Victor Chandler: Victor Chandler International
The 'Indiana Jones of gambling' invites GB to the Rock to discuss his offshore gamble
With his imposing build, tailored suit and leathery features, Victor Chandler may fit the image of the swashbuckling gambling entrepreneur, but for a pioneer behind a global business, he’s surprisingly shy.
The ‘Indiana Jones of gambling’ has invited Growing Business to the firm’s Gibraltar headquarters to discuss the impressive adaptability he’s driven into the business, and also no doubt to help build up a brand that punches above its weight, but lacks the instant recognition the likes of Ladbrokes and William Hill enjoy.
The interview itself, held in Chandler’s sixth-floor office, is a touch surreal. He delivers his gravel-voiced responses in his own time, and, deprived of sleep after a bumpy and delayed early morning flight, I find the long pauses he leaves between question and answer soporific instead of uncomfortable.
While his office’s views across the Gibraltar Straits and out towards Africa are enviable, Chandler didn’t move his entire operation here in 1998 for the scenery. An overseas territory of the since 1713, Gibraltar’s offshore status means it boasts generous tax laws that have seen it develop a reputation as an eccentric sibling of traditional havens like Jersey and the Bahamas.
The firm’s relocation has often been reported as an overnight one, but Victor Chandler International (VCI) actually made the innovative leap offshore in two stages. As betting from Asia took off in the early 1990s, going partially tax free became a necessity if Chandler wanted a piece of the action. “Around the time of the 1994 World Cup, we started taking loads of business from the Far East,” he recalls. “I’d never even thought of it before.”
Unfortunately, the Asian high rollers wouldn’t bet regularly with VCI unless the firm was at the racecourses where there was no tax. “Asian players wanted to bet, but didn’t want to pay tax, so we were restricted to a large degree on when we could take their business. But I saw huge potential. We had half a dozen people wanting to put more than £20,000 on football matches, all emanating from Hong Kong and Singapore.”
Chandler travelled to to meet the customers and found they wanted to bet on the Premier League as well. “In fact, they wanted to bet on any football match they could see on TV,” he says. “So I set about trying to find somewhere to set up with a licence where you didn’t have to pay tax.”
After flirtations with Antigua, Guernsey and Jersey (where a national is required as a business partner – “I tried that and we fell out very quickly”), Chandler discovered from Ladbrokes’ Cyril Stein that a floating licence was available in. The tax-free arm of the business was open in time for the 1996 European Cup.
“I took half a dozen people who either already worked for me or that I’d spotted in the industry and we opened up,” he says. At first, they used mobile phones to take bets because they couldn’t get connected to the local network quickly enough. Now, the company has more than 350 staff in Gibraltar and an annual turnover of around £1bn.
At the time of the initial move, with offices still open in the UK, Chandler was spending a lot of time on planes. He would come to Gibraltar once a fortnight, while travelling to recruit lucrative customers in the during the same period. “It sounds fun until you’ve done it a dozen times,” he says.
But what was the catalyst for moving the entire operation? “My ex was reading an article about Irish bookmakers advertising in the UK in The Daily Mail,” he explains. “She said: ‘If the Irish can bet in the UK, why can’t you do it from Gibraltar?’ First I thought it was a pretty stupid comment. Within a week I’d gone to see the council for an opinion, and there was no reason why we couldn’t bet into England from Gibraltar.”
Ladbrokes might have been there first, but as a private entrepreneurial firm, it was VCI that was to change the British gambling landscape forever with its move to Gibraltar. It was an impressive and innovative leap, and it allowed the company to expand dramatically as it became the first operator to give its clients tax-free online betting.
Countless firms followed suit, and Gordon Brown responded to the massive tax loss that the migration constituted by abolishing gambling tax in his 2001 budget, replacing it with a 15% levy on top-line profits. Asked if he’s ever tempted back, Chandler is unequivocal. “I miss my friends, but they can come and see me,” he says. “I don’t think I’d ever dream of going back.”
A gambling firm, with its uneven monthly profit profiles, was never going to find the government’s concession attractive, unless, as Chandler notes, it was on gross profits carried forward. “The business is different now,” he says. “A lot of it comes from places other than the UK. I’m not going to pay 15% on business that comes from the Far East or Europe.”
Despite his years in the sun, Chandler’s attitude to the Labour government hasn’t thawed. “I think history will speak of Tony Blair and Gordon Brown in a very unfavourable light. The chickens have come home to roost. You can’t spend and not save. Look at the things they’ve done: selling gold [at the bottom of the market], the promises of less quangos when there are four times as many now. I think everything’s worse than when they came into power.” When Chandler quotes the political commentator and journalist Peter Oborne’s description of Tony Blair as “the great mountebank”, he provides further evidence of my initial assessment that he’s about as far as it’s possible to get from the wide boy image his industry is traditionally associated with. Gracious, shy and softly spoken, even when delivering a barbed criticism, for all his impressive business nous, Chandler is also something of an unlikely entrepreneur.
VCI was founded in 1946 by Chandler’s grandfather, the owner of the recently closed Walthamstow Stadium. Chandler’s father, also called Victor, eventually took the reins, but had no desire for his son to succeed him. “He thought we were heading for a tote monopoly, and that there were more steady jobs to be found,” Chandler recalls. Despite a private education, he didn’t take well to academia, and was expelled from Highgate. “I wasn’t expelled, I was asked to leave,” he jokes. “I found it very hard to settle. I was caught climbing out of a window for a third time to go and see my girlfriend. They didn’t take too kindly to that.”
After completing his schooling at the less academically focused Millfield in, he went to catering college in Switzerland with the aim of going into the hotel and restaurant industry. “I liked restaurants, I liked meeting people and I thought it might be a good way to travel,” he says. “I spent time in Paris in a hotel kitchen, then I worked in Nice for a while, and then joined a management consultancy in Spain when I was 21. It was great fun.”
At the helm
This carefree lifestyle came to an abrupt end when his father died of cancer at 52, and Chandler came home to take over an ailing business in an industry he barely understood. “It was the early 1970s, the economy was doing badly and the harsh realities of having to support a mother, two sisters who were still at school and the lifestyle they aspired to was a rude awakening to the realisation that you have to work,” he explains.
He dug deep, learned the ropes and slowly turned the business around, but not before some dark moments. “There was no money about,” he says. “Our 30 shops were doing alright, but the credit business was in a mess because we had huge debtors. We’d lost our pitches on the racecourse, which had been a terrific source of income and clients for the telephone business. And it was a much harder business then because of the tax.”
When Alan Kinghorn was tasked with setting up a bookmaking arm of Playboy, he approached VCI with an offer to buy the business. Chandler says he came “very close” to selling up. So what changed his mind? “Pride,” he replies.
Instead, he took the firm back to its roots. “We got rid of some shops,” he explains, “keeping the ones that were easier to manage and within close reach of each other, and I got one person to manage them all. We consolidated really. We decided what we were. We wanted to become an exclusive bookmaker, concentrating on high net worth individuals.”
By the time the Queen’s Silver Jubilee arrived in 1977, things started to look up, particularly at that year’s Ascot. “People had spare cash,” he says. “The boxes at Ascot were owned by wealthy individuals, not corporations. A lot of them were entrepreneurs who liked a bet. I didn’t have a pitch on the racecourse, but I had one in the stand – a desk, almost. We won an awful lot of money.”
And the firm kept on winning. Chandler’s personal fortune stands at an estimated £365m. It turned out that the reluctant gambling entrepreneur was rather good at business building. When I ask him whether he’s proud of what he’s made of the business, and the foresight he displayed with the bold leap offshore in particular, he’s almost dismissive. “Moving your betting firm abroad isn’t significant if you take it in the context of what else is going on in the world,” he says. “It’s just the principle of trying to do the best you can whatever business you’re in. In the grand scheme of things it’s not that important.”
Instead, like the classic entrepreneur, Chandler’s focus is on what’s coming next. “From a new payments system to a new territory, that’s still what motivates me,” he says. “Our focus is on growing in. We’re in the process of getting a license in Spain. That’s our main project at the moment, and we expect to be operational by the latter part of next year. When things settle down in South Africa, that’s another territory that we’re interested in and we’ll continue to expand in France and Germany. And I’ll keep lying in the bath thinking about what the next thing is.”
Old school innovator
He may appear old school, but Victor Chandler has a reputation as a great innovator. When asked about the closure of the VCI-owned Walthamstow Stadium, he’s unsentimental. “No one’s going to keep a business open that’s losing money,” he says. “Even on the last night there were people who were protesting about the closure. When you asked them the last time they came, they’d say four years ago. That’s why it was closing.”
Thanks to the leap offshore, the fi rm has spread its wings to Asia and beyond. Some of the focus on high rollers remains, although Chandler points out that it’s all relative. “Most of the big customers we have now are Far Eastern and it’s all proportional,” he explains. “Having a £100,000 bet when you’re worth £1bn doesn’t really matter.
Chandler is also keen to develop the high volume, low spend side of the business, both online and through the adoption of mobile applications, which he’s particularly excited about. “It’s going to be absolutely huge,” he says. “The next big thing. None of the technology is good at the moment but the person who comes up with the best technology will win the war.”