Betting Exchanges Could Face Tax Hikes

Published: Friday, January 21, 2005 Online-Casinos.com

BETTING EXCHANGES COULD FACE TAX HIKES

Brit Chancellor is watching...

The possibility of a tightening of the UK tax screws on betting exchange sites was raised by The Register this week.

The report claimed that Chancellor Gordon Brown is expected to change taxation rules to squeeze more cash from websites which allow punters to place bets with each other.

The changes follow a National Audit Office report which found online exchanges paid a mere GBP 7.3 million in tax last year despite taking bets worth more than GBP 2.67billion. This compares to GBP 376 million paid by bookmakers on bets worth GBP 30 billion.

Quoting a "well-placed industry source", The Register reported: "The duty and the commission that exchanges make just doesn't add up. It's all pointing to the Treasury acting to stop this."

Traditional bookmakers pay tax on gross profits rather than individual gamblers paying tax on their winnings. But the growing popularity of betting exchanges has reduced the amount of revenue Customs and Excise has collected.

The NAO also raised concerns that Customs needs more technical expertise to help it ensure new types of gambling are compliant with legislation.

The mainstream newspaper The Observer also carried the story, pointing out that, "A change in taxation rules may hurt The Sporting Exchange Ltd., also known as Betfair, which controls 95 percent of money wagered on exchanges."