Tempers Flare Over P2P Betting in UK

Tensions between the biggest Internet person-to-person betting site in the world and one of the United Kingdom's biggest bookmakers reached new heights this week as William Hill lashed out against the practices of Betfair.com.

William Hill filed a legal challenge with the U.K. government because it feels users of Betfair's platform need a permit to offer bets to other gamblers.

The action was filed after government officials indicated that betting exchanges would be targeted in upcoming gaming law reforms.

Betfair's pioneering site offers users the chance to offer bets to other gamblers, but the 1963 Betting and Gaming Act stipulates that "to be a bookmaker, a person must carry on or be held out as carrying on the business of receiving or negotiating bets."

The suggestion, which is unclear in the context of present-day gaming, is that users would require a permit from the government to lay or offer a bet.

British press services reported on Sunday that William Hill Executive Chairman John Brown was livid with the lack of response from government officials. He called the decision to keep betting exchange users from needing a betting permit a "dereliction of duty."

"I am amazed that the civil servants from the Home Office whose responsibility for betting and gaming is to uphold the law don't feel it's their responsibility to invite the Crown Prosecution Service to do something," he said. "Personally I think it is a dereliction of their duty to the public. As the law stands at the moment, anybody who lays a bet, whether occasionally or regularly, requires a permit."

Brown feels the law is black and white about sports betting.

"It goes further and says anybody who holds themselves out as somebody who takes a bet, requires a permit," he said. "If you go on an exchange and say 'I'll take 6-4 Arsenal,' if you are not holding yourself out as someone who takes a bet, I don't know what you are doing."

Mark Davies, director of communications for Betfair, also feels the issue is cut and dried, but sees it in a different light.

"The Gambling Review being undertaken by the government at the moment will address, among other things, precisely the issue of betting exchanges," he said. "The existing 1963 legislation has become unclear because of the changing ways that people can bet, as a result of which William Hill insist that we are providing a platform for illegal bookmaking, while our legal counsel says we are doing nothing of the sort."

Even the suggestion that users who operate a business through betting exchanges may be required to hold a special permit has been criticized by Brown as not going far enough.

Brown and his William Hill colleagues insist that any punter laying a price on an exchange is operating as a bookmaker, and he is demanding that the government enforce the 1963 Betting and Gaming Act in this area.

The Racing Post on Saturday reported that, according to a government source, exchanges "don't fit neatly into the current legislation," and arrangements for their regulation are currently under discussion with a view to supervision by the new Gambling Commission.

A slew of other betting exchange sites, and even betting exchange services that allow bookmakers to provide P2P options by matching up bettors from a host of sites, has risen in the last year.

Dublin-based Betdaq, Iwageru.co.uk and newer arrival SportingOptions.co.uk are among the sites.

Brown did indicate whether other High Street bookmakers might join William Hill in supporting its legal case.

He feels the response from the government is unacceptable.

"Are they saying every bookmaker in Britain can now just not renew their permit and that they can start taking bets on the National Lottery because the only sanction against this was that you would lose your permit?" he said.

If the government is willing to look the other way with betting exchanges, Brown feels it might as well abolish the existing laws.

"Either all bookmakers should have a permit or nobody needs one," he said. "If the law is seen as outdated, the government should get rid of it, but as long as it remains, it should be applied across the board. We, the bookmakers, shouldn't need to go to law about this. The government, Culture Minister Tessa Jowell, her officials and the Crown Prosecution Service should ensure that the law is complied with. It is a bit like if somebody broke into my house and stole something, I have to take them to court, not the police."

David Harding, CEO of William Hill, said the rift between Betfair and his company is more than just a battle among two businesses.

"This has moved beyond a David and Goliath, Betfair vs. William Hill issue," he said. "A lot of people, bookmakers, sports administrators and punters are asking the integrity questions."

Despite the appearance that traditional operators might be threatened by Betfair's revenue growth of 25 percent every month, Harding feels the P2P sector is still very small and will never compare to overall sports betting turnover.

"Our concern is little to do with any commercial threat," he said. "We see the exchange as a niche service which will appeal to a small proportion of higher staking and more financially sophisticated punters."

As has been a concern since the inception of the P2P craze, Harding is worried that the integrity of the starting price mechanism can be violated if people with "inside knowledge" can lay to lose.

Harding doesn't see an immediate end to the debate.

"I suspect that the debate will rumble for a while," he said. "The BBOA have pointed out to DCMS that the only sanction the government has to prevent side betting on the Lottery is withdrawal of a bookmakers permit," he said. "This is likely to get the focus of the DCMS mind, since protection of the lottery is high on their agenda. So if they do not enforce the requirement for a permit some interesting legal issues may emerge."

Harding told IGN that William Hill could set up its own exchange but has chosen not to since the company feels that would be aiding and abetting illegal bookmaking.

"We would not do anything to compromise the legality of our own operation until the law is changed," he said.

Davies finds that argument rather ironic considering, he said, William Hill's willingness to take bets from the United States.

"Our view is that they are dressing up a commercial battle by couching it in legal terms," he said. "When the law has never really previously bothered them."

Davies said Betfair officials have been in talks with the government about the best way to clarify the position of the current laws, and part of that will be the creation of new legislation.

"We hope we will be regulated, but we are making it clear to government why it would be a mistake to regulate our individual users, whose place we take for regulatory and tax purposes," he said. "The precedent is the stock exchange: the NYSE is regulated, its brokers are regulated, but you and I trading shares do not need to be regulated, because the exchange ticks all the boxes."