The word controversial is never far away from Betfair, the online betting exchange which allows users to act as bookies by "laying" horses to lose as well as backing them to win. It is the latter which causes a fuss, most recently in Cyprus where the Government has included provisions in a crackdown on online gambling that appear aimed directly at the company.
Cypriots are keen users and Betfair's admission of a problem with the proposed new laws caused its shares to wobble yesterday. There may be worse to come.
The move appears motivated by tax as much as anything else. With an economy from which the term "bailout" is never far away that's no surprise. Most online gaming companies are based offshore to avoid ponying up. Cyprus (and many others) would like to change that.
Governments usually tax gambling by imposing levies on companies which take (or lay) bets to profit from losers rather than on individuals who like to hunt winners.
That's much harder to do with an exchange, where punters can sit on either side of the wager. Cyprus's solution to this conundrum is to ban exchanges and Betfair has countered with the threat of an EU challenge.
Working out the odds on the winner is tricky at this stage but the company should have a care. Let's say it wins. What's to stop the Cypriots saying: "Fine. We'll tweak the rule. Anyone who lays a horse (or a football team, or a whatever else) to lose in our country pays a tax. And you, Betfair, are responsible for collecting it." That could cause the company all sorts of problems. And not just in Cyprus.
Gambling in this country is taxed through a 15 per cent levy on bookies' gross profits. They have long complained that this puts them at a disadvantage to punters who "lay" bets on Betfair whom they feel should cough up a similar amount.
William Hill has made this case at the High Court and a decision is expected soon, but even if the case fails, under existing law that can always be changed, and rather easily if Cyprus – pushed by pressure from Betfair – comes up with something workable that we and other countries could follow.
When it paid the gross profits tax Betfair could argue that its punters should be exempt, regardless of which side of the bet they were on. Since it moved its servers offshore to duck the tax, however, that case is now very much harder to make.
Green's volte face is a warning to criminals
David Green is rapidly establishing a reputation as a man to watch with a degree of trepidation, at least among the criminal fraternity.
The new boss of the Serious Fraud Office (SFO), below, yesterday pushed the organisation into a quite unprecedented volte face by ordering it to reopen its inquiry into the $600m (£387m) Weavering hedge fund collapse, which his predecessor had dropped because he feared he wouldn't be able to make a case.
Victims of the collapse were spitting tacks and went on to successfully pursue Weavering's founder, Magnus Peterson, and others in a civil case that netted them $450m. Peterson was found liable for deceit and breach of fiduciary duties by the High Court.
Of course, pursuing a case in the civil courts is a lot easier than getting one through the criminal courts. The burden of proof is lower – with cases resting on "the balance of probabilities" rather than "beyond all reasonable doubt". Verdicts are also the responsibility of judges. Juries often find it difficult to convict in criminal fraud trials thanks to defence briefs' habit of spinning cases out for months and blowing lots of smoke.
The SFO has sometimes given the impression that it lacks the stomach to take this on. It is to be hoped that this is changing, because any future cases emanating from the Libor interest rate-fixing scandal won't be easy to prove.
One problem is funding. Bringing such complex cases to court is time consuming and expensive and the SFO's budget is being cut. That needs to change, even if it involves a U-turn from the Government.
The results should be the same regardless of whether the criminals turn up to court in sportswear or Saville Row suits.
JJB Sports investors suffer penalty shoot-out
Talking of sportswear, it seems that JJB Sports isn't selling too much of it again.
The bedraggled company is the corporate equivalent of the England football team. Just like the latter, it has often promised much, only to fail to deliver when it counts. As with England supporters, JJB's investors have been getting fed up with this and lowered their expectations.
Despite that, both have recently offered a tantalisingly brief promise of better. In the case of the football team, as we know, this came when they surprisingly topped their group in the recent European Championships before the inevitable exit in a penalty shoot-out. As for JJB, it has been the company's very survival.
Sadly, however, just like England, JJB isn't yet ready to compete with the big boys; people like JD Sports Fashion or Sports Direct (for which read Italy and Spain perhaps).
Yesterday, JJB's failed penalty shoot-out came out in the form of yet another profits warning. The company blamed a "deterioration" in trading during May and June when "the expected peak in sales in connection with sales of replica football kits and associated products generated from consumer interest in the European Football Championships did not materialise to the extent anticipated (and previously experienced with other major football championships)".
So there's another parallel with the England team that JJB appears to have had rather too much faith in – when it all goes wrong there's always an excuse.Reuse content