City Index Sticks to its Guns

19 May 1999
Despite London-based bookmaker Victor Chandler's recent decision to escape high U.K. tax rates by re-centralizing operations offshore in Gibraltar, English online spread betting firm City Index remains intent on staying put. The company made its views public Tuesday when it released a statement from Managing Director Martin Belsham.

Belsham, also the Chairman of Blue Square, a division of City Index, emphasizes a need to continue Internet the advancement of Internet technology and e-commerce in the U.K. and warns that offshore betting services aren't regulated as tightly as those in England.

Here's the statement in its entirety:

When we launched Blue Square, the most comprehensive, secure Internet betting site available globally, we intended to trade entirely under existing UK legislation. The recent announcement by Victor Chandler that he has relocated his credit business to Gibraltar - thus allowing his customers to avoid paying betting duty - has caused some controversy and not a little speculation amongst the sporting press corps as to the future of betting in the UK.

But Chandler's decision and vigorous press speculation will not change our position.

There are three key elements to our decision. The first is that whilst the tax pendulum has swung away from the government, we have had no clear response yet from the regulatory authorities as to what their likely action might be. Whatever they decide, it is unlikely that the current status quo will be maintained. Whether the government will simply change current offshore tax status for locations such as the Channel Islands or whether they change the level of gaming duty, bringing it into line with countries such as Ireland is not clear. Until such time, our commercial decision is to remain trading in the UK, despite the fact that moving offshore would take a matter of hours rather than weeks.

Secondly, the vast majority of betting slips in this country are written for an average of some GBP5. That market is currently operating almost exclusively through high-street betting shops, where regardless of how slight, there is at least some punter protection and regulation. The Internet offers almost anyone with minimal technical knowledge, the opportunity to open an on-line betting office anywhere in the world, offering unbeatable bargains and tax-free betting. Once they have your money there is nothing to stop them shutting up shop and moving on. We believe it is important that customers know with whom they are dealing and where they can be contacted, should they have any problems or queries.

Thirdly and most importantly, the concept of the high street is rapidly changing as more and more reputable companies open up interactive sites via the Internet and supply almost every commodity from smoked salmon to the latest CD. But the Internet is only the beginning. Interactivity will sweep into this country on the back of digital television and will impact eventually on every house in the country. Its size and importance cannot be over-emphasised and until the whole of its development is clarified, focusing on the offshore profit potential rather than a digital future, which by its nature must be on-shore is, in our opinion, a mistake.

We will remain based in the UK, because we have a vision of a broader future. A future, which properly managed, will bring into the majority of lives a safer, more effective opportunity to bet entirely legally and to have the occasional bit of fun supporting our favourite sport or team.

Clearly, we will keep an eye on these developments and if necessary we will respond.