UK’s government slated to pass a gambling bill which will see betting firms pay a tax premium, a topic of concern that resonates deeply within bookmakers.
Safe havens will not be safe anymore, as the UK government takes a hard swipe at both online and offline betting companies.Licensing, taxation and other reforms are no longer a possibility, but a reality.
The law is set to take effect in December this year, which will allow sportsbooks little time to plan and make the necessary adjustments for the changes that will take place.
What is even more problematic is that the real consequence will not end with bookmakers, but rather the people that revenues come from, the players themselves.
Customers will be hit with increased odds, which will limit their potential earnings, as bookmakers will look to compensate for their losses by offering weaker odds to their players.
Hiding in safe havens no longer – new licenses required
Gibraltar, Cayman Islands and many other “welcoming” nations in the Caribbean are just some of the places where traditional and internet betting firms look to register their business.
• New betting licenses will be required
• Revised advertising and marketing schemes
• Betting odds will go up to cover expenses
For many years, companies that were not registered in the UK, could not be taxed, although they accepted bets from UK residents.
With the introduction of the new UK gambling laws in December, offshore betting companies will also have to apply for new licenses.
Companies will be able to present an application for the new licenses before the reforms come into effect.
Once the bill goes into force, any applications made by companies will be reviewed and given an interim license, until the UK Gambling Commission decides upon granting a real license.
UK’s Gambling Commission website states, “This consistency will make it easier for a consumer to understand their rights and ensure operators report suspicious activity direct to us, all of which should provide greater transparency to consumers and protection against match fixing.”
Raising the tax will echo a loud cry from many bookmakers, including Coral Interactive. Coral is an online sports betting firm, which among other sports also offers bets on horse racing.
Coral’s link to this weekend Grand National horse race is quite evident. They’re hoping that a horse named “Swing Bill” will once again carry the victory.
“Swing Bill has become a standing dish at Aintree and is 66/1 with Coral to make it third time lucky in the Crabbie’s Grand National on Saturday, April 5th.“
Advertising and marketing promotions – bonuses andperks
When new sportsbooks start their business operations they are hungry for customers, and lots of them. Having a big and diverse customer portfolio enables a betting provider to remain in business and strive for potential growth.
In recent times, gaming sector’s marketing efforts have widely increased.The way they do this is by enticing players with readily available bonus schemes.
When the bill passes, the Gambling Commission and other regulatory associations will join up to ensure better transparency. They will strive to make greater efforts to review and regulate the manner in which these promotions are rendered to customers.
As a direct result, the Commission’s License Conditions and Codes of Practice might very well be reviewed, and some changes may be applied to the respective policy.
Companies that will wish to advertise to UK citizens or offer remote gambling facilities, will only be allowed to do so if they will have the license approved by the Gambling Commission.
Additionally licensed gambling providers will be advised to follow the voluntary code set by the Commission, which intends to promote socially responsible advertising for gaming players.
The government hopes all these efforts will raise up to 300 million GBP of this is designed to curtail offshore internet betting in UK.
In the future, firms offering betting services to the Grand National, will also have to abide by the these rules. Perhaps the new rules may give potential customers better understanding of which horse to bet on and therefore go home with more money than before.
The house wins and players lose
The new tax will cause many bookmakers to alter their business strategies, as they will have to seek for profit opportunities elsewhere in operations.
The proposed 15% tax will heavily dent income levels, which will contribute to a lack of funds to continue their businesses.
Currently, bookmakers are contemplating what to do, in order to increase revenue streams. One suggestion is raising the betting odds. For a certain case this is a valid proposal, however it would not be very welcome by some other sections of their customer base.
The introduction of higher odds might very well result in players opting to switch to other betting providers that offer preferential odds.
However, regarding the current growing trend of in-play and mobile betting, there might be a realistic possibility to implement this idea. As price sensitivity is less of a factor in mobile and in-play wagers, bookmakers can capitalize on this, which could substitute the new consumption tax.
Horse racing is another possibility that sportsbooks might lose out on, if they raise their odds. The most popular horse race in England, the Grand National, is the most recognized horse racing event which attracts numerous horse enthusiasts and garners a great deal of betting business.
However, with the onset of the tax bill, odds may be subject to change. Players will not take a liking to this, and might in fact prefer to observe and place wagers on other competitions in the country.
Whatever any one offshore sportsbooks decides upon will be heavily scrutinized by both players and other competing firms.
If raising odds is the only manageable solution to cover taxation expenses, then players will have no choice, but to accept this. As most likely, other firms might do the same.
However, if they were to offer the increased betting odds at a gradual rate, instead of putting out the new odds all at once and scaring the players, it might appeal more to the customers.
By increasing the odds little by little might actually alleviate the problem. Although players would notice a regular increase, they might nevertheless be more supportive of this, than a bulk change in odds.