UK's New Online Gaming Law Eroding Business ConfidenceDecember 18, 2014 12:39 pm
The UK’s new online gambling law introduced in late 2014 is having a detrimental effect on business confidence, and making the UK an unattractive market to do business for online operators, according to Peter Howitt, Chief Executive of the Gibraltar Betting & Gaming Association (GBGA).
The Gambling Act is the UK government’s attempt to protect its internet gambling industry from offshore competition by requiring online operators obtain a UK license to offer their products in the country, and then subjecting those operators to a 15% ‘Point of consumption’ tax. As Priti Patel, Exchequer Secretary to the Treasury, explained at its time of introduction:
“The new rules will provide a fairer tax system for all gambling operators. Those businesses that moved their operations abroad to avoid paying UK taxes will now have to pay their fair share of tax. The Government has created a level playing field across the gambling industry so that all gambling by UK consumers is now subject to UK tax.”
Nevertheless, Gibraltar’s Peter Howitt insists the UK government could instead end up reversing some of the gains made in the country’s online gambling market in recent years, whose revenues expanded by 6% to £6.8bn ($10.6bn) from April 2013 to March 2014. In Howitt’s opinion, the UK government should be doing more to promote a positive relationship with online operators for the health of the British online gambling industry. To that end, the GBGA had launched a legal challenge against the new legislation earlier this year in the London High Court arguing it was unlawful and in breach of EU laws permitting free movement of goods and trade across borders. Ultimately, the GBGA’s challenge was thrown out of court, but the organization has since mounted a second challenge to the new Gambling (Licensing & Advertising) Act. As the GBGA claim:
“The Government says this tax ensures ‘respect for fiscal sovereignty’ and is essential for the ‘coherence of UK tax authority’. We believe this means their real aim is to ensure that UK operators in this market are favored, at the expense of law-abiding and responsible operators outside of the UK.”