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.

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