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More Debate on UK Online Gambling Tax

By: Joe Valentino, Tuesday February 21st 2012
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The British government has been for some time working on a proposal that would require offshore online gambling operators to obtain secondary licenses and pay taxes in the UK. At current rates of taxation it has been estimated that government is losing revenue of £300 million a year. The Independent newspaper carried out interviews with the industry leaders to ascertain their views.

The two top online gambling operators that have not moved offshore are Gala Coral and Bet365. Gala Coral's chief executive Carl Leaver stated that onshore betting taxes are crippling his business and not providing any competitive advantage. Therefore the decision to move offshore is under "constant review". Leaver wants equalization of onshore and offshore taxation.

Tory MP Matt Hancock has already prepared a draft bill in which taxation would be based on the location of the online gambler rather than of the location of the servers of the operator. This would eliminate the onshore versus offshore distinction completely. Hancock has taken his cue from a 2011 South African high court ruling. The penalties provided in the bill for offenders include halting advertising in the UK and prosecution of operators if they enter Britain. The Department for Culture Media and Sport, which is responsible for the regulation of UK online gambling, has stated its commitment to a Government sponsored bill as soon as Parliamentary time allows. It may be 2014 before there is time for online gambling on the Government's agenda. Therefore, if Hancock's bill reaches the committee stage, the ministry will support it with a few technical amendments.

Ladbrokes is one of the online gambling operators that have moved offshore. Ciaran O'Brien its corporate affairs director, made a case against raising online gambling taxes any further. He cited figures from the Association of British Bookmakers that the gambling industry paid £1 billion in tax and retained only £600 million as profit. He said, "We are working harder for the government than we are for ourselves." He pointed out that high tax rates would eventually bring in unlicensed sites. In the past such sites have not only operated with impunity but have also advertised their services. O'Brien advocated a reasonably low rate of online gambling tax to be levied at the point of consumption.

Meanwhile the land casino operators have sounded a different call. Their representative body, National Casino Industry Forum, called for higher taxation on online casinos to bring them on par with land casinos. The Forum chairman Malcolm Moss told Sunday Telegraph that offshore casinos pay no tax in the UK while land-based casinos pay up to 50% tax. Leaver of Gala Coral, which is also into land based gambling, pointed out that land casinos and betting shops create jobs in the UK and pay rent on the high street, which online gambling operators do not. Clearly the Government's job is not going to be easy.

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