iGaming


10 per cent flat rate of tax proposed


With the UK government currently weighing up how it should change its approach to the online industry, two of the market’s biggest operators have suggested a one size fits all framework might succeed.


REGULATION TV GAMING C


oral Interactive managing direc- tor John O’Reilly has told the Culture Select


Committee that a 10 per cent gross profits tax across all types of gambling, both online and offline, would be a success in the UK.


Giving evidence at the Committee’s inquiry into the Gambling Act, O’Reilly said that it would be tricky to impose restrictions on the UK’s remote gambling market given its current liberal framework.


He explained: “I think that presents a challenge because effectively the UK market has been an open market. To regulate now those operators that are tar- geting the UK from offshore locations like Gibraltar, which is acknowledged in the Act, and Alderney and others that are on the white list, presents some legal issues. I suspect it is not going to be an easy ride to deliver a licensed and taxed regime for online in the UK. “That said, if it can be achieved through legal


process and if it can be deliv- ered with proper enforce- ment - that is, it is not just a tax on UK plc as we would describe it - then it has to be the right way forward. If it is delivered with a regime of tax that does not massively distinguish the online from the retail industry- and what we propose in our papers is a 10 per cent flat rate of tax across all forms of gambling, online and offline - I think that is a regime that could work.” Rank Group CEO Ian Burke agreed with the concept of the flat rate. He said: “We would like the government to avoid the errors of the previous gov- ernment in terms of taking a piecemeal approach to gambling taxation. It is a real patchwork quilt of six different regimes currently.


ANALYSIS


While a 10 per cent flat rate of gambling tax might appeal to operators with massive land-based estates as well as online interests, it is unlikely to attract the interest of pure online companies that have been used to paying much lower rates of tax. However, if a local licensing system can be ruthlessly enforced by the Gambling Commission, possibly with the help of other agencies, then operators will have no choice as to which regime’s tax rate they prefer.


Bingo update marks Probability’s progress MOBILE M


obile phone gaming operator Probability has been lauding the launch of a new generation of its mobile bingo product. Launched in August, the new bingo service is avail- able to iPhone and Android customers, who now make up half the company’s active user base, for the first time. In addition, a number of new features and a more modern interface have been introduced including the ability to pre-buy tickets for future games, rollover jack- pots and promotional games with discounted or free entry. Chat moderation, including quizzes for cus- tomers, will be managed by the company’s Gibraltar


subsidiary.


The company talked up its new bingo offering during a trading update in which the company revealed a 38 per cent increase in Net Gaming Revenue to £1,702,000 for the quarter with the number of active cash players in the quarter increasing by 44 per cent. Of new players who registered in the quarter, 50 per cent of these were playing on an iPhone, iPod, iPad or Android device. Probability CEO Charles Cohen said: “This was a great quarter for us, deliver- ing solid growth despite the summer holiday period which is usually weak. High- lights included not just the


6 BettingBusinessInteractive • NOVEMBER 2011


launch of our next genera- tion bingo platform but also a very successful promotion in which one lucky cus- tomer picked up a genuine 24 carat gold plated iPhone 4 during September - helping to make this one of our best quarters ever.


“As well as bingo, we have been delighted by the response to a trial TV adver- tising campaign for our core LadyLuck’s brand. This is now a highly scalable mar- keting opportunity and we are exploring how we can expand this over the coming months to continue to build on the strong momentum we already have.” Total money deposited by players into their gambling


accounts with Probability during the quarter was 61 per cent higher than in the same quarter last year. Combined with the unaudited trading results for the first quarter, total Net Gaming Revenues for the first half of the current year were approximately £3.27m, 42 per cent higher than the first half of the pre- vious financial year.


Despite this encouraging growth, it has transpired that William Hill has decided against making an offer for the firm. The bookmaking giant had successfully applied for an extension to an earlier deadline, but the extra time does not appear to have persuaded Hills to flash its cash.


There is an opportunity to introduce a flat rate across all gambling products, regardless of channel, whether it is land-based or online. We think that is achievable, but I think the tax has to be lined up with the policy objectives in the social arena.”


Burke suggested that for firms to come back onshore, the UK would need a combi- nation of the licensing regime, the tax regime and the regulator being deter- mined to use its enforce- ment powers to enforce the licensing objectives. “We have seen the Gambling Commission do that in a number of situations now in land-based environments in the UK, closing down illegal poker clubs, for instance. They would have to follow that through with unli-


censed online operators otherwise, as John said, it would be the public compa- nies and the major compa- nies who would be licensed and paying tax in the UK and they would still be at a com- petitive disadvantage against any unlicensed operators operating off- shore online.”


Burke suggested this could be done through payment processing or restricting advertising, but O’Reilly was less confident. He said: “I think it is a chal- lenge, though, because this is about locking the stable door in some instances and it is a difficult one to do. How you bring about a reg- ulatory regime with strict enforcement when the UK has been an open market for so many years is diffi- cult in Europe, I think.”


I


nteractive gaming firm NetPlayTV has signed a new five year broadcast


agreement with Channel 5 which the operator cites underlines the strong performance that NetplayTV’s Supercasino.com brand has illustrated for the past two years on the channel. NetplayTV says it has


proven that using TV as a customer acquisition tool is a successful model, and this new agreement adds further advertising presence on Channel 5, in addition to its current 23.5 hours teleshopping airtime per week.


NetPlayTV CEO Charles Butler commented: “NetPlayTV’s relationship with Channel 5 continues to go from strength to strength and this new five year agreement is further testament to this. TV has continued to perform well in terms of both the acquisition of new customers and increasing existing customer loyalty. This new agreement will provide continuity of access to a key source of customer


acquisitions, both via the web as well as directly into iPhone, which is a channel to market where we are experiencing significant growth.”


Butler said


that the milestone will enable the group to further develop its position as the UK’s largest


interactive TV gaming company. Channel 5 commercial sales director Nick Bampton added: “We are really pleased with how our partnership is progressing with


NetPlayTV, and the results that their show has produced so far. We are looking forward to growing the Supercasino brand together and creating further value in the relationship between the two companies.” NetPlayTV has also


revealed strong


performance for the third quarter with a 57.3 per cent increase in new casino players up to 24,686. The trading statement said: “The company is focusing continuously on how best to maximise the number of players acquired through the post midnight teleshopping TV window, and during Q3 also carried out tests on pre midnight TV advertising spots which produced positive results. As a result of this initiative, together with the continued strengthening of the relationships with key broadcasters, the company will be further increasing marketing expenditure on TV


advertising in Q4.”


CHARLES BUTLER: ‘RELATIONSHIP WITH CHANNEL 5 CONTINUES TO GO FROM STRENGTH TO STRENGTH’


IAN BURKE: ‘WOULD LIKE THE GOVERNMENT TO


AVOID THE ERRORS OF THE PREVIOUS GOVERNMENT’


NetPlayTV has the sweet smell of success after renewing a Channel 5 deal with its Supercasino.com brand.


Channel 5 renews NetplayTV agreement


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