Lunchtime racing and turnover Levy

[andyfuller]

After thinking about the situation for some time I can't see things changing, at least not in terms of them charging individuals.

As Betfair have said the government themselves have said that as individuals we are not acting as bookmakers and I agree with that. All we do is place bets to win or lose with Betfair. We are betting with Betfair not another exchange user. Betfair only accept our bet if they can instantly accept the counter bet from another individual.

Policing this would be extremely costly and have huge difficulties. At what stage do you become a business, for example someone may only do 5 bets all year but when they do they go big and that is all they do. Yet you could have a hobby trader who places thousands of bets over the year.

If we were to be classed as a business we could then offset costs and I am sure people could conveniently lose profit to someone they perhaps know, we can't do this with the PC as Betfair would catch us but would they care in terms of a Levy payment?

All in all I agree with Betfair, it is just more wasted money by the BHA/HBLB that could be better used else where, they are just going over old ground again which the government doesn't have any issue with so are unlikely to do anything about.

If they were to somehow bring it in I would just switch to trading other sports as they can not ask for Levy on anything other than on UK horse racing so I would move to US racing, Irish Racing, Tennis and Cricket and I am sure others would do likewise as the costs would just make it not worth the effort anymore and thus they will just have shot themselves in the foot.

With regards to Betfair moving offshore to Malta I was chatting to someone who knows about the technology side of things and they were saying that Malta doesn't have the infrastructure in place for Betfair to move all of their operations there at this time.

[hgodden]

I may just be about to display my general ignorance here but I'm assuming that anyone who themselves lived outside the UK would not be liable for such a levy

[andyfuller]

I would say that you wouldn't just like the bookmakers who have moved offshore are not. It would be very hard for them to police really when you think about it as they would rely upon people coming forward and trying to chase hundreds of people for in reality little money is hardly cost efficient. For example if you were to make just £50,000 gross from UK racing you would be liable for £5,000 in Levy assuming 10%. How many resources are they going to commit to track you down, check your status and chase you for the money?

[Iron]

Andy - That assumes that Betfair won't be asked to siphon off the money from the relevant people's accounts, and forward it to HM Treasury...

Jeff

I would say that you wouldn't just like the bookmakers who have moved offshore are not. It would be very hard for them to police really when you think about it as they would rely upon people coming forward and trying to chase hundreds of people for in reality little money is hardly cost efficient. For example if you were to make just £50,000 gross from UK racing you would be liable for £5,000 in Levy assuming 10%. How many resources are they going to commit to track you down, check your status and chase you for the money?

[andyfuller]

The Levy at present as I understand it is not collected by HM Treasury but rather the HBLB. True they could get the Government involved but I would guess that as the Government is happy with the current definition of users they are unlikely to want to get involved in something such as this. The Government really tries to avoid getting involved in anything to do with the Levy process from my understanding so I would say they are going to be very reluctant to get involved.

My view has changed since they first announced this from being slightly worried about it to more of Betfair's stance that it is just another daft attempted by a group that doesn't understand Exchanges.

[RinTaaramae]

I think you're being massively complacent if you think this is just going to turn out OK without a fight. The BHA are spending millions on lawyers to get the result they want, and I suggest you read what their lawyer David Zeffman, a senior partner at Olswang, has said in the Racing Post and written on Mark Davies blog (in the comments at the bottom).

http://markxdavies.blogspot.com/2010/05 ... reach.html

Basically he's saying that whether a customer is a bookmaker and owes Levy is down to how a court would interpret the 1963 bookmaking act, and anyone in government who's looked at the issue (are Betfair customers bookies?) in the past is irrelevant because it's not their decision - it's 100% down to what a judge would say. Basically we're at the mercy of whether a judge thinks our betting is best described as a punter or a bookie. You might be 100% confident some old duffer in a wig would get it right but I'm not.

Obviously if they can get a judge to say that someone who makes a living betting on sports is a bookie not a punter, then that doesn't just apply to Levy (10% of what you make on the horses before commission). The Gambling Commission and the government could use the same ruling to make you pay for a licence and take 15% of your profit ON ALL SPORTS as Gross Profits Tax. Then you'd pay commission and premium charge on what's left, and income tax on the remainder. It will make the current situation that everyone moans about all the time look like a walk in the park.

At the moment the only people arguing our side of the case is Betfair. I don't think the people who run Betfair are all that bright, but at some point even those morons will twig that they're currently spending millions in lawyers' fees arguing points that don't affect them, just a group of their customers.

If you've spent the last two years slagging off Betfair to anyone who'll listen, done everything you can to move your business and told everyone you know to move to Betdaq, and you're relying on Betfair effectively paying your legal bills on this issue forever then at some point they're bound to wise up and the party will be over. How much do you think Betdaq have spent arguing our case ?

I for one won't be relying on Betfair. I'll be fighting my own corner, and I'd recommend you all do the same.

[Iron]

If events happen that effectively make trading on horses unprofitable, will that not have a massive impact on Betfair?

Firstly, because they won't be able to make profits from the traders. And secondly, because the liquidity available to straight bettors & layers will be vastly reduced.

Jeff

At the moment the only people arguing our side of the case is Betfair. I don't think the people who run Betfair are all that bright, but at some point even those morons will twig that they're currently spending millions in lawyers' fees arguing points that don't affect them, just a group of their customers.

[SilentDave]

Although the levy issue is obviously a different one from the income tax issue, are the two not indirectly linked - if Betfair customers are seen as bookmakers then doesn't this then get back to the point that any losses on the exchanges are tax deductible which would really spoil things for the Revenue?

[andyfuller]

The BHA are spending millions on lawyers to get the result they want

They have done this before though on this issue and others such as the picture rights and they have had the same outcome of not getting what they want. I can't see this time being any different, I think the biggest winner from this will be David Zeffman and his team from all the legal fees they will be getting

At the moment the only people arguing our side of the case is Betfair. I don't think the people who run Betfair are all that bright, but at some point even those morons will twig that they're currently spending millions in lawyers' fees arguing points that don't affect them, just a group of their customers.

That is so wrong imo. Firstly, I think the Betfair people are some of the brightest and cleverest people out there. You just have to look at what they have achieved in 10 years and the many many court cases they have won.

To say it doesn't affect Betfair is crazy and is highlighted by the fact that they are arguing the case so much. The people it will affect most is arguably Betfair as without customers there is no Betfair and they are well aware of this understandably.

How much do you think Betdaq have spent arguing our case ?

Betdaq are not in the UK and as such don't pay tax or levy to the UK racing/government as I understand it. Also it will have a much less affect upon them than on Betfair imo given that their racing markets are so small.

I for one won't be relying on Betfair. I'll be fighting my own corner, and I'd recommend you all do the same.

I will be keeping my wallet firmly in my pocket and not wasting my money on lawyers pointlessly imo but I wish you the best of luck but the onyl outcome I can see is that your lawyer will in a years time be driving a new Mercedes and nothing else bar the racing industry being in more trouble than it already is in will have changed.

[RinTaaramae]

If events happen that effectively make trading on horses unprofitable, will that not have a massive impact on Betfair?

Firstly, because they won't be able to make profits from the traders. And secondly, because the liquidity available to straight bettors & layers will be vastly reduced.

Jeff

Well Levy and GPT are both paid on gross profits, so they can't make anyone unprofitable - it will just mean you make £75 where you used to pocket £100 (if you have to pay £10 Levy and £15 GPT). It's nearly 2 years since Betfair effectively said that winners need access to Betfair's losers more than Betfair needs the winners' "liqudity" by introducing the premium charge, and they were right.

It's like shooting fish in a barrel - we used to shoot the fish for next to nothing, now we have to buy a permit from Betfair, and if we're not careful we'll have to pay for shooting permits from Racing and the government too. Betfair don't care if some traders decide permits are too expensive. Every trader who doesn't buy one means more fish for the rest to shoot. Still the same amount of fish shot, Betfair make the same amount of money. You don't have a lot of choice. William Hill, Ladbrokes, Bet365 and the rest have got plenty of fish in their barrel, but won't let you near them; they shoot them themselves. Betdaq and WBX have got a bucket each, but they won't spend the money to stock them with more than a couple of fish.

If half their traders jack it in there's twice as much money to be made by the ones who stay. All that changes is some of the money lost by losers that ended up in our pockets goes to keep multi-millionaires like Paul Roy at the BHA in champagne and lobsters. All IMVHO of course.

[RinTaaramae]

Although the levy issue is obviously a different one from the income tax issue, are the two not indirectly linked - if Betfair customers are seen as bookmakers then doesn't this then get back to the point that any losses on the exchanges are tax deductible which would really spoil things for the Revenue?

I think you're right that they're linked. If a court decides that we're bookmakers then you'd owe GPT too. Not sure why that would make losses tax deductible. Capital Gains Tax is 18% or 28% now depending on your income tax rate. You can carry capital losses forward to reduce your future capital gains bill, but you can't deduct them from your tax bill.

[RinTaaramae]

They have done this before though on this issue and others such as the picture rights and they have had the same outcome of not getting what they want. I can't see this time being any different, I think the biggest winner from this will be David Zeffman and his team from all the legal fees they will be getting

Oh I absolutely agree the biggest winners will be the lawyers. There's one thing I guarantee, and that's that Zeffman won't be doing this "no win, no fee". He'll be milking Racing for every penny they're stupid enough to pay.

To say it doesn't affect Betfair is crazy and is highlighted by the fact that they are arguing the case so much. The people it will affect most is arguably Betfair as without customers there is no Betfair and they are well aware of this understandably.

I disagree. Racing is not proposing that all Betfair customers be classified as bookies, just those that it thinks it can persuade a judge are "in business". If it was all Betfair customers, then I'm sure they'd be more bothered, but these days their whole charging scheme is based around the idea that as long as you have enough losers the winners will have to stay to get access to them. They went out of their way in their answer to the question in the Q&A to point out that Betfair itself isn't in the crosshairs and that it's us they're after. I don't think they would have said that without a reason.

Betdaq are not in the UK and as such don't pay tax or levy to the UK racing/government as I understand it. Also it will have a much less affect upon them than on Betfair imo given that their racing markets are so small.

Yes just being flippant. I wasn't suggesting they'd lift a finger - more just highlighting that there isn't anyone apart from Betfair arguing our side of this, and that just assuming they'll continue to forever seems a pointless risk to take.

I will be keeping my wallet firmly in my pocket and not wasting my money on lawyers pointlessly imo but I wish you the best of luck but the onyl outcome I can see is that your lawyer will in a years time be driving a new Mercedes and nothing else bar the racing industry being in more trouble than it already is in will have changed.

Sorry for any misunderstanding, but I wasn't suggesting anyone pays to hire a lawyer. My wallet is at least as firmly in my pocket as yours is in yours, if not more There's no need to hire a lawyer at all. Just make sure you take part in the consultation and point out all the holes in Racing's crap arguments. There's going to be dozens of submissions from every vested interest under the sun to claim that anyone who's even thought about using Betfair must be a bookie. My biggest worry is that the submissions talking sense come from Betfair, me, and a couple of other traders with time on their hands. If they get a hundred submissions from people talking sense and pointing out why Racing's arguments are a pile of poo then I think the result might be different.

[Mug]

The whole thing is probably politically motivated as if they don't make these sorts of statements or moves they will be seen to be doing nothing?

The core issue is that racing is in decline and it is that which is causing the drop in levy. Unless that is addressed then no efforts will halt the decline in the levy revenue.

[Iron]

I think you're right that they're linked. If a court decides that we're bookmakers then you'd owe GPT too. Not sure why that would make losses tax deductible.

Let's say income from trading were taxable.

John, a self-employed plumber, enjoys trading, but isn't very good at it. In fact, he loses 3K over the year. So when he fills in his tax forms at the end of the year, his overall profit from his self-employment activities is 3K less than it otherwise would have been, depriving the Inland Revenue of a hefty chunk of change.

That's why income gambling will probably never be taxed!

Jeff

[Iron]

Well Levy and GPT are both paid on gross profits, so they can't make anyone unprofitable - it will just mean you make £75 where you used to pocket £100 (if you have to pay £10 Levy and £15 GPT).

True, but there will come a point when a trader will think 'Bother this! I'm going to find a more profitable way of making a living (like spread betting on Forex)'.

But if the levy is on turnover rather than profit, isn't it possible that it will make trading unprofitable?

Jeff