John Penrose MP commissioned a report on using money from dormant betting accounts and unclaimed winnings to fund sports. There are two types of unused funds - unclaimed winnings from in-person bets and dormant online or phone betting accounts. Bookmakers classify accounts as dormant after 12-18 months of inactivity and absorb leftover funds. The government wants this money used for sports rather than bookmaker profits. However, it is unclear if bookmakers legally own these funds. The report proposes partnering with the RFL, which already manages a similar program for bank accounts, to administer the program and ensure funds go to sports as intended.

1. Overview
of
Use of Dormant Betting Accounts
and
Unclaimed Winnings report
to
John Penrose MP
Customer
Bookmakers
RFL
Government
Sports

2. Summary
John Penrose, the Minister for Tourism and Heritage, asked Don Foster
MP to carry out a report on the possibility of using monies in Dormant
Betting Accounts and Unclaimed Winnings to fund improving sports
provisions.
The first thing to note is the two distinct situations in which money is
never collected:-
 Unclaimed Winnings – This money is normally transacted through betting shops,
whereby the customer will personally visit the shop to place the bet. They then
would use cash or Electronic means to carry out their transactions.
 Dormant Betting Accounts – This type of transaction is done remotely either by
going online or over the telephone.
There are many reasons why monies are not claimed. It could be as simple as the race
had started when the bet was made, this then makes it a void bet and the customer did
not know this had happened. Also when an account has been inactive for a period of
time the bookmakers then assumes the account is dormant and might then take the
money and put it into ‘ring fenced’ accounts, whereby it gains interest for the
bookmaker. Again the account holder can always active the account by accessing it over
the phone and/ or the internet. This is not dissimilar to how dormant bank accounts are
reactivated. After another period it is not uncommon for Bookmakers to then use
account methods to absorb the ring fenced money into their balance sheets.
It is clear in the report that the Government has a keen appetite to use this money for
sports related purposes rather than letting Bookmakers absorb this money into their
balance sheets. Also in the new Coalition Government Agreement it says,
“We will use cash in dormant betting accounts to
improve local sports facilities and support sports
clubs”.
Although the report does not indicate the amounts of monies that could be involved with
this scheme, as the bookmakers have not supplied the MP with figures that he asked for, he
does suggest that he has some indications that it would be large enough to warrant taking
this scheme forward. The reason why some of the operators say they cannot given the
definitive amount is due to the fact that on unclaimed winnings the betting shops use EPOS
to transact the bets and these transactions are not sent electronically to the Head Office,
unlike Supermarkets and other organisation of such size. The Bookmakers have said that it
could be a simple process to resolve this. However they must have some form of manual
process of knowing what their liabilities could be.

3. The report talks about not only obtaining the money and how it could be used but also it has
identified a number of difficulties in doing so like:-
Who owns the money? – The bookmakers or the customers?
Wording in a newsletter produced by the
Association of British Bookmakers says that the
money, “belong to winning punters.” With that in
mind there could an argument that the
bookmakers do not have the legal or conventional
right to give the money away or indeed the
Government to take it without legislation. The
Government is hoping for an easy and voluntary
scheme in the first instance.
Different Bookmakers have different rules on when accounts become dormant. Some even
just call them “inactive”. But there seems to be a common theme with the Bookmakers
which is 12 – 18 months is a reasonable period for an account to be classed as Dormant.
Once they have been classed as Dormant there are a large number of Bookmakers that put
the money into a ‘Ring-Fenced’ interest bearing account and then once further periods have
elapsed they absorb the money into their balance sheets using numerous accounting
methods. Regardless whether they do this or not the MP says that it would be far better to
use the money for good causes rather than letting Bookmakers absorb the money into their
balance sheets.
One positive thing the report says about any scheme put in place is,
“Using, whenever possible, existing distribution
mechanisms, to avoid anything more than the bare
minimum being spent on administration costs.”
Given that RFL has a scheme that could be easily mirrored our proposition could
complement the scheme that the MP and minister are trying to achieve, in terms of minimal
cost.

4. Conclusions
It is clear that the Government wants to access and use this money but with the difficulties
of ownership of monies, either unpaid Winnings or dormant accounts, it is probably fair to
say that this is holding them back from making any formal recommendations on how best to
get the funds. This poses an excellent opportunity for RFL, as I believe that we are able to
facilitate this by being given the monies from the bookmakers just like the banks gives their
dormant account monies at present. This way there is no real legal argument as to who
owns the money, as the customer will always own the money and have a right to reclaim it
back. Then we could distribute it however the Government wants either through Sports
England or other body. Reclaims by Bookmakers could be done like banks at present on a
quarterly basis.
I would imagine that the agreement, setting up and running the scheme could all mirror the
scheme we have in place currently with dormant bank accounts. This would work well as it
will keep the cost to a minimum and to maximise the full potential for funds being released
to sports clubs and sports facilities. Given that this was one thing mentioned in the report by
the MP this should only complement us more for running and operating the scheme.
It is possible that the MP and/or the Minister that are overseeing this report are not aware
of RFL and the scheme that we have currently with the banks and if we could introduce
ourselves, either directly or indirectly, then it could be beneficial both to RFL and the
Government, as we would be able to help demonstrate how they could work with an ethical
and ‘not for profit’ company for this proposed scheme.
Given that we already work with them for a much bigger project then we are also a trusted
partner for the Government too. And the positives perspective for both the Bookmakers
and Government to use some one like ourselves would far out weigh the negatives of them
just taking the money like as been suggested.

5. Points to bear in mind.
We do not know if the scheme is big enough to warrant our involvement, i.e if the funds are
large enough for us, or the cost of setting it up might not make it worthwhile, even though
we could mirror it on the current scheme.
Government might decide that unclaimed winnings could just be collected d has even
suggested in the report that they could split the money 75% to the Government and 25% to
the bookmakers’ profit. Any reclaims would then have to come out of the profits of the 25%
and any interest they make on that money. Although this could be easy to operate, it could
look in bad taste, both for the sector and the Government and I would suspect that if
Bookmakers where going to lose this money they would like to go down an ethical route
first. Using a scheme and company like ours would overcome this and put a positive take on
it.
Note
On the front cover is an arrow showing the progress of how the money would be
channelled. Given the money could go through Sport England or other organisation I have
just called that Government for now until they come up with the desired channel to go
through.
Extract from
Associationof BritishBookmakersAutumn2010 Newsletter
© Gareth Fairhurst.