Punters escape betting levy

Posted: 23rd July 2012

An attempt to make customers of online betting exchanges pay a statutory levy used for the benefit of the racing industry has failed at the High Court.

Leading bookmakers, William Hill Organisation Limited, had asked a judge to rule that sophisticated punters, some of whom use state-of-the-art software to place thousands of bets on the internet, should be subject to the levy.

However, in a decision which will have substantial financial implications for horseracing, Mr Justice Stanley Burnton ruled that, however well organised they may be, betting exchange customers are not ‘bookmakers’.

The judge agreed with the Horserace Betting Levy Board (HBLB) that it has no statutory power to charge betting exchange punters the levy, which is paid by William Hill and other traditional bookmakers and which goes towards supporting the sport.

Lawyers for William Hill had argued that the parliament which passed the 1963 Betting, Gaming and Lotteries Act could not have conceived of the possibility of punters placing and laying bets through online exchanges in 2012.

The act defines bookmakers as those engaged in the ‘business’ of ‘receiving or negotiating’ bets and William Hill argued that that description is wide enough to embrace betting exchange customers, opening them up to the levy.

Some betting exchange clients place and lay bets in very high volumes, using software derived from financial trading floors to improve their returns. William Hill argued that such punters are running ‘businesses’ and should be categorised as ‘bookmakers’ subject to the levy.

The judge said that the issue was of considerable financial importance to the horseracing industry because of the increasing popularity of betting exchanges and the relative decline in betting with traditional bookmakers, who currently pay 10.75% of their gross profits to the HBLB.

However, dismissing William Hill's judicial review challenge, the judge ruled: ‘The question posed by the statute is not whether, in the course of a business, a person receives bets. The question is whether he carries on the business of receiving bets.

‘Someone who operates a betting shop, or who has a stand at a race meeting, receives bets there. His business is that of receiving bets.

‘The person who operates through a betting exchange may in the course of doing so find himself receiving a bet. But he does not carry on the business of receiving bets. He is not a bookmaker. It follows that he is not liable to pay the levy’.