Tote Joint Venture May Flout Offshore Agreement

by Jason Gorringe, Tax-news.com, London

11 June 2001

Criticism has been expressed from both political and betting quarters following the news that the Tote, the state owned pool betting monopoly which recently entered into a commercial relationship with the Go Racing consortium, may be about to contravene the unwritten agreement made between UK bookmakers and the Treasury following Gordon Brown's March budget.

The Chancellor agreed to scrap the 9% betting duty on each transaction and replace it with a 15% gross profits tax, only on the understanding that the biggest UK bookies would close their overseas tax free betting operations. However, it was recently revealed that the Tote's new partner, whose members are reported to comprise Arena Leisure, Channel Four, and BSkyB, is seriously considering basing its internet betting venture in Gibraltar.

According to the Financial Times, Tom Kelly, the director general of the Betting Office Licensees' Association which represents the UK's largest bookmakers, has written to the minister responsible for betting duty, Stephen Timms, to protest, describing the situation as 'very serious' and 'a potential setback to the Treasury's objective of creating conditions in which Britain can be a major centre of world betting.'

Both organisations have decided to keep a low profile for the moment, and John Heaton, chief executive of the Tote said the idea of an offshore base had only just been raised. A Go Racing official indicated that the consortium was considering all the options available to it, but refused to confirm or deny the plan to base an internet operation in Gibraltar.

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