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Betting Exchange Customers Are Not ‘Bookmakers’

Horse in FieldIn a ruling of great financial significance to the gambling and racing industries, the Court of Appeal has ruled that sophisticated customers of Betfair and other online betting exchanges do not fit the definition of ‘bookmaker’ within section 55 of the Betting, Gaming and Lotteries Act 1963.

William Hill Organisation Limited had pointed out that some betting exchange clients operate on an almost industrial scale, employing state-of-the-art software to place thousands of bets per hour. It was submitted that such punters should be viewed as bookmakers and subjected to licensing conditions as well as being required to pay a levy to the Horserace Betting Levy Board.

William Hill and other ‘traditional’ bookmakers pay 10.75% of their gross profits to the board for the good of the sport and the company argued that it was fundamentally unjust that betting exchange customers who treat gambling as ‘a business’ should operate unlicensed and contribute nothing.

The act defines bookmakers as those engaged in the ‘business’ of ‘receiving or negotiating’ betting transactions and William Hill argued that that description was broad enough to embrace large-scale betting exchange customers whose methods ensure that they are effectively guaranteed a return.

William Hill’s arguments failed at the High Court and, in dismissing the company’s challenge to that ruling, the Court of Appeal noted that even the most sophisticated betting exchange customer never knows whether he is offering odds or taking the odds of another customer.

Lord Justice Moses ruled: “Once it is recognised that the statute distinguishes between those who make bets – the customers – and those who receive them – the bookmakers – the size and organisation of those customers who make bets on the exchange is irrelevant…it seems to me impossible to regard those who use the facilities of a betting exchange as bookmakers”.

Observing that the clear differentiation between bookmakers and their customers was fundamental to the workability of the statutory scheme of regulation, the judge concluded: “In light of that distinction, those who use a betting exchange do not receive or negotiate bets within the meaning of section 55 of the Betting, Gaming and Lotteries Act 1963“.