for Xmas..." - yeah, doesn't really matter how they got the money in the first place now does it?

I eagerly await publication of the draft Bill and the shitfight that follows. I sincerely hope that a decent resolution can be found to bring firms back to Britain, improving the economy, improving the rights of punters and improving the coffers of the racing industry. But I reckon that's a tad optimistic....

ADDENDUM - and don't forget, racing could have brought about change itself if it had banded together as one to take action against the levy dodgers. When the premier tracks in the country accept sponsorship money from firms seeking to absolve themselves of the legislated burden of supporting the racing industry as a whole, the sport is doomed. So much division within the industry works as a slow-acting toxin, poisoning the sport for a generation at least. The bookmakers in question will push their 'noble' cause as direct funding to the industry rather than going through the red tape; a hollow argument at best, it's just their way of maximising exposure via voluntary sponsorship rather paying their dues as legislated.

Don't bank on there being huge support for the Bill - it was introduced in the Ten Minute session, i.e. cut to the chase and get it over with. Yes, it was unanimous that it passed to the next stage but that was a 1.01 shot as it is relevant and if it's anything to do with raising more tax revenue, politicians will wake up to vote yes to take it to the next stage. It will be heard again in late March when people have had plenty of time to digest it and pick through all the holes inside...

Comments

  1. Great post Scott, I was looking for more info on the ins and outs of this and I knew I could rely on your blog!

    Not entirely related but I've often wondered why bookmakers don't offer lay bets or bets to lose? The 'bet against your mate' concept on Betfair is no longer promoted and their odds aren't always best these days and I think being able to lay and trade easily keeps a lot of people coming to/betting on the site.

    Even at rubbish prices I think they would attract a lot of customers with a bet to lose campaign but there must be an obvious answer to why bookies can't/haven't done this?

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    1. Webbo - some bookies have tried offering 'not to win' markets but it's a minefield - it turns every market into a two-way 107% proposition. There's a reason you can only bet on one side in the 'Elvis to return to earth in a spaceship' market, because they have no interest taking money in the other side, and would price it up at 115% if they could because only mugs would get involved. Much easier to hide mistakes in pricing in markets with multiple selections - even if the price is off, you still have plenty in your favour. It would also force a few bookies to eat their words re Betfair causing corruption via direct access to betting on losers.

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  2. Yikes Scott don't expect Barney Curly is on your Christmas card list ! It does appear to be general knowledge that his horses often don't seem to run on their merits yet he continues to have a licence to train so presumably he doesn't breach the rules of racing.
    Just a thought but now the press have been taken on and their seedy practices revealed i wonder whether or not those who run racing will have the courage to stamp out nefarious practices.

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    Replies
    1. Nigel - they (the likes of Curley, he's not the only one, just the highest profile of them) know exactly what they can get away with. I think there's a rule any marked improvement after 90 days off isn't queried, plus stewards questioning in the UK & Ireland is pathetic at best. Few questions ever asked and lame answers regularly accepted.

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