Betfair wins licence in Malta - Thursday 12th of May 2005

BETFAIR, the betting exchange considering a possible stock market flotation, has won a gaming licence in Malta, fuelling speculation that it could quit the UK if the Treasury introduces a punitive tax regime.

The online gaming licence from the Malta Lotteries and Gaming Authority will enable Betfair to offer its customers poker games on the internet, which it cannot do under current UK gambling legislation. However, the licence also gives the company the option to shift its sports betting exchange to Malta if the Treasury bows to lobbying from the UK’s big fixed-odds bookmakers and changes the tax regime that applies to exchanges.

While Betfair believes that it should be subject to the same gross profits tax as the likes of Ladbrokes and William Hill, the bookies argue that person-to-person exchanges such as Betfair allow professionals to “lay? bets in the same way as a bookie while avoiding paying tax. Stephen Hill, Betfair’s chief executive, yesterday insisted that the decision to apply for a licence in Malta, which has a zero tax rate, was not a veiled threat to quit the UK.

 “Malta’s technological infrastructure, its progressive and responsible gambling legislation and its EU membership were the three key reasons,? he said. However, industry sources said that the timing of the move was far from coincidental, coming as the Treasury is close to completing its review of the tax treatment of exchanges. “This is a clear threat to the Government not to tax layers,? one analyst said. Four years ago, the big bookmakers themselves made similar threats to move internet sports betting offshore, prompting the Treasury to scrap betting tax and introduce a tax on companies’ gross profits.

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