Starters' orders for bets taxrevolution

The p-words were the ones which mattered when Gordon Brown, the Chancellor, delivered his pre-Budget statement last week, but amid all that fuss about pensioners and petrol, many seemed to overlook his message for the country's punters. Yet in the long term, the most significant passage in Brown's entire speech could be his brief, teasing hint that betting tax, that remorseless nine per cent on every bet placed in Britain, could soon be a thing of the past.

The p-words were the ones which mattered when Gordon Brown, the Chancellor, delivered his pre-Budget statement last week, but amid all that fuss about pensioners and petrol, many seemed to overlook his message for the country's punters. Yet in the long term, the most significant passage in Brown's entire speech could be his brief, teasing hint that betting tax, that remorseless nine per cent on every bet placed in Britain, could soon be a thing of the past.

It might not happen, but it is hard to believe Brown would have floated the possibility of replacing betting duty with a charge on bookmakers' gross profits unless it was odds-on to go ahead. Bookies are the professionals when it comes to predicting the future, and their glee has been unconfined. They anticipate, no doubt correctly, that even a reduction in the rate of duty would send turnover through their nicotine-stained ceilings, while its abolition could turn Britain into the leader of the global betting industry. Punters, meanwhile, will be equally delighted.

So there would be smiling faces all round, not least at the Treasury. Brown, after all, does not grab you as the sort of man who would have much time for gambling, were it not for the £600 million or so it brings into his coffers each year. There would be no chance of any changes to betting's taxation regime were his officials not fairly certain that the Exchequer's revenue will be unaffected at worst, and significantly higher at best. Making everyone happy, and making money too, is something that politicians can normally only fantasise about.

On balance, clearly, the reduction or outright abolition of the punters' tax can only be a good thing, since both the racing and betting industries depend on healthy turnover to thrive. The best guess of the Betting Office Licensees Association, which represents most of the major chains, is that the removal of deductions would increase turnover by around 60 per cent - and 60 per cent of £7bn is a lot of money.

But such a dramatic chance to the structure of a complicated industry would undoubtedly have other, unforeseen effects. The "beeswax" is, after all, older than many of today's punters, having been introduced shortly after betting shops were legalised in 1961.

Suppose, for instance, the new regime allowed the "Big Three" bookmakers (Coral, William Hill and Ladbrokes) with their economies of scale, to forsake the 2.25 per cent they add on to the 6.75 per cent betting duty and make no deduction at all, while the independent bookmakers felt obliged to retain a two or three per cent stoppage to cover their overheads. Any increase in the power of the Big Three would hardly be in punters' interests. And consider too the possible effects on the on-course betting market, whose strength and consequent resistance to manipulation has been a great benefit to off-course backers. Why take your money to a track to bet tax-free when you can do so 200 yards away in the local betting shop?

Not many people go to a racecourse simply because they can bet tax free, but those who do are likely to be serious players. People like Eddie "The Shoe" Fremantle, who bets for a living and spends up to £5,000 annually on travel. "I'll still be happy to go racing," he said yesterday, "because a lot of my betting depends on seeing the horses in the flesh. But I think it could signal problems for the on-course market, although no-one can know how something like this will affect things until it happens. It could, contrary to expectations, actually strengthen the market, because the off-course bookmakers will want to move in and 'blow' [telephone] money back to the track, but theory and practice are not always the same thing."

The on-course market might indeed be stronger in terms of the volume of money changing hands but, if most of that cash is money from the Big Three, "blown back" to the course to shorten up the odds of fancied horses, that is bad news for the average backer. On-course markets do, however, retain advantages over the local bookmaker which can never be taken away,

"It would have to have some kind of effect if they abolished it completely," Liam Mohan, field services manager of the National Joint Pitch Council, said yesterday, "But what you've always got on-course is the chance of getting a better price. If there's a lot of 7-4 and a bit of 2-1, you'll get 7-4 in the shops, while the punters on the day will look for the 2-1."

There is little doubt some sort of change is coming for a 40-year-old system, but how every one of the industry's many tentacles will be affected is difficult to judge. Given that uncertainty is the bedrock of betting itself, however, perhaps that will simply add to the fun.