Operating Under a Non-UK Means Tax Savings for the Exchange
LONDON, UNITED KINGDOM -- Saving some £18.5 million (US$30 million) in taxes might be one of the reasons leading online betting exchange, Betfair, has opted to cease operations under a British license and instead operate under a Gibraltar.
While the firm has not fully disclosed its reasons for doing so, Betfair is the latest online gaming operator to shy away from United Kingdom's 15% tax on gross betting profits, following other gaming giants such as Ladbrokes and William Hill. Both operators left the UK in 2009 for reasons of tax relief and have been announcing millions saved in tax costs.
However, Betfair said that it continues to be incorporated in the UK and does not plan to move 1,200 UK-based personnel. It however has also announced that its key systems have already been transferred outside of the UK, particularly to Gibraltar and Dublin manned by over 120 personnel. Last October, the exchanged opened a Dublin office for its data center and phone-betting operations.
Betfair also said that moving out of the UK would allow it to consolidate its technology platforms:
"Betfair continually strives to create the best technology platform for the business. This revised structure will provide the company with the freedom to locate key technical equipment in more efficient locations in order to improve service to customers and compete on a level basis in the UK market."
The exchange added that it remains committed to the British horse racing industry and promised it would still pay the British horse racing levy even if it was operating on a non-UK license.
According to a statement from the company:
"Betfair will continue to support British horse racing by committing the same amount of money to the sport that the company has been paying via the statutory levy for the remainder of the 49th Levy Scheme and on the terms set out for the 50th Levy Scheme."
Last year, Betfair made £7.35 million in payments, £1.25 million of which was voluntary owing to the number of non-UK players betting on horse racing.
Befair CEO David Yu said that the company plans to continue holding talks with the UK racing board regarding its commitment to the industry:
"We believe making contributions to racing is important, and we will look at what the right mechanism is. We need racing to do well and if it continues to thrive that would only be good for our business."
Sources: eGaming Review Magazine and The Guardian UK
