Customers of betting exchanges are not bookmakers

20/07/12

Stanley Burnton LJ today gave judgment dismissing a challenge by William Hill to the decision of the Horserace Levy Board that the customers of betting exchanges, such as Betfair, were not bookmakers and therefore were not liable to pay horseracing levy.

The decision focused on the definition of "bookmaker" in the Betting, Gaming and Lotteries Act 1963 as someone who carries on the business of "receiving or negotiating bets". Stanley Burnton LJ held that a bookmaker was someone who accepts bets from members of the public (i.e. punters) and who normally tries to "make a book", in that the bookmaker will seek to manage its odds such that a profit is made whatever the outcome of a particular event. The Judge held that this was consistent with Parliament's intention to regulate those individuals who were providing betting facilities to the public.

Betting exchanges generally "match" the bets of their customers, and take a commission on winning bets. They do not, unlike traditional bookmakers such as William Hill, take any risk on a particular bet. William Hill contended that those customers that were betting in business on the exchange were bookmakers. Stanley Burnton LJ rejected this argument, holding that customers of betting exchanges are not bookmakers because it is impossible to know, when using a betting exchange, whether the customer is making a bet or accepting the bet of another. Such customers, even if in business, could not be said to be in the business of receiving or negotiating bets.

William Hill was ordered to pay 25% of Betfair's costs, and its application for permission to appeal was refused.

The judgment is here.