Wednesday, 27 January 2010

Deloittes/Ladbrokes report

I'm afraid I haven't read all of the Deloitte report published today by Ladbrokes.

I was all set to: I think it is important to get the full picture, and I take my hat off to Ladbrokes for having commissioned it. I agree entirely with their Chief Executive, Chris Bell, when he says that, "This report comes at a crucial time for the industry and will help inform the Government and stakeholders about the important contribution the industry makes to employment and taxation in these difficult economic times. We hope it will contribute towards more informed policy making and help remove much of the uncertainty that has surrounded the taxation and regulation of our industry in recent years."

But having read seven lines of it, I don't know if it is worth me reading any further. They're the seven lines in a box entitled 'The tax differential', on page 38, and they read as follows:

"Acting on a British betting exchange, a layer can offer bets and profit without paying taxes or levies as a licensed betting operator does (10% of levy on profits on British racing, and 15% betting duty). Efficiency is gained here as instead of the layer paying tax and levy on their gross profits, the exchange pays tax and levy on its commission which is usually circa 3% on the layer's profits. therefore the levels of tax and levy are smaller compared to traditional bookmakers."

This is the same tired old argument which has been run by opponents of Betfair for ten years now. People tried to get MPs to believe it as the Gambling Bill (now Act) was debated, and got nowhere; and then they tried to get the Treasury to believe it, but the Treasury spent 18 months analysing the true picture and rejected it as a massive over-simplification. The Treasury accepted, after detailed and lengthy study both of customer behaviour and of mounds of empirical evidence, that in fact, Betfair's customers (backers or layers) are not bookmakers avoiding tax and levy at all. If you want the arguments why, you can find them here.

Personally, I think it's a shame that a statement that is so obviously political should appear in this report. Ladbrokes have a good factual story to tell: they are leaders in an important industry, the contribution of which needs to be recognised.

How that cause is helped by including within the report a bit of betting-industry political in-fighting with plenty of history, I don't understand. It makes it too easy to dismiss a report whose publication should be welcomed.

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