By Jana Sedlakova
In July 2012 Lord Justice Stanley Burnton issued his analysis in the judicial review brought by bookmaker William Hill over the Horserace Betting Levy Board’s treatment of betting exchange users. But the ruling has by no means ended the matter and, in some respects, made the situation more confused.
After the year-long consultation which ended June 2011, The Levy Board ruled that customers of betting exchanges are not subject to the Levy. It deemed that customers cannot be considered ‘bookmakers’ as per the wording of the Betting, Gaming and Lotteries Act 1963. This was then challenged by William Hill who believed that the unique business model under which Betfair operates may constitute the basis for the levy to be imposed on customers as if they were bookmakers [particularly in light of the section 27 of the Act 1963].
Martin Cruddace, Chief Legal and Regulatory Officer at Betfair, said in the company’s press release:
“It is now neither sustainable nor rational to argue that Betfair customers should be liable to pay the Levy any more than should customers of any other betting operator. It is ironic that William Hill’s online business pays not a penny in Levy itself, despite making tens of millions of pounds in profits annually from British Racing. Yet still, it chose to argue that an undefined class of exchange customers should be required to pay Levy.”
Analysing the High Court judgment, David Zeffman, Partner at Olswang LLP [Judicial Review of Levy Board’s Treatment of Betting Exchange Users Fails, 20 July 2012], stated that according to the ruling the ‘exchange users’ are ‘effecting betting transactions on horse races’ who ‘may be receiving bets’. He also stated that both are in opposition to what the Horserace Betting Levy Board’s lawyers stated and added “they may be carrying on a business. However, according to the Judge, they are not carrying on the business of receiving bets.”
Further, Lord Justice Stanley Burnton dismissed all arguments, of both William Hill, Betfair and others, and made his own analysis of the review. This has, as outlined by Zeffman, left “the law in a very uncertain position. Not only is this distinction confusing, it also leaves unclear the position of the activities of traditional bookmakers on exchanges. On one view, these activities would now appear (again) to be subject to levy since traditional bookmakers are certainly carrying on a business of receiving bets. But this is contrary to the position adopted by the Levy Board and the challenge to that position has failed. The only means of clarifying these uncertainties is if the case is appealed to the Court of Appeal.”
In the judgement Lord Justice Stanley Burnton said “the question posed by the statute is not whether, in the course of a business, a person receives bets. The question is whether he carries on the business of receiving bets. Someone who operates a betting shop, or who has a stand at a race meeting, receives bets there. His business is that of receiving bets. The person who operates through a betting exchange may in the course of doing so find himself receiving a bet. But he does not carry on the business of receiving bets. He is not a bookmaker. It follows that he is not liable to pay the levy.”
Ralph Topping, Chief Executive of William Hill, stated in the press release: “We think it is important for bookmakers, the Levy Board and horseracing that we take this to the Court of Appeal. Independently from all the arguments put before him, the judge drew his own conclusions as to the meaning of the Act in question, and we were never given an opportunity to address that thinking. We don’t think it is right. The only simple interpretation of his judgement – i.e. that no users of exchanges pay levy, ever – seems to go against what Parliament has said previously about both levy, taxation and licensing, and could, if unchallenged, totally undermine any value in the Levy. We are certain this is fundamental to the future of the Levy Board, and hence important to British Horse Racing and bookmakers, and once again, we believe it requires clarification.’’