Betfair Group Limited – 2008 accounts

[davidbrady]

TDK – lets take a theoretical race which a high street bookmaker accepts bets

Punter A stakes €100 on Horse A at 3/1
Punter B stakes €150 on Horse B at 4/1
Punter C stakes €150 on Horse C at 5/1

So the bookmaker has taken €400 over the counter

Horse A wins so Punter A wins €300 and the other 2 Punters lose €150 each

Does the high street bookmaker pay Levy on this race?

[wit]

TDK – lets take a theoretical race which a high street bookmaker accepts bets

Punter A stakes €100 on Horse A at 3/1
Punter B stakes €150 on Horse B at 4/1
Punter C stakes €150 on Horse C at 5/1

So the bookmaker has taken €400 over the counter

Horse A wins so Punter A wins €300 and the other 2 Punters lose €150 each

Does the high street bookmaker pay Levy on this race?

At the moment, no, whereas obviously BF would.

But if i understand correctly, TDK is suggesting that the fair way to assess levy would be by reverting to a focus on turnover rather than gross profit?

I have to smile at that because turnover-based levy was exactly what the bookies objected to Lord Wigg imposing in the late 1960s, and which led to Levy schemes being determined (absent agreement) by the Home Secretary rather than by him as Chairman of the Levy Board.

And its not so long ago that the move back to profit-basis from turnover-basis was lauded by the bookies.

Why the change of view now ?

best regards

wit

[thedarkknight]

You are misunderstanding me, wit.

I didn’t say levy should be based on turnover for bookmakers – I was merely saying that it would provide a fairer comparison between what bookmakers and the exchanges pay back to the sport. The models are clearly different – Betfair have no risk attached to taking bets on anything whereas bookmakers do.

[thedarkknight]

Your example of levy paid/overall profit is deeply flawed.

If Hills bought Timeform, spent millions more on race sponsorship and had hundreds of techies working on their website, would racing be happy to accept less levy from them on the basis of less overall profit?

[davidbrady]

Sponsorship, advertising, computer costs, & salaries do not affect a Bookmaker’s Gross Profit which is purely “Stakes received LESS Winnings paid out”

They obviously affect Net Profit but the Levy is based on Gross Profit, as far as I know

[wit]

Your example of levy paid/overall profit is deeply flawed.

tdk

i guess that depends how you view the levy.

if you take the privatisation of off-course betting in the uk as the proverbial licence to print money, one way to look at the levy (and GPT) is that it is the price the bookie pays to the state for priniting that money.

ladbrokes pays the state 100p to print another 198p for itself.
betfair pays the state 100p to print "only" 122p for itself.

in many – even most – other racing jurisdictions, that licence is not available at any price and the state and racing get all the benefit of betting expenditure direct without any privateer taking a skim from the activity.

so if the levy was originally what off-course bookies paid for the right to do in the uk what the state reserves to itself in other countries:

– do you think uk bookies should no longer have to pay for that right as a matter of principle in respect of all the other betting activities they have introduced alongside the horseracing that gave them that opportunity?

– do you think we go back to punters paying it on stakes (which I understood by your reference to "every pound risked" by them) ?

– how do you view the underlying rationale for the levy and/or GPT?

best regards

wit

[gamble]

Redman Davies and Big Tony
saved by the miserable morning
edit
maybe the post was a tad strong for the noble
or as some would have it
ignoble departed

[thedarkknight]

– do you think uk bookies should no longer have to pay for that right as a matter of principle in respect of all the other betting activities they have introduced alongside the horseracing that gave them that opportunity?

– do you think we go back to punters paying it on stakes (which I understood by your reference to “every pound risked” by them) ?

– how do you view the underlying rationale for the levy and/or GPT?

best regards

wit

The levy is a tricky issue on many counts, but I do think bookmakers have to pay something back to the sport and I don’t think it should be based on turnover.

The best “solution” is one where Racing gets a fair chunk of the profits generated on the sport, while the set up of the levy neither favours nor disadvantages punters too much. By the last bit of that sentence, I mean that it would be no good (for Racing) having 100.01% books on every race and horse racing getting a share of the vastly diminished profits generated on the sport. Equally, putting a levy on turnover for risk taking operators (bookmakers) could see things go the other way with margins pushed up as bookies try to squeeze every penny out of punters. There is a difference between what exchanges and bookmakers do and I’m not sure that they should necessarily be treated in the same way when it comes to the levy.

I also share some people’s concern regarding the fixture list. The Programme Book should absolutely not be compromised on the basis of what is best for bookmakers and/or exchanges.

[Author]

Posts