William Hill has failed in its judicial review claim against the Horserace Betting Levy Board’s decision not to impose the levy on betting exchange users.
Hill’s brought the claim last September with the British Horseracing Association (BHA) after the Horserace Betting Levy Board (HBLB) concluded at its June board meeting that exchange users who carried on a business were not bookmakers within the terms of the Betting, Gaming and Lotteries Act. The 1963 law defines a bookmaker as someone who” carries on, whether occasionally or regularly, the business of receiving or negotiating bets …”, and therefore were not subject to the Levy.
While William Hill’s counsel argued in the judicial review hearing in the High Court that exchange users “receive” bets and in instances that they where they were in business they would be “bookmakers” and therefore subject to the Levy, Lord Justice Stanley Burnton this morning ruled in favour of the HRLB and “interested party” Betfair. The BHA withdrew from the action earlier this month, leaving Hill’s to fight on alone, when Betfair agreed a £40m deal with British racing.
The Lord Justice stated: “The question posed by the statute is not whether, in the course of a business, a person receives bets. The question is whether he carries on the business of receiving bets. Someone who operates a betting shop, or who has a stand at a race meeting, receives bets there. His business is that of receiving bets. The person who operates through a betting exchange may in the course of doing so find himself receiving a bet. But he does not carry on the business of receiving bets. He is not a bookmaker. It follows that he is not liable to pay the levy.
Hill’s lawyers Olswang said following the ruling today that the Lord Justice’s distinction between whether a person received bets in the course of a business or carried on the business of receiving bets was “confusing”, and left the position of traditional bookmakers on exchanges unclear. David Zeffman said an appeal was “the only means of clarifying these uncertainties”. However, it is now understood that Hill’s was refused leave to appeal.
A triumphant Betfair today welcomed the High Court ruling, that it said “vindicated” its position by affirming its customers were no more liable to pay the Levy those of any other online betting operator.
In reference to William Hill not being liable for the levy on its online business, Betfair’s chief legal and regulatory affairs officer Martin Cruddace said: “The savings made by William Hill through Levy avoidance may help fund poorly advised legal challenges such as this one, but I would suggest that their resources would be better spent working with British Racing to reach a commercial agreement in a similar vein to the one Betfair recently signed with the sport.”
Bookmakers agreed last year under the terms of the 51st annual levy scheme to pay £72.4m to UK horse racing in the financial year starting 1st April 2012, with William Hill, Ladbrokes and Coral committed to £45m between them and Betfair, whose exchange-based business model falls outside the current remit of the levy, volunteering to provide £6.5m, the latter now offset against the payments due under its new commercial agreement with British Racing, consisting of the BHA, the Racecourse Association and the Horsemen’s Group.
BHA chairman Paul Roy has consistently argued that the re-location of most of the industry offshore to Gibraltar in recent years is costing the industry vital revenues necessary for its survival.