1. Brief history of betting on sports
1.1. History of Regulation
Great Britain (1) has a long tradition of gambling generally, and betting on sports in particular. The first Gaming Act was passed by Parliament in 1710, 300 years ago, so the activity has always been regulated. The betting activity initially revolved around horse races, cricket matches, prizefights and other pursuits such as hare coursing and cock fighting. The first definition of 'cheating' was included within the Gaming Act of 1835. One advantage of legitimating this betting activity is that the UK Government has been able to tax it. One disadvantage of taxing it has meant that online gambling operators have needed no further encouragement in order to choose a taxneutral jurisdiction for their establishments.
In the same way that gambling has long since evolved from its origins within the aristocracy, the legislation has been extended from "gaming" (playing games of chance and/or still e.g. in casinos) to include "betting" (see 3.2 below) and "lotteries" (games exclusively of chance). The most recent legislation - Gambling Act 2005 - consolidated all earlier regulation into one Act of Parliament.
1.2. The role of bookmakers
Before recent advances facilitated gambling by use of interactive technology and through betting exchanges, the market for betting on sports was exclusively controlled by 'bookmakers'. The name is derived from the practice of creating a market on a racecourse by accepting wagers which were duly noted in a ledger or book. The market would be created by the bookmaker making an actuarial estimation and offering the 'odds' of a participant winning. Subsequently more ingenious combinations of wagers and outcomes were devised. Bookmakers also later accepted bets over the telephone and opened call centres for this credit betting. The moral high ground was preserved by the legislators who decreed that such wagers should not be enforceable at law.
1.3. Establishment of the Tote
The Racecourse Betting Control Board ("RBCB") was established by the Racecourse Betting Act 1928. The function of the RBCB was to operate pool-betting on-course as an alternative to fixed odds betting with bookmakers. Its object was to distribute profits for "purposes conducive to the improvement of breeds of horses or the sport of horseracing". Off-course and credit bets were accepted by a company called Tote Investors Ltd from 1930 and these monies were also channelled into the on-course pools.
1.4. Betting off-course
The landscape was altered significantly by the Betting Levy Act 1961. For the first time, bookmakers were permitted to open betting shops and operate off-course. There are now over 9,000 shops (usually referred to as 'licensed betting offices' or 'LBOs') in the UK and Ireland. Surprisingly, the turnover in these LBOs has not been since eroded by the inception of on-line or 'remote' betting, although there are indications that betting exchanges are impacting turnover. Under this Act, bookmakers were obliged to pay a levy ("the Levy") on their off-course horseracing turnover to the Horseracing Betting Levy Board ("the Levy Board") which in turn assumed many of the funding responsibilities of the RBCB.
Under this Act, the RBCB was reconstituted as the Horserace Totalisator Board ("the Tote") and it subsequently acquired Tote Investors Ltd. Although the Tote was now permitted to open shops off-course, it was restricted to offering only horseracing pool bets. This restriction on the Tote was lifted in 1972 and thereafter it was permitted to operate as a bookmaker accepting bets on all sports.
1.5. Establishment of the Levy Board
The Levy Board was created by the Betting Levy Act 1961. Its object was to redistribute funds generated from the Levy in order to improve horse breeds and to facilitate horseracing. The level at which the Levy is fixed is determined by the UK Government, failing agreement between the horse racing and betting industries. …