British Racing’s concerns about the impact on the sport of betting exchanges will be pressed home tomorrow morning (Tuesday) by BHB Chairman Peter Savill when he gives oral evidence to the Joint Committee of both Houses of Parliament which is scrutinising the draft Gambling Bill.
In tomorrow’s hearings, the Committee is expected to address a number of issues relating to horserace betting, including betting exchanges. Peter Savill will emphasise British Racing’s strong concerns about the threat which exchanges pose to the integrity of Racing and the sport’s view that exchanges are not currently on a level fiscal playing field, as far as taxation is concerned.
His evidence will complement BHB’s written submission to the Joint Committee in December 2003, which BHB publishes in full today, and which included the following:
• The scale and international nature of betting exchanges represent an unprecedented and substantial threat to the integrity of Racing, which lies at the heart of the racing product, as the number of reports of alleged irregular betting patterns, focussed on losing horses, accelerate on an almost daily basis.
• Betting exchanges create the possibility that any unlicensed person can make substantial profits by the laying of a horse to lose and that an unlicensed bookmaker can make substantial profits without paying the appropriate amount of tax or levy or to Racing.
• The regulator of the Sport, the Jockey Club, can, to a degree limited by voluntary behaviour, monitor the use and abuse of betting exchanges but is powerless unless adequate sanction is created by statute in the hands of the Gambling Commission.
• Betting exchanges, fuelled by the change to gross profits tax, have grown at a phenomenal rate over the last two years to the point where BHB estimate that they will soon match £6bn of stakes (matched stakes) on an annualised basis, operating on an international stage.
• The taxation of betting exchanges creates an unlevel playing field which distorts the market, gives betting exchanges an unfair advantage and results in less money flowing to Government and to Racing.
• The use of betting exchanges by bookmakers to arbitrage market prices results in lower margins for the betting market overall which results in less money flowing to Government and to Racing.
BHB goes on to recommend:
• Recreational layers on a Betting Exchange should be distinguished from non recreational layers by the volume of their laying over a specified time period whereby non recreational layers would be deemed to be in the business of betting and would require an appropriate licence, awarded on the basis of a “fit and proper” test.
• The Gambling Commission should be given powers of investigation and audit to uncover abuse.
• The Gambling Commission should be given sufficient powers of sanction to deter wrong-doing including, but not necessarily limited to, the withdrawal of licences from non recreational users.
• The scope of taxation of betting exchanges should be widened to include the taxation of individual layer’s profits to ensure a level playing field, eliminate market distortions and that betting exchanges and their users make an appropriate revenue return to Government.