They say that the bookmaker always wins, but, according to Ralph Topping, the chief executive of William Hill, the pendulum has swung away from the bookies in favour of the Treasury and the racing industry.

In an attempt to redress the balance and save the company almost £10 million in tax and racing levy deductions, Mr Topping announced yesterday that the bookmaker would move its internet betting operations offshore within days.

Its move to Gibraltar is expected to push Ladbrokes, its biggest rival, into following suit, although Coral is expected to stay put, at least for the time being, pending a review of remote gambling by the Department for Culture, Media and Sport (DCMS).

William Hill said that the move would save it about £7.5 million in gross profits tax and about £1.5 million in annual levy payments.

Mr Topping, who had previously characterised betting as “recession resilient”, admitted that rising unemployment and constraints on consumer spending were becoming a factor.

He said that a “weaker horse racing product” was also causing problems. Although the National Hunt season, culminating in Cheltenham and the Grand National, remained popular, flat racing was losing its allure with punters. He said: “The reality is it’s turgid fare. The industry needs to modernise the sport. It’s going to go the same way as the Yeti if it doesn’t watch out.”

He added: “You’ve got the traditionalists who cite the history of flat racing over 300 years. That’s great. But you try explaining to a 21-year-old lad from Shrewsbury why you’re running a championship three-year-old race over a mile in May and call it the 2,000 Guineas — he doesn’t know what a guinea is.”

Mr Topping said he had decided on the offshore move after analysing the impact of offshore competitors on its telephone betting, which contributes about 4 per cent of the business, down from about 15 per cent a few years ago. “The future for telephone betting in the UK is quite bleak,” he said.

This would make it more competitive with rivals such as Paddy Power, which pay as little as 1.5 per cent of their gross profits in tax, while those in the UK pay 15 per cent.

The Scot, who started out as a “Saturday boy” at a William Hill betting shop in Glasgow, was dismissive of the review by the DCMS. “Lobbying has got us nowhere. Being in the DCMS doesn’t work in our favour. I think if you’re a serious business you should be in a department that deals with business.”

A government spokeswoman said that it was “very disappointed to hear that the company plans to move its online betting offshore”, insisting that the DCMS review was aimed at “getting a fairer deal for UK-based operators and ensuring continued consumer protection are the top priorities”.

However, Mr Topping said that the move offshore was not just about saving on tax but also a recognition of the international potential of William Hill Online. He did not rule out moving William Hill’s telephone betting offshore, putting at risk more than 400 jobs at call centres in Sheffield and Leeds. “There are options open to us and one is to cut down on costs. If the decline continues I wouldn’t rule out closing a call centre, and I’m not ruling out moving offshore.”

The group, which has about 2,300 betting shops, warned that full-year profits from its retail business would be below expectations after a difficult first half and amid continuing economic uncertainty. The announcement came as the bookmaker reported a 9 per cent fall in adjusted pre-tax profits in the first half to £103.1 million, from net revenues up 5 per cent to £515.5 million.

Source: The Times Online

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