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]. 

The judicial review hearing was held on 4 and 5 July 2012. According to the judgement of Lord Justice Stanley Burnton, William Hill challenged the Horserace Betting Levy Board’s decision on the basis that the decision was established on an incorrect interpretation as well as on the wrong application of the 1963 Act. William Hill argued that it should be “quashed for legal error”. The issue then was listed as “one of statutory interpretation”. In his twenty two page long judgement Lord Justice Stanley Burnton upheld the Levy Board’s decision and that it was correct in law.
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.” 
Paul Lee, Chairman of the Horserace Betting Levy Board, commented on the judicial review judgement: “I am pleased with the judgement in the Board’s favour. It justifies the result which was reached last year by a number of Board members that customers of betting exchanges (acting in that capacity) do not constitute leviable bookmakers under the Betting, Gaming and Lotteries Act 1963.” 
Later in the Betfair press release Martin Cruddace added that “the savings made by William Hill through Levy avoidance may help fund poorly advised legal challenges such as this one, but I would suggest that their resources would be better spent working with British Racing to reach a commercial agreement in a similar vein to the one Betfair recently signed with the sport”.
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.” 
Zeffman then questioned the difference “between a person who is carrying on a business which includes the receiving of bets and a person who is carrying on a business of receiving bets” and stated that this difference is uncertain. “That was not a distinction that either the Levy Board, Betfair or any other party had ever sought to make during the consultation. Nor was the point argued at all in the proceedings. It was a subtlety introduced by the judge only in his final judgement,” he added.
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.” 
Overall, it was agreed that betting exchanges users are not subject to the levy duty, but not on the grounds as argued by the parties [either the Levy Board or Betfair]. It was ruled that conducting a business of receiving bets constitutes liability to pay a levy, but conducting a business which purely comprises of ‘the receiving of bets might not be’.
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.” 
The sector did not have to wait long for a response from William Hill who announced an appeal on 3 August 2012. The reason that William Hill states it is using the Court of Appeal is that the case “leaves confusion on the correct interpretation of who ought rightly to be considered a ‘bookmaker’, and as a result, who should be paying the levy.” William Hill’s argument centres around the unclear differentiation between the entities (specifically in light of the exchange users perspective). William Hill also states that this ground was not part of the judicial review hearing. As David Zeffman expressed, William Hill takes his view that the issues can only be clarified in Court of Appeal. 
Clive Hawkswood, CEO at Remote Gambling Association (‘RGA’) too found the recent High Court ruling confusing: “Probably like a lot of other people I found myself confused by some of the judge’s comments, but hopefully greater clarity will emerge following the outcome of William Hill’s challenge.”
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.’’