|Betting Exchanges, where players bet against each other, have been endorsed in principle by the UK government. A position paper, published by the UK’s Department of Culture, Media and Sport, spells out that the UK government is ready to accept the newest, most controversial development in betting.|
The paper, published in advance of the UK’s forthcoming gambling law reforms, acknowledges that betting exchanges “have no profit interest in the outcome of the event.” It also acknowledges that all current betting exchange operators have sought, and been granted, bookmakers' permits and, that arrangements have been made for them to pay betting levy and betting duty (gross profits tax).
The paper suggests that betting exchanges (the largest of which is Betfair.com) should have a specific licence for their operations.
This licence will permit them to establish betting markets and to hold monies on behalf of their users;
'Where exactly opposed bets are initiated, the exchange may allow the bet to proceed and make arrangements for the winning user to be paid. Terms and conditions would allow the operator to generate an income through the charging of a commission.'
betting exchange operators will be obliged to conform to the following rules:
- they must display and disseminate their betting rules;
- they must consent to having their play and payment systems checked by someone authorised by the Gambling Commission;
- they must at all time seperate money belonging to punters and their own operating resources;
- on matters of public policy, the exchanges will be subjected to the same level of regulation as any other gambling product operating through the internet.
Arrangements will be made to ensure that exchanges are not susceptible to money-laundering – although, as companies like Betfair have pointed out, the electronic paper trail generated by online exchanges make money-laundering far easier to detect than cash betting at betting shops or at the racetrack.
Individual bettors and layers of bets will not be require licences – as called for by William Hill, for example.
Although the paper is not a final position on betting exchanges, the proposals within it will be welcomed by betting exchange operators, not least the refutal of the case for individual licences for layers of bets. The paper states that the responsibility for tackling corruption will be placed on the regulatory bodies of the sports concerned rather than the exchanges themselves. The traditional betting establishment has seen its arguments convincingly rebutted by the paper, and will have to learn to live with competition that offers the punter odds of up to 20% better than they can presently offer.