Consultancy analyzes three European markets
H2 Gambling Capital, the respected online gambling consulting agency, this week has released a survey of three regulatory regimes in the European market (France, Italy and UK) whose aim was to assess a level of taxation which would be attractive for operators and would give back an acceptable taxation value. They came to the conclusion that taxation on gross profit at over 15% wouldn’t be satisfying for operators or for bigger tax income. If the tax level crosses 15%, the survey shows that the tax income declines because operators don’t want to enter the market or don’t follow the regulations. With a recent development in Europe and United States in the processes of legalization of online gaming, H2 survey has given a very useful contribution to the international debate.
H2 also analyzed the connection between gross profit tax and taxation rewards noticing that with the increase of one percentile, on average, in tax rate leads to only 0.5% rise of tax income, so as a result, with the higher tax rates, the income gets lower. H2 further reports, "The percentage of a nation's remote gambling demand that is catered for a by a dot.country scheme is maximised with a lower rate of gross win tax applied to all product verticals. Under a 5 percent gross win tax, after five years 95 percent of a country's market is likely to be captured by the dot.country scheme, whereas at 20 percent, this would fall to approximately 60 percent."
Since the high French tax levels have been often criticized, their tax officials should be interested in the H2 survey results, especially after several important gambling groups decided to withdraw from the French market, but also due to a review of the liberalization process later this year. Another lesson about influence of high taxes can be learnt from an example of United Kingdom, where major groups (Ladbrokes, William Hill and Betfair) have taken or are in the process of moving their online divisions elsewhere, like Gibraltar as many British companies do. Other countries, such as Spain and Greece, are in struggle to get the process of legalization going with the increased tax proposals in recent months, while Denmark will continue its legalization with the latest measure of 20% of gross profits rate, which will be implemented later in 2011.