So, did you relocate abroad? The Post-PoC-Apocalyptic UK betting market

This article is written as a follow-up piece to the article “The Impact of the Point of Consumption Tax on the UK Betting Market”

Categories: All Sports, Execution & Getting On, Funding, Prices

Related Articles

Related Jobs

I received a comment on this article some time back which reminded me that an update was long overdue – and indeed, this article represents the first of a series which I have committed to write on STN. This seems as good a place as any to start, but like any part-time writer, I’m bound to be scrabbling for inspiration soon enough. I would happily drone on about brokerage relationships, grey markets, Asian handicapping, commission agents, Betfair, arbitrage, or a whole host of other things (Jack of all trades, master of none?) so please feel free to comment and I will unashamedly use anything constructive as inspiration for the future.

It seems, looking and reading back, that largely speaking the impact of PoC on the end consumer has been relatively benign, and certainly less serious than some of the copy at the time suggested. There are numerous segments of the market who have been affected, however – so I will start by addressing three of those, although there are no doubt more:

i)               Tipster-followers. For those who have spent any time researching the minefield that is sports tipsters, you may well have come to the same sort of conclusion that I did some years back. There are some crooks, some marketing “geniuses”, some absolutely laughable rubbish relying on staking recovery systems, and, perhaps surprisingly, some half-decent products. Many will no doubt have found their way to one or more of these via a tipster proofing site of some kind or another, of which there are several dozen these days. Those who have produced any discernible results over the last few years require either a constant stream of fresh, new accounts at the UK bookmakers (Holy grail, anyone?) or a steely determination to get the best prices from the piecemeal accounts they have left, combined with the exchanges and the Asian bookmakers/pinnacle – but of course, since PoC, Pinnacle has evaporated.

Some made statements that 70%+ of their bets were placed with Pinnacle, so these people have seen margins squeezed even further, and inevitably some slipped into loss rather than profit because of this, and/or gave up the game altogether.

ii)              Affiliates. Affiliates have seen costs that have been increased for their partner bookmakers be passed onto them in their entirety, in almost all instances. Lower margin, more of the same, do-more-for-less is very rarely a value proposition that works in the modern world. Some have diversified, some have had to work harder as they have limited outs, some have moved away from the game and found other ways to earn a crust.

iii)            Shareholders. M + A activity has been on the wax since the recovery from the poorly-named Great Recession, and PoC gave just one more reason for the infamous “synergies” to be ever more worthwhile chasing. Ladbrokes and Coral, Paddy and Betfair, Skrill and Neteller – we see a market becoming more compressed with the bigger players hoping they will move from a near-perfect-competition situation to a more oligopolistic market. Of course, a more likely outcome is that some of the talented staff that find themselves out of work as a result of these overhyped cost-saving exercises will find funding, and a clear vision of how to do it better than their old employer did. M + A is great if you were holding the shares before the market started whispering, of course, but in the long term the impact on shareholder value has been shown time and again to be negative, or at the very best overestimated.

Of course – not everyone in one (or more) of these categories have been particularly affected. Those particularly in the first category who are higher volume players (an example would be Steve at http://www.daily25.com; although Steve is not a UK punter so PoC has not directly affected him – think numbers similar to Steve’s or higher) would no doubt have found an “out”. One way some punters in my immediate network went was to form a partnership with an offshore individual and enter into a profit-sharing agreement with them as a “bet placer”. That offshore person  (KYCd of course by the relevant intermediaries) could and has continued to place bets with impunity as it has avoided (quite legally as far as I see it) the PoC issues.

Some went down the route of a broker – I referred in my original article to certain brokers, whose blushes I spared by not naming them, who saw PoC as a great opportunity for a land grab. In all those instances, someone in Legal or Compliance soon tapped them on the shoulder and told them in no uncertain terms this was NOT the time nor the reason to acquire a batch of UK customers – whether HMRC’s application (or theoretical application) of the PoC to brokers is badly misguided or not. Bear in mind any broker openly dealing with UK citizens (I’m not aware of any at this time) is taking a pretty significant risk and I’d be rather concerned about the counterparty risk, personally.

Some have come through those changes unscatched – the ones using an offshore “network” or system have dotted the is and crossed the ts more than those who haven’t, but the problems that moving money offshore and back on can cause may mean the jury is still out on whether it was the right thing to do, even if it was the belt and braces approach.

You’d think less competition in all the above fields might be a good thing – but realistically, the inevitable has happened – the middleman coming in for a larger slice of the pie has meant less is left on the table for everyone else. Despite a mandate not to increase taxes, the UK Government has proceeded to do exactly that via stealth taxes, additional stamp duty, and other weird and wonderful methods – and with a budget speech not too far away, I wouldn’t be betting too heavily on gambling not being under the cosh again. Described by an expert a few months back as “one of the last, if not the last, bastion of untaxed income” (for those lucky enough to know how to tap into it) – his advice was make hay while the sun shines, and whilst that’s always a fairly sensible approach, we may be looking back in the rear view mirrors at the golden years relatively soon. They’d love to tax the serial winners if they could; they’ve found a way to repeal some fairly basic principles in the recent property tax increases, so the age-old argument that taxing winners would mean offering relief on losses to the 97%+ of losers looks weaker than it ever has, to me at least.

About Adam Lawrence

Adam divides his time between betting for profit and the property business. His background is varied including a strong academic pedigree alongside international experience in finance and wealth management, but he has found his niche now and is busy settling into it for the long haul.
No Thoughts on So, did you relocate abroad? The Post-PoC-Apocalyptic UK betting market

Leave A Comment