Levy Board Seeks To Stop Online Betting Going Offshore

by Robin Pilgrim, LawandTax-News, London

16 July 2009

The Chairman of the Horserace Betting Levy Board, Robert Hughes, has proposed three levels of action required to head off potentially huge losses to the horse-racing industry and UK tax revenues, in the event that the major UK bookmakers relocated their online and telephone betting operations to offshore locations.

• At a basic level, in his view, bookmakers already operating overseas, and taking bets from British customers on British racing, should be persuaded to honour a moral and, perhaps, legal obligation to British racing by paying a levy contribution. This is already being done by certain betting operators.
• The second level concerns everyone in the media and racing, who should review the relationships they have with overseas based betting operators, Hughes believes. The Levy Board Chairman would like to see a boycott of advertising, sponsorship, promotion and betting with overseas-based bookmakers if they do not agree to contribute to the levy.
• The third level is support and encouragement for Government initiatives.

The Department for Culture, Media and Sport announced earlier this year that it is reviewing remote gambling rules to make regulation fairer 'and ensure a more level playing field between British businesses and their overseas counterparts', which should include securing contributions from overseas licensed operators towards the cost of regulation, the treatment of problem gambling and the Horserace Betting Levy. According to eGaming Review, the Department will not grant white list status to any new applicants, while the review takes place. White List status allows egaming operators based in offshore jurisdictions to advertise in the UK.

If bookmakers William Hill, Ladbrokes and Coral were to relocate their telephone bets and online businesses, the Treasury could lose up to GBP45m a year in taxation according to Racecourse Owners' Association estimates, while the loss of the 10% bookmakers' levy may create a further shortfall of about GBP25m to horse-racing. This would have an extremely harmful effect on British racing according to Mr Hughes.

William Hill has already told the Financial Times that competition from rivals enjoying benevolent tax regimes meant the UK bookmaker did not have 'the luxury of being parochial about the future', and that relocation remained a 'live issue' for bookmakers because of the lower tax regimes enjoyed by overseas rivals. UK bookmakers persuaded the government not to raise the tax on gross profits by 2% in the last budget by contending that this would force closures of betting shops and lead to offshore relocations.

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