legal, cashflowI have some spare cash in my startup company account. I would like to generate some yield by doing sport betting arbitrage. (Please note that sport betting arbitrage is different from gambling as you make a profit regardless of the outcome)
The activity involves:
My company is in UK. I was wondering if there is any issue in doing that from a legal perspective, and if there is, how to do it legally.
Pay yourself, and bet your own cash.
Legally, what you described looks suspiciously like it may fall under “misuse of company assets” – which can basically land you with a fine if a taxman or an investor looks into the gory details.
In the worst case scenario, you could become target for investigation as a gambling addict who misappropriated company funds.
To avoid this, be explicitly authorised by the company to place bets - e.g “Gaming accounts manager”.
This would allow you to place under your name but you could track emails, payments etc properly back to the company.
Secondly, research on laws regarding gambling as corporate investment in the UK.
Finally, a bit of personal advice - gambling is addictive and insanely risky. Do you have a plan and discipline for cutting losses when you incur them? I suggest you don’t risk your company money and your reputation in gambling at all. Rather you could check out stock market or invest in other companies.
There's some good advice from Denis in his answer.
A few things to add:
Consult a real accountant and possibly a lawyer too.
Don't open a betting account in your own name and begin transferring money to it without accounting properly for tax as the money leaves the company and goes into your own name. When it's in your name, it's your property, and that transfer from the company to you needs to be properly documented and taxed, otherwise you will get yourself in serious trouble.
Instead, open a corporate trading account (i.e. in the name of the company). This is in fact possible, e.g. see Betfair: Corporate Accounts. You might need to do more research to find other exchanges that offer corporate accounts, but if Betfair does then others probably do too - maybe you need to phone them up and ask.
Be clear with yourself and with the authorities (e.g. Companies House) that your company will be trading as a bookmaker.
When I say "be clear with yourself", I mean that if you have particular skills or knowledge in this area then fine. But if you don't really know anything about it and you think that there's a quick way to make a buck here then be prepared to lose all of your money. If you're not clear whether or not you do have the expertise needed then start small and remember to cover the worst-possible-case scenario. And when you're modelling it remember to include spreads, fees, and possible lack of liquidity.
So be honest with yourself about whether or not this is truly an area of core competence for you. If it isn't then don't do it.
Ask yourself what information you have (or what skills you have) that the sports-betting professional traders working for large corporations (or even for the exchanges themselves) lack. Be prepared for the possibility that the difference between you and the professionals is that there's some aspect of the risk that they know about and you don't, i.e. that the trade is more risky than you think it is.
For example, if a price moves through a stop-loss then the loss isn't actually stopped at the stop-loss level itself, it's stopped at a worse level. You have to pay more fees for a guaranteed stop-loss, where the exchange takes on that risk (I'm coming at this from a finance rather than sports angle - the terminology or the details may be different in sports, but I bet there's some similar subtleties around risk).
tl;dr: don't do it.
Re Companies House: amend the company registration so that the company activity includes this new activity: here's the list of activity codes. A company can have more than one activity, so it doesn't preclude you from continuing to do what you were already doing.
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