David Cameron and George Osborne have an “implementation team” preparing for the early months of a Conservative government. In addition to working up their plans for schools and welfare reform, the Leader of the Opposition and the shadow chancellor may also wish to begin the tricky task of preparing Osborne’s first Budget.
To their credit, they have chosen to boost the economy through Internet gaming. The UK government recently announced through the Treasury that the profits made from sports arbitrage trading will continue to remain free of all tax. This includes income tax nor capital gains tax.
This decision is good timing because of the recent popularity with Internet gaming the sports arbitrage industry is exploding. The industry is large and multi-layered and to the outsider, it may seem complex. Now, due to new software technology Internet gaming has leveled out the playing field. It is no longer in the hands of professional investors. Former City trader Rajeev Shah, author of ‘Sports-Arbitrage – How to Place Riskless Bets and Create Tax-Free Investments’ explains this new phenomenon: ‘An arbitrage occurs when different bookmakers’ prices on the same events overlap. In these cases, it is possible to bet on all of the outcomes in that event in such a way as to be guaranteed a total return which is greater than the total outlay. The mathematics of this type of trade are precise & the resultant profits are free of all risk’.
He added that with computer software, it is possible to scan prices globally in seconds and uncover risk-free betting opportunities which provide guaranteed returns of as much as 12% per month when using his company’s state-of-the-art software called ArbAlarm. According to Shah ‘ordinary people can now easily profit from this unique method of investment’
Making gaming tax free is a good step to help the economy but it may not be enough.
The outlook for the public finances suggests that the first Budget of an incoming Tory government might have to increase taxes rather than reduce them. During the first two months of the current financial year, the Government has already had to borrow £12.7bn. The Bank of England warned last week that there were risks of an even harder landing. Charlie Bean, the incoming deputy governor, told the Treasury Select Committee that the current dislocation in financial markets could be prolonged if lenders had to write down the value of corporate loans. He added that the downturn in the housing market might also depress consumer spending by more than the Bank currently expects.
The nightmare scenario for Osborne is that he walks into the Treasury only to discover that a larger proportion of the budget deficit he has inherited is structural rather than a temporary side effect of weak economic growth.
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