The UK government has responded to July’s Select Committee report on its plans to overhaul the 2005 Gambling Act, stressing the importance of adhering to its December 2014 deadline for implementing a place-of-consumption (POC) regulatory and tax regime for egaming.
HM Government said sticking to this date would “give certainty to online operators, and their investment plans”. It also however admitted that Treasury still needed “to work with industry stakeholders to establish the correct level for online gambling taxation, taking into account the need to encourage companies to accept UK regulation and taxation and to discourage the formation of a grey market.”
The publication of the government’s response to the Culture, Media and Sport Committee’s report yesterday follows William Hill on Friday submitting its formal response on the government’s move to license and tax all operators selling into the British market.
CEO Ralph Topping, who spoke of potential legal action from Gibraltar-based companies in the wake of the DCMS report last July, said the company had reiterated the points made in its 2011 Deloitte-produced submission to DCMS. Namely that the POC tax ran the risk of creating a large unregulated grey market – as has happened in the US, France and Italy – and that setting the POC tax at 5% of gross profits could push up to 13% of customers to grey market operators, increasing to 27% at a 10% POC rate and 40% at a 15% levy.
Topping also argued that the government had “failed to provide empirical evidence” that offshore regulation of the industry from jurisdictions such as Gibraltar had resulted in greater risks of problem gambling, a point supported by MPs in their report last July.
“It leads you to think that Treasury is looking at no more than a tax opportunity and putting poor old DCMS under pressure to come up with a reason – hence the need to protect the public!”, said the Hill’s chief on Friday.
In its response published yesterday, the UK government largely accepted the recommendations of MPs last July, that British regulator the Gambling Commission should:
- aim to improve links with overseas regulators to ensure best practice in consumer protection and problem gambling
- consider a kite-marking system to indicate UK-regulated websites
- consult the industry on ring-fencing of player funds in light of the Full Tilt debacle
- approve certain overseas regulators and continue to monitor their performance where they meet their requirements, while also carrying out test purchasing exercises to ensure standards are maintained
The government concluded that: “Such an approach would have the merit of encouraging international co-operation leading, in due course, to a more harmonised, consistent and less bureaucratic regulatory system across the 27 member states.”
However, MP’s suggestions that online should be subject to the same restrictions in stakes and prizes as in terrestrial gambling “missed an important point”, according to the government: that “account-based play” online actually provided more sophisticated and powerful tools to manage underage access, money laundering and problem gambling than the anonymous cash-based regime prevalent in terrestrial environments.
Article written by Stephen Carter
