Forced into online black market gambling?

A review of the £1.7 billion British online gambling market is set to be reviewed in early December. It’s been reported that a secondary licensing fee on offshore gaming companies operating in British markets could be on the cards. The shakeup means that the government could close tax loopholes taken advantage of by offshore online gambling operators. Most of the top 20 operators in the UK market operate from offshore locations and do not pay taxes or horseracing levies in Britain. William Hill, in particular has voiced themselves on the issue.

It’s been reported that William Hill is the gambling group most likely to be affected by the secondary license fee. It has more than 10% market share and operates offshore. It commissioned professional business services provider Deloittes to carry out a review.

Deloittes concludes that secondary taxation at the point of consumption could lead to an exodus of the more reputable online gambling operators, forcing an estimated 40% of the players to shift to unauthorized and untaxed operators. This would result in the growth of a black market in online gambling. A spokesman for William Hill told The Independent newspaper, “The question for the Government is, should it introduce policy which distorts markets?”

The drastic proposal was aired by Tory MP Matthew Hancock and would involve taking tax from where a bet is placed as opposed to the physical location of the company. It means companies that decided to buy up a money-saving sun-haven need a UK Gambling Commission license. An Independent article quotes the Deloitte report as saying “a 15 per cent tax could mean two-fifths of legitimate firms leaving the UK market.” Hancock wants to determine where online gambling is taking place in an annual Finance Bill.

Changes are expected to come into force this time next year. The UK remains one of the world’s best licensing regimes and companies – private or public – will always be attracted to a country that has the centre of the iGaming universe, London, at its core.