The UK is intent on recovering revenue from online gambling operators marketing to British players from tax havens in Gibraltar, Malta and the Caribbean with a 15% point-of-consumption tax that is expected to come into force in December. This month, a key piece required to make the plan stick fell into place with Parliament’s approval of a bill making British licensing mandatory for all remote operators.
The Gambling (Licensing and Advertising) Bill has passed in the House of Lords and is headed to the queen for her signature to become law. The measure has already been approved by the House of Commons.
An amendment added to the bill in the Lords also will require online operators to pay the existing levy charged to all bookmakers in the country who offer bets on racing.
Under current regulations embodied in the 2005 Gambling Act, remote operators that locate their servers overseas do not need a license from the UK Gambling Commission, whereas home-based operators are required to have one. The act was passed in the aftermath of an exodus of major operators to tax havens such as Gibraltar and Caribbean islands like Antigua where effective tax rates can be zero.
The commission had sought more enforcement power on the licensing issue by blocking financial transactions between Britons and unlicensed sites, but the Lords rejected the request. Several major credit card banks have since said they would comply voluntarily.
Joining the new licensing bill are tax changes aimed at cracking down on the proliferation of electronic table games in betting shops and bolstering the country’s flagging bingo industry.
The office of Chancellor of the Exchequer George Osborne announced an increase from 20% to 25% in the duty on the controversial casino-style e-tables. Known as fixed odds betting terminals, the games have emerged in recent years as the biggest source of bookmakers’ earnings, and their popularity has sparked an explosion in the numbers of high street betting shops. The machines took in more than £11 billion in bets last year, according to news reports, generating £422 million for operators, or more than half their revenues. Critics consider them a leading cause of problem gambling and other social ills, and local governments have asked Parliament for stronger zoning powers to deny applications for new shop licenses. The Department for Culture, Media and Sport, which oversees the industry, is considering mandatory limits on bet sizes and other restrictions.
Bingo, meanwhile, will benefit from the halving of its tax obligation from 20% to 10%.
The Bingo Association, a trade group representing the sector, blamed the old tax for hundreds of closures and the loss of thousands of jobs in recent years.
The cut brings the tax on bingo below the 12% imposed on National Lottery tickets and the 15% for bookmakers.
“Everyone is absolutely delighted,” the association’s chief executive, Miles Baron, said.
Ian Burke, chief executive of Rank Group, a leading operator with 97 Mecca-branded bingo halls, said the reduction has “created a basis for renewed investment and innovation”.
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