UK Internet Gambling Tax Debate Continues

The British Government is busy exploring all avenues to compel foreign based internet casinos to apply for a secondary license in order to pay tax in the UK. It’s estimated that the British government is losing £300 million in potential revenue per year. The Independent newspaper recently interviewed industry leaders to obtain their perspective on matters.

Gala Coral and Bet365 are two of the top internet gambling sites that closed up shop in the UK and moved to greener pastures. Carl Leaver chief executive of Gala Coral said that onshore betting taxes has a severe impact on his business and is not conducive to him in the long run. As it is the decision as to why internet gambling operators are moving offshore and how they’re going to be taxed is under “constant review”. Leaver said onshore and offshore taxation should be taxed the same.

Britain Online Gambling Point Of Consumption Tax

Matt Hancock Tory MP prepared a draft bill which taxes internet gambling sites based on the location rather than the location of the servers of the operator. In essence this eliminates the onshore versus offshore debate. Hancock used the 2011 South African high court ruling as yardstick. The bill includes penalties to those who advertise in the UK and internet casinos who enter Britain will face prosecution. The Department for Culture Media and Sport responsible for the regulation of internet gambling in the UK, said that it supports a Government sponsored bill. The government will only be in a position to fully address the internet gambling issue in 2014. Should Hancock’s bill reach the committee stage, a few technical amendments will be made by the ministry first.

Another internet casino that moved offshore is Ladbrokes. Corporate affairs director Ciaran O’Brien vehemently opposed the increase in internet gambling taxes. He referred to the research done by the Association of British Bookmakers that the gambling industry paid £1 billion in tax and only retained £600 million as profit. He said, “Basically we’re working for the government and not for ourselves.” He said that higher taxes encourages rogue internet casinos. O’Brien proposed a lower tax rate since internet gambling operators will then be in a position to offer punters better promotions and more jobs.

Meanwhile the representative body for land-based casinos, National Casino Industry Forum said that internet casinos must pay more tax to be on par with land casinos. Malcolm Moss who is the Forum chairman told the Sunday Telegraph that foreign based operators are not paying tax in the UK while land-based casinos pay us much as 50% tax. Leaver of Gala Coral also involved in land based gambling said that land casinos and betting shops create employment and pay rent on the high street, whilst internet gambling sites do not. Taking the above mentioned factors into account it seems like the Government has its work cut out.