8th November 2002, 11:47 AM
After meeting with a representative of the BHB, it was confirmed to me that they intend to charge betting exchanges 10% of their gross commission and a further 10% of winning non-aggregated yearly layer's profits on UK horse racing.
Also, currently the GPT is being charged at 15% of aggregated monthly layers profits.
With these two charges based on layer's profits, the financial viability of betting exchanges is in grave danger. The reason being layer's profits on betting exchanges can be easily manipulated, to the extreme, against the betting exchange by a competitor or a spiteful individual. For example, an individual could easily, if not stopped by the exchange in time, bankrupt any betting exchange very quickly. To do this, all a user has to do is constantly back and lay in a certain manner, in the same race, over and over again.
The only way that betting exchanges could survive under these layer's profits charges is to pass on the charges to their users, thus avoiding the possibility of manipulation. However, this will eliminate the good value punters were getting from the Betting Exchanges and many will switch back to bookies.
The only other answer would be to move offshore, but this is not as easy as it sounds.
As suggested by others, Betting Exchanges should pay tax and levy based on gross commissions, not layer's profits.
Also, currently the GPT is being charged at 15% of aggregated monthly layers profits.
With these two charges based on layer's profits, the financial viability of betting exchanges is in grave danger. The reason being layer's profits on betting exchanges can be easily manipulated, to the extreme, against the betting exchange by a competitor or a spiteful individual. For example, an individual could easily, if not stopped by the exchange in time, bankrupt any betting exchange very quickly. To do this, all a user has to do is constantly back and lay in a certain manner, in the same race, over and over again.
The only way that betting exchanges could survive under these layer's profits charges is to pass on the charges to their users, thus avoiding the possibility of manipulation. However, this will eliminate the good value punters were getting from the Betting Exchanges and many will switch back to bookies.
The only other answer would be to move offshore, but this is not as easy as it sounds.
As suggested by others, Betting Exchanges should pay tax and levy based on gross commissions, not layer's profits.