Bookies in Big Bust Up
There is a big battle going on at the bookies as Betfair are accused by William Hill of not paying enough taxes and they are also involving the government.
The top man at William Hill, Ralph Topping, has sent a letter to Gerry Sutcliffe the government minister for sport. In it he demands that the ministry launch an investigation into the taxation system as applied to betting exchanges.
Betfair is the largest and best known of the online betting exchanges. These exchanges function somewhat differently from standard bookies in that the betting is carried out by Betfair customers against other Betfair customers. Customers can bet, which is wagering on the positive outcome of an event, such as a horse will win a race, or they can lay, which is wagering on a negative outcome, such as the horse will lose the race. In the conventional bookmaker model, bets are placed against the bookmaker. Betfair makes its money by charging its customers a commission, which is calculated as a specific percentage of their winnings.
It is not difficult to understand why conventional bookmakers are upset. They pay over to the government £250,000,000 a year in taxation as they are taxed on the actual bets made. The exchanges only pay taxes on the commission that they are paid. The bookmakers understandably argue that this is unfair, and that in effect customers who lay bets on betting exchanges are carrying out the same role as conventional bookmakers but are not paying taxes.
In addition, conventional bookmakers are expected to pay a levy to the British Horseracing Authority, and this association is also calling for a crackdown on exchanges.
Betfair has dismissed these claims and have pointed out that the bookmakers have raised the same claims every year of the last eight.
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