Thursday, 8 August 2013

The Land of Milk and Due Diligence

This week, while the sheep and cows were parading around the main arena at the Cartmel Agricultural Show, the board members of Ladbrokes PLC were preparing to release their financial results in London. On a personal level, the results of the cattle show were far more interesting – but the bookmakers’ results will have a bigger impact on the racecourse’s business.

A change to the way in which gaming machines are taxed in betting shops – nothing to do with betting on horse-racing or other sports – has resulted in the company paying increased tax receipts to the Government of around £1 million per month. So should we be crying in our prize-winning local milk over Ladbrokes’ announcement that half year profits were down by nearly 20%? 

The financial report paints a rosy picture of the industry’s future, despite the increased tax burden. The company made a profit of £73 million in the six months to 30th June and has been opening new betting shops on the high street. Shops that opened in 2010, at significant expense, have taken less than 3 years to pay for themselves and are already generating positive cash balances for the business.  

Last week shares in William Hill took a tumble on the back of disappointing trading figures, although they too are reported to be expanding their business – attempting to purchase the Tom Waterhouse betting operation in Australia. The off-course betting industry seems pretty healthy to me. 

In the meantime on-course betting businesses, including the Tote and traditional board-bookmakers, are facing an unusual threat from new European legislation. Imagine walking up to your chosen bookmaker in the Cartmel betting ring: “I’ll have £30 on Painted Sky at 66/1 please”. In future the bookmaker may turn around and say “Certainly, just complete this due-diligence form, provide two forms of identification and allow me to photocopy the details…” 

The ‘Fourth EU Money Laundering Directive’ proposes that all bookmakers should conduct due diligence investigations on all customers that are involved in cash transactions of 2,000 euros (£1,730) or more, including bets where they are paying out that amount. Earlier this year one Cartmel racegoer won more than £11,000 on the Tote Placepot for a stake of just £1.50 – I wonder whether all Tote customers would be required to complete ID checks prior to placing a bet? 

I dare say long-standing losing punters may be exempt – so if you are following my tips you’ll probably be fine. This Saturday I’m looking north to the 8.05 pm race at Ayr, where Algar Lad runs for local trainer Jim Goldie.

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