Betfair Moves to Gibraltar

In a bid to minimise its tax burden, Betfair (BETF.L) has announced that it will relocate part of its business to Gibraltar. The world's largest betting exchange, founded 10 years ago, is not the first to recognise the financial sense of this decision and is following in the footsteps of other industry giants like Ladbrokes (LAD.L) and William Hill (WMH.L).

Cutting Costs

This move is said to save the gaming company more than 20 million pounds each year as their tax obligation will drop from 16 percent on gross profit from betting to a mere 1 percent. However, the financial benefits are not expect to be felt until 2012 as Betfair will incur higher operational costs during this year while it maintains its existing offices and sets up new ones in Gibraltar.

Additionally, despite the move, Betfair has stated that it will continue to pay the British horse racing levy.

Change is in the Air

It is hoped that the loss of three huge online gaming companies will prompt the British government to reconsider its position with respect to tax and its licensing system. Betfair is also urging the government to revise the "double taxation" situation under current UK tax regulations. This can result in the company paying tax to the local jurisdiction where the customer is based as well as in the UK.

Gibraltar Regulatory Authority

The move also means that Betfair will now operate under the Gibraltar licensing body called the Gibraltar Regulatory Authority. It is known for its strict levels of high standards and is responsible for formulating regulatory policies, assessing new applications for gaming licenses and considering other gambling related issues.