UK-listed betting exchange Betfair is wearing some accounting egg on its face after admitting that the company paid out £60m in “illegal” dividends in recent years. The company also copped to having incorrectly purchased over 6.5m of its ordinary shares in 2012 despite the fact that it lacked sufficient reserves to do so.
Nestled deep within Betfair’s fiscal 2014 annual report is the admission that, due to unnoticed “changes to the technical guidance” issued by the Institute of Chartered Accounts in England and Wales in October 2010, dividends issued by Betfair in fiscal years 2011 through 2013 “should not have paid” because the company “did not have sufficient distributable reserves to make those distributions.”
Betfair insists that it always had the option of drawing sufficient funds from the distributable reserves of its subsidiaries and doesn’t intend to claw back any dividends paid to shareholders. But in order to bring itself back into compliance, Betfair has proposed a special resolution for next month’s Annual General Meeting that would cancel the ordinary share purchase and extinguish the shares in question.
Betfair has already made an appropriation from its distributable reserve position to cover the cost of the purchased shares. A company spokesman told the Telegraph the accounting cockup was “a minor technical point” that would have “no impact on shareholders.”
LADBROKES EXCHANGE SPANKED BY ADVERTISING STANDARDS AUTHORITY
In other exchange betting ‘math is hard’ follies, UK bookies Ladbrokes have been spanked by the UK’s Advertising Standards Authority (ASA) over a promo for their recently launched betting exchange. The banner ad in question appeared on Lads’ fixed-odds sportsbook and offered “up to £500 in free bets” which an irate punter found more than a little misleading.
A link to the promotion’s T&C’s indicated that a bettor would receive £25 in free bets after their exchange wagering had generated £25 in commission. Bettors would receive an additional £25 in free bets for every subsequent £100 of commission generated up to a maximum of £500 in free bets. Our irate punter complained that he’d have to win a minimum of £38,500 in order to generate the necessary £1,925 in commission and collect the full £500 in free bets, leaving him expressing doubt that punters were being treated “fairly and honestly.”
Ladbrokes defended its ad, saying the promotion had no expiry date and was intended to reward long-term customer loyalty. Lads noted that nearly 6% of the 890 customers that had availed themselves of the offer had already earned the maximum free bets available and that more would do so given enough time.
Nice try, said the ASA, which upheld the complaint after noting that just 0.9% of Lads’ exchange customers had received the full benefit when the ad implied that a “reasonable proportion” of punters would make the grade. The ASA also felt the T&C’s should have more clearly specified the significant volume of wagering required to claim the maximum free bets. Lads were ordered not to run the ad again in its current form and to more clearly spell out the extent of the monetary commitment in any future adverts.