Joint Committee on the Draft Gambling Bill Minutes of Evidence


Supplementary memorandum from Betfair (DGB 112)

  I am writing, as requested, to reiterate in writing a point made to you privately.

Profits of our customers

  Lord Brooke had enquired how many of our customers make more than the current Capital Gains Tax threshold in a given year.

  Looking at 2003, 1.09 per cent of our active users made more than £7,900 in profit, including betting on outcomes to happen and not to happen. Of those who bet exclusively on outcomes not to happen (that is, the `layers' in the Betfair sense), only one customer made more than the CGT threshold.

  It is important to note that almost all users regularly bet both on outcomes to happen and not to happen. Just as you would expect from a competitive market, there is no inherent advantage on either side. If a user considers the odds available on a particular outcome occurring to be too generous, he will take them (ie "back" that outcome in Betfair terminology). And if a user considers the odds available on that same outcome not to occur to be too generous, he will take them instead (ie "lay" that outcome in Betfair terminology). Neither type of bet can possibly make a user either a "bookmaker" or a threat to the licensing objectives, and therefore require him to undergo a fit and proper test, any more than a punter betting on England not to win with Ladbrokes poses a threat to the licensing objectives and needs to undergo a fit and proper test. If this were not the case, and all those opposing an outcome were deemed to represent a threat and require licensing, then any two-outcome event would require all backers to be licensed as well: anyone betting that one of the outcomes will happen is also by definition betting that the other outcome won't.

  One thing we cannot determine, of course, is what the overall profit and loss of customers is, taking into account the fact that we are often used as a hedging tool. A customer who is profitable with us may have a net loss on his betting activity, just as one who appears to be losing money to us may be very successful. Many of our customers will look to arbitrage prices between bookmakers, and may bet with William Hill that an outcome happens, and with us that it does not—or vice-versa. In that instance, the customer might show a profit with us and a loss elsewhere, but it is obviously the net position that is of interest to you. It also goes without saying that one year's performance is not an indication of future profit.

Inside knowledge

  On a separate point, I enclose a clipping from the Racing Post from Tuesday 10th February. It relates to the concern that some have that the public might bet with people `in the know' when they bet on an exchange.

  You will obviously be aware of our view that there is no bigger insider than a bookmaker: it is a bookmaker's business to make sure he is finding out information which is not available to the general public, and all the exchange does is allow everyone to seek the best information possible in the most transparent environment. The quote from SkyBet's rugby-odds compiler, Mike Triffitt, illustrates that point clearly. After making one player the heavy odds-on favourite for the outcome of a bet (and, unfortunately for his company, being proved wrong), he says: "I thought Barkley was an absolute certainty. I will have to have a word with my contacts."

February 2004





 
previous page contents

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2004
Prepared 7 April 2004