Britain hits offshore gambling industry with 300 million pounds

Mousey

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I have a question... How are they going to enforce this tax?

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Reuters
5 hours ago

LONDON (Reuters) - Online betting companies based in offshore havens to sidestep Britain's gambling taxes will be hit with a new levy that could cost the industry 300 million pounds ($467 million).

Under rules published on Friday, Britain will tax gambling according to where customers are based rather than where the online operator is registered, meaning that offshore operators pay the same 15 percent tax rate as domestic remote-betting companies.

The tax will be levied on companies' gross profit - total bets placed minus prizes paid out - in the 2 billion pound remote-gambling market from December 2014....
 

Nifty29

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I have a question... How are they going to enforce this tax?

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It is very simple.....they can't.

In fact, I can't see anyone except the huge bookies and 32Red, who are already established and trusted in the UK anyway, bothering to sign up given the significant price tag. It wouldn't surprise me if it pushed the odd one or two offshore.

The only entity they can realistically hit up for the tax is the player, and I cant see that happening.

My prediction is the same as the day it was announced....that is, it will not affect anyone from the UK, and perhaps even make offshore operators more attractive as they can afford to be more generous than those coughing up the 15%. I know more here think its going to revolutionize the industry and eliminate the rogues and force casinos to accept dodgy IDs, but I cannot see it doing anything good for anyone except the UK coffers.
 

vinylweatherman

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I have a question... How are they going to enforce this tax?

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We have a start date, and it's less than 18 months away.

I haven't seen any details on enforcement other than that only operators who pay the tax will be allowed to advertise on UK media.

How they are going to freeze out non compliant offshore operations has yet to be revealed. If they don't care about not being able to advertise in the UK, they will not care to register and pay the taxes either. They will still reach players through the internet, and email spam can be as effective as "junk mail" through the post. A ban on postal mailers also cannot work, as it doesn't work now to stop the offshore scams that post into the UK from outside the EU.

The only semi effective measures would seem to be to use a blacklist in a way similar to the Greek government, and have all ISPs block casinos that have failed to register by the cut off date. This won't put off the determined player, but it will put a serious dent in the ability to recruit new UK players.
 

Andy Walker

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It is very simple.....they can't.

In fact, I can't see anyone except the huge bookies and 32Red, who are already established and trusted in the UK anyway, bothering to sign up given the significant price tag. It wouldn't surprise me if it pushed the odd one or two offshore.

The only entity they can realistically hit up for the tax is the player, and I cant see that happening.

My prediction is the same as the day it was announced....that is, it will not affect anyone from the UK, and perhaps even make offshore operators more attractive as they can afford to be more generous than those coughing up the 15%. I know more here think its going to revolutionize the industry and eliminate the rogues and force casinos to accept dodgy IDs, but I cannot see it doing anything good for anyone except the UK coffers.

As we know the UK government has been very successful in dealing with online companies that avoid UK taxes, a rather large river in Brazil springs to mind.
 

Nifty29

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As we know the UK government has been very successful in dealing with online companies that avoid UK taxes, a rather large river in Brazil springs to mind.

True, but we are talking about one huge entity there who could (and did) decide that doing the right thing by the UK government was a smart and necessary investment, in addition to being easily absorbed in the long term.

However, here we are talking about thousands of gaming sites operating out of dozens of jurisdictions, who most likely will not be happy to cough up and cannot be forced to either....and will be able to carry on doing business regardless, albeit perhaps with more difficulties. As I said, the big guys will play along most likely, as they already have a huge presence and exposure in the UK and will be willing and able to absorb the costs (although one wonders if there won't be impacts on players too in regards to recouping those costs)
 

jetset

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I believe there may be some legal and political fireworks ahead (the offshore jurisdictions and the big corporates have already indicated they are not happy with this arrangement and may be prepared to go legal on the Brit government's ass) but in the end the government machine will bulldoze on and introduce the new UK secondary licensing and taxation regime in December 2014 or possibly even before then.

Due to the requirements of EU law, they will do this on the pretext of consumer protection, but we all know the real reason is all about vested interests and the tax money.

I agree that it will be difficult to practically implement, but officialdom can create enough disruption and damage with ISP blocks and advertising bans to make doing business unpleasant for companies that decide to try and circumvent the new regime and continue to service the UK punter. And they have other persuasive weapons in the armoury to bugger about the former white list jurisdictions like IOM, Alderney and Gibraltar.

At the end of it all I reluctantly suspect that the Brit punter will be no better off, and quite possibly have less attractive domestic offers available as a result of this move.

I have little faith in the ability of politicians to actually make things better for those at the bottom end of the power pyramid - the poor old taxpayer-consumer.

It's another nail in the internet freedom coffin, too imo.
 

vinylweatherman

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I believe there may be some legal and political fireworks ahead (the offshore jurisdictions and the big corporates have already indicated they are not happy with this arrangement and may be prepared to go legal on the Brit government's ass) but in the end the government machine will bulldoze on and introduce the new UK secondary licensing and taxation regime in December 2014 or possibly even before then.

Due to the requirements of EU law, they will do this on the pretext of consumer protection, but we all know the real reason is all about vested interests and the tax money.

I agree that it will be difficult to practically implement, but officialdom can create enough disruption and damage with ISP blocks and advertising bans to make doing business unpleasant for companies that decide to try and circumvent the new regime and continue to service the UK punter. And they have other persuasive weapons in the armoury to bugger about the former white list jurisdictions like IOM, Alderney and Gibraltar.

At the end of it all I reluctantly suspect that the Brit punter will be no better off, and quite possibly have less attractive domestic offers available as a result of this move.

I have little faith in the ability of politicians to actually make things better for those at the bottom end of the power pyramid - the poor old taxpayer-consumer.

It's another nail in the internet freedom coffin, too imo.

I suspect the advertising bans is serious leverage on those operators that advertise heavily on UK TV, the press, and through sponsorship of teams, events, and even TV programs. These companies will probably toe the line to keep hold of their brand presence within the UK. It's the others that can't effectively be stopped, the ones that don't rely on advertising in the traditional media, and who realise (like Bodog in the US), that no amount of blocking or seizures of domains will have much of a deterrent effect on the determined player. These others may well be in a position to make better offers to players, and hope they don't realise that they are not protected by UK laws as they are with UK licensed and tax registered operations.

The UK government could always introduce an "advertising tax" levied on the adverts, rather than the profits. It would be much harder to dodge. It could be levied on advertising for any product deemed "high risk" for consumers, and argued to be a contribution to the "social costs" involved in dealing with the problems associated with the product.
 

Richas

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I have a question... How are they going to enforce this tax?

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Lots of detail in the press release here:

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and the response to last year's consultation here - that was finally published yesterday

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They have been working on this for several years.

This is a new approach to Internet taxation and it looks very much like it will stick and be enforceable.

Providing gambling services remotely to any UK resident without a UKGC will be an offence, as will advertising such services even online. The advertisers would be guilty so good luck getting any press, billboard or online ad for an illegal unlicenced site. The UKGC also claim that they already have IP blocking and financial transaction blocking powers if they want to use them.

As for the tax man pretending that it is consumer protection to get the cash, well maybe but there are big potential consumer protection advantages to having a regulator with the power to dictate the terms rather than just having those that set up shop to attract sites.

Immediate consumer gains include
  1. a third party arbitrator being appointed to handle customer disputes
  2. a legal requirement to report any cheating or suspicious betting patterns
  3. software providers like PlayTech, Microgaming will be brought in to the regulatory regime, they will become jointly and severally liable for their skins tax bill as well so they will want to keep them straight. All software providers to remote gambling sites licenced by the UKGC will need to be licenced and the software will need to be produced to the UKGC technical standards.
  4. The UKGC are also about to do a consultation on ring fencing player funds and one on regulating poker.
    Not dealing with Malta and the LGA if like me you live in the UK
  5. it will really annoy Phillip Brear of the GRA who again will become completely irrelevant to any UK based players.

The UKGC will have the power to require the publication of RTP information (as they do for FOBTs) and to make sure that games are described in such a way that the optimum play is accessible/explained.

The finsoft Hi/lo fiasco alone shows the need for software firms to be brought into regulation and for a regulator that stands up for consumers unlike Phillip Brear who sees us as whinging loser gits*

This step - the first time sites and the big software firms could be forced to accept a regulator (fortunately a pretty light touch one that welcomes innovation) rather than cherry picking whatever regulator lets them do what they want has the potential to be a big step forward in consumer protection.

The UKGC consultation on player funds allows us to say
- we want jackpots paid in full not restricted by monthly cash out limits
- we want the real providers (the software firms) to be jointly and severally liable for player funds as well as for their marketing agents potential tax bill to HMRC.

The idea that regulation today is so good that the UKGC imposing itself on providers cannot offer far better consumer protection is risible. The sites may want to sue in the EU courts but all that means is that the UKGC will have to play hardball to justify itself, the fees they will charge, the HMRC tax bill and the insistence on help for problem gamblers and research from the online firms. Frankly pretending Malta and Gibraltar are good enough as regultors is comical.

* I paraphrase slightly but with threats on here and his comments to the DCMS Select Committe re this legislation I am if any thing being soft on Mr Brear.
 
Last edited:

Nifty29

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Lots of detail in the press release here:

You do not have permission to view link Log in or register now.


and the response to last year's consultation here - that was finally published yesterday

You do not have permission to view link Log in or register now.


They have been working on this for several years.

This is a new approach to Internet taxation and it looks very much like it will stick and be enforceable.

Providing gambling services remotely to any UK resident without a UKGC will be an offence, as will advertising such services even online. The advertisers would be guilty so good luck getting any press, billboard or online ad for an illegal unlicenced site. The UKGC also claim that they already have IP blocking and financial transaction blocking powers if they want to use them.

As for the tax man pretending that it is consumer protection to get the cash, well maybe but there are big potential consumer protection advantages to having a regulator with the power to dictate the terms rather than just having those that set up shop to attract sites.

Immediate consumer gains include
  1. a third party arbitrator being appointed to handle customer disputes
  2. a legal requirement to report any cheating or suspicious betting patterns
  3. software providers like PlayTech, Microgaming will be brought in to the regulatory regime, they will become jointly and severally liable for their skins tax bill as well so they will want to keep them straight. All software providers to remote gambling sites licenced by the UKGC will need to be licenced and the software will need to be produced to the UKGC technical standards.
  4. The UKGC are also about to do a consultation on ring fencing player funds and one on regulating poker.
    Not dealing with Malta and the LGA if like me you live in the UK
  5. it will really annoy Phillip Brear of the GRA who again will become completely irrelevant to any UK based players.

The UKGC will have the power to require the publication of RTP information (as they do for FOBTs) and to make sure that games are described in such a way that the optimum play is accessible/explained.

The finsoft Hi/lo fiasco alone shows the need for software firms to be brought into regulation and for a regulator that stands up for consumers unlike Phillip Brear who sees us as whinging loser gits*

This step - the first time sites and the big software firms could be forced to accept a regulator (fortunately a pretty light touch one that welcomes innovation) rather than cherry picking whatever regulator lets them do what they want has the potential to be a big step forward in consumer protection.

The UKGC consultation on player funds allows us to say
- we want jackpots paid in full not restricted by monthly cash out limits
- we want the real providers (the software firms) to be jointly and severally liable for player funds as well as for their marketing agents potential tax bill to HMRC.

The idea that regulation today is so good that the UKGC imposing itself on providers cannot offer far better consumer protection is risible. The sites may want to sue in the EU courts but all that means is that the UKGC will have to play hardball to justify itself, the fees they will charge, the HMRC tax bill and the insistence on help for problem gamblers and research from the online firms. Frankly pretending Malta and Gibraltar are good enough as regultors is comical.

* I paraphrase slightly but with threats on here and his comments to the DCMS Select Committe re this legislation I am if any thing being soft on Mr Brear.

So, residents of the UK will only be able to play where they're told they can play by Whitehall.

I think there's gonna be fun and games within the EU once this comes into effect. I can't see the software providers....who currently have no obligations insofar as stumping up if their licencees default on payments and taxes....suddenly saying "Oh sure...no problem...we'll step up to the plate" just because HMG says so.

I still say it could lead to a mass exodus of many casinos from the UK, and could end up leaving UK players with limited choice and little competition, which inevitably means less generosity from operators.

I guess we shall see.
 

Richas

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So, residents of the UK will only be able to play where they're told they can play by Whitehall.

I think there's gonna be fun and games within the EU once this comes into effect. I can't see the software providers....who currently have no obligations insofar as stumping up if their licencees default on payments and taxes....suddenly saying "Oh sure...no problem...we'll step up to the plate" just because HMG says so.

I still say it could lead to a mass exodus of many casinos from the UK, and could end up leaving UK players with limited choice and little competition, which inevitably means less generosity from operators.

I guess we shall see.

No. UK consumers will be offered more legal options as to where to bet than the other EU countries. The UK will licence an unlimited number of providers regardless of where they are located in the world so long as they meet the licence conditions re consumer protection and pay the taxes on UK generated revenues.

There is no barrier to a provider based elsewhere in the EU (or any plac where they are legal) - they are treated exactly the same as a UK based firm. That's an open market, far more open than any of the others with their state monopolies and restricted number of licences.

All those operating legally today will be given UKGC licences upon application for that transitional legal stamp. Then they need to comply with the UKGC and HMRC conditions.

As for a mass exodus - nah, it is a £2bn a year legal market with open advertising allowed, the sites with any sort of brand or presence today will want to maintain it - plus the UKGC licence is a better brand than the rest of the regulators. The ROW player choosing a non UKGC site is choosing a riskier proposition. Unless you are US based then choosing any site that does not want legal UK participation is just risky, a foolish choice.

BetFred alone is spending £10m on their new football advertising blitz. They know this is coming, they are not pulling out of the UK market. Indeed the bookmakers in their evidence to the DCMS select committee made it clear that they would stay in the UK market. Their concerns were focussed on the tax rate and forcing non licenced providers out of that £2bn a year legal market so that they don't get an unfair advantage over the legal providers.

As for the software providers - up to them, either work in a large legal market or don't but none of the big players can afford to refuse regulation, they want regulation - having regulated white markets is vastly better for them than grey markets or operating illegally. It also gives them hope for the US market opening up. It is a new era for them. This UK model will fly and the model will start to look very good to all the other big markets like Germany too. The only EU opponents will be Malta and Gib.

The downside to this is the impact on the Gib economy, not some threat of sites pulling out of the Uk market but more likely moving onshore in the UK to avoid Gibs taxes and reduce their regulatory costs.
 

Richas

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BetFair results are out and their CEO has made clear that they will not be joining any legal challenge to this tax, indeed they think it could help their market share


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Online gambling companies face a 300 million pound bill from December 2014 when Britain closes a loophole that has allowed companies to avoid taxes by basing themselves offshore in locations like Gibraltar.

Corcoran said Betfair could benefit if the tax meant smaller online players were unable to compete.

"There could be market share gains. We see that as an opportunity," he told reporters. ($1 = 0.6399 British pounds)
 

Ajax

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London
They can't see it and won't have access to the data unless it's voluntarily given to them by the operators. Considering most of them are based in Gibraltar, IoM and Malta (with some others scattered throughout the Caribbean, Canada and other jurisdictions, they really have no obligations to collaborate with the Tax Authority. They will however most probably have full collaboration from most reputable and big online operators since no-collaboration could get access to their websites banned. The same has happened throughout Europe (Greece, Italy, France, etc) where governments shut down access to non-licensed operators. That would mean a lot of money lost in revenues from British customers. Guess the choice is easy but expensive..
 
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