Industry | Regulation

UK Brings into Effect New Gambling Regulations

The UK is bringing into effect new laws that will require offshore online gambling companies operating in the UK to pay a point-to-consumption tax.

As per the new regulations, taxes will no longer be based on server location, but on consumer location. This means that, irrespective of the company’s location, it will have to pay taxes to the UK government if it accepts wagers from UK customers. According to UK lawmakers, the new regulations will create a level playing field for UK operators who pay taxes on their gross profits and horseracing levies and offshore operators who previously escaped having to pay taxes to the UK government.

Treasury Exchequer Secretary Priti Patel said: “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.”

The country’s tax authority, Her Majesty’s Revenue and Customs (HMRC), now allows offshore online gambling companies to apply online for a license to continue operating in the UK market.

Its reported that the new laws were expected to be brought into effect on Oct 1, but were challenged in court by the Gibraltar Betting and Gaming Association (GBGA), which stated that the new regulations were unfair.

Just before launching the new regulations, the UK Gambling Commission (UKGC) showed that the online gambling market in the UK has grown considerably from April 2013 to March 2014. The gambling industry in the UK generated gross profits of £6.8 billion or $10.6 billion in the above-mentioned period, making it a growth rate of 6 percent.

Although a large number of offshore online gambling operators accept British players, the domestic betting sector enjoys the biggest share of the market, contributing 47% of the industry’s gross profits. Online gambling, especially casino gaming and bingo, has enjoyed the fastest growth rate, showing a 22% expansion rate when compared to last year.

According to the UKGC, casinos experienced 15% growth rate, while betting, lotteries, and arcades also expanded from April 2013 to March 2014. The only sector that suffered a decline in profits during this period was bingo.

However, 5,357 of the total number of 102,715 employees in the industry lost their jobs in the above-mentioned period.

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