Bet Exchange News - March 2004

Hillside Girl four to be charged

On the day of the Kieren Fallon incident, the Jockey Club announced plans to press charges over Hillside Girl. The allegation is that this horse was allowed to run despite the fact that it was lame and therefore stood no chance of winning, therefore allowing those in the know to benefit by laying the horse on betting exchanges. Those to be charged are trainer Alan Berry, jockey Paul Bradley, amateur rider Dale Jewett and Steve O Sullivan the farrier with the near 100% record as a successful layer on exchanges.

This case has been seized upon by the media as another example of the way that betting exchanges are corrupting the sport of racing. I fear they are missing the point. On 16th June 2003 the Memorandum of Understanding between the Jockey Club and both Betfair and Sporting Options came into force. This gave the Jockey Club the power to investigate the betting record of anyone profiting from a race with suspicious betting patterns. This race took place on 15th June, significantly the day before the agreement came into force. This appears to be a case of these four individuals (assuming they are guilty) taking their last chance to abuse the system before the loophole was closed forever. Rather than being a tool for the anti brigade to attack the exchanges, I believe the Hillside Girl case demonstrates the effectiveness of the MoU and the value of a proactive and open relationship between the Jockey Club and the exchanges. Sadly I did not notice anyone in the media take this view.

Key date approaches for new Gambling Bill

How much damage could the latest round of racing scandals do to betting exchanges and could they even threaten their very existence? There is no denying that there could hardly have been a worse time for all this negative publicity to come out as the new Gambling Bill is at a crucial stage of its development. The white paper has been published and has been scrutinised by a group of cross party members of the house. The Scrutiny Committee have interviewed many key players from the industry and will publish their report on April 8th.

Will their report hold any unpleasant surprises? If you read some of the newspaper reports over the last week or two, you would think that the very existence of betting exchanges is under threat. However, anybody who has followed this process closely will know that this is highly unlikely. Fortunately those involved in the process of shaping these laws are no fools and are highly unlikely to be swayed by ill informed soundbites which have been spoonfed to the media by the anti exchange lobby.

One of the reasons the Government is seeking to reform the gambling laws is that they recognise the potential revenue benefits from establishing the UK as a world centre of excellence for virtual gambling. The UK is already seen as an excellent base for anyone wanting to run a betting exchange, with the majority of the major betting exchanges already based here. Even businesses such as Betsson and Betonbet are based here, even though the UK has so far been a secondary market for them.

When betting exchanges come to dominate the world's gambling industry, as they surely will, the benefits to the Exchequer from all these sites paying Gross Profits Tax and Corporation Tax from their world wide operations will be absolutely immense. There is no chance that the Government will risk throwing that away to placate a traditional racing and betting industry who are desperately trying to turn the clocks back and get the betting exchange genie back into the bottle.

The anti exchange lobby is still trying to push the concept of licensing layers on betting exchanges, and the media is giving this campaign some credence and in some cases support. Betfair have made it clear that should this become law they would no longer be able to operate. Lord McIntosh, the Minister in Charge of Gambling, has already dismissed the licensing of individual layers as unnecessary and impractical, although the committee does seem keen on investigating the possibility of differentiating between commercial and recreational layers. However, in addressing members of the Joint Committee Lord McIntosh stressed the difficulty in coming up with a definition which would enable the two to be separated. In the event he gave an assurance that his department would look at it "very carefully and sympathetically". Whilst it would be unwise to write this possibility off, I believe that the difficulties in defining a commercial layer would make it impractical, and that this will therefore go no further.

The only new measure that the government seem to be committing themselves to is the facility to freeze funds involved in any suspicious bets, pending the outcome of an enquiry. Its difficult to see how this would be administered, but no doubt, if this is the most onerous task facing betting exchanges, they will find a way. By the time the next newsletter comes out I should be in a position to tell you exactly what the published findings of the Scrutiny Committee are.

Attheraces set to go off air

As all attempts to find an agreement fail, the racing channel Attheraces looks set to go off air on Tuesday 30th March. Ron Hartnett of Betdaq summarises what this could mean for the racing industry and for his company.

We will continue to offer a full racing service and do not expect to experience any falling off of custom in the short term, except perhaps in in_running markets. The question in the longer term though is how long racing can afford to hide its light away. Ours is an international customer base and outside of the UK and Ireland, racing only barely figures in the betting consciousness. Those who are keen to see a continued bright future for the sport should take heed of the fact that fashion changes very quickly and the gains of the last two years can be lost in a very short time.

Traditional bookmakers have long recognised this and it is perhaps notable that the major firms appear sanguine at the prospect of there being no home broadcast of the sport. Betting exchanges have grown rapidly alongside the attheraces service. Perhaps the bookmakers feel its loss will in some way help to resuscitate the old status quo. If that is the case they are mistaken. The only loser in this will be racing and if there is any prospect of a 'midnight' resolution it should be grasped.

Betfair Masterclass

I spent a very enjoyable afternoon and evening at the Betfair Masterclass in Leeds on March 9th. There are two sessions, afternoon and evening. You can attend either or both its up to you.

The afternoon session involves trading on several horse races with Betfair's money. Everyone is split up into groups depending upon their level of experience. Lots of intense conversation and sharing of techniques and ideas followed. Several representatives from Betfair walked around the room, pointing out all the different features on the site, several of which I was unaware of. They also shared some of their own personal trading strategies.

For the evening we were split into teams and we all traded on the Champions League match between Manchester United and Porto. There was a competition to see who could increase their opening balance of £250 by the most. The winning team made a profit of £800 when they layed Man Utd just before Porto scored. Unfortunately they did not get to keep the cash, although they did win a bottle of champagne.

No expense was spared by Betfair with an excellent lunch and evening meal provided, along with a free bar. Exchange betting can be a lonely lifestyle, therefore it was very good to spend some time with like minded people and share ideas. Something that I found very surprising was the way some people are not aware of things that others take for granted. When I pressed File then New to open a second web page, two of the people on my table expressed amazement that you could have two web pages open at the same time. Both said that it had been worth the trip just to find that out. I would imagine that everyone there came away with something new from the masterclass and everyone I spoke to thoroughly enjoyed it. If you get the chance to go to one, I recommend you do.

Stock Exchange calls in Betfair as consultants

At the Betfair Masterclass it was revealed that Betfair are now matching bets to a value of £250million a week. This was particularly interesting as I have not heard any concrete estimates of turnover from Betfair since they topped £50million a week. It was further revealed that they have up to 5-6,000 members on line at any given time and that they are matching up to 1.5 million bets a day. In an amazing testimony to the stability of the Betfair system they have been asked to act as consultants to the world renowned London Stock Exchange to assist them with improving the efficiency and operation of their trading system.

Betdaq back on line after attack

Betdaq press release:

At 2040 Hours on Friday March 12th, Betdaq _ The Betting Exchange became the latest target of a distributed denial of service attack believed to be perpetrated by criminal gangs that have been threatening major betting websites over the last few months. The exchange was brought back online shortly after 12 noon on Saturday.

The attack consisted of a barrage of unnatural requests for information which effectively slowed the response time of the website so as to make it unusable. It did not however impinge in any way on the security of personal or non personal information stored by Betdaq. All unmatched offers on the service at the time of the attack have been cancelled and all markets have been reopened.

"We are working hard to ensure that disruption is kept to a minimum," said Rob Hartnett of Betdaq, speaking at the company's international headquarters in Dublin. "This is a very busy time for all betting companies and we intend to pull out all the stops to make sure the tens of thousands of customers of the exchange are able to place bets as and when they want."

Budget speech welcomed by bookmakers and Betfair

(The following article by Seb Vance was first published on 8/3/2004 and appears with the kind permission of the Racing Post. This article and thousands more can be accessed free of charge in the excellent archive of www.racingpost.co.uk)

THE spectre of betting exchange layers having to pay tax on their winnings was raised in Chancellor Gordon Brown's Budget speech yesterday. Brown's announcement of a review into the tax treatment of exchanges and their clients is the latest in a long line of inquiries. Brown said yesterday:

On betting duties, I will freeze rates and I will review the tax treatment of betting exchanges and their clients.

Industry sources said the wording of the announcement suggested it was the layers' tax position that will be examined most closely. The announcement was, unsurprisingly, welcomed by bookmakers, but also by the leading exchange Betfair, although it claimed a tax on its clients was "inequitable", while Betdaq and Sporting Options voiced their disappointment. Andrew Silverman, Betfair's director of public affairs, said:

We welcome the Chancellor's announcement. Our customers do the same as customers elsewhere _ they bet on outcomes of events. The fact is that a tax on Betfair's punters would be inequitable, and would penalise them purely for being our customers. If a tax is brought in on successful punters, it must be brought in across the board.

Betdaq managing director Rob Hartnett said:

It's disappointing we are subject to another review, but we recognise the spotlight is on our industry and welcome the opportunity to once again state our case for being part of the betting industry.

Paul Cooper, of Sporting Options, said:

Professional gamblers have not been taxed in the past and there's no way they should be taxed now because they're taking the position of saying something will or won't happen.

By contrast, William Hill spokesman David Hood said:

All we're asking for is that anyone who lays bets on an exchange should be subjected to the same regulation and taxation issue as any other licensed bookmaker.

A Ladbrokes spokeswoman said:

We've always maintained that layers- individuals who act as bookmakers - on exchanges enjoy an unfair tax advantage.

The Association of British Bookmakers said it was pleased Brown

has recognised that the taxation regime relating to betting exchanges is a problem area

while the BHB indicated that, while integrity was its prime concern, it was pleased to see the Government addressing fiscal issues too. A Treasury spokesman said the review would be carried out by Customs and Excise in the coming months.

Research reveals that outsiders are less likely to finish the Grand National

The longer the odds on a horse running in the Grand National Steeplechase, the less likely it is to complete the course, scientists have confirmed.

Not a wind up honestly. The full story can be accessed here http://news.bbc.co.uk/1/hi/sci/tech/3564393.stm