William Hill managing director John Brown has urged government to tax bookmakers' profits rather than turnover, thereby shifting the liability for tax from punters onto the layers.
In a hard-hitting speech at the British Betting Office Association Industry seminar in London, Brown made the suggestion as the "catalyst of discussion" rather than a proposal or a solution.
"There has to be, right now, not at some time in the distant future, a substantial cut in general betting duty and in the deduction to punters," he said.
Speaking to an audience of bookmakers and representatives of allied trades Brown conceded: "It could be necessary to have no deductions to punters at all."
Brown warned that the biggest threat to the betting industry in the new millennium was the increase of electronic, duty free betting caused by the Internet and off sure duty free telephone betting.
"It is a technical revolution that will have a huge impact not only on bookmakers but on anyone who benefits from our enterprise, the Government, the sports of horse and greyhound racing and everyone employed by us and them," said Brown.
"We are at a dawn of a new age. A mere 10 years ago the term Internet had not entered mainstream vocabulary. Now it is the fastest growing telecommunications medium in industry.
"Since 1993, when it began to be used by businesses and individuals the Internet has grown from nothing to an estimated 81 million users world-wide in 1999 and that figure is by now probably many millions if not several tens of millions out of date."
He warned that government would ignore and stand aloof from the Internet revolution at their own peril adding that if bookmakers are going to match the medium in terms of tax free betting then a level playing field should be produced.
"Clearly, if we are going to compete then, at the very least, deductions will have to be the same as for on-line telephone betting."
According to Brown, William Hill, in common with the trade organisations and the Bookmakers' Committee, is firmly behind the campaign to persuade the Treasury to reduce betting duty to 3 per cent.
"However, and this is a personal view, I am not sure how long given the growth in electronic communications, even a 3 per cent duty rate could be held.
"But I have become increasingly convinced that radical problems require radical solutions and what could be more radical than getting rid of betting duty and the deductions as percentage of turnover altogether."
Brown stressed he was not suggesting that betting should not be taxed but he believes a solution must be found that removes the incentive for UK residents to bet off-shore while providing an equal incentive for overseas punters to bet in this country and he believes his method would be a way of shifting liability to the bookmaker.
"If we did this, not only would there be no reason for UK punters to bet abroad but at a stroke the main driver for the UK illegal betting market, tax avoidance, would be removed."
