Deadline Set for UK Gambling Law Change

Following last year’s legislative recommendations on changing the UK gambling laws, the British government confirmed that it is planning to levy a POC (place of consumption) tax on online gambling.

At the same time the bill will mandate all operators that make it available to players to play online poker in UK or access any other online gambling services be licensed in the country. A further step in the comprehensive effort is to exempt from the Gaming Duty (gambling tax) all revenues, which are not generated from UK gamers. Corporate tax would still apply to those revenues, of course.

The proposed taxation method will thereby apply to all gambling operators who receive revenues from UK players, but would not tax revenues channeled in from abroad. Proponents of the plan expect this move to cause some off-shored operators to return and be licensed in the UK. They also hope that it would remove the competitive disadvantage of UK-based operators, such as Bet365.

As much as the picture may look attractive at first, the issue of the online gambling tax rate of 15% casts a large shadow over any “re-shoring” efforts.

The government certainly needs the revenues from the industry, and is not willing to commit to a rate reduction. Experts, however, warn that at these levels the tax rates will hinder the success of any governmental plan to bring back operators under UK tax jurisdiction, as well as hamper the effective overhaul of the online gambling system.

Large industry stakeholders have already voiced their discontent, envisioning a further exodus of UK internet casino companies instead of the planned repatriation of online gambling operators.