New UK Online Betting Law Upsets Offshore Bookies
23rd September 2014
A new law brought in by the Gaming Commission to stop UK based sportsbooks with offshore betting facilities dodging taxes is upsetting some bookies.
Some big names are crying foul on the laws designed to make everyone pay their tax dues to Her Majesty's Government whether they are running their business in the UK or elsewhere. But does this change affect the people at the other end of their computers and smart phones, the bettors themselves?
Let's take a look at this new law and see what it's all about and who it affects.
Taxes are Inevitable or Are They?
Several years ago, some major names in British sports betting figured out that they could pay less tax if they kept their companies registered in the UK but moved their betting operations offshore to tax havens such as Malta, Gibraltar or Antigua. We saw the likes of William Hill, Ladbrokes and Victor Chandler relocate their online betting arms to Gibraltar while maintaining a headquarters in the UK.
This irritated the British Government because while it levied tax on gross profits made by companies based in the UK, they could not collect them from firms that moved their operations offshore. Several strategies were debated by the tax authorities, but while it would have been possible to follow the line taken by France and Germany to force those companies to base themselves at home and pay their taxes if they wanted to keep legally accepting bets from British punters, they decided it would cause a backlash in free trade complaints.
Pay Your Dues
So instead, the tax office came up with the current plan to bring in a whole new licensing program that would still collect the 15% betting tax (point of consumption on gross profits) on bets collected from British bettors, while allowing those companies to keep their operations based offshore. It meant gambling companies acquiring a new UK Gaming Commission (UKGC) license which would allow them to keep taking bets from UK punters. Without that license, they would be breaking he law.
This would mean those companies facing the prospect of double taxation if they remained offshore because they would still be liable to pay the local rate of tax to the country or territory they are operating from. Unless a solution could be found, it is likely those firms will end up moving their gambling operations back to the UK.
What Does This Mean for the Bettor?
While it won't change the cost of betting online for the British based customer of online sportsbooks, it will almost certainly lead to a reduction in the amount of choice of Internet bookies that will take their bets. That may or may not be such a good thing, since firms like William Hill and Ladbrokes who moved to Gibraltar will simply abide by the new laws and continue taking bets while swallowing any additional taxes from the Gibraltar government.
Established firms like Bet365 will reap any benefits in profits thanks to their foresight in remaining UK based and having already created a betting structure compliant with the new laws.
