Restoring Confidence in UK Bettors

Editor's Note: The reference to the closure of Bowmans in this article pertains to the land-based bookmaker and not Bowman International Sports Ltd., the online bookmaker also known as Bowmans, which has been fully operational since 1985 and continues to be so.

The U.K. bookmaking industry is experiencing the fallout of the recent closure of the Burns Bookmakers' betting shops.

The twin brothers who ran the business, which also included online and telephone betting operations, fled the country late last month. Beforehand, nearly a dozen of the company's account holders reported unauthorized withdrawals from their bank accounts via debit and ATM cards.

Investigators now believe the brothers withdrew more than £100,000 from the accounts and also left with an undisclosed amount of money generated from advanced betting on English football.

In light of the scandal, and as Parliament gears up for passage of a massive gambling bill, one MP is campaigning for additional measures that would prevent a reoccurrence.

The Guardian reported Thursday that Alex Salmond, one of racing's major supporters in the House of Commons, is proposing a bonding system to protect consumers from losing money if a bookmaker ceases operation without warning.

Salmond would like to see licensed bookmakers forced to set aside a specific amount of money in a bonded trust fund to protect their customers in case the business fails.

"Bookmakers can go out of business for two reasons," he told the Guardian. "They might just have a bad Cheltenham, or they might go bust, as appears to have happened in this case, because they abscond with the dosh. The financial test obviously provides some protection against the first, but it provides no protection against the second, and there should be some sort of lifeboat there."

Bookmaking experts said Burns was offering unusually attractive odds for Manchester United and Arsenal to win the English league title and were offering bonuses and other gimmicks that were out of line with the current market.

Burns' punters are owed at least £100,000 in deposits and winnings, while another £25,000 was deducted from backers' debit cards without their approval. The banks involved in the illegal withdraws said the money would be returned to the accounts as soon as it could be determined that the account holders weren't involved in the fraud.

Burns is the latest in a long line of U.K.-based bookmakers to shut down unexpectedly.

Bowmans, Front Line, SP Racing and Rio Bookmakers, Salmond said, are just a handful of operators to have suddenly shut down in recent months. He also mentioned that online sports books Netbetsports.com, Firststake.com, Luvbet.com and Betachance.com folded without paying customers what was rightfully due to them.

Warwick Bartlett, Chairman British Betting Office Association, said the Burns situation is a classic example of what could go wrong when trying to compete in a highly competitive sector.

With the ability of operators to set up shop in tax-free jurisdictions, he said, the business of bookmaking has become a low-margin one. Business is most fierce when a company is trying to enter into the marketplace and vying for new customers. The easiest way to get them is to offer appealing odds and extra bonuses. The only problem is the bookmaker is then taking on a major risk itself and essentially becoming a gambler.

Salmond is aware that the scheme could be seen as a competitive advantage for major high street bookmakers who don't have trouble funding the bond. He's confident, however, that the plan can be embraced by all in the industry as a way to restore any consumer confidence that may have been lost in the past two years.

"I'm sure there will be those who are against it," he said, "but it could help them in the long run. People need to have confidence in bookmakers, and lack of confidence in the smaller ones is one of their major problems."