10 November 2000
Chancellor Gordon Brown is already committed to reforming betting duty in the next Budget, and is now expected to tackle the burgeoning business of tax-free telephone and Internet betting.
Punters placing bets on horseracing or greyhound racing can do so tax free at the track, but in betting shops they must pay 9% in tax either on stakes or on winnings – often 10% with bookmakers' extra deduction for 'administration'.
But most major bookmaking firms now quite legally offer direct betting on Internet sites at reduced or zero tax. Backers will soon be able to place bets directly on their television screens by new interactive mechanisms.
In addition, many leading firms have set up offshore operations – notably in Gibraltar – for telephone betting from Britain.
The Commons Public Accounts Committee, in its report on revenue from gambling duties published this week, says: 'The estimated loss from telephone betting is £15m–£20m a year, and although the impact of the Internet has been small so far, in a rapidly changing environment new business could cut into revenues quickly.'
But, for the moment, the MPs see illegal betting as the main source of loss – people avoiding tax by striking bets with unofficial bookmakers in pubs or clubs. The MPs warn that Customs and Excise should not downgrade its efforts to crack down on illegal betting.
'Illegal betting makes a substantial hole in the public purse each year,' said committee chairman David Davis. 'Customs and Excise have shown good awareness of the risks of illegal activity, but their current thoughts on reducing their coverage of gambling duty are a cause for concern.'