Change in UK Gambling Taxes Could Net Government Coffers GBP 300 Million

Under draft legislation, gambling companies offering their online services to players within the United Kingdom could be liable to pay tax on that income within the UK instead of their country of incorporation. These changes to the British gambling laws should not affect players themselves, but large online casinos and sportsbooks are on the lookout.

At the moment, large companies such as William Hill, Ladbrokes and bwin.party are taking advantage of the favourable tax situations in places such as Gibraltar. On the peninsula, taxes are just 1% – and capped at GBP 425,000 – but should this law change go through, these companies could be liable to 15% tax.

The Gambling Commission has estimated that the British online casinos offshore market is worth more than GBP 2 billion a year, making potential tax take a whopping GBP 300 Million.

In an interview for the BBC, British Business and Education Minister Matthew Hancock said: “The government’s announcement is a big step forward. For a long time now the majority of the large bookmakers have been using a loophole to avoid paying up to GBP 300 million a year in taxes and UK consumer protections.”

While poker, blackjack and slots are all popular amongst UK players, it is the sportsbook market where these companies will be hit the hardest, with the government suggesting they need to protect prize money, especially for horse racing.

This is potentially the biggest piece of British gambling news since 2005’s gambling law changes, yet the draft legislation would not come into affect until December 2014. At the moment, the draft is up for public consultation, and individuals are encouraged to raise issues until September 30th, 2013.

As William Hill has vowed to fight the legislation – claiming it violates EU competition law – this situation could change drastically before it is enshrined into law.