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Betting Exchanges in the News

By: Shirley Spicer, Sunday June 12th 2011
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Betting exchange is a unique online gambling product. It works using a concept similar to eBay. Someone is willing to offer particular odds on an outcome, usually in horse racing or sports betting. Someone else is willing to accept the offered odds for that outcome. The transaction is then done, with the betting exchange getting a commission. The problem is that betting exchanges are not finding favor with many of the European countries that are contemplating or are in the process of setting up a regulatory online gambling regime.

Spain will probably be the next European country to implement legalization and regulation of online gambling. The Spanish legislators have passed the laws allowing online gambling. The laws appear to be in synch with the European Commission policies and have been generally accepted by the private operators in the online gambling industry. But some clouds have loomed in the horizon on the eleventh hour.
The Guardian newspaper reported this week that analysts have received indications from the Spanish regulators that not all internet gambling products would be available in the first licensing wave and some may have to wait. The approval of online betting exchanges was expected to be delayed. This news emanated after a conference in Madrid, in which the Spanish regulators gave "more color on the potential future shape of the online gambling market". The Guardian report also stated that Italy, France, Germany and Greece are also not enthusiastic about betting exchanges.

Greece has excluded betting exchanges from the ambit of its proposed online gambling legislation. Betfair dominates the betting exchange market. It has filed a complaint with the European Commission (EC) about this exclusion. Betfair has claimed that the exclusion of betting exchanges is clearly incompatible with European Union law and has asked the EC "to review the matter and engage with the Greek authorities, with the aim of addressing the concerns raised". Other clauses in the Greek draft law that have been objected to are the obligation to establish a Greek legal entity, locate servers and process gambling transactions exclusively within Greece, and also the requirement for online customers to obtain a special players ID card. The EC is expected to decide on the Greek draft law on July 5.

The only good news for online betting exchanges comes from the United Kingdom. There a bitter dispute was on between the British Horseracing Association (BHA) and the betting exchanges. The BHA claimed that betting exchanges were on par with online sports betting sites and would have to pay the levy applicable to bookmakers. The British Horserace Betting Levy Board (BHLB) was the nodal agency for deciding on the dispute. After seeking expert legal advice and on the basis of the submissions made BHLB ruled that betting exchanges do not constitute leviable bookmakers under the Betting, Gaming and Lotteries Act 1963.

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