Betfair to follow rivals to base in Gibraltar

Betfair is to follow rivals Ladbrokes and William Hill by moving part of its business to Gibraltar in a further slap in the face for Britain's gambling tax laws.

The world's largest betting exchange, which was founded ten years ago by one-time professional gambler Andrew Black and former JP Morgan derivatives trader Ed Wray, yesterday said it expected to save 20 million a year as a result of the switch.

The group currently pays 15 per cent tax on gross profit from betting, but this will drop to 1 per cent following the move.

Betfair said it would continue to be incorporated in the UK and employ some 1,200 people at its headquarters in London, and other UK locations.

Chief executive David Yu said the firm was also looking to avoid the so-called "double taxation" which it faces under UK tax regulations.

"When you look at how the UK does their taxation, it's based on all revenues rather than where the customer is located," he explained.

"For example, if you're paying tax to a local jurisdiction it doesn't really work to have a case where you're double taxed both in the UK as well as the other jurisdiction.".

Britain is reviewing its licensing system for gambling companies following the decision of Britain's two biggest bookmakers, William Hill and Ladbrokes, to relocate their businesses to Gibraltar in order to pay less in taxes.

Liberum Capital analyst Richard Taylor said: "The question mark is whether this provokes any response from the UK government, now most of the online gambling companies have moved offshore."

Betfair said it had seen a decent performance in the last quarter, with revenue up 6.2 per cent at 77m.