|The battle between the betting establishment and Betfair.com took another turn last week with the news that the UK treasury is set to close a loophole exempting gamblers at betting exchanges from paying tax.|
The change in tax rules could happen as early as Wednesday, when the budget is announced. If the rumoured change happens, it could force Betfair to operate offshore. Betfair currently operates from London.
One of the options being considered by the Treasury is the introduction of a gross profits tax on the winnings of those punters who use Betfair to lay bets. This would in effect treat those punter who lay odds at betting exchanges in the same way as William Hills and Ladbrokes, who pay a 15% tax on gross profits.
Mark Davies of Betfair said: 'We argue that this is a clear tax on the punter, which is precisely what the government moved away from two years ago, when it said it would introduce gross profits tax, charging the operator and not the individual.'
The UK’s established bookmakers, such as William Hill and Ladbrokes, are losing market share to Betfair, which takes bets worth £2.5 ($3.73) billion per year and represents 90% of the betting exchange market.
William Hill and Ladbrokes argue that unlicensed bookmakers are using sites like Betfair to avoid tax, undercutting the traditional bookmakers and thereby depriving the treasury of two sources of revenue.
A source close to Ladbrokes said: 'It's important that there is a level playing field because at the moment the Treasury is losing millions of pounds in lost revenue because the exchanges are not paying their due.
'At the moment, betting exchanges have a fiscal advantage which means they can offer better odds, which is eroding bookmakers' margins. So the Treasury is losing money on two fronts.'