Memorandum from Mr Anthony Clare (DGB
161)
I understand that in the context of the forthcoming
Gambling Bill, the subject of "non-recreational" users
of exchanges has cropped up, the implication being that the licensing
status and/or taxation status of certain users of certain gambling
intermediaries is up for discussion.
I am concerned that the Joint Committee is allowing
itself to be led down a particular path by the anti-competitive
interests of the large bookmakers such as Ladbrokes, William Hill
et al, masquerading as integrity concerns.
For decades the only protective mechanism in
place to prevent individuals from profiting from a particular
horse losing has been the exhorbitant expense of betting through
traditional bookmakers. The major supermarket chains and mobile
phone providers must be green with envy at being regularly investigated
over their pricing when big bookmakers offer an easily replicable
product with neglibile delivery costs to consumers with a massive
100% markup. Ironcially when well-publicised racing scandals have
occurred where these bookmaking firms were the benficiaries, these
"guardians of integrity" have regularly stonewalled
the Jockey Club and refused to co-operate in any investigation.
Prior to the emergence of Betfair I was an occasional
losing punter with Ladbrokes and William Hill. Since Betf air
arrived in late 2000 I now do the vast majority of my betting
there, and the volume of bets I place has increased greatly. I
now bet nearly every day, and I have gone from being a losing
punter to regularly making money. Having analysed how this has
happened I have come to the following simple conclusion: it's
cheaper. Using my skill and judgement (which I don't believe has
changed greatly in the last few years) I appear to have an edge
over the consensus of about 2%. Ladbrokes transactional cost is
about 10%, leaving me a loser. Betfair take about 1%, leaving
me a net winner.
My concern is that purely because I have chosen
to use a betting intermediary with lower costs I may now fall
into the category of "non-recreational" users. This
does strike me as unfair, as to the best of my knowledge going
along this line of enquiry the Joint Committee is making no effort
to apply similar thinking to Betfair's more expensive competitors.
Will the "non-recreational" customers of Ladbrokes,
William Hill and Coral also be required to be licensed? If not
why not?
Frankly I find it baffling that in this day
and age, where I have to prove my identity (by replicating my
signature or by debit or credit card with PIN), demonstrate that
I am over 18, and satisfy money laundering regulations to undertake
a £10 transaction through a bank, anyone can still go into
a bookmaker, either on course or in a shop, and execute a transaction
for thousands of pounds in cash with no formal verification of
age, no proof of identity and not a single measure taken to hinder
money laundering.
Put simply it is still possible for a 17-year-old
drug dealer to launder the profits of his crimes in cash without
having to provide his identity using Ladbrokes, William Hill or
Coral. On the contrary the bank details (and therefore the age
and identity) of every deposit and withdrawal to and from Betfair
are recorded permanently, and any transaction can be investigated
and traced. Yet perversely continued lobbying by the "big
three" causes the Joint Committee to be more concerned about
the threat to integrity posed by the latter than by the former.
It is perfectly understandable that the encumbent
interests should push for legislation that would entangle the
customers of a low-cost competitor with red tape, in order to
maintain high margins in the face of competitive pressure. It
is less understandable that experienced public servants appear
to have difficulty spotting when wily bookmakers are trying to
pull the wool over their eyes. I will happily see myself regulated
and licensed as a "non-recreational" Betfair user the
day that legislation is enacted forcing Ladbrokes to identify
its "non-recreational" customers, and require them to
be similarly licensed. Until that willingness to treat customers
of all betting intermediaries equally emerges I will continue
to be of the view that the expressed desire of the "big three"
bookmakers to have their competitors' customers licensed is nothing
more than an effort to hobble low-cost competition and maintain
the current extortionate level of profit margin within the industry.
March 2004
| 
