Formalizing a Gambling Syndicate
where all questions find their answer, sounds good.
I currently share financial resources, tips etc with a few other advantage sports bettors and the constant flow of money between our accounts is a becoming a bit of a worry, as far as tax goes. How would we go about formalizing a gambling syndicate; presumably this would be tax exempt in the same way a National Lottery Syndicate, or Football Pools Syndicate is? If you're wondering why we don't just use our own accounts, we get limited pretty quickly for consistently exploiting weak lines and costing the book too much basically. We're also adding new members regularly, and sharing our financial resources with them. If this isn't the right forum to be asking about this sort of thing, anyone got any suggestions? I've looked into the manner in which a National Lottery Syndicate is run and its very informal; aside everyone signing to agree on a few points relating to a major win, formalizing their appointment of a manager (the National Lottery will only pay a single person for a win; they won't split it between the members, akin to how we operate except different/multiple people will be placing wagers and then putting payouts back into the pool, which admittedly is generally adminstered by myself.
Thanks very much hoping there's people here doing this - I'd ask an accountant but I doubt few have come across this scenario before.
Its very tricky, and a Grey area, basically as worried as you are that you might get the Govt trying to tax you somehow, they are equally concerned that they might try and lose the case. Then accountants would have an absolute field day getting around all sorts of tax.
Example dont pay your employees anything over min wage, and at end of the week, bet with them for say £500 heads or tails on a coin toss. Keep going doubling up with unlimited credit until the employee wins. Hence got wages at minimum and £500 from gambling tax free. Do that every week. Thats just one silly example I thought of this second but generally, they wont try to push it because if they lose, they would be screwed, so its not worth the risk for a few £k they would get from you.
Hence, nobody has ever been made to pay tax on what you describe, although there are arguments it is providing a service, etc etc.
In UK gambling is tax free as it is not a trade and there is case law in a Graham vs Greene case (think it was that) which said so.
Basically if your not asked, dont tell them.
Have a plan and stick to it
- what's the best way to set up a structure to trade the sporting exchange with several other people ? is it a betting syndicate or an official company created in a tax-haven place ?
- how can i set up a betting syndicate in the UK ?
i'm currently trading on the betting exchange with a partner, the account is under my name, i'd like a mechanism to "protect" my partner and make my "business" more official.
also, in the future, i'd like to raise money from investors, and allow them to invest their money in my syndicate/company. I will take a commission on the gains, for example 20%, like a hedge fund. Is a betting syndicate suited for that ?
thanks in advance
Originally Posted by setagayaku
Taking a commission on the gains will be an absolute turn off to many people. Just like in the lottery, people take little notice on the odds of winning but will surely be turned off if the company announced having certain percentage of the gains.
i will do all the work with my partner, and look for people who trust me to invest their money. it's a sort of "hedge fund", not a usual, casual betting syndicate. All the trading is automated with algos.
Since I will start very small (small amount, small number of investors), I thought a betting syndicate may be enough, and more tax efficient.
using a betting syndicate should (?) be tax free for them to if they "join" my betting syndicate.
i am just wondering how to set up such a syndicate, what are the pros and cons, can i have partners or investors living outside the UK...
Unfortunately I don't think anyone here will be able to advise you. You really do need to take professional advice and it would need to be from someone specialising in that area ideally with previous experience of setting up a formalized betting investment scheme.
Since you are recruiting people to invest money - it is likely that you would need to be FSA regulated as a collective investment scheme. The FSA have shut down numerous betting syndicates which, if I remember correctly included a Tote Scoop 6 syndicate. The FSA pulled the plug on them just before a big rollover weekend, and I think this was only a "fun" betting operation.
It may seem ludicrous that the FSA would deem a betting syndicate to be a collective investment scheme but I guess you can thank all the criminal scam outfits who operate as ponzi schemes and run away with pensioners money after sucking them in at their "seminars" and events.
As above, noone on here can advise you, I can only think you are asking on here in the hope that someone has set something similar up but that is not the case as far as I am aware. You would be better asking on one of the existing forum syndicates that exist out there, we do not have an official syndicate in place, it has only ever been one trusted individual that's acted in an unofficial capacity as syndicate manager to do the Scoop6 and lottery on rare occasions.
Originally Posted by setagayaku
I looked into it vaguely and it is not clear how you would legally set up a syndicate. As soon as you legally set up a syndicate then it stops being a syndicate from what I can make out - a syndicate is an organization where each individual has a say in how the syndicate operates, if you have a syndicate manager then to my mind you could argue that by definition it's no longer a syndicate, it's a board with a chairperson.
My thought was that you could set up a Trust to hold funds paid into the syndicate. You might then appoint trustees to handle the way in which funds within the trust are spent (ie payments to the Scoop6 or lottery or whatever the syndicate agrees on spending the money on) - similar to the way in which Investment Trusts are set up. But all of that would need to be done legally and consume fees/expenses and so straight away you're losing money on the syndicate member's investment and is really only suitable if you're planning on having 1000s/10s of 1000s of members to dilute the fees/expenses.
Re what LP above says about FSA regulation, I don't know at what point you'd need to be regulated, perhaps when you get to a certain size you need to have the thing signed off by a regulator. Again that's something that would incur large expense. But certainly initially I think having a Trust in place would go some way to covering many of the issues that the regulator would be concerned about (though then again a Trust is probably only as good as the trustees that run it and the intermediaries involved in it).
But there is such a huge amount of greyness about it all... you mention having investors from outside the UK... for something like the UK lottery that might not be acceptable. All stuff you'd need checked out by a solicitor probably.
Vaguely remmember I got a ticking off for talking about betting syndicates when I joined munk.
does anybody know what's the best way to trade other people's money on the betting exchange ?
trade your own money. Start low and if you have skill it will build.
Why should anyone trust you, just sounds like you want to start a ponzi scheme or straight up scam.