Ensuring the UK’s forthcoming point-of-consumption (POC) regulatory regime “has teeth” and forces out unlicensed operators is more important than the tax level, argued the boss of Ladbrokes today.
Richard Glynn was responding to a question in the company’s Q3 earnings call as to whether or not the lobbying battle had been lost over UK government plans to regulate and tax the online industry based on location of gambler, not company, from December 2014.
“I don’t know whether ‘lost’ is the right word. I certainly think there will be a point of consumption tax. There’s a lot of work going on in two areas. One is the rate, which we think is high, at the [15% GPT] rate proposed”, Glynn told analyst Ivor Jones of Numis.
“But most important for those that are firmly rooted in the UK, is that when this thing comes on, it has real teeth. If it has real teeth, then I think you will find it unsustainable for a number of offshore operators to focus on the UK, and I think you will find this number, quite a material percentage of the market, will float towards the dominant incumbents in the marketplace. So making sure the Act has teeth, is one of the biggest mitigants of the POC.”
The UK proposed new criminal penalties for operators who continued to target UK consumers while not complying with its new regime in a formal consultation paper into the new place-of-consumption (POC) tax published in April. The UK has not yet proposed the use of technical enforcement measures such as IP or payments blocking, suggesting it has taken account of the limited success of these tools in countries such as Italy and France, instead proposing to rely on “mutual assistance agreements with other countries”, new criminal penalties and pulling operating licences for non-payment of taxes.
Glynn was speaking as the company unveiled a lacklustre set of Q3 results ahead of the company’s long-delayed sportsbook launch. Group net revenues were up 3.9% and operating profit 0.4% to £49.2m, affected by 38 racing cancellations compared to 2 in the same period last year, and punters being distracted by “24 channels of once-in-a-lifetime entertainment” during the Olympics and Paralympics, according to Glynn.
Digital revenues were up 6.1%, as stronger margins in the sportsbook due to trading improvements – where revenues were up 21.7% year-on-year – offset a weak gaming performance. Casino and games were up marginally by 1.1%, bingo down 6.1% and poker down a massive 25.7%.
Article written by Stephen Carter