Saturday’s press

I keep being asked about two stories which I have not yet commented on, from last Saturday. I wasn’t going to comment because both are seen to relate to Betfair specifically rather than the industry as a whole, and I am loathe to do that. But I’ve been accused of picking and choosing what I write about, and while it would seem on some levels to be the prerogative of a blogger to be able to do exactly that, I’m bored with people telling me that the reason I haven’t written on one if that there isn’t a response that can be given. So I shall instead comment on both.

The first relates to the story in Saturday’s Telegraph about the taxman investigating “bookmakers using Betfair to avoid levy”. It has had a certain amount of legs online, and it was the subject, when people weren’t talking about arrest rumours, of a fair bit of discussion at Ascot on Saturday. But frankly, I’m amazed it ever made it into print.

Amazed, in one sense; in another, it is hardly surprising. That people are using the Betfair float to have a PR pop at the company about a long-standing commercial beef will come as a shock to no-one. So it should also be no surprise that a story about one issue (levy avoidance) should be mixed with another (the levy debate) as if they were connected, when it should be clear to anyone who knows anything about either that they are not.

The Telegraph story was about levy avoidance, and the answer to it is that levy avoidance is not a Betfair issue. Of course, as Betfair implied with their quoted response, it is possible that – in the same way as the man in the Monty Python argument sketch – bookmakers might punt in their spare time; and on that basis, they would be foolish to do so on a company account, given that profits on that are taxed differently. But let’s not suddenly make that a Betfair issue, as the response could be argued to imply, because it would be no different in any other business or any other industry: if you mix business with pleasure in order to gain some tax benefit by characterising one as the other (such as charging a taxi receipt as expenses, even when you are actually not taking the taxi for business purposes), then you’re on the fiddle; and the best way to ensure that you don’t do it is not to mix up the receipts.

This is an altogether different issue from the overall levy debate, which is all about whether there are people on Betfair who should be licensed or taxed as bookmakers on the basis that some people think they look like bookmakers, and about which I have written at arguably tedious length. It is an argument that is being raised with a vengeance right now, for two reasons: first, because there is a levy consultation going on; and second, because the announcement of a floatation has seen some of Betfair’s commercial opponents take their chance. To give them credit, they have used amusing soundbites, but their argument continues to be to speculate on the existence of something they dearly would like to be true, when, sadly for them, it isn’t. (Indeed, that particular debate is followed up again today, once more in the Telegraph, and I have no doubt we will see more of it.) But let’s not confuse ourselves because of the ubiquity of one of the two stories: the second remains a different issue, and Saturday’s story had nothing whatsoever to do with the general debate.

So, to be clear to those who tell me I’ve kept quiet because there was nothing to say in defence of the story:  small bookmakers hedge themselves all the time, with all sorts of other operators. If they are not including their hedge as part of their P&L, such that they are hiding part of their profit away from the taxman and Levy Board, then they’re breaking the law – period. It doesn’t make any odds whether they are hedging with Betfair, Ladbrokes, or Uncle Tom Cobbley.  It isn’t a Betfair issue. Simples.

Meanwhile, at the other end of the scale of not having commented, I was told off for not having lauded the fabulous news that California has passed a law allowing exchange betting from 2012. Hats off to all those who were involved in driving that. The announcement had a special sweetness for the fact that it was made 24 hours after Paul Roy had exhorted racing jurisdictions around the world to be wary of Betfair. Although if, as you might expect, he felt like a prize tit as a result of that, he didn’t seem to have lost any of his swagger as he strode the Ascot paddock.