How I went from punting PCs to betting a quarter billion on Betfair Former channel man Peter Webb has become one of Betfair's leading customers and bets a quarter of a billion pounds annually on horseracing alone. He also sloshes a good amount on the X Factor market. The ex Compaq and Medion man finally left the UK's computer distribution channel in 2003 to make a full time go of trading on …
Could betfair not screw him with some clever 'market' manipulation? Obviously not allowed in the real financial world but since they actually set the odds I would have thought there would be a way of either getting some of his account back or at least making it impossible for him to make money?
I'm not saying they should - its just gambling is all about screwing people - every punter loses eventually so this bloke must be really pissing them off.
Betfair's regulated by the Gambling Commission, and screwing a customer in the way you suggest wouldn't be allowed under their licence, even if they wanted to. They don't set the odds. That's the whole point - people like Mr. Webb do. But most people getting a payment labelled "Betfair" into their bank every month would have the brains to know which side their bread was buttered.
I'll bet he does piss them off - happy to make a living from them, never has a good word to say about them. If I were them I'd shut his account and tell him to sod off.
As per the discussion last week on matched betting, a lack of understanding on what Betfair is or how exchange betting works.
Betfair is not a bookmakers and they have no interest in whether you win or lose. It is merely an exchange platform for you to trade bets with other users. They take a small commission from your winnings (whether you win or not it doesn't matter, as if you lose someone else wins in this zero sum game) Its a fascinating technology platform and doesn't get the respect it deserves. This is almost certainly because Joe Public thinks it just another bookies - when it's anything but.
Isn't it? Ever heard brokers talking about "shaking the tree"? And don't get me started on spreadbetting.
"gambling is all about screwing people": You've actually got this back to front. Gambling laws are pretty tight. The person who runs the bet is allowed to take a certain profit. With "investing" on the other hand (depending on your security), you can lose it all.
Of course, this is all irrelevant to betfair who are only a facilitator.
Back in the nineties contractors would quite legitimately lower their tax bill by employing themselves and paying themselves dividends rather than income. Then every idiot started doing it and the most stupid of them would crow about it, forever telling you how clever they were. They shouted until the Government introduced IR35 and stopped the practice.
In 2010 we've got gambling, an activity that's currently tax-free (the bookie pays the tax). If you can make money from it, and you've got a brain, then you'd keep quiet. If you've got an ego the size of a planet and a mouth like a foghorn, but a brain only the size of a pea, then you'll shout how much you make from the rooftops like a braying donkey until they change the rules.
They're looking at it now, with Horse Racing arguing that people like Mr. Webb are technically bookmakers and should be paying tax, levy to horseracing etc. Government (DCMS minister Jeremy Hunt) is being asked to look at it right now.
http://www.hblb.org.uk/document.php?id=360
Ironically Mr. Webb's own company, betangel, is mentioned numerous times as examples of people who should be taxed, so he's already in the cross hairs. The only submissions to the process protecting his untaxed status were made by Betfair, the company that's the source of the money he makes and that he's happy to slag off at any opportunity.
It's hard to know what would motivate someone to boast about how much they make tax-free when it's under review (being a long way up your own arse is probably the most likely explanation). I'll wet myself laughing if Mr. Webb finds that the £40k a month he claims now becomes £15k after racing has taken £4k of levy, HMRC has taken £6k of Gross Betting Duty and then £15k of income tax and NI on the remainder.
Didn't/ hasn't catch that many people, and certainly hasn't stopped the practice.
Had a bit of a chilling effect, certainly, but there are still loads of people (most who call themselves contractors) doing exactly as you describe.
I'm doing it now, in fact, I'm not a 'disguised employee' though (whatever thats supposed to mean), as all my contract terms have been exercised (including the 'we don't need you today, go home now, no money for you!') and so I'm outside of the rules.
I suspect that any rules will catch the people, like Mr Webb, who are taking the piss out of gambling not being taxed, and will not affect anyone else who tries this with a little less ambition.
>> suspect that any rules will catch the people, like Mr Webb, who are taking the piss out of gambling
Imagine two companies that do currency exchange, imagine the currency exchange market was really competitive, so much so that occasionally if you bought some dollars from one of them and sold to the other, you would make a tiny profit (say 0.001%). This is exactly what is happening in gambling, Mr Webb is exploiting the bookies greed for your money (lengthening the odds as much as they can to be attractive) and only betting when the result of laying two bets (sometimes multiple) will give him an overall gain (after fees), but what he does is "gamble" large amounts of money for a guaranteed profit, he is no more taking the piss than the house having a '0' on the roulette wheel (which you might consider taking the piss too).
Personally, good luck to Mr Webb, the only ones losing (overall) are the bookies (and the bookies are still paying the taxman so the people still win), it would only take them offering less enticing odds to stop the practice dead.
He's not actually making a guaranteed profit as such. The profit is only guaranteed at the point when he closes out (nets) his position. Until such point he is long-only one side of the trade hoping for the odds to change in his favour. As he states he is taking on risk - the risk that they don't move in his favour.
You probably understand this but I though I'd just clarify the situation for anyone trying to copy him - it's like going short HSBC shares hoping they drop in price in the next 10 minutes - they may or they may not - and making sure your position is closed out by the end of that 10 minute window. As he states he's no better at predicting he's just reliant on prices moving. As long as he cuts losing positions fast and rides winning ones (pardon the pun) further he stands to make money. This is just like day trading in a way.
with anything you've said. The point I wanted to make about IR35 was not whether it was effective, but to highlight that it didn't come about by accident - it came about because so many contractors, even ones working in Westminster, would boast about how they were playing the system, until politicians sat up, took notice, and changed the law.
If a court did determine that Mr. Webb was captured by the definition of a bookie in law then it wouldn't just mean he'd have a bill going forward - it would mean the law would consider that he was always a bookie and should have been paying the appropriate tax/levy for the last decade. Assuming his boasts aren't total BS, he's looking at a possible tax bill for the last 10 years of more than £1m. Only an idiot would think exposing themselves to that kind of financial risk was a price worth paying to get a ego-boosting article in the Register.
Toby, Toby, Toby......
Mr Webb is making lots of cash (from a bigger pile of cash), and it's getting harder and harder to make the same amount of cash, he knows that other people are doing the same and soon the income vs effort ratio will fail (and catastrophically if the bookies find a legal way of closing the loophole), for these sorts of things you need to get in early and have an exit strategy, why not make money from the people entering the game? if he doesn't then someone else will, I'm sure this is part of his exit strategy.
>>Back in the nineties contractors would quite legitimately lower their tax bill by employing themselves and paying themselves dividends rather than income. Then every idiot started doing it and the most stupid of them would crow about it, forever telling you how clever they were. They shouted until the Government introduced IR35 and stopped the practice.
I think when you say "quite legitimately" I think you mean "quite legally", legitimately would imply some moral correctness, in the same way as I couldn't "quite legitimately" take the last seat on the tube when there's some poor OAP with a heart condition standing, although I could "quite legally", remember taxes don't go to the government just to pay civil servants wages, they go to education, health, roads (and it's safe to walk the streets - (c)MP), besides just move your company to an IOM umbrella and the most you'll pay is around 5% (people with lots of money like to keep it), don't get me wrong, if I was a contractor who may or may not be working, no sick leave, shoddy credit rating, no company pension, limited working life etc. I'd want to make the most of it.
Oh and of course, IR35 was introduced because the revenue was perfectly aware of what people were doing after getting the accounts from the accountants not because the "loads of money, look at my new BMW M3" brigade were telling their mates about it. And of course some of it wasn't legal, often a company employed a specific person, not a company as part of their contract but on the tax forms was the company being employed to supply a person, many cases of tax avoidance were in fact evasion just hard to prove, unless you got the contracts out of the compan(ies), which without a court order were rarely forthcoming.
"Shout about it and eventually it'll get taxed". It works both ways; gambling losses could be offset against tax. So I don't think the government will be as quick as you think. As for Betfair, I happen to know that they have many, many, many losers for their winners. Overall they turn a profit. If shouting about it changes anything it will be gradual evolution within Betfair and its ilk so they continue to do so.
I would like to add that over the years I personally have made lots of money quite legally by finding and exploiting loopholes and of course it continues to this day. However I have the intuition to work them out by myself and would never tell anyone else, talk about biting the hand that feeds you!
As a break in the tide of "online gambling" sentiments, let's look at something more straight-forward:
The title reads he's betting a "quarter billion" on Betfair, however, the article states "and currently has £250,000 in his account." Looks like a quarter MILLION to me. Might want to correct this error to reduce the sensationalizing title.
The quarter billion will be the amount he puts through the market in bets, i.e. turnover, or throughput if you like. For example he'll place a £500 back bet, wait for the odds to move (hopefully in his favour) and then place a £500 lay bet. There's £1K towards the quarter billion, but he'll do that many times trading a single race, in about 50 races a day. Soon adds up. Good luck to him.
This is a classic example of why people shouldn't follow schemes like this.
Like limewire, kazaa, bit-torrent, buy-to-let, unfair bank charges etc, if the scheme is in the media it is too late to jump on board. While something is low-key the authorities wont bother to get involved. Kept word of mouth between friends and all is okay, but once the chap on the street reads about it in the news, it is only a matter of time before it all shuts down or becomes unprofitable due to reckless investment from one million other chaps on the street.
It is an interesting scheme though, but the real challenge is to find the NEXT scheme before everybody else does.
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