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So, BF earn more from ‘Income from the managment of Customer Balances’ than they pay in Levy.
I don’t know why I find that strange – but I do.
Mr.Wilson,
No problem.
Betfair is still a private company. With public companies you can normally get their full accounts from their corporate website:
just google for "ladbrokes corporate", "william hill corporate", etc
best regards
wit
Quote – "So, BF earn more from ‘Income from the managment of Customer Balances’ than they pay in Levy.
I don’t know why I find that strange – but I do."
The reason it jars is that there is something fundamentally amiss with such a situation.
Aren’t betfair taxed on their profits in the same way that other boomakers are though?
i’m not sure that interest on customer balances is part of that debate.
using one of Glenn’s examples, if he had put 100k on ManU for the title a couple of months back at 3.9, neither the bookie nor betfair will be paying him out until May – even if he had laid it all back today at 1.8 with either of them and "gone green".
best regards
wit
- Total Posts 17716
Perhaps it’s (the ‘management of customer balances’ situation) worth asking Andrew Black about via his blog…
Fair enough Wit. Just struck me as strange.
Also Davidjohnson is correct. BF pay the amount of levy legally required. (If fact I think they pay more, on US and Irish markets, for example.)
- Total Posts 17716
But would ‘income from the management of customer balances’ fall within the scope of their taxable (in terms of Levy contribution) profits?
I have put the question to Andrew through his blog.
If its through a clearing mechanism it will be interest earned on balances as noted so they would..
But would ‘income from the management of customer balances’ fall within the scope of their taxable (in terms of Levy contribution) profits?
I have put the question to Andrew through his blog.
According to the pdf detail of the 47th Levy Scheme a couple of clicks from here:
http://www.hblb.org.uk/document.php?id=12
levy arises on "Gross Profit on British Horserace Betting Business".
where
"Gross Profit" means the aggregate of amounts which fall due to a Bookmaker during the levy period in respect of bets made with him and in respect of any bets entered into by him via one or more Betting Exchanges or via one or more Bet-brokers, less the aggregate of amounts paid out by that Bookmaker in the levy period by way of winnings to persons who made bets with him, save in the case of a Bet-broker where it means the amounts that the Bet-broker charges in relation to bets entered into via the Bet-broker and in the case of a Betting Exchange where it means the amounts that the Betting Exchange charges the parties to all bets entered into via the relevant Betting Exchange, in each case whether by deduction from winnings or otherwise, and save that this definition shall not apply in respect of bets placed on point-to-point, harness racing or trotting events.
and
"British Horserace Betting Business" means the business of effecting betting transactions by Bookmakers on horse races, where such races take place anywhere in England, Wales, or Scotland, whether such business is carried on personally or through servants or agents and whether carried on by post, telephone or in any other manner whatsoever. This includes the carrying on of such business through the medium of a Betting Exchange or a Bet-broker, carried out by whatever means.
The question I think is whether the time-value of money as regards (a) client cash deposits and/or (b) bets with a long wait to settlement, is included within either or both the phrases:
"amounts which fall due to a Bookmaker during the levy period in respect of bets made with him",
and/or
"amounts that the Betting Exchange charges the parties to all bets entered into via the relevant Betting Exchange".
The BF documentation distinguishes charges made on clients from interest foregone by clients, so has an argument against paying levy on the latter.
Bookies as counterparties I think don’t usually make that distinction in their terms and conditions (or maybe they do?).
But then do bookies take time-value into account in offering longer odds to a cash or deposit client than to a credit client ? And if they do, do they account for the portion of time-value benefit arising to them levy-period by levy-period before the levy period in which the bet settles?
I’m always open to correction, but I kind of doubt it, so I would hazard that bookies don’t pay levy on the time-value of money either.
best regards
wit
well put as usual. I missed the "(in terms of levy contribution)" from equitracks post..
Quote – "So, BF earn more from ‘Income from the managment of Customer Balances’ than they pay in Levy.
I don’t know why I find that strange – but I do."
The reason it jars is that there is something fundamentally amiss with such a situation.
I wonder if these customer balances are actually ‘ringfenced’ in a single account or are shuffled about the money markets to try and maximise interest, much like the Councils’ ill-fated deposits with Icelandic banks.
I don’t actually have much of a problem with surplus yet-to-be-needed capital being put to ‘work’ as it’s just a good business practice but what they, be it Betfair or Councils, are doing with our money should be made quite clear at the outset.
I’ve written several times on here that I cannot understand why folk leave money on deposit with the Exchanges. In-and-out as required with a Debit card, and let the money work for you at a glorious ~0.8%
Is it just me or does £6.8M contribution to levy seem like a pittance compared to the benefit it recieves from Horse racing.
I presume that Betfair (and indeed all other bookmakers) pay Levy based on profit from horse-racing markets only and not all sports.
So how can a bookmaker or Exchange pay Levy on monies on deposit which may or may not necessarily be used on a horse race.
Also the logistics of establishing which bets are subject to levy and which aren’t would make charging the levy on (as yet) client monies on deposit unfeasible IMO.
Is it just me or does £6.8M contribution to levy seem like a pittance compared to the benefit it recieves from Horse racing.
its notoriously difficult to choose your parameters for making a comparison, never mind then trying to extract figures from accounts to make sure you’re comparing apples with apples.
its not helped by ladbrokes and hills grouping levy with GPT into a single figure in their P&Ls.
however, making a number of very loose and arbitrary assumptions (including that horseracing contributes the same proportion to pre-tax profit of each of hills, lads and bf), one comparison might be to look at combined GPT/levy paid against overall pre-tax (ie corporation tax) profit :
Ladbrokes (year to 31 Dec 07 )
GPT and levy – 177m
Pre-tax profit – 352mHills (year to 1 Jan 08 )
GPT and levy – 137m
Pre-tax profit – 229mBetfair (year to 30 Apr 08 )
GPT and levy – 30.9m
Pre-tax profit – 38mOn those figures, for each quid it pays in GPT and levy:
Ladbrokes makes a profit of almost 2 quid (1.98 )
Hills makes a profit of 1.67
Betfair makes a profit of 1.22which in fact makes Betfair already a significantly greater proportionate contributor than those bookies to GPT and levy.
sure, that approach mixes in sports betting and gaming figures, but the argument can be run that those other businesses only exist in private hands because they have had a free ride on the back of the horse-race betting legislation. in HK for example the tote monopoly on horse-racing means that sports-betting and other gaming are under the same monopoly.
of course there are many other potential bases of comparison, particularly where there are axes to grind.
leaving aside axes, any other comparison basis thought fairer?
best regards
wit
ps db, levy is on "gross profit from british horserace betting business", per earlier post above.
"In-and-out as required with a Debit card"
That depends on whether you can get it, er, in and out quick enough.
its notoriously difficult to choose your parameters for making a comparison, never mind then trying to extract figures from accounts to make sure you’re comparing apples with apples.
.
It is very hard to make a fair comparison. Probably the fairest would be how much levy racing gets for every pound risked by punters. I don’t think Betfair would come out very well on that measure.
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