In a speech to the British House of Commons outlining his proposed budget, U.K. Chancellor of the Exchequer Gordon Brown on Wednesday said he wants to revisit the tax structure for betting exchanges.
Brown said he would like to see a tax imposed on layers who use betting exchanges to bet on horses or teams to lose. Brown, along with traditional land-based bookmakers, would like to see those punters pay a tax on their winnings, similar to a tax bookmakers have to pay.
He said the Customs and Excise office would conduct a review of the tax scheme in coming months, but no timetable is in place for its completion.
For exchanges, the call for a review is nothing new. Last year C&E hashed out a plan after months of hearings and debate with exchange officials and traditional bookmakers like William Hill and Ladbrokes. The Department for Culture, Media and Sport also studied exchange betting last year.
In his budget speech, Brown was direct regarding his intention with bookmakers.
"On betting duties, I will freeze rates, and I will review the tax treatment of betting exchanges and their clients," he said.
Brown's remarks were welcomed by William Hill and other high-street chains, while those in the exchange industry were less than supportive.
Andrew Silverman, Betfair's director of public affairs, said he understands the desire for government officials to be persuaded by traditional bookmakers, but urged everyone involved to take an objective look at the issue.
"Our customers do the same as customers anywhere else: They bet on outcomes of events," he said. "The fact is that a tax on Betfair's punters would be inequitable and would penalize them purely for being our customers."
Silverman said Betfair would support a plan to tax all punters only if such a plan didn't discriminate against one segment of the market.
"We are firm in our belief that tax policy should not be defined on the basis of the wording of a betting slip," he said.
Rob Hartnett, the managing director of Betdaq (another betting exchange), agrees.
"If a tax is brought in on successful punters, it must be brought in across the board," he said. "It's disappointing that we are subject to another review but recognize that the spotlight is on our industry and welcome the opportunity to once again state our case for being part of the betting industry and expressing our desire to be treated as such."
William Hill spokesman David Hood echoed a long argued sentiment from traditional bookmakers who want to see users that lay bets on exchanges treated as bookmakers because they are setting their own odds and betting on negative outcomes.
"All that we are asking for is that anyone who lays bets on an exchange should be subjected to the same regulation and taxation issue as any other licensed bookmaker," he said. "We have always maintained that layers--individuals who act as bookmakers--on exchanges enjoy an unfair tax advantage."
Paul Cooper, of P2P site Sporting Options, said any punter who places a bet with a fixed-odds bookmaker on a team to win, is essentially betting on the other team to lose. He also feels that imposing a tax now on layers would be inappropriate since the government had the chance to do so years ago.
"Professional gamblers have not been taxed in the past, and there's no way they should be taxed now because they're taking the position of saying something will or won't happen," he said. "Layers are basically backing all the other horses in a race."
The Association of British Bookmakers has long been opposed to betting exchanges and applauded Brown in a statement after his speech for recognizing that "the taxation regime relating to betting exchanges is a problem area."
Another longtime opponent of betting exchanges, the British Horseracing Board, has argued that exchanges, with their ability to allow punters to lay horses, are contributing to the downfall of racing.
Alan Delmonte, the board's communications manager, said the board welcomed the review but was reserving comment.
"We will develop our position more firmly as and when we make the submission at the review," he said.
Brown also indicated additional areas of gambling taxation to be addressed with the budget scheme, including whether a gross profit tax structure should be introduced for the lottery, re-examination of the tax treatment of fixed-odds betting terminals and appropriate tax treatment of hedged bets.
Click here to view the entire text of Brown's speech.