MAJOR UK GAMBLING GROUPS HEADED OFFSHORE?

7 August 2009

Announcements expected this week
 

Comments by senior executives and industry speculation earlier this year (see previous InfoPowa reports) that major UK gambling companies may be headed to kinder tax climes appear to have been confirmed over the weekend with reports in several major UK newspapers.

The reports, which received widespread publicity, suggest that two of the biggest Brit bookmakers, William Hill and Ladbrokes, are expected to unveil plans to shift their online sports and phone betting operations to offshore tax havens.

William Hill chief executive Ralph Topping has repeatedly voiced the opinion that it is is difficult to compete with offshore-based Internet gambling operations due to the heavier UK tax burden, quoting the UK rate of 15 percent against that of Gibraltar-based rivals which pay only 1.5 percent.

The Financial Mail and several other major newspapers report that Topping is expected to confirm that he is moving the online sports and phone betting operations of Will Hill to Gibraltar when the company reports interim results on Tuesday. The bookmaker already has a division based there for online casino-style gambling and has apparently been relocating staff in anticipation of the move.

Ladbrokes has been less vociferous, although company sources admitted it would have to respond to any move by William Hill. Ladbrokes will report its interim results on Thursday.

The horseracing industry has already expressed fears that such a move by major gambling groups will have a serious impact on the racing industry, with millions of pounds lost from the racing levy while millions more in tax will be lost to the Treasury. Industry bodies have suggested that the government consider moves on offshore operations targeting Brit punters as one way to level the playing field (see previous InfoPowa report).

With the Treasury set to lose up to GBP 45 million a year in tax if the big three UK bookmakers, Ladbrokes, William Hill and Coral, relocated online and telephone operations offshore, the Department of Culture, Media and Sport (DCMS) has announced a review to ensure a more level playing field between British betting businesses and their foreign competitors.

In related news, This is Money reports that William Hill is facing a lawsuit from the Gibraltar-based online gaming company 32Red, which has launched a claim against it, alleging trademark infringement.

William Hill runs an online service called 32Vegas, one of a number of websites it acquired in a deal last year with Playtech. But 32Red claims the site is confusing for its customers and wants William Hill to close down the operation. It says it has suffered “loss and damage” as a result of the rival company and hopes to recover funds to compensate for this.

A spokesman for William Hill played down the dispute. He said: “This is the kind of claim that is made regularly between businesses. We have been advised that this is not an issue for us and are confident of our position. We will defend our legal rights.”

However, William Hill does appear to be taking the 32Red claim seriously. According to the Affiliates United website the company is re-branding 32 Vegas as "...our new, improved and revamped casino brand, 21nova. The launch of 21nova, on August 3rd, will mark a new era in online gaming where the focus of play shifts back to the most important element in online gaming; the player.

"We have taken our trusted 32Vegas brand and enhanced it to include a second to none game selection, improved around the clock customer support in a variety of languages and a loyalty program which rewards the player for every single wager made. All of these elements combine to pave the way for a new name: 21nova – the New Star in Online Gaming."

32Red believes that 32Vegas made around GBP 4 million earnings before interest, tax, depreciation and amortisation last year.

Online Casino News Courtesy of Infopowa

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