UK iGambling Industry Developments in 2015December 30, 2015 12:52 pm
In December 2014, the UK introduced its new point of consumption tax which required gambling operators to pay a hefty 15 percent tax on their gross gaming revenues. Prior to this, operators were able to chose their own favorable regulatory jurisdiction from which to receive an iGaming license and pay taxes. Added to their extra tax burden, companies offering digital services were also required to pay a new EU VAT levy.
In the first month of 2015, gambling operators already started complaining about having their margins squeezed, and half way through the year William Hill reported a £21 million drop in its operating profits compared to H1 2014.
While many gambling operators chose simply to abandon the UK market altogether, including Winamax, Mansion Poker, and Carbon Poker, the bigger companies which remained felt compelled to consolidate their businesses with that of other operators through acquisitions and mergers. The biggest news story in this space involved the sale of bwin.party, and the bidding war between GVC Holdings and 888 Holdings which was eventually won by GVC for the sum of $1.6 million.
In 2015, Ladbrokes and Gala Coral also said that they would merge their operations in the near future, while Paddy Power and Betfair decided to focus their attention on building an online sportsbetting platform, Paddy Power Betfair, in order to take advantage of the huge appetite for sports betting that exists in the UK.
In the meantime, the Gibraltar Betting and Gaming Association (GBGA) has vehemently protested the new UK regime and its point of consumption tax, which it claims contravenes EU law that allows businesses to trade freely across borders. The GBGA’s argument is currently being considered by the European Court of Justice (CJEU). If found to be at fault, the UK government could possibly find itself having to refund all the point of consumption duties it collected under its new scheme. That would be a daunting prospect for the government, but responding to the CJEU case, a HMRC spokesman said:
“The judgment has not found against any aspects of the UK gambling tax regime, and we remain confident that the place of consumption reform for the gambling tax regime is lawful. We are considering the judgment in full before deciding how to respond.”