An expanded licensing regime for online gambling which will ultimately catch more operators within the tax net is on the UK government’s legislative agenda for 2013-14, it was confirmed this morning.
The Gambling (licensing and advertising) Bill, requiring “all operators selling or advertising into the British market, whether from here or abroad” to hold a UK Gambling Commission licence, was among 19 measures the government hopes to implement during the new session of Parliament opened by the Queen this morning.
The briefing notes accompanying the Queen’s Speech today justified the Bill’s passage in terms of “providing greater consumer protection for people in Great Britain”. The proposed legislation would also “[l]evel the regulatory field for all remote operators allowing British-based operators to compete on an equal footing,” said the government.
The Department for Culture, Media and Sport’s top Mandarin said in March that securing a third-session slot for the Bill could see the UK “commence new arrangements” for regulating remote gambling in Britain on a point-of-consumption basis as early as April 2014, ahead of the previously announced December 2014.
This date could however be compromised if the Gibraltar Betting and Gaming Association follows through on its threat to take legal action if the UK government proceeded with its plan to regulate and tax online gambling in Great Britain based on the location of customer, not company.
The Culture, Media and Sport Select Committee last week approved “the principle” of the Bill. It also declared itself “satisfied” that the government had considered the compatibility of the proposals with EU law, adding that: “[W]e note its confidence that any challenge to the legislation would be unlikely to succeed.”
HM Treasury has yet to confirm the level of the accompanying tax licensees will be required to pay on business generated by British consumers, however its modelling assumes a continuation of the present rate of 15% GPT.
Following the offshore exodus to Gibraltar of Ladbrokes, William Hill, Betfair and Gala Coral in recent years, Bet365 now stands alone among the UK’s major operators in paying this duty - on all of its sportsbook revenue - but has benefitted from double tax relief since April 2012, offsetting what it pays under other local licences held in territories such as Denmark, Spain, Australia and the German Land of Schleswig-Holstein.
The Culture, Media and Sport Select Committee warned against setting the tax rate too high in its pre-legislative report on the Bill last week, arguing this could drive customers and companies into the unregulated market.
UK giants Ladbrokes and William Hill both called in their submissions to the Committee for the eventual tax rate to be set at 5% of gross profits, in Ladbrokes’ words “to maximise the level of compliance among operators”, with Ireland-based Paddy Power advocating for “an absorbable rate (5-8%).”
Article written by Peter Holmes
