BIM22015 - Trade: exceptions & alternatives: betting and gambling: introduction

The basic position is that betting and gambling, as such, do not constitute trading. Rowlatt J said in Graham v Green [1925] 9TC309:

“A bet is merely an irrational agreement that one person should pay another person on the happening of an event.”

This decision has stood the test of time. In an Australian case, Evans v FCT [1989] 20ATR922, 89ATC4540 Hill J said:

“There has been no decision of a court in Australia nor, so far as I am aware, in the United Kingdom where it has been held that a mere punter was carrying on a business.”

However, an organised activity to make profits out of the gambling public will normally amount to trading.

Although over time new forms of games of chance have evolved, these principles remain the same. The taxpayer placing a spread bet is not normally carrying on a trade (see BIM22020 for exceptions). They are not taxable on the profits, nor do they receive relief for their losses. The bookmaker organising the spread bet is taxable on their profits.

The section on betting and gambling contains the following further guidance:

• what is a bet - BIM22016,
• the professional gambler - BIM22017,
• organised activity - BIM22018,
• element of existing trade - BIM22019,
• spread betting - BIM22020.