Monday, 31 May 2010

Betting in cash

I was at the SportsAid quiz at the end of last week, which, I can't resist mentioning, my team won for the fourth year on the trot.

But boasting aside, the most interesting part of the evening for me came before we had even started with any questions, when I fell into conversation early on with one of racing's most amicable and sensible Chief Executives.

Inevitably, conversation turned almost straight away to the levy, which has fallen to £77m this year, which takes it back to where it was about six years ago, if memory serves me right. I think much of the world is where it was six years ago - the price of my house certainly is, for example - but of course this drop has led to a lot of wailing and gnashing of teeth. As Ralph Topping has pointed out in his own inimitable way, the racing industry seems to believe that in the face of the biggest recession in a generation and amid calls for austerity measures from everyone, its funding ought to hold up.

But we weren't actually arguing about the rights and wrongs of the levy. Instead, I suggested a solution to the 'problem' which I had presented to me, which, specifically, was punters using hospitality boxes at racecourses to trade 'live'.

This is, of course, racing's new bugbear. It is evidence, they seem to think, that Betfair punters are trading 'in the course of business'. It is muddled thinking if ever you came across it, and I thought it was about time I tried to explain why.

When it comes to the levy debate, I personally have no argument about 'professional punters'. It just has an argument about professional punters being singled out at one operator specifically. As the Weekend FT as amply demonstrated this weekend, professional punters are not limited to one platform; and it is irritating that racing should attack successful punters on Betfair and not anywhere else, just because Betfair tracks what its customers do.

I pointed out to the said CEO that if I were racing, I would give up arguing, bogusly, that guys who are prepared to spend money in order to try to give themselves an edge are 'in business', when they clearly are not. They happen to be at differing levels of professionalism, but that is an entirely different thing. The minute 'having an edge' makes you in business, then all Racing Post readers are in the net. It's an absurd argument that will never stand up to any challenge, so they might as well drop it and find something that might.

All this I told the CEO, and he asked me what, therefore, I would do about the fact that nobody else tracks betting. And, like our Australian CEO Andrew Twaits did recently, I suggested that if I were racing, I would be making the case to government that betting should be made account-based. It would solve all sorts of problems at one fell swoop.

First of all, it would deal with all the problems which exist in an environment where large amounts of cash change hands: money laundering and fraud would be reduced dramatically.

Second, it would provide data for problem gambling research, which government always says is so bad (without much evidence), and it would save separate and less accurate data collection exercises for prevalence studies.

And third, it would allow us to see how punters made or lost money across the board. If you made money on Betfair but lost it on Ladbrokes, you wouldn't be taxed on your winning portion without being able to offset your loss. And if you made money on one platform, you were not discriminated against relative to someone who made money on another.

People will argue that this is pie in the sky. But is it? I'm not advocating that betting has to be cash-free (although I don't agree that a move away from cash is so difficult, myself... The move out of cash to card-based transactions has been embraced by the younger generation, at least). I'm just suggesting that you swipe your betting account card at the moment you place your bet. It's not difficult; it takes no time at all; and it provides fantastic data for marketing purposes which any other industry would embrace (indeed, most other industries incentivise you to use a card precisely so that they can get that data: do we all think Tesco give us points out of altruism), but which racing and betting seem to think is somehow so problematic that they won't entertain looking at any solutions around it.

Anyway... that was the argument. You can take it or leave it, and I am sure far more will disagree with it than think it has merit. But the response? I kid you not: word for word, it was this:

"But what happens about the person who comes along with £20 grand cash in a briefcase?"

I think my jaw hitting the ground took him aback slightly, because even before I'd had the chance to comment that of all the possible reasons for rejecting the idea, this was not a great defence, since there is only one reason why someone comes along with £20 grand cash in a briefcase, he went on: "People like to be able to use cash without it being tracked. I do it. I pay my builder in cash. That way I save 17.5%!"

I'm not for a second suggesting that my companion is the only person who has ever done that, but there was a certain irony in hearing one of racing's most senior figures arguing against a solution designed to capture so-called 'levy-evaders' by commenting that any move towards greater traceability of funds would make it harder for people to avoid tax that is due.

Monday, 24 May 2010

Change of view

Many of you have asked me why the 'view' of my blog title has changed geographical location from my office to my home, and why I've suddenly cut down the amount that I'm writing.

The reason is that with my job at Betfair having recently changed so that I have responsibility for regulation but no longer for our public positioning, I have been asked not to blog about industry and company issues. Rather than stop writing completely, I have only been publishing things which cannot be construed to be a Betfair view.

This blog has been a useful communications channel for me in my role running our external affairs, but for some people it has now become a cause of confusion as to whether it is an official Betfair channel of communications, or just my blog.

With responsibilities changing, it's now the latter, and is therefore confined to non-industry issues for the time being.

So if you've kept coming back in the last ten days wanting to know my thoughts on David Zeffman's article about betting exchanges; the Ways and Means hearing in the US; the sports integrity survey in PR Week; Paul Roy's interview in the Racing Post; the reaction in Australia to calls from Betfair's Andrew Twaits for betting to become account-based; apparent evidence of the growing black market, judging from EU Commissioner statements; the latest with regard to France now that legislation is in place; or rumours of an attempt to get horsemen to strike; I'm afraid that I didn't publish my view on any of them, but instead merely wrote them up for my own record. Maybe my draft blogs will be like the Beatles' long-undiscovered back catalogue, and one day will all get published at once!

In the meantime, I'm afraid you're confined to anecdotes about where I've been and what I remember from my past, which will no doubt please those of you who have asked for less corporate-speak and more stories!

Friday, 21 May 2010

Ralph Topping

Ah, you clicked on this link quickly, didn't you... Expecting a tirade? Go on, you know you were.

In fact, it was to say, hats off to him. I sent a note out to various CEOs in th gambling industry today, asking them to support a Betfair six-a-side football tournament we are holding in aid of the Anthony Nolan Trust.

Despite our commercial differences, Ralph was the first to answer, confirming that William Hill would be there, happy to be taking part.

Good on him.


Words reaches my ears that Paul Roy and Nic Coward have been holding secret meetings with trainers with a view to calling a one-week strike, should racing not secure what it is after in the current levy debate.

Surely not? It seems such an odd strategy that I struggle to believe it. But my source was at one of the meetings in question, and I can't believe he dreamt it!

Paul Roy

It comes as no surprise that BHA Chairman Paul Roy should once again repeat verbatim the wording that he gave the Racing Post last week, and that David Zeffman put in his article two days earlier, about professionals operating on exchanges, in today's 'exclusive interview' in the paper.

It's no surprise either to see him making statements like, "exchange prices which are very keen but have minimal liquidity at those keen prices".

But both statements go to show that racing has not lost its old knack of saying things it wants to believe, and then believing them just because it hears them said.

The idea that we have 'minimal liquidity' at prices that are 'keener' than those that traditional bookmakers would otherwise make is easily dismissed by anyone who actually looks at our markets.

It may well be that Paul Roy wishes that there was minimal liquidity, and that somehow the traditional price on-course is a fairer price to the punter because it is more reflective of proper volume.

But unfortunately, Paul, it isn't true. However many times you say it.

Thursday, 20 May 2010

Queen's Award

I went to a lunch the other day with the chairman of British Airways, Martin Broughton, who was also once the Chairman, of course, of the BHB (as it was then). He was extremely warm and friendly, and made a point of coming to say hello before we sat down, which was kind.

But my reason for mentioning it is not to talk racing, much as that encounter brings thoughts to mind in a week where there has been plenty to discuss. Rather, it was because at the lunch I sat next to someone whose company has just been given the Queen's Award for Enterprise, and as I told him the tale of how we had gone to collect ours back in 2003, I remembered that it was a story that I had said I would blog.

There are two awards ceremonies when you get the prize: one which takes place at your offices, attended by Her Majesty's representative, the Lord Lieutenant; and the other at the palace, where, if you're lucky, you get the Queen herself.

Neither of ours went entirely according to plan, but both are hard to forget.

The Lord Lieutenant's visit to Betfair's offices in Hammersmith took place on a hot summer's day in which we had decamped from the clutter of desks and television screens on the first floor of our office building, to the wide open and uninhabited top floor of the building. The landlord had given us special permission to use the space so that everyone in the office could come and see Bert accept the large glass bowl, which was displayed prominently on top of a pedestal in front of a fairly cheap hoarding of the type you see at convention centre booths.

Because the fourth floor was uninhabited, it had no air conditioning; and with 150-odd people gathered in the airless space, it was quite warm. The room was plenty big enough; but it is surrounded on all sides by big glass windows, and with the sun shining through, it was a bit like being in a greenhouse.

Unfortunately, the Lord Lieutenant was late. And it was getting hotter, and hotter, and hotter. Eventually, someone decided to do the sensible thing: let's open a window.

Er... let's not. Oh. Too late. Just as the Lord Lieutenant comes out of the lift and walks into the room, the window is opened: a rush of air blows through the building, catching the cheap hoarding like a kite, and collapsing it onto the pedestal, which topples over and - crash! - the Queen's Award hits the ground and smashes into a thousand pieces. Ooops. The photo of Bert receiving recognition from the Lord Lieutentant sees them both clutching only the framed certificate confirming its authenticity.

Weeks later, we were off to Buckingham Palace. It was Ed, Bert, and me; and the start was no more auspicious, when, as our car pulled up to the Palace's gates, I realised I hadn't brought my passport, as identification procedures required. But they let me though, somehow, and in we went, led into a large room where other award winners were milling around, and the Queen was being taken round those who, for reasons unknown, had a yellow sticker on their name badges. Ours were plain white.

We took a glass of wine, as offered, surveyed the scene. Bert was hopping from foot to foot, slightly nervously and in need of a pee. Did we know where the loos were, he asked. A door to the right was indicated, and off he sets - no sooner having stepped away from our little group of three than Ed and I clutch each other in horror: in a straight line between us and the door through which Bert will have to pass is Her Maj, with a bodyguard standing just close enough to her to protect her, but just far enough away that in a normal cocktail party, it was a gap you'd happily slip through with a hand on the shoulder and a quick 'excuse me'. Bert was heading straight for it, and we had visions of him being in a half Nelson, on the floor, within seconds. Closer, closer, and closer he got... And at the last minute, he spotted her, and veered away. Crisis averted.

By the time he got back, we were being briefed on what the procedure was for us to go through and formally be congratulated. Speak when spoken to; 'Your Majesty' first time, "ma'am" or "sir" after that; don't be the first to initiate anything. Three rules. Don't forget them.

We joined the queue: Bert leading, Ed next, me bringing up the rear. Bert still hopping foot to foot, even though he'd had his pee. Just as we approach the door, a change of plan: "you go first" he tells me, slightly panicky, and I get pushed through.

Seeing the Queen for the first time in real life is quite an odd experience. It might seem obvious to say so, but she's a little old lady, and it's a bit like standing in front of your granny. Only, for some reason, you're terribly nervous. She extended her gloved white hand and offered her congratulations. "Thank you, Your Majesty," I said, and went on to the Duke.

The Duke was an altogether different proposition, and not just for being about two foot taller. He looked less bored, and he wanted to chat. "Aaah..." he says, in a drawn-out sort of way. "Congratulations! But tell me... what is it exactly that you doooo?"

I thought that there was a long answer to this and a short one. On the basis that he wasn't going to be over-interested in our risk-management processes, I told him, "we're a betting exchange, sir".

"Aaaah!" he said, like he knew all about it in an age where I suspect Harry Findlay had only just heard about us, "a betting exchange!" I half expected him to tell me his mother-in-law would have been a customer had she still been alive.

Ed followed on behind me, and we greeted each other with a smile and a nervous laugh once we we through. And then came Bert, all of a fluster.

"I can't believe it!" he said. "I fluffed my lines!"

"You what?" we asked.

"When I found myself in front of her, I got slightly covered in confusion. So before she had done anything, I thrust my arm forward to shake hands, and said, "hello!""

Ways and means hearing

The opening statement for the Republicans in yesterday's hearing into the mooted McDermott Bill, had the California senator Wally Herger question the need even to have a hearing on Internet gambling.

“Given the fact that just four years ago the House voted overwhelmingly – 317-93 – to ban Internet gaming , I have to ask why we are even holding this meeting when so many other more pressing issues confront us,” he said.

The bit he seems to have forgotten is that the 317-93 vote was in favour of the Safe Ports Act, onto which the UIGEA was tagged at the last moment. The vote wasn't a vote against internet gambling at all - certainly not by 317-93 - but a vote on a bill aimed to protect the United States against terrorism, which few were ever going to vote against.

I have no idea what the vote would have been had it been on UIGEA alone, and had UIGEA been properly debated. Who knows, it may have been a bigger majority. But it would seem less disingenuous to accept that no proper debate on this issue has yet been had, and then to have it.

Thinking out of the box

I'm surprised by the aggressive response to the proposal by my Australian colleague Andrew Twaits that betting should be made account-based to increase transparency.

Harness Racing Victoria chief executive John Anderson has said the proposal is "absolute nonsense", and "ridiculous", and has said that It would "totally cripple the racing industry."

Meanwhile, the Tabcorp spokesman takes the opportunity to take a pop at the part of our business model his company can't compete with, saying that "If betting exchanges were serious about maintaining Australia's high levels of integrity in betting, they would also agree that backing a horse to lose is one of the biggest risks to the integrity of racing." I wonder if he'd like the spreadsheet I have which allows me to do exactly that, undetected, on the TAB.

It seems to me that having something sold on a predominantly cash basis, and gravitating it to a card-based system, is not actually all that difficult. We have, after all, managed it in our everyday lives, such that many of us now prefer to pay by Switch and Maestro than we do carry around a wallet stuffed with notes and a pocketful of change.

And further to that, what about the advantages? There's a reason why the supermarkets introduced loyalty cards, and it wasn't so that they could give us things for nothing. They have the most comprehensive understanding of our spending habits as a result of it, and they know when to target us, and with what. Why should knowledge of a punter's habits be any different.

Who knows... Maybe all the critics are right. But the comment that ""We haven't done the numbers, but I think it would be catastrophic" is telling. It seems to me to translate as, "Hey, it's new; it's out of the box. We're the racing industry. Please, we don't want to consider something like that."

Wednesday, 19 May 2010


I see more operators are pulling out of France. Some of them, of course, are doing so in order to apply for a licence, but others because their product offering is banned under the new legislation.

Specifically, Betclic has shut down its casino;

Sportingbet has blocked access to French customers while applying for a licence;

Paradise Poker has blocked access to French customers. And it is rumoured that BET365 is to close French accounts.

Meanwhile - quelle surprise! - the PMU have applied for a sports betting licence

Two thoughts spring to mind.

First, any lingering doubts from those among us who still believe in fairies that the French legislation is designed to protect the encumbent player must finally have exploded. The PMU is not obliged, as others are, to close its existing business while it goes through the application process.

The other is that experience has shown that it is actually remarkably difficult to win an account from another operator, because standard levels of customer lethargy mean that however good and competitive your product, people still tend to stick with their existing provider, because it's just too much like hard work to change. Famously, this is why people keep their bank accounts, on average, for longer than they keep a spouse.

This means that all those customers who are having their accounts closed, who will then go to open an account wherever they can, will be relatively unlikely to return where they were once their first operator is licensed. They have to go through the account opening process, submitting details, and perhaps having Know Your Customer checks done as well. Some simply won't be arsed.

This would be wonderful for France if they all, instead, opened with the PMU in the interim; but as the PMU offers neither innovation nor value, the chances are that they will, instead, open with an operator which is acting in breach of French law: in other words, in the black market.

Makes a lot of sense, this French law, non?

The growing black market

I've just seen a report of the presentation in late April by the EU Commissioner Michel Barnier on his work programme for the immediate future of the European Parliament's Internal Markets Committee.

Aside from the fact that he praised the Schadelmose report, my response to which was pre-blog and was therefore published in Parliament Magazine and can be seen here, it is notable to me that the new Commissioner warned against the existence of 15,000 illegal gambling sites.

When the French did their lengthy report into online gambling, the Durieux report, they talked about there being 5,000 illegal sites.

Many times since, I have commented, on this blog and publicly, that 5,000 is an awfully large number of operators, when you consider that after 10 years in the industry, I could probably name you 30 at a push. Now, it seems we have 15,000 operators - three times as many!

To me, it suggests one of two things: either politicians are pulling numbers out of the air for effect; or the failure of politicians to regulate in a way which allows competitive product to be offered to people has resulted (and will continue to result) in the massive growth of the black market.

Which is it?

PR Week, and integrity in sport

There's a very interesting reputation survey in PR Week this week, which asks 3,000 members of the public what impact they think sports scandals have on sport.

It found that 73% of people did not think rugby was damaged by the 1999 drugs expose on Lawrence Dallaglio; 58% think boxing was not damaged by Joe Calzaghe's revelations of cocaine use; and 40% of people felt that snooker's reputation would take less of a knock than John Higgins' and the News of the World's as a result of the recent story there.

I found it interesting in light of my time sitting in the Parry Commission which looked at the issues of integrity in sport.

One of the things that set the betting industry and the sports industry at loggerheads during the meetings for that Commission was the betting industry representatives' view that the extent of the problem which the Commission was being asked to investigate had never been quantified or addressed; and the response of the sports' representatives that it really didn't matter that it hadn't been, because 'just one instance' is 'catastrophic'.

The PR Week investigation doesn't actually cover betting scandals, or indeed other sporting scandals like l'affair Renault or 'Bloodgate': it is restricted instead, to instances of 'entrapment' and undercover newspaper stings.

But it's interesting to see just how sanguine the public is in these instances. I find it hard to believe that they view different types of scandal in a significantly different light; which rather suggests that addressing the quantum of the problem is a relevant starting point.

Friday, 14 May 2010

Sports Industry Awards

Someone asked me earlier in the week if I am now a little bit obsessed by Sir Alex Ferguson, and do you know what, I am beginning to think he is following me around. I was at the Sports Industry Awards last night, and there he was again. That makes three meals I've had with him in a week. Of course, I told everyone I saw at the dinner, for most of the night. Remarkably, though, Sir Alex didn't mention me in turn when he made the acceptance speech for her Lifetime Achievement Award. I guess he didn't want to namedrop.

I have to say that the Sports Industry Awards make for one of the best evenings in the calendar, and I was delighted to get an invite from Tim Lawler, the Chief Executive of SportsAid - the charity which produced the remarkable hit-rate of having supported 18 of Britain's 19 Beijing gold medallists when they were nothing more than promising youngsters.

Because SportsAid was the event's benefitting charity, my evening started through the VIP entrance, rather than fighting through the crowds. Walking up the red carpet, surrounded by snapping photographers, is an experience. I'd imagine so, anyway. Unsurprisingly, I didn't actually find out: the bouncer advised me to 'wait until they've had the chance to get some clear shots of Annabel (Croft)' who was walking in ahead of me. And of course, having done so, I then marched down to witness them peering my way, quickly working out that they had no idea who I was, and taking the few spare moments to look down at their digital screens and check out what they'd snapped to date. Still, it was a bit of fun.

It also meant that once I'd got inside, I was in the little area roped off for the rich and famous, and given that there were plenty of them and it was not a huge enclosure, I can say with absolute honesty, and not even having to pretend a teeny bit, that I was rubbing shoulders with them. Half, it seemed, had been at the League Managers' bash the other night: well, Fabio Capello, Brian Barwick, and the aforementioned Glaswegian, at least.

When I walked in, all of them of them were standing in a little circle which also included Alastair Campbell and Brendan Foster, but Barwick was having none of my brazen attempt to break into the group. As I greeted him, he told me to say hello to my dad - who was, he said, "one of the sports true gents and a proper, proper bloke" - and then promptly turned his back on me to talk to the others. He's a big man, Brian Barwick. There's no getting past that back. It's almost as wide as I am tall.

Never mind: there were plenty more to see. In a week that has seen me recapture lots of moments of my youth, I then spotted a chap called Steve Walford, who, back in the days when I would trail around behind dad at a football ground a week, worked as a liaison officer for Match of the Day. I made a beeline for him, only to discover as I got to him that he was talking to Michael Lynagh, the former Australian fly-half.

I once interviewed Lynagh back in the days when I was working for Five Live at the same time as we were trying to set up Betfair, and it made for a reasonably amusing story which almost saw me lose both jobs at once.

There was a gathering of rugby greats at a lunch at the Rubens hotel in Victoria, and Five Live sent me down to get as many short interviews as I could get. But, they said, on no account miss either David Campese or Michael Lynagh. Doing so was on pain of... well, probably not working for them again.

At Betfair, though, we were having a bit of a crisis. I can't remember why, now; I just know that we were having a lengthy conference call, and my input was required. So there I was at the Rubens Hotel, waiting for the rugby lunch to break up, and trying to do this call somewhere quiet so that no-one got annoyed with me. The place I found was one of the phone booths in the hotel, which is clearly not intended to be a booth for someone on a mobile, but a booth for someone without a mobile, who needs a phone. No matter: I was in it. Anyone needing a long-distance call would have had to go elsewhere.

Every few minutes, I would poke my head out of the booth to see if the lunch had broken up. On and on it went, so after a few "every few minuteses", it became "every five minutes" and then, "every seven minutes or so". You'd think that the longer it went on, the more frequently I would check, not the less. But I was into the call, and you can guess what happened next.

How long it was between the penultimate and the final check, I'm not sure. But, it almost goes without saying, it was too long: the lunch had not only broken up, but half the guests had disappeared; among them, of course, Lynagh and Campese.

Crisis! And not just for me, but back at TV Centre. Lynagh, aware that he had been asked to do an interview, had called them. Where was this bloke they had asked him to meet? My editor that day had tried to contact me; but of course my phone was engaged. As I hung up on the conference call (which, at least, had just ended), my voicemail called me immediately. Three messages. The middle one was "where the bloody hell are you?"; the others, set either side, formed a linear progression from polite enquiry to outright abuse.

Thankfully, Lynagh appeared, moments later, and we did our interview. He, in turn, then called Campo, who had gone to his room. We ended up doing his interview sitting on his bed.

Back to last night, though, where we were lucky enough to be on a table right at the front. It was a hugely entertaining evening: Martin Bayfield, as compere, was as brilliant as ever (even if, inevitably, he re-told half the jokes he had made doing the same job on Monday for the LMA); Betfair was nominated for a sponsorship award for its Fan versus Fan campaign, which was some achievement; Clare Balding came over all weak-kneed after meeting Alastair Cook; and Alastair Campbell got booed.

The highlight for me, though, must have been the moment when Fabio Capello made a short speech, after making a presentation, which left everyone scratching their heads in utter bewilderment. He was absolutely, 100%, impossible to understand. When I woke up this morning to hear on the sports news that the England manager is considering a complete change of tactics before the World Cup, I was left wondering: is he really? Or is it just that the team have spent his first couple of years not understanding a word of what he tells them?

Thursday, 13 May 2010

Olswang: Once more unto the breach?

I haven't yet commented on the article written by David Zeffman in the Racing Post on Tuesday, which was followed up on Thursday.

The more eagle-eyed among you will have noticed that I did, briefly, put up a post entitled 'Olswang' that said, "I won't get into the ins and outs of the piece by David Zeffman in today's Racing Post. I do find it curious, though, that an article flagged as a 'news special' on 'betting exchanges and the law', and headlined 'Frank Exchanges', should be written by someone whose firm is currently acting for the BHA in matters relating to the levy and betting exchanges - but the fact should, inexplicably, not be mentioned." But in the end I took it down.

I did so for a number of reasons.

First, I thought that the Racing Post, which was apparently not aware of David Zeffman's link to the BHA, would do the decent thing and make it clear themselves that what purported to be a full-page article was in fact, through no fault of their own, not much more than a free advert; and I didn't think there should be any suggestion that I was pre-empting that.

Second, I rather took the view that this is a technical legal argument which has, frankly, been done to death. David Zeffman can have his view; he's expressed it before, as I have mine. But the thing is that every time to date that there has been an independent assessment of it, no-one that matters has agreed with him. I'm all for having the debate again, but I thought it was easier to have it in full with the people who will have to decide. As David Zeffman proved, you can't make a watertight case on one page of the Racing Post. Writing statements like, "it seems very likely that some users are conducting themselves as a business" might be enough to persuade people who really want to believe something, but it clearly isn't based on any evidence. It might once have seemed very likely - indeed, for a very long time and to an awful lot of people - that the earth was at the centre of the universe, but saying so repeatedly didn't actually change the facts.

But those caveats notwithstanding, I'm afraid that today I can't resist. The follow-up piece in this morning's paper is surprising, at best.

Consider the facts: a lawyer who is retained by a given organisation which has long been in dispute with a given company on a matter which over the years has repeatedly been considered by various government departments, writes a full-page newspaper article, without declaring his interest or connection, relating to the dispute in question. That this has happened is pointed out by the given company to the newspaper in which the article was published.

Two days later, the paper uses the original article to headline a renewed call by the client of the lawyer to re-open the much-considered issue, on the back of the fact that there has been an article by a lawyer which suggests it could be done. The connection between the lawyer and his client is only included in a quote from the company which is the target of both the original article and the follow-up, in paragraph 9 of an 11-paragraph piece. Paragraph 3 of the article, meanwhile, repeats the unfounded comment deemed by the lawyer to be 'very likely' mentioned above; while paragraph 5 quotes the client using the unsubstantiated view of his lawyer to state that, "we are not just going to sit here and watch professionals operating on the exchanges, in business, negotiating and taking bets when they are not licensed and not paying tax and levy."

You will no doubt have your own view on whether that constitutes journalistic balance. I guess that only if the HBLB were suddenly to open up a consultation exercise on the issue on the back of the article, might the view that it was wittingly or unwittingly kicking off a campaign be reinforced.

But aside from that, let us consider the argument.

Mr. Zeffman claims that "the accuracy of my analysis is not affected by whether or not I'm instructed by a client."

Let us accept that this is true. I have commented above why you should not just believe something that is generally-accepted just because it is generally-accepted, so I will assume that there is not actually any truth in the the generally-accepted notion that lawyers do what you pay them to do.

I therefore accept without question that the accuracy of Mr. Zeffman's analysis can absolutely be unaffected. But on that basis, it can also be not very accurate, whoever is paying his bills.

Let's consider it.

The law is absolutely clear that two things have to be established for someone to become liable for levy as a bookmaker: that they are negotiating or receiving bets, and that they are doing so in the course business. Mr. Zeffman says that the 'key question' is the latter, and it is true that this is the point on which most debate has raged over the years. But let us not forget that it is a two-stage definition, and Mr. Zeffman predicates his entire argument by dismissing the first part with the boldly-stated and entirely unsubstantiated opinion that, "There is no doubt that an exchange's customers are receiving or negotiating bets".

Mr. Zeffman will not be unaware of the response to this opinion of his, since the BHA had were sent it, in full and in writing, eighteen months ago. Let me quote directly the answer they received responding to the question, "Is any party ‘receiving or negotiating bets’ on an exchange?":

"The fact that a betting exchange customer has the flexibility to request a price different to that available, provides no determinative answer because so does a betting shop customer and a racecourse punter asking a bookmaker for ‘the fractions’. All gamblers, whether betting on an exchange or with a traditional bookmaker have the ability to ‘negotiate’ the odds available. It seems to us that no gambler ‘negotiates’ a bet; the arranging of the rules which govern the placing of the bet (and indeed all consequences following therefrom) is conducted by the betting operator (whether Ladbrokes or Betfair).

There is nothing ‘received’ by any customer on a betting exchange – or at least nothing is ‘received’ by a betting exchange customer that would not similarly be ‘received’ by a betting shop punter (a betting receipt, winnings in some cases etc). If the word ‘bets’ in the context of the 1963 Act means ‘stakes’, then of course the stakes are received (and held pending the outcome of the event) exclusively by the exchange operator. If however ‘bets’ equates not to ‘stakes’ but to the standing of loss, then even the exchange operator does not appear be covered by the definition within the 1963 Act.

In short, we do not believe that any exchange customer is ever ‘receiving or negotiating bets’. However, if this interpretation is wrong and the unique nature of exchange betting means that customers are ‘receiving or negotiating bets’ then it is strongly arguable that Betfair (as a pure intermediary) does neither. In this case, what is the justification for Betfair continuing to account for Levy and on what basis has HBLB been accepting Betfair’s Levy payments over the past 8 years?

The argument that both Betfair and its customers are ‘receiving or negotiating bets’ is symptomatic of a ‘cake and eat it’ attitude from the BHA."

Now, whether you agree with this analysis or not, one thing is undeniable: when David Zeffman says that "there is no doubt that an exchange's customers are receiving or negotiating bets," he is clearly, 100%, wrong. There is a doubt. And it would need him, or his client, to persuade a judge that his version of the argument is right, and Betfair's is wrong. This is what the BHA has been trying, unsuccessfully, to do for the last eight years, just as it has, equally unsuccessfully, the whole argument about 'can you be in business purely on an exchange?' - another whole debate which we've repeated continually and can of course repeat again, in my view with the same result. The BHA clearly believes that in doing so, it is not wasting its time over matters it cannot and will not win, when so many other things under its control are being ignored.

"Behind all the myths, the legal reality is relatively straightforward," Mr. Zeffman wrote on Tuesday - a quote repeated in today's article as if it supports the BHA's argument. Anyone would think that in making their deliberations in the past and coming down on Betfair's side, the last government decided to ignore the law, rather than base their analysis on it.

In the Racing Post today, BHA Chairman Paul Roy suggests 'a new approach to a new government', just as racing has made a new approach every time there has been a new Minister, or a new Shadow minister, or a new set of officials at DCMS. Every time, the BHA gets knocked back, because what they need is not new people, but a new argument that actually falls in line with legislation; or, failing that, a new law.

Personally, I don't mind which it decides to work on creating. But continually pretending that their existing position, expressed unsuccessfully for so many years, suddenly becomes true when you tell it to someone who hasn't heard it before, is just insulting to that person's intelligence. Any in-coming administration will have to look at the issues in far greater detail than could be afforded to Mr. Zeffman even in a double-page spread of the Racing Post, and it seems unlikely to me that careful and objective analysis of the position as it stands will come to a different conclusion from any reached to date.

So if I were Paul Roy, I would be deciding what it is I actually want - levy from betting operators, punters, traders, backers, layers, successful backers, successful layers, or professional punters - and then trying to get a law which secures that. Any administration that thinks that reworking a 2005 law deemed to be at least to some extent future-proof makes sense three years after it was actually implemented, can then write a new one.

If that one, as is true now, is consistent in its treatment of the individual interest groups (betting operators, punters, traders, backers, layers, successful backers, successful layers, or professional punters) whoever their customers are (if they're operators) or wherever they choose to place their bets (if they are customers), then Betfair will be quite happy. But you can bet the exact same argument will rage, because this was precisely the debate, held between 2003 and 2005, that led to the perfectly sensible law we've currently got.

Wednesday, 12 May 2010

People and places

I think, when I left my last job at JPMorgan 10 years ago, that if someone had told me where the next decade would take me in terms of who I would meet and the places I would walk into, I'd have been hard-pressed to convince even my mother that I was anything but a fantasist.

But last night, as half of my friends were updating their Facebook statuses either with glee or in mourning, I was adding a name to my list of People I Never Expected to Meet: sitting immediately to my left at dinner was the controversial Conservative Party donor Lord Ashcroft.

And as a result, as David Cameron moved between the Commons, the Palace, and his new home, I got thinking about just how many people and places I have met and seen during my Betfair adventure. It really has been a spectacular world tour, the like of which you might expect to have to hold some serious Office of State to achieve.

OK, so the House of Lords and the Commons are perhaps somewhat run-of-the-mill; so, too, the European Commission. But St. James's Palace; Buckingham Palace; Clarence House; Number 10, Downing Street; the Office of the Majority Leader of the US Senate, where Lyndon Johnson brokered so many unlikely deals; the floor of the Senate itself at the signed invitation of the current incumbent (I still have the ticket!); the Australian Parliament; the Office of the Australian Prime Minister... All are places I never expected to see inside.

Nor did I ever think it likely I would sit next to a Prime Minister at dinner, as I did Down Under (John Howard wears a hearing aid in his right ear, I discovered when immediately to that side of him; that's presumably why he always cocks his head slightly when on camera, so it can't be seen); shake hands with the Queen or the Duke of Edinburgh (a story that merits telling another time for what the Duke said); or be kissed by a Princess. But the last ten years have, I realised as I thought about it heading home around midnight, brought all of the above.

Last night's dinner was held under Chatham House Rules. To be honest, I'm always slightly confused by what that means: if a dinner party comprises company and conversation, can you reveal either one or the other, providing you don't reveal both? Or does reeling off a guest list set you up for the firing squad?

I'm not sure. But, tempting though it is to relay the names of some of the fascinating people present - Ashcroft, though the most high profile currently, was certainly not the best-known in the room - I shall err on the side of caution in the interests of not upsetting my hosts.

Suffice it therefore to say little more than that in a crowded field, it was the most interesting and educational political evening I have spent in a long while, in part because of the obviously fortuitous timing for such a gathering, and in part because of the breadth of views expressed.

A leading politician was asked to grade his party's election campaign on a scale of 1 to 10. The question, 'is it better to have principles without power, or power without principles?' led to vigorous debate. Some present were significantly exercised and outraged by City remuneration packages, and demanded that others justify them. One person genuinely suggested that you are more likely to be over-paid as a bus driver protected by a union than you are if you're a hedge-fund trader protected by no-one; another argued eloquently that the obvious requirement for any government was to pluck its wealthy geese for as many feathers as possible without actually killing any of them off.

On which note, I was sent the following by e-mail the other day.

I think it's rather elegant.

Suppose that every day, ten men go out for beer and the bill for all ten comes to £100.

If they paid their bill the way we pay our taxes, it would go something like this...

The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7..
The eighth would pay £12.
The ninth would pay £18.
The tenth man (the richest) would pay £59.

So, that's what they decided to do..

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball.

"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by £20". Drinks for the ten men would now cost just £80.

The group still wanted to pay their bill the way we pay our taxes.

So the first four men were unaffected. They would still drink free of charge. But what about the other six men? The paying customers? How could they divide the £20 windfall so that everyone would get his fair share?

They realised that £20 divided by six is £3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid £2 instead of £3 (33% saving).
The seventh now paid £5 instead of £7 (28% saving).
The eighth now paid £9 instead of £12 (25% saving).
The ninth now paid £14 instead of £18 (22% saving).
The tenth now paid £49 instead of £59 (16% saving).

Each of the six was better off than before. And the first four continued to drink free of charge. But, once outside the bar, the men began to compare their savings.

"I only got a pound out of the £20 saving," declared the sixth man. He pointed to the tenth man,"but he got £10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a pound too. It's unfair that he got ten times more benefit than me!"

"That's true!" shouted the seventh man. "Why should he get £10 back, when I got only £2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered that they didn't have enough money between all of them for even half of the bill.

Tuesday, 11 May 2010

Glowing tribute

I was, as I mentioned in my previous post, at the LMA dinner last night as a guest of its Chief Executive, Richard Bevan, and I was sitting next to my host when he was paid probably the most extraordinary public tribute I have ever heard. I had to turn around and check that he was still alive.

It came from Sir Alex Ferguson, who addressed the 400-odd guests - all invitees, no tickets sold - before the organisation's annual awards were announced.

Fergie asked what the LMA would do when, one day, Bevan leaves them, because, he said, what Bevan had achieved on behalf of the association was simply outstanding. Then, to add context, he told the tale of the conversation he had with Carlos Quieroz when Quieroz was offered the top job at Real Madrid.

The Portuguese went to tell his then boss of the approach, and asked his advice. Ferguson apparently replied that of course Quieroz had no option but to take the role: it was, after all, one of the leading jobs in football.

But, he added, Quieroz should realise, in accepting, that in fact he would never have a better job than the one he held at Old Trafford. He was, explained Ferguson, loved at his present club; revered; and appreciated in a way that no organisation would ever be able to top.

"And that," concluded Fergie, "is how it is with Richard Bevan here at the LMA."

What a nice thing to have said about you.