Sports Betting: Punters surf to net tax havens

Betting on Finnish baseball with a bookie in Alice Springs helps make gambling big business in cyberspace
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The Independent Online
THINGS HAVE moved on in the 30 years since the American thinker Marshall McLuhan pointed out that our planet had become the global village. For one thing, they play sport on the village green 24 hours a day, and for another, there is a huge betting tent pitched on the sidelines. Its doors never shut, and the guy ropes are telephone lines.

Welcome to the fevered world of cyber-punting, where if you have credit and trust in equal measure, you can bet until your mouse finger seizes up. There are no boundaries, few regulations and more gambling opportunities than anyone could ever want or need.

You can even bet on teams and events you never knew existed. Two days ago, one online bookie was offering odds on the semi-finals of the Finnish baseball play-offs.

The bookmaker concerned is based in Alice Springs, Australia. The same website offers odds not only on our own football Premiership, but also this weekend's matches in the Norwegian Second Division (Steinkjer are narrow favourites to win at Mo), and the Adelaide derby between Ravens and Thunderbirds in the Commonwealth Bank netball final.

And if you are feeling really lucky, you can always try to second-guess the roulette wheel at the cyber-casino. Out in the real world, casinos use gambling chips rather than cash, mainly because they detach the punter from the sensation of losing money.

Virtual chips double the illusion, and the owner doesn't even have to pay a croupier. The first of these websites, which offer electronic roulette, blackjack, dice and so on, opened on 18 August 1996. Four years later, there are hundreds, which says much about both the global demand for their services, and the profits to be made.

Their location tells a story too. The great majority of online casinos are based on Caribbean islands such as Curacao and Turks & Caicos, where tax and policing are four-letter words. This is not to say that most of them are anything more than standard betting businesses, who want to take your money a little and often, rather than stealing your credit card limit in one hit.

To send one your Visa details over the Net, however, requires faith, courage, and above all, a serious desire to gamble.

But there is no shortage of that in the world, particularly in countries, including the United States, where local laws severely restrict or even prohibit most forms of betting. Quantifying the size of the online gambling market, however, is a little like putting a chip on a single number at roulette - you might be right, but it is long odds against. One recent estimate of American online turnover alone put it at close to $1bn (pounds 620m), and the graph is still on a steep upward curve.

British punters, however, have so far lagged behind the Americans in the rush to cyber-betting. Concerns about the security of e-commerce are one obvious reason, but another is the relative laxity of British gambling laws. Most of us, after all, can probably walk to a reliable betting shop in the time it takes to log on to the Net, so why bother to change?

But now a unique selling point for Net betting is starting to emerge. Offshore, low-tax or tax-free betting has been available online for years, not just on casino games but also on Britain's major growth area, sports betting. No one, however, would want to travel to Australia or the West Indies to chase a winning bet that had not been paid by a welching, anonymous e-bookie.

Soon, though, one of Britain's best-known bookmakers, Victor Chandler, will go online and offshore in Gibraltar. When Chandler moved to the Rock to offer low-tax telephone betting earlier this year, his plans for Internet betting were somewhat overlooked.

Not, however, by the hard-headed financiers at ENIC, the investment company which is thought to be in the process of buying Victor out. The phone betting is still a handy sideline, but it is Chandler's nascent online operation which really has them interested.

Jump forward a year or two to the arrival of fully interactive television, and the potential is clearer still. There will be no need to stop watching the football and wander off to the study, just to log on and place a bet on the match.

The touch of a button on the handset will take you straight to your bookmaker's website, and another will place the bet. It will be even easier than setting the video, and if there is one fundamental rule about gambling, it is that the easier it is to do, the more people will do it.

At the other end of the line will be firms like Blue Square, Britain's biggest online bookmaker. Based in the City, Blue Square charges betting tax at the going rate, but is hopeful of a reduction in the near future to allow fairer competition with offshore operators. Just in case, though, they also have an unused, but valid offshore betting licence in Australia.

Blue Square has a list of account holders "well into five figures," according to Damian Cope, who heads up the company for its owners, the spread-betting firm City Index.

"We want to make betting more of an entertainment business, rather than the typical, grungey, slightly shady image of the high street bookie. One of the reasons we came up with the name Blue Square was to remove any kind of associations with our other businesses, like spread betting. It's like a blank sheet of paper."

Blue Square's name remains unfamiliar to high street punters. As Cope points out, however, "many of the market leaders in Internet commerce, firms like BOL, QXL and, did not exist three years ago. We're not simply a bookie with a new distribution system, we're a technology company which deals in betting."

The demographics of his business are also interesting. "We wanted to appeal to existing punters, but also to casual punters and also to women, who are intimidated by the high street bookmakers.

"We have a lot of women users now, and we know that the anonymity is something they like. The number of women across the country who have an interest in sports, have disposable income and access to the Internet is not 50-50 [with men], but it's pretty darn close."

Security remains the principal worry for potential e-customers, be they punters or shoppers, no matter how many times people are told that reading out your credit card number on the telephone to book a theatre ticket is far more likely to lead to fraud.

Even this concern, though, is slowly being eroded, as the online community tests the water in areas such as banking or buying books, and finds that financial disaster does not automatically follow.

When Internet access, and confidence in the security of e-commerce, reach their global critical mass, online bookmakers, whose only raw material is money itself, will be perfectly placed to clean up. Many netwatchers, indeed, predict that betting will soon overtake pornography as the Web's biggest moneyspinner. Make of that what you will.


The number of web sites, by category, listed by Rolling Good Times, an online betting fanzine: