Betfair Downplays ASA Ruling, Possible Changes to UK Taxation Policy

23 May 2003

Officials with downplayed a ruling on Thursday in which the Advertising Standards Authority ordered the group to discontinue a successful Internet-based advertising campaign.

The decision came in response to a complaint that Betfair was running a misleading banner advertisement campaign.

The banner in question included text that read: "January sales. Sale! Now on! Now 20% better odds!" The ASA ruled that the ad was misleading on the grounds that it implied Betfair had slashed its odds when it really hadn't. Betfair has been asked to not run the advertisement again.

Betfair's communications director, Mark Davies argued that both the ASA and whoever filed the claim, misunderstood its meaning.

"We meant one thing by it; they understood something else," Davies said.

Betfair contended that its odds were better than those found through traditional betting means, but officials with the ASA said the ads were still misleading to consumers. Davies said Betfair will abide by the final ruling.

"They ruled against us as a result, and we said OK, fair enough," he said. "We think they misunderstood it but no harm done. We won't run it again."

The banner ad, according to Davies, was a minor part of the campaign and business generated on Betfair.

"I'm surprised that anyone was that concerned about it to complain about it," he said. "It was really no big deal. I don't even now who objected to be honest--certainly someone who should take life less seriously."

The ASA ruling wasn't the only event Davies was downplaying on Thursday.

No announcement was made after officials with three of England's biggest bookmakers met with the John Healey, economic secretary to the Treasury, to discuss how betting exchanges should be taxed.

Chris Bell, David Harding and Vaughn Ashdown, the chief executives of Ladbrokes, Hills and Corals, respectively, attended the meeting, along with Tom Kelly, the Association of British Bookmakers' chief executive.

The meeting came after a late amendment was added to the budget bill, but later pulled with the understanding that the meeting would take place.

After the meeting Kelly told reporters that the conversation lasted about 40 minutes and that there was a "good and sensible exchange of views with the minister and his officials."

Despite the latest efforts of High Street bookmakers to fend off competition from Betfair and other betting exchanges, Davies remained confident that the proposed tax plan, which was agreed to after a fourth month review by the HMCE, will remain in place in the final budget. Betfair hadn't received any reports on how the meeting went, but he didn't take that as sign one way or the other.

"I think in this case it's more that we just haven't heard," he said. "Although I will be amazed if it goes against us."

Last month's budget established that betting exchanges would pay 15 percent of their gross profits, deemed to be the commission exchanges receive from their customers, to the Treasury.

Bookmakers argue that this is not appropriate, and that exchanges should pay 15 percent of the profits made by successful layers.

The method of taxation has implications for betting exchanges' profitability, commission rates charged to customers and, indirectly, bookmakers' margins and horse racing's income from the betting industry.

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