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Clutching at straws?

I received an e-mail today with the headline, ‘Exchange Users to require a Gambling Commission licence after all’.

Having once suggested that I would run naked down High Holborn if such a change were effected, I had half a hand on my belt. Following hot on the heels of the news from Australia that Racing Victoria Limited has reverted from a Gross Profits Tax to a Turnover Tax following Racing New South Wales’s victory in the High Court – a decision too depressing on so many levels (not least of which, the medium-term future of their racing industry in the face of competition from other products) for me to have so far succeeded in summoning the will to put pen to paper about it, to be honest – I feared the worst.  Could it really be?

And then I looked closer. And closer. And close as I get, I can’t see for the life of me how it is anything other than a technical change which will do nothing more than increase the admin burden for those already licensed. Unless I’m much mistaken, it won’t add an iota to the on-going, decade-long argument about whether some of Betfair’s customers should be licensed – not, at least, the ones that anyone who either wants or doesn’t want them licensed is worried about.

To explain: the requirement behind what was described to me by a journalist as ‘the triumphalist headline’ appears to be that those licensed bookmakers who use Betfair as a means by which to conduct some of their business have to get a new licence to reflect that peripheral, hedging, part of their trading.

Those who have always argued that “Betfair’s customers should be licensed” want people who are very serious punters to the extent that they look (at a glance) like they are basically acting like a bookmaker in business, licensed as if they were. The debate, therefore, has always been around whether people who use Betfair can conduct a business by virtue of their use of Betfair alone. Betfair argue not; the BHA, William Hill, and Olswang (senders of above-mentioned e-mail) – argue yes, they are.

The change heralded by the e-mail requires people who are already licensed as bookmakers to have a new licence to cover their business activity on Betfair. It doesn’t do anything about the ‘professional punters’ whom Betfair’s opponents in this argument want to capture as if they were bookies.

But Betfair has never disputed that some licensed bookies use them. They’ve argued (1) that it is superfluous to have that set of people required to have an additional licence; and (2) that it is impossible to be in business if you use Betfair alone.

Sure, they’ve lost the first argument, which means that that sub-section of their customers (and not Betfair themselves) have an admin burden today that they didn’t have yesterday. But the real debate is around the second point, and far from this change being ‘a vindication of [the bookmakers’] campaign against “unlicensed layers”‘, it doesn’t appear to affect that section of people at all.  Indeed, I can’t see what has changed – other than the requirement for already licensed bookies suddenly to apply for a second badge.

The e-mail states that, “Many traditional bookmakers will see this as an important victory,’ but it’s hard to see why. Far more accurate would appear to be the phrase that precedes it: “This may appear a narrow, esoteric point of detail”.

Posted in Australia, Betfair, Betting industry, Regulation.

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17 Responses

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  1. David Zeffman says


    I hesitate to post something which may result in you unbuckling but I think if you read through all the GC’s impenetrable documents, you will find that you’re wrong and I’m right (on just this occasion). See the bits I’ve extracted below:

    “In the course of business: The Commission has previously identified that operators using exchanges “in the course of a business”, whether to back or lay, in principle require a remote general betting licence costing from £13,529. However, such operators and their activities do not pose significant additional threat to the licensing objectives as the main risks are handled by the betting exchanges. IT IS ALSO RECOGNISED THAT EXISTING OPERATORS HOLDING GENERAL BETTING LICENCES (WHETHER REMOTE OR NON-REMOTE) MAY ALREADY USE BETTING EXCHANGES OR OTHER REMOTE PLATFORMS “IN THE COURSE OF A BUSINESS” AND THAT THEIR SUITABILITY IS ALREADY ADDRESSED WITHIN THE EXISTING REGULATORY WORK AND FEES.

    It is proposed that a new fee category be introduced for a general betting (standard)(remote platform) operating licence, to cover operators that use exchanges or remote operators “in the course of business”. …FOR THOSE USING BETTING EXCHANGES OR ANY OTHER PLATFORMS PROVIDED BY REMOTE OPERATORS “IN THE COURSE OF BUSINESS” BUT NOT ALREADY HOLDING A GAMBLING OPERATING LICENCE, the application fee for this licence will be £198 and the annual fee will be £280.”

  2. MD says

    The wording of the GC’s doc isn’t in dispute, David: your interpretation of it bringing something new is!

    My point is that it comes no closer to clarifying the key point, by which I mean it comes no closer to (to quote the blog with the promise) ‘identifying any section of Betfair’s customers as people who should be paying the levy in a way that is not consistent with the customers of other bookmaking operators’.

    The GC are forever talking about categories of licence which they want to exist “just in case”, and are just as readily prepared to accept that those categories can sit empty… I’d happily wager that no-one will be paying £198 for a licence.

  3. David Zeffman says

    I thought your post was suggesting that it meant nothing more than bookmakers, who already hold an operating licence, requiring an additional licence where they bet via an exchange. To quote you: “The change heralded by the e-mail requires people who are already licensed as bookmakers to have a new licence to cover their business activity on Betfair”. If that were the case, then I would agree with you that this is nothing new but the words I’ve highlighted say the complete opposite.

  4. MD says

    The words you have highlighted certainly don’t say “exchange users to require a gambling licence after all”.

    The GC doc does nothing more, as I understand it from your e-mail, than require those already in possession of a licence to get a new one. It also adds a new category that will never be filled, and therefore requires no-one to do anything.

    So, there is nothing new. In the event that one day someone manages to demonstrate the existence that this group of people you and some others believe exists but which you have so far (in 12 years and counting) not managed to have anyone in DCMS, Treasury, or the Gambling Commission find, then there will be something new. Sadly the creation of a basket into which to put the application forms of the said people is not the same as the creation of the people themselves. It’s like someone opening a bank account earmarked for a lottery win. It isn’t the same as getting the numbers.

    So, if you think it makes a difference to your cause, good for you. I’m afraid I don’t!

  5. David Zeffman says


    I have to say I think you’re the one clutching at straws and it’s probably best if I now leave you (and I hate typing this) to go and unbuckle


  6. MD says

    Time will tell, I guess… I’m still quite comfortable i can keep my trousers on, but if the man paying your cheques, Mr. Roy, wants to accept the wager (he has a side he has to state publicly, if you look back… There’s no such thing as a free lunch!) then I’m happy to re-establish the terms. Shall we say, by the end of the year? You can’t have the offer til I’m old and grey, you know. Or even another 12 years (which is sooner, clearly).

  7. MD says

    PS… Just to clarify, when I say: “‘identifying any section of Betfair’s customers as people who should be paying the levy in a way that is not consistent with the customers of other bookmaking operators’”…

    the fact that both parts that you highlight in capitals seem to be at pains to add “OR OTHER REMOTE PLATFORMS” in one case and “OR ANY OTHER PLATFORMS PROVIDED BY REMOTE OPERATORS” in another, would seem to support my point rather strongly. Even the bits you cite in support of your own argument stress that the GC is not singling out exchanges, but, in the event that a type of user is found, the behaviour of these people must be equal on all the platforms. Strangely, though, your headline does not say “PROFESSIONAL PUNTERS USING ONLINE BETTING PLATFORMS TO REQUIRE LICENCE AFTER ALL” which seems curiously, well, incomplete.

    If they end up with a category for professional punters, they will end up with a category for professional punters. But when I say, ‘nothing new’, this is such old hat that it is one of the very first blogs I wrote:

    and I covered it again a month later, here

  8. OccasionalGambler says

    I just came across a press release from Betfair (see here:

    The press release contains a statement from the Gambling Commission which seems to clearly support Mark Davies’ view above and not David Zeffman’s (in fact it seems slightly unhappy with Olswang’s “manufactured storm in a teacup”).

    I wonder whether Mr Zeffman will be back to let us know what he thinks about the Commission’s comments?

    This is what the Commission’s statement says:

    ‘There is no change in policy as we and DCMS have made clear – this is a manufactured storm in a teacup. The new fee category is simply a technical amendment to avoid having to charge bookmakers (whom it was realised technically needed a remote licence if they wished to hedge on remote platforms) the remote licence fee which starts at £13,529. Bookmakers with only non remote licences have already been asked if they need a zero price remote licence. Since the Act came into force the Commission has made it clear that ‘in the course of business’ is a tax concept and that the Revenue have not identified nor expect to identify users of exchanges in this category. So while for completeness a minimal fee is specified for those without existing non remote licences no income is forecast from this fee category.

    ‘Finally the implication in the Olswang commentary that the Commission might feel compelled to act if, as a result of the current Judicial review proceedings, exchange users were to become liable to pay the levy is wrong. The levy liability is under separate legislation with different definitions.’

  9. colston says

    On points of Law….
    Mark Davies 1 Olswang (David Zeffman) 0
    Good luck BHA and William Hill, perhaps you may want to look for another law firm to fight your action.

  10. Chris_Fawcett says

    I think its fair to say that the whole Judicial Review is ‘Clutching at straws’. A blog post on the new fee structure for NSW and Victorian racing would be much more interesting. I hope that it does not have far reaching implications for other sports and jurisdictions.

  11. OccasionalGambler says

    Perhaps we shouldn’t be surprised that David Zeffman has not come back to comment following the rather robust and chastising response by the Gambling Commission.

    Although following his previous exchange with Mark Davies above, it might have served him well to come back and show some humility by admitting that he (and his firm) got this wrong, rather than simply hiding away!

  12. David Zeffman says

    Below is the letter from me published in yesterday’s Racing Post:

    Dear Sir

    I am writing with regard to your piece today concerning exchange users and the Gambling Commission.

    You mention my disappointment at the Gambling Commission’s statement but not why. The reason for my disappointment was the wording in the statement that “this is a manufactured storm in a teacup” which suggests, particularly when read with Betfair’s statement, that I had conspired with the BHA and William Hill to produce some contrived effect. That is not the case. I decided to write my note, without reference to either organisation, because I thought the Commission’s statement was important and I’ll explain why.

    Whilst I understand that the Gambling Commission has introduced this category to fill a gap in their licensing framework, they do not dispute that it could equally apply to an exchange user who does not otherwise have a remote operating licence. If it can apply to bookmakers using exchanges for hedging purposes, it can apply equally to exchange users who are in business. What the Commission go on to say is that they will take the HMRC’s lead on the question of whether or not any such individuals exist. It is correct that the Treasury and HMRC looked into this issue in 2004/5 and concluded that – on policy but not legal grounds – that there were no exchange customers who they then wished to pursue for betting duty.
    The Gambling Commission is correct that the judicial review concerns different legislation but it does also relate to the question of whether there are exchange users acting in the course of a business. If, subsequent to those proceedings, the Levy Board does identify any such users, then I find it difficult to see why the Gambling Commission (or HMRC for that matter) would choose to turn a blind eye to their existence.


    David Zeffman

  13. Chris_Fawcett says


    Why is someone using a betting exchange in an organised manner any more ‘in business’ than someone who uses traditional bookmakers or spread betting to make money?

    You never hear about other financial firms squealing about people making ‘tax free’ profits betting on the financial markets yet some bookmakers seem to be pushing and pushing for punters on Betfair (and only punters on Betfair) to be taxed or charged levy.

  14. colston says

    What’s the differance between an exchange user being “in business” and a successful punter using traditional bookmakers?
    Of course winners can be traced through their accounts on the exchanges but it’s impossible to track successful punters who use betting shops.
    I know that anyone with a modicum of success and knowledge using traditional bookmakers will soon be told that their custom isn’t wanted but make no mistake there are a number of professional punters who have “runners” placing their bets for them in shops spread far and wide.
    Will these punters be targeted for a levy charge? I don’t think so.

  15. bigdipper says

    There is no way that Olswang or anyone else can redefine recurrently winning as a punter to betting ‘in the course of business’. This point has been (it would seem, definitively) decided in English law. Phil Bull taking out the 90% best priced part of the market as a backer was not ‘in the course of business’. Phil Bull so doing with his army of placers was not ‘in the course of business’.

    Mr Zeffman, if Hills retained you in an advisory and not simply a legal capacity, you might better direct your energies in suggesting that the company grow its client base through better prices and offers and recognisably fair terms. The company’s profits fall 14% and it proposes to expand online, where its best prices are available only to derisory sums or not at all and it is in competition with every other fruit machine purveyor in the sector. Meanwhile its shop estate courts increasing social unpopularity and political risk in seeming to push addictive products on the most vulnerable.

    In the long run, decently regulated markets prove efficient, and Hills will not thrive without offering a price-service combination which a sufficient segment of its potential client base perceive as fair.

Continuing the Discussion

  1. New client needed. Issue put to bed. | Mark Davies linked to this post on July 20, 2012

    […] that to be the case. As I said to one independent bookmaker who tweeted as such at me recently, my own view is that if people really believed that it was as simple as that, they would all just get on and do […]

  2. And so she sings at last | Mark Davies linked to this post on May 3, 2013

    […] again by William Hill, against all logic but at the behest of their lawyers at Olswang – was never going to lead to me stripping off. In the end, so resoundingly was the William Hill/Olswang case defeated that not only did they fail […]

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