UK Gambling Laws Under Pressure to Tax Online Casinos
Posted: April 15, 2011
Updated: October 4, 2017
Major changes in UK gambling laws are expected to force the current offshore based gambling operators to pay taxes
The situation with offshore gambling in the UK is about to change. After the government’s decision in 2010 to look deeply in the matter of online gambling operators registered offshore, changes to British gambling laws are coming. The UK didn’t receive any tax or licensing fees from these operators, and now the time has come to correct the advantage online operators enjoy over their land based competitors.
The majority of online gambling operators including online casinos and operators of internet betting in UK have already accepted the beginning of the end of their tax free status, and are preparing to be taxed at the same rate as land based operators. Currently only a 1% tax is paid by offshore operators compared to 15% paid by British mainland based competitors.
Some of the offshore havens are “white-listed” by the UK allowing operators to enjoy full access to UK advertising and media. It’s expected that offshore gaming companies would need to receive a British license, to make them more in line with other European countries. This will naturally bring higher taxes and additional licensing costs.
Ian Burke, CEO of Rank Group, commented: "Many European markets are moving to regulating and taxing online gaming and it's inevitable that the UK government will look at changing the offshore tax regime. Weaker companies would disappear as their business model would no longer be sustainable."
The UK online gambling industry is estimated around GBP 1.5 billion annually. Knowing that some companies are spending over thirty percent of their total revenues on promotions and advertising, the upcoming tax changes could play a crucial role for all parties involved.
CEO of Remote Gambling Association, Clive Hawkswood, made the following comments: "Some online casinos in UK have a payout rate of about 97 percent so there is no room to withstand such a jump in tax. In order to survive companies may have to cut back dramatically on marketing, which has been lucrative for the UK media and sports industries”.
The majority of online gambling operators including online casinos and operators of internet betting in UK have already accepted the beginning of the end of their tax free status, and are preparing to be taxed at the same rate as land based operators. Currently only a 1% tax is paid by offshore operators compared to 15% paid by British mainland based competitors.
Some of the offshore havens are “white-listed” by the UK allowing operators to enjoy full access to UK advertising and media. It’s expected that offshore gaming companies would need to receive a British license, to make them more in line with other European countries. This will naturally bring higher taxes and additional licensing costs.
Ian Burke, CEO of Rank Group, commented: "Many European markets are moving to regulating and taxing online gaming and it's inevitable that the UK government will look at changing the offshore tax regime. Weaker companies would disappear as their business model would no longer be sustainable."
The UK online gambling industry is estimated around GBP 1.5 billion annually. Knowing that some companies are spending over thirty percent of their total revenues on promotions and advertising, the upcoming tax changes could play a crucial role for all parties involved.
CEO of Remote Gambling Association, Clive Hawkswood, made the following comments: "Some online casinos in UK have a payout rate of about 97 percent so there is no room to withstand such a jump in tax. In order to survive companies may have to cut back dramatically on marketing, which has been lucrative for the UK media and sports industries”.
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