Betfair switches to Gibraltar

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Bet Angel
Bet Angel
Bet Angel
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Betfair released an interim management statement today detailing the following results: -

Overall Core Betfair revenue up 6.2% on Q3 FY10 to £77.0m

Core Betfair Sports revenue up 8.6% to £56.6m

Core Betfair Games revenue up 8.2% to £14.3m

Core Betfair Poker revenue down 20.5% to £5.2m

Further down the statement they slipped in the following announcement: -

Betfair announces that, with effect from 9 March 2011, its Betting Exchange will operate under a Gibraltar licence.

In recent months, Betfair has undergone a period of significant restructuring and has now transferred the majority of the key systems for its Betting Exchange from the UK to Gibraltar and Dublin. The Company has also opened new offices in both Gibraltar and Dublin, together employing over 120 people. Betfair continually strives to create the best technology platform for the business. This revised structure will provide the Company with the freedom to locate key technical equipment in more efficient locations in order to improve service to customers and compete on a level basis in the UK market.

Betfair will continue to support British horse racing by committing the same amount of money to the sport that the Company has been paying via the statutory levy for the remainder of the 49th Levy Scheme and on the terms set out for the 50th Levy Scheme.
andyfuller
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Was only a matter of time.

Another hit for the Levy though and it will make it harder imo for Betfair to defend its position as a friend of the sport.
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Euler
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They will continue to pay the levy, this just avoids the GPT.
lewismbet
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I would be interested to know a little more about the 'resources' which are now in Dublin/Gibraltar. Does this mean that we are likely to see ping times increase if the servers are no longer in London?

Also as a provider of VPS solutions will you keep this service 'as is' or is it likely that you could change your infrastructure? More UK people could be interested in one if we are being beaten to the market.

[Share price is on the up today [around 6% from open] however is still poor compared with Initial price, Betfair may be in search of more 'efficiencies' later this year]
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Euler
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Since Betfair moved the servers ping times have increased about 15ms.
andyfuller
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Euler wrote:They will continue to pay the levy, this just avoids the GPT.
That is incorrect.

From how I read it they will do exactly what they do with the Levy they would be liable were they to complete the transaction of foreign customers onshore. They used to pay it as a Voluntary Levy but in their spat with British Racing they decided they would decide where the money was spent within British Racing and not the Levy board, i.e. not spent on the lawyers that were being employed to fight Betfair and not on the bottomless pot of prize money as I think they called it.

Today's press release basically says the same, they will support British Racing for the same amount as they would if they were to pay the Levy but it doesn't say anywhere that they will pay the Levy. Prize money will fall again but other initiatives will get more money, no bad thing imo.
Bet Angel wrote:Betfair will continue to support British horse racing by committing the same amount of money to the sport that the Company has been paying via the statutory levy for the remainder of the 49th Levy Scheme and on the terms set out for the 50th Levy Scheme.
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Euler
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OK I mis-read that then. It's a bit more of a gamechanger then.
andyfuller
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Cant remember off the top of my head how much they paid last year but I guess you can knock £7m to £10m off the Levy for next year just when racing thought it had got itself a relatively good deal.

I think this decision is a big one that can have a lot of consequence not only for Betfair but also for us traders.

No longer will they have the same strength in their arguments with the Government, the Levy Board or the Racing Industry.

Their payment will now be voluntary which means it can be withdrawn at anytime and with a falling share price pressure surely will be on for them to improve profits and an easy way to do that would be to reduce these such of payments.

Also it highlights the change in the way the company is run now.
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oddstrader
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i think racing needs a Bernie Ecclestone to sort out the sorry mess its got itself into, far too reliant on gambling revenue.
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jimrobo
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this is bad news for us uk traders IMHO

The future definately isn;t bright!
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Euler
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I just re-read the levy stuff and I can't see that they are saying they won't pay the levy it just seems to refer to the voluntary levy on overseas contributions?
andyfuller
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I haven't read anything other than the opening post and what was reported on the Racing Post website but this line seems to me to be pretty clear that they won't be paying the money via the Levy but how they see fit:

Betfair will continue to support British horse racing by committing the same amount of money to the sport that the Company has been paying via the statutory levy

Is there some other stuff which indicates differently?

I don't see any reason why they would pay the Levy when they are not legally required to like all other offshore bookmakers pretty much.
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Euler
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Betfair will continue to support British horse racing by committing the same amount of money to the sport that the Company has been paying via the statutory levy for the remainder of the 49th Levy Scheme and on the terms set out for the 50th Levy Scheme.
This is from the official statement.
andyfuller
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Okay,

It says in that it will continue to support the sport, it doesn't say specifically how it will support the sport.

They used to pay a voluntary Levy on foreign bets on UK racing but changed that policy to support the sport but in a way they saw fit and by not giving it to the Levy board for the reasons I said before.

So if I were a betting man I would bet they will do the same now by sponsorship, frost covers etc etc to the tune of the amount they would have had to pay in Levy had they been based in the UK still.

But they aren't going to be in the UK any more so any Levy payment would be voluntary and as we no they aren't willing to make voluntary Levy payments as they think the money is miss spent.

They say they will pay on the 50th Scheme on the terms laid out in the scheme which is 10%(a bit more but can't remember the exact figure) on UK Gross Profits from UK racing. But their Gross Profits in the UK from UK racing will be non existent won't it as the business will all be done offshore and the Profits reported offshore. As such the amount they pay under the 50th Scheme's terms will be very small if any.

I may well be wrong but I don't see anything that indicates to me they will continue to pay over £7 million in Levy next year.
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jimrobo
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according to reuters

http://www.reuters.com/article/2011/03/ ... geNumber=2

they are planning to consolodate their offices in 2012 which means we a complete move to gibraltor.
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