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|UK gambling tax puts us at disadvantage, says Betfair
| Simon Bowers
Betting exchange group Betfair, Britain's largest online betting
business, has become the latest bookmaker to publicly attack the Treasury's
online gambling tax rates and refused to rule out a move offshore.
The privately owned firm, one of
Britain's most successful internet startup companies, issued a thinly veiled
threat to move its UK business to Malta should the competitive disadvantage of
paying tax in Britain worsen.
The chief executive, David Yu, said
Betfair, which already channels almost all of its non-UK business through
low-tax operations in Malta, remained committed to the UK and had no plans "at
the moment" to move.
Treasury's 15% betting tax on profits, he said: "It is not ideal. It does put
us at a competitive disadvantage." He declined to rule out abandoning the UK at
some stage in the future, though he said the company was "very proud" of its
achievements as a British business.
Yu's comments came after William
Hill yesterday confirmed it is moving its online business to Gibraltar,
shattering a 2001 "gentleman's agreement" with the Treasury not to do so.
Ladbrokes is expected to respond with a similar move, possibly announced as
soon as tomorrow when it delivers half-year results.
William Hill and Betfair already operate UK-targeted gaming websites, offering
poker and online slot machines, from offshore tax havens as does
government-owned bookmaker the Tote.
An exodus of online betting
operations will make a mockery of Labour's efforts to establish Britain as a
global centre for gambling companies and regulation. Already higher tax levels
mean no online poker or casino business operates in the UK under a licence from
the Gambling Commission.
The departure of sports betting firms will
leave the UK's entire online gambling market the largest legal betting
market in the world beyond the scope of both the Gambling Commission and
the Treasury. Meanwhile, the government two years ago introduced some of the
most liberal laws on gambling advertising anywhere in the world.
Betfair published limited financial figures for the year to 30 April
showing top-line operating profit up 29% to £72m, despite a heavy
investment programme. Revenues have doubled in three years to £303m and
the company has net cash of £133m. Much of last year's growth came from
outside the UK.
The group's core UK sports betting exchange continued
to show double digit growth during the year, said finance director Stephen
Morana. The performance is in contrast to William Hill, which yesterday issued
a mild profits warning, blaming a poor run of luck on flat racing and football
The exchange model, which "matches" rather than "takes" bets,
means the company is never exposed to sporting results. Betting exchanges work
like stock exchanges, matching buyers and sellers of fixed odds wagers.
Betfair said it was matching an average of 6.4m transactions in real
time every day more than every stockmarket in Europe.
is shifting its online gambling arm to Gibraltar in a move that will cost the
UK Treasury millions of pounds. Chief executive, Christopher Bell, blamed
"intense competitive pressures" for the decision, which industry experts had
already said was inevitable following William Hill's move on Tuesday.