New UK levy threat for offshore online gambling sites

The British government's minister for sports, Gerry Sutcliffe, is having a busy week with gambling interests front and centre. He is not only working on an anti-corruption task force to combat sports bet cheating (see previous InfoPowa report) but is now embroiled in arguments that offshore Internet gambling sites that advertise in the UK should be coughing up more money for gambling addiction research and support for horseracing.

The Financial Times reports this week that if some British politicians and bookies have their way, a new levy could result in demands for millions of pounds sterling in levies from Internet gambling firms based in jurisdictions like Gibraltar, the Isle of Man, Alderney, Malta and Antigua, all of which enjoy "white listing" enabling them to advertise in the UK.

Apparently MPs have complained about the unfairness of British-based operators paying addiction research and other levies while operators licensed offshore are allowed to advertise their products in the UK, yet pay nothing.

The view is shared by UK-based bookmakers who this week agreed to a further year of contributions to the Horserace Betting Levy, amounting to 10 percent of their gross profits and totalling around GBP 100 million.

Sutcliffe is to announce today a review by the Gambling Commission and civil servants aimed at creating a fairer system of payments and “a more level playing field between British businesses and their overseas counterparts”.

As well as contributing to the horseracing levy, companies that have offshore servers such as PartyGaming, 888, Sportingbet and Betfair could be expected to help pay for regulating the industry and the treatment of problem gambling.

Just one of the problems faced by such a review will be whether it is possible to distinguish between the profits offshore companies make from UK activities and those made from non-UK punters in order to determine the quantum of the levy.

The commission and the Department for Culture, Media and Sport will also review the controls introduced in the 2005 Gambling Act that created a regulated market in Britain for online operators.

Since September 2007, companies licensed in UK-recognised licensing jurisdictions such as Alderney, Gibraltar, Malta, Antigua and the Isle of Man have been allowed to advertise under regulations policed by the commission. But MPs have been pressing ministers to explain why significant amounts of the GBP 1.4 billion generated by online gambling in the UK goes abroad.

Sutcliffe said the Gambling Act, though freeing up the industry, was aimed at protecting consumers. “We have taken steps in the right direction, but technology is changing and attitudes are changing,” he said.

The minister said he recognised that Britain’s 15 percent gaming taxation regime discouraged operators from basing their servers in the UK, but the issue was one for the Treasury to examine.

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