Wednesday, 7 July 2010

Come on down - the price is right!

There is a certain gameshow feel to the Levy Board's statement that it is opening a consultation on whether Betfair has any customers who are liable for levy.

I can almost picture them hiring Cilla Black to make the announcement, given David Zeffman's article in May's Racing Post, which so obviously heralded the start of a concerted campaign that I wrote at the time, "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 [the newspaper] was wittingly or unwittingly kicking off a campaign be reinforced."

Surprise, Surprise!

Perhaps the Nic Coward view is that if this time, racing plays its cards right, it might get what it has failed to get in every past exploration of this subject. Presumably Stuart Hall will be next up, declaring on Coward's behalf that "It's A Knock-Out!" and revealing the killer blow.

Except, a cursory glance at the Levy Board's consultation announcement reveals that there is nothing new in the paper. As Martin Cruddace, Betfair's Legal Director, declared in a statement published by the company yesterday, "After a thorough, independent review of this very issue throughout 2004 and 2005, the Treasury came to the conclusion that the treatment of betting exchanges and their customers was fair. Since then, there has not been one scrap of evidence produced by anyone to suggest the situation has changed".

Indeed, the opening section of the Levy Board's consultation document merely reiterates the extent to which we have covered all this ground before; and paragraph 112 is extraordinary: "First, there is a difficulty with a necessary premise: that there are customers of a betting exchange who are carrying on a business. That is ultimately a question of fact which would need to be demonstrated and in truth cannot be. Leaving aside that fatal initial objection, the following points arise."

So to my mind, this seems to me an admission that the Levy Board already knows that it is about to draw another Blankety Blank. Although I received an e-mail yesterday from one of my favourite racing journalists, who told me that, "David Zeffman I know not. What I do know is that bookmakers operate their business (rather than stand, uselessly, at the course) on Betfair.... Love you to death, love Betfair to death - but none of you are bookmakers and the nuances (dark arts) of racecourse betting are perhaps not your strong suit", in reality, perception and fact here are a long way apart.

While people might be making money as punters, that doesn't make any of them bookies. And as I tried to explain to Racing many times when it was my job to give a monkey's about it, laws, and law enforcement, need to be based on something other than rhetoric. Unfortunately for Racing, rhetoric is all that Nic Coward has on his side in this debate.

To give him credit, at times that rhetoric is Shakespearean in its stature. But at others, like in his statement yesterday, it is laughably poor. So desperate is he to connect Betfair to racing's ills, that he name-checked it in isolation in the most absurd manner, apparently missing completely the fact that the company has decided to pay a voluntary contribution to racing directly into projects of its choosing, rather than into coffers he controls. That decision, taken while I still worked there, was the direct result of Nic's approach to running the sport: he gave Betfair no credit for its voluntary contribution (despite the fact that it was unique at the time it was paid); he insisted it was not levy at all, but a payment Betfair should do what it wanted with; and he spent much of it on legal fees aimed at damaging the company's business.

It continues to pain me, even in my post-Betfair world, that he should keep leading Racing on a hopeless cause, just as it does that people in racing should blindly follow him. There are so many other things they need to get on and address, and their task in addressing them gets harder with every day that they waste tilting at windmills.


  1. they are getting very desperate. Conveniently, they don't bother imposing any penalty on bookies who choose to move their internet operations offshore specifically to avoid paying tax and levy...

  2. "I do know is that bookmakers operate their business (rather than stand, uselessly, at the course) on Betfair"

    I read this to mean they bookmakers have given up that particular trade and are now simply (value) punters, as we all know laying the feild on betfair would send you broke quickly. If they are bookmakers also using Betfair to balance books then i assume they are paying the correct levy on bets taken / net position?

    So whats this guys point exactly?

  3. Mark,

    I'm afraid I couldn't resist responding again – and let me make it clear that these are my own views and not those of the BHA or any of Olswang's other clients.

    I agree with you that the Levy Board's consultation is unnecessary although you won't agree with my rationale. I say this because, cutting through all of the verbiage, smokescreens, red herrings and everything else, there is a very clear issue: are there users of exchanges who are "bookmakers" within the terms of the 1963 Act? If there are, they have an obligation to pay the Levy and the Levy Board has an obligation to collect it – end of story! And this is an issue which is entirely a matter for a judge to decide – it's a legal question that is not appropriate for consultation. All of the many side issues such as the licensing position, the Gambling Act, the Treasury's Review, the Sporting Options case, what Betfair and the BHA and others have said in previous submissions is all very interesting (to some!) but is irrelevant to a judge's decision.

    A decision which does properly face the Levy Board is whether changes should be made to the 50th Levy Scheme to make exchanges liable for an appropriate contribution in respect of the profits made by their customers. In particular, it may not be necessary for exchange customers to be held to be "bookmakers" for exchanges to be deemed liable for their profits in a Levy scheme – whilst Olswang, on behalf of Sporting Options, successfully judicially reviewed the 42nd Scheme you will know that the basis for the judge's decision was inadequate consultation and not that the Scheme was unlawful in substance.

    Finally, in defence of the Levy Board, you have quoted paragraph 112 entirely out of context. So, for those people who don't have the enthusiasm or energy to read the consultation document, paragraphs 103-110 set out possible arguments as to why betting exchange customers can be regarded as leviable bookmakers and paragraphs 111-118 set out possible arguments as to why they cannot. As I read the document, the Board currently has an open mind on the issue and in these paragraphs merely sets out both sides as fairly as it can. You are wrong to suggest that either side of the argument reflects the Board's present view.


  4. David,

    Call me a cynic, but to summarise what you've just written:

    1. the consultation is a sham, because whatever evidence is submitted the conclusion will be that someone who meets the 1963 Act legal definition of a bookmaker is liable for Levy.

    2. Even if no judge agrees that a Betfair customer meets the legal definition, the Levy board can just pretend they are bookmakers anyway. To get around the obvious problem that creates (It's tough to get money out of bookmakers who don't exist, so who are you going to charge?) the Levy board could pluck a number out of thin air, and use that as a justification for charging Betfair a discriminatory rate of Levy. The consultation document itself has nonsensical and contradictory numbers plucked out of thin air on its very first page in point 5, so I suppose they've got form.

    Is that how you think it will pan out David, that the consultation is a sham and that it will be used as an excuse to discriminate against Betfair on rate of Levy?

    By the way, the time you spend posting on Mark's blog, do you bill those hours back to the BHA?