Legal delay a blight to betting

Once again, the law is making an ass of itself, this time over the vexed issue of offshore tax-free betting.

First it was, then it wasn’t legal – according to the Court of Appeal which reversed the original verdict – to advertise such bets in the UK. The case, which was brought against Gibraltar-based Victor Chandler International (VCI), will now be contested – at some indefinite point in the future – in the House of Lords.

Even assuming the Lords, after ponderous consideration, find in favour of VCI (and that’s a big ‘if’), it will not be a satisfactory verdict for the rapidly changing industry that VCI represents.

The law’s delay is simply not acceptable when dealing with issues of this kind. Commercial issues, that is, driven by the development of the Internet, where success and failure are often determined in a matter of weeks rather than years.

In the last year or so, the somnolent UK betting industry has been transformed by the ease with which tax-free bets can now be placed offshore. Coral, the number three player, is confidently preparing a &£1bn flotation, thanks to the awe with which its recently acquired online business, Eurobet, is regarded by investors. Ladbrokes’ shares experienced a similar rerating when it announced it was about to launch two Internet betting sites. Even William Hill, whose float was snubbed last year by investors, is now considering another shot at it. And all because of the potent I-word.

But the interim legal ruling threatens to blight this blossoming el dorado, in two ways. First, it will have a chilling effect on investor sentiment, which is bad for everyone. And secondly, it cripples smaller players such as VCI, which are more reliant upon advertising to boost their awareness and had been successfully exploiting the Internet’s low-cost leverage to level the industry playing field. The effect will be curtailed competition.

The Government, rightly concerned at the haemorrhaging of tax revenues offshore, may well be rubbing its hands with glee at this impasse. But its joy will be shortlived. The lines between what is, and isn’t, acceptable advertising are becoming increasingly blurred. For example, Eurobet has recently set up an exclusive online partnership with Manchester United, and a two-year Arrows Formula 1 sponsorship deal. True, Coral is launching a UK-based (tax-paying) Eurobet service in Surrey. But it is hard to see how this marketing activity will do anything other than encourage the offshore betting with which the Eurobet name is primarily associated.

In the circumstances, the Government would be wise to cut its losses and listen to the betting industry’s pleas for reducing the 6.75 per cent UK betting tax. It would be a much more effective tax-generating stratagem than hiding behind the judiciary as it tilts uselessly against the power of the Internet.

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