UK LEGAL
stated intention of using taxes to disincentivise uptake of more harmful products is not born out by the tax rates being applied.
IMPLICATIONS
Significant tax increases mean that businesses must cut costs elsewhere. Options likely being considered include adjusting odds and RTP, cutting the marketing budget including reducing bonus offers, reducing headcount and/or moving more of the business offshore.
Cuts to odds, RTP rates, bonus offers and marketing budgets will, unfortunately, directly impact the ability of licensed operators to compete with those illegally targeting the British market without paying any tax. The Gambling Commission’s recent research identified searching for the best odds, RTP percentages and bonus offers as one of the key drivers behind use of unlicensed operators, relevant to three of its four identified audiences.
Unlicensed operators do not, of course, need to follow the Gambling Commission’s LCCP and guidance documents or advertising codes. Customers tempted to such operators by better odds and offers will often find they are unable to set themselves limits on their gambling or self-exclude and sometimes experience difficulties withdrawing their winnings.
Whether increasing tax rates for activities perceived as “more harmful” actually leads to lower rates of harm is highly questionable.
TACKLING THE BLACK MARKET The Government has promised £26m in additional funding for the Gambling Commission to tackle illegal operators, spread over the next three years. Whilst this funding will no doubt be welcomed, it is difficult to see how it will have any significant impact on the regulator’s ability to block access to illegal providers. The Commission already issues a large number of cease and desist letters, but these are unlikely to have any impact on those who clearly already know they are operating unlawfully. It has also removed many URLs from search results, but operators easily create new URLs and redirect customers, so again it’s unclear whether this action serves to reduce the use of unlicensed operators.
Given that the Commission’s research has so far failed to accurately estimate the size of the illegal market, it will be nigh on impossible to determine whether this increased funding for disruption activities has any impact.
FREEPLAYS AND BONUSES The original consultation sought views on the treatment of freeplays and free bets, proposing to align the treatment of prizes
under remote gaming duty, general betting duty and pool betting duty, so that only prizes won as a result of a successful outcome of single game or bet could be deducted from the duty calculation as winnings. Rather than making changes to the existing system, the Government has chosen to “monitor developments”, but HMRC will review and update its guidance to “ensure it is clear and supports effective compliance”.
PREMISES BASED OPERATORS
The Government’s decision to maintain existing duty rates for premises-based operators (and remove the duty for bingo halls) reflects a deliberate policy choice to protect this section of the industry. In particular, no increased duty rates for gaming machines will come as a relief.
Melanie has been providing UK legal and regulatory advice to betting and gaming clients since the advent of the Gambling Act 2005. She advises on all aspects of gambling law including licence applications, compliance, advertising, licence reviews and changes of control and is described in the legal directories as “a very impressive lawyer” who “demonstrates commercial pragmatism supported with a great deal of technical and operational knowledge and experience”.
Melanie has acted for a wide range of gambling operators including major online and land-based bookmakers and casinos, B2B game and software suppliers and start-ups. She also frequently advises operators of raffles, prize competitions, free draws and social gaming products. Melanie has a particular interest in the use of new technology for gambling products and
novel product ideas. She is a regular contributor to industry publications and often speaks at industry events. Melanie is listed as a ‘Leading Partner’ in the Legal 500 guide and is also ranked in Chambers.
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