UK Gambling Laws Set To Change
The Chancellor of the Exchequer, George Osborne, announced plans to drastically change the way that gambling companies are license in the UK in a speech made in the House of Commons yesterday.
The Chancellor is building on statements made by John Penrose (the minister responsible for gambling policy) last week, which is likely to lead to a reform of how gambling companies in the UK are licensed. Analysts expect these changes will be made in order to make the legislative process of increasing gambling taxes in the UK much easier.
Currently, offshore gambling companies which accept punters from the UK are completely untaxed, while onshore gambling operators are taxed 15% in addition to VAT. This unpopular, heavy levy on profits is why all of the UK’s major bookmakers including William Hill, Ladbrokes and Bet365 are based outside the UK in Gibraltar. In Gibraltar, all betting companies only have to pay a 1% tax, giving them a huge competitive edge over any operators licensed in the UK.
The current UK gambling tax laws, which relaxed restrictions in 2005 by the Labour Government (allowing gambling operators to promote their services on TV ads and media in the UK) was seen as the pinnacle formula for how gambling operators should be regulated around the rest of the world. Any operator could provide services in the UK without a UK Gambling Commission license provided they were licensed wherever they were based. However, recent shutdowns of US poker rooms and in the US, combined with a reform of gambling legislation in Italy, has inspired the UK government to reform their own tax policies and hope to earn addition tax revenue under the backdrop of the economic climate.
Some gambling analysts and representatives have been frustrated by the government’s announcement of the change in UK gambling law. The announcement was veiled under the idea of “consumer protection” from the department of culture, media and sports. However, the gambling tax reforms are transparently more about money and allow the government to earn more revenue from gambling companies as opposed to protecting consumers. The tax laws will effect all types of gambling, including bingo bonus sites, sports betting, poker and casinos.
After news of the UK gambling law plans went global, shares in many of the UK’s leading betting firms decreased. William Hill and Betfair’s shares both fell by around 4%, while Ladbrokes price fell 1.2%. Never the less, if the reform in UK gambling continues, all gambling operators are expected to work together to lobby ministers for lower tax rates and more favourable terms.
