Memorandum from David Morgan (DGB 108)
I am writing in response to an article in today's
Racing Post concerning yesterday's sitting of the Joint Committee
of the Gambling Bill at which bookmakers and the BHB were demanding
that layers on betting exchanges were licensed the way that bookmakers
are.
I would like to point out that I do bet and that
I have accounts with bookmakers and one of the betting exchanges,
but that I was also a bookmaker for a number of years. I therefore
believe that I can provide an informed and fairly objective view
on the subject, and would like to make the following points:
1. The bookmaking industry have been keen to
curtail the rise of betting exchanges as they must be taking a
significant amount of business away from their own internet and
telephone betting divisions. If the licensing of layers took a
similar form to the existing process for a bookmakers' permit
then this would probably stem the rise of exchanges as it would
discourage many people from spending the time to apply. In addition,
with the current process, bookmakers always object to the granting
of new licenses on the grounds of competition.
2. The main purpose of the existing bookmaker
licence is to ensure that when a customer wins he is paid out
what he is owed. Due to the way in which exchanges operate the
customer, namely the backer, never has any risk of not being paid
what he is owed.
3. Some existing bookmakers are not opposed to
exchanges and are indeed trying to offer new bets in order to
compete. Super Soccer, Bet365 and Fred Done have started to introduce
"lay" prices on football matches. I am sure that it
will not be too long before they will offer the same service on
horse racing. Therefore if layers on exchanges are to be licensed,
then every individual going into a bookmakers having a bet at
a "lay" price will have to produce his licence before
the bet is accepted.
4. If you want to "lay" a horse in
a horse race or "lay" a dog in a dog race, you can easily
do this without using an exchange by backing all the other horses
or dogs. The only reason that people would prefer to do this on
the exchange rather by this method is that the price that they
would get on the exchange would be slightly better, due to the
fact that they would not suffer the larger bookmakers' margins,
and they only have to place one bet.
5. A lot has been written and said about how
exchanges have made it so easy to lay a horse, that corruption
in horse racing will increase. I dont think it is possible to
say one way or the other whether this will happen, but all we
can say is that in the past there have been a number of instances
of corruption in horse racing and there will be a number in the
future. However if an individual or group of individuals were
involved in fixing race then the last place that you would want
to place your bets would be on an exchange due to the visibility
of your transactions. I am sure that I have not raised any points
that you have not already heard but after reading so many ill
informed comments from self-interested individuals I thought I
would use my democratic right and air my views.
January 2004
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