Online
A common theme in consultation responses from operators is the difficulties faced by UK licensed online operators in competing with those based overseas. The Gambling Commission estimates that 75% of remote gambling carried out by UK residents is with operators located overseas. Well known UK bookmakers such as Ladbrokes and William Hill have been forced to move their operations offshore, because the UK’s 15% gaming duty prevented them from competing effectively. However, on 14 July 2011 the Government announced that it was proposing to amend the provisions of the Gambling Act 2005 in relation to remote gambling. Currently operators based in the EEA and ‘White List’ jurisdictions may freely advertise in the UK, but the Government now intend to remove this permission and instead require all operators targeting UK customers to obtain a licence from the UK Gambling Commission. This will apply to those merely accepting deposits from UK residents, as well as those actively advertising in the jurisdiction.
In making these changes, the UK is following the general trend in Europe, where many jurisdictions are moving to systems which require online gambling operators to obtain a local licence. When the 2005 Act was drafted, the UK Government took the position that European law required that companies based in other EEA jurisdictions to have the freedom to provide their services to the UK. However, the European Commission has since accepted licensing regimes in other European jurisdictions which require all those wishing to target that market to obtain a local licence. It is unsurprising, then, that the UK Government has decided to follow that model, given the large tax revenues which would flow from bringing all online gambling onshore.
The UK is currently a very attractive market for online gambling operators who, by basing themselves in tax efficient jurisdictions such as Alderney, Gibraltar, Malta or the Isle of Man, can target this lucrative market without paying large amounts of tax. The Government has yet to comment on the tax implications of the proposed changes, but we anticipate that the current gaming duty of 15% on gross gambling yields will continue to apply to all UK licensees. Given the value of the UK as a target market, it is likely that the majority of operators currently targeting the UK will obtain a UK licence when the requirement comes into force, most likely
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Balkan Entertainment & Gaming Expo Eastern European Gaming Summit
17-20 October, 2011 Inter Expo Center, Sofia, Bulgaria
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