Chapter 2,426 of the U.K. Betting Tax Dilemma

11 January 2000
Can lowering taxes increase revenues? According to the British Horseracing Board, yes, and that's exactly what the Board intends to propose to the U.K. Treasury. The Board has agreed to press for a reduction in General Betting Duty (GBD) from 6.75 percent to 5 percent in this year's budget and for a simultaneous cut in punter deductions from the present level of 9 percent to 5 percent. Board officials believe that a small cut in the GBD will result in more betting with locally based bookmakers, increasing revenues for the Treasury.

Board Chairman Peter Savill explained, "The proposal the BHB will be submitting to Government later this month is one which the Board believes has a realistic chance of success and would do much to counteract the threat posed by offshore betting."

Savill added, "The proposal recognizes the legitimate interests of all four groups concerned. It would be good for racing and good for punters. It offers a practical means of protecting Government revenues and it would protect bookmaker profitability."

The Board, however, nixed the idea of pushing for an even greater reduction of taxation levels to three percent, calling it unrealistic and unlikely to be accepted by the British government.

"Cuts in GBD and deductions to 5 percent could yield benefits to racing, a much improved deal for punters and reduce the impact of offshore betting without adversely affecting betting industry profits," BHB Chief Executive Tristram Ricketts said. "The net effect on Treasury revenues should be marginal and might well be positive, taking into account tax income which would otherwise undoubtedly be list if the offshore issue is not addressed. Thus the rare chance of four interest groups all ending up as winners without a loser is there for the taking."

Additionally, at least one bookmaker reacted negatively to the proposal. According to PA Sporting Life, William Hill's public relations director David Hood gave the Board a thumb's down.

Conversely, Damian Cope, managing director of U.K. bookmaker Blue Square told Sporting Life that the U.K. government would experience huge losses in revenue and of punters without a lower betting duty. "The government appears to be realizing how badly punters are affected by the whole taxation question, but until taxation is lowered, racing is going to be under pressure as bookmakers look to other sports and tax regimes to maintain their bottom line," Cope said.

In the last few months, several major U.K. bookmakers have set up shop at offshore locations, such as Isle of Man and Gibraltar, to circumvent the heavy betting duty. Among the bookmakers fleeing the coop are Ladbrokes, Victor Chandler and Coral. As a result, the U.K. Home Office has announced that an independent review body will be formed to design a new regulatory structure for the gambling industry.