Memorandum from the National Association
of Bookmakers Ltd (DGB 181)
May I take the opportunity to express my appreciation
for being invited to give evidence at the hearing of the Joint
Committee on the Draft Gambling Bill on 20 January 2004 after
initially being excluded from this process by default. The initial
response of the National Association of Bookmakers to the Budd
Committee Report was subsumed under the Bookmakers' Committee
submission. Subsequently, much of the work of the Bookmakers'
Committee has been undertaken by the Association of British Bookmakers
which is primarily a trade association representing "off-course"
bookmakers of which the National Association of Bookmakers is
not a member. It is because of this sequence of events that I
believe the contribution of the NAB in the consultation process
has been overlooked.
Inevitably the time available at the Joint Committee
meeting referred to above was severely limited which together
with the fact that the NAB was not invited to submit comment on
the Draft Gambling Bill has meant that the views of this association
have not been fully presented. As a consequence I would like to
expand our views on two issues in particular, namely the abolition
of the "5 times rule" ie Sections 13(2) and 18 of the
Betting, Gaming and Lotteries Act 1963 and the impact of betting
exchanges on racecourse bookmakers.
The Draft Gambling Bill leaves the question
of the "5 times rule" open which from the point of view
of existing and potential holders of seniority positions is unsatisfactory.
There is unanimous agreement among racecourse bookmakers that
this safeguard should remain in order to ensure pitch tenure whilst
at the same time maintain competition between bookmakers and other
betting outlets on the racecourse. Racecourse bookmakers fear
that removal would provide racecourses with an opportunity to
price bookmakers out of business which would lead to higher margins
among the remaining bookmakers. The incentive for racecourses
would be the resulting higher gross profits earned by the "off-course"
betting industry from which the racecourses would benefit, the
cost being borne by punters. The majority of racecourses would
probably not take such action but it would be a real concern with
respect to some courses. We understand the aspirations of racecourses
to maximise income flows but we would hope that bookmakers charges
can be settled by negotiations within the existing framework.
With respect to betting exchanges we hold equally
strong views. Historically prices on the racecourse were determined
by leading racecourse bookmakers, who can be described as price
makers, using a mixture of form and information data influenced
by market forces of supply and demand. What exchanges have done
is to provide an opportunity for thousands of individuals, unencumbered
by operating expenses, to act as unlicensed bookmakers over a
period of 18 hours prior to a race. As a consequence the price
makers have become price takers with the resulting reduction in
margins making racecourse bookmaking increasingly unviable, particularly
at the midweek bread and butter meetings.
In the initial stages of the above process there
was a marked price differential between racecourse prices and
exchange prices. As a consequence a few racecourse bookmakers
took advantage of these differentials to engage in profitable
hedging. However, the use of exchanges either for price taking
or hedging has expanded rapidly until today in excess of 50% of
bookmakers have direct or indirect connection and this level is
likely to continue to expand. Thus the initial advantages to be
gained have been substantially diluted as the differentials have
narrowed. In addition to this most bookmakers are reporting that
the regular £25-£100 punters seem to have disappeared
which is probably due to the attractions of bet exchanges. On
the reverse side of the impact coin the ability of bookmakers
to lay on the exchanges is a dubious advantage. With margins in
the 1-2% range it would appear, in theory, to be impossible for
a racecourse bookmaker to pay general betting duty, gross profits
levy, income tax and national insurance and commission and benefit
from this activity.
The NAB is not opposed to betting exchanges
per se but recognises the threat to the integrity of racing, racing
finance and the viability of racecourse bookmaking arising out
of the failure to treat all layers in a manner which would result
in a fiscal level playing field.
The NAB has firm views on other aspects of the
Gambling Bill but the above points are considered to be of paramount
importance to our members. If you require any further information
concerning our views please do not hesitate to contact me.
March 2004
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