Merit in call to tax bookies not punters

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The Independent Online

In a week when many punters are preoccupied by the International Classifications, John Brown, one of the most senior figures in British betting, has been talking through a different, and potentially far more significant, set of figures.

In a week when many punters are preoccupied by the International Classifications, John Brown, one of the most senior figures in British betting, has been talking through a different, and potentially far more significant, set of figures.

Brown, the chief executive of William Hill, addressed an industry seminar in London and proposed what he described as a "radical solution" to the problem of betting turnover drifting abroad to low-tax and no-tax operators. He was being modest - wholly revolutionary would have been a fairer description. The Government, Brown said, should scrap off-course betting duty altogether. Instead, it could raise money, both for the Exchequer and racing, by taxing bookmakers' profits.

In other words, Brown was seeking to shift the burden of taxation from punters to bookmakers. At present, the nine per cent the punter pays on off-course bets includes 6.75 per cent in duty, and about one per cent for the Levy which is returned to racing. The rest, incidentally, along with the "Levy" slice on non-racing bets, stays with the bookmaker.

But Brown wants to sweep this all away, and pay tax on his profits instead. There are two possible explanations for this. First, that he is mad, or second, that he is very worried indeed about the future of off-course betting in general, and William Hill in particular (Brown is the company man's company man). And if he is worried, then racing should be, too.

In his vision of the future, British punters would no longer need to call the world to have a tax-free bet. Instead, the world will be calling us. What's more, much of the demand for illegal betting in Britain, which is fuelled by the deductions, would presumably vanish overnight. The turnover would be so vast, the profits so huge, that paying a percentage to the Chancellor and racing would still leave more than enough to keep everyone, including Brown's shareholders, happy.

Which all sounds fine, in theory. That, though, is where the plan will surely remain for the foreseeable future. The Government is hardly likely to give up an immense, guaranteed return from betting duty tomorrow, in favour of a system which might eventually yield even more, but then again, might not. It is far more likely that laws will be drafted in an attempt to stifle attempts by British bookmakers to move offshore, or, at least, to advertise such operations. Duty revenues would need to be in steep decline, and racing on its knees, before any such plan would hold much appeal - by which time, of course, it would be too late anyway.

That a man of the experience and intelligence of Brown can even think such a thing, though, shows how rapidly the world is changing around our betting industry. There are many countries with far stricter controls on gambling than Britain's, where there is an immense, and largely unrequited, lust for a punt. In the medium to long term, cyberbookmakers who can service that need are going to clean up. Brown, clearly, is worried that the Government may make it difficult for the grand old name of William Hill to be among them.

In the immediate future, Hills' plans include an off-shore call centre in the Caribbean, with callers routed via Ireland, and a low-tax betting website which British residents will be able to access (such a site already exists for foreign customers, but entry is barred to anyone trying to surf in from Britain). The launch of both operations is believed to be imminent. It would presumably not be difficult, however, for the Government to introduce legislation which prevented major British-based companies with significant presences on the High Street from allowing their customers to dodge betting duty.

The British Horseracing Board met the idea yesterday with the straightest of bats. "John Brown emphasised that his was not a formal proposal, but a catalyst for discussion," Tristram Ricketts, the BHB's chief executive, said yesterday. "If the wider betting industry feels that this is a practical way forward which would benefit all parties, we would be happy to engage in those discussions. John Brown did not comment on the implications of his idea either for racing's revenues or bookmaker's profits. Both would need to be included in any such talks."

Throughout the 40 years since betting shops were legalised, the betting industry has been characterised as a professional, modern business which could run rings around the dusty conservatives in charge of racing. Ironically, though, it is now the racing industry, with its control of the all-important media rights to pictures from British racecourses, which may advance into this uncertain future with an ace in the hole. Some of the most familiar names in betting, on the other hand, may be starting to feel that, when the next card comes out of the shoe, their hand could add up to 22.