The report, obtained by The Telegraph, warns that the tax proposals – aimed at levelling the playing field between domestic operators and operators located offshore – could backfire as gamblers move their business away from legitimate operators to the lightly-regulated ‘grey market’.

The government has proposed to review the UK’s regime so that offshore operators would be required to obtain a license from the UK regulator in order to transact with UK clients. The Treasury is also reviewing the case for changing the taxation regime in line with these proposals and taxing operators on the basis of customer location.

The study warns that if the new regime is introduced, it could have the unintended consequence of boosting the market share of the ‘grey market’. It finds that a 10% tax would boost grey market revenues by about 27%, rising to 40% if a 15% tax were introduced.

Presently gambling operators in the UK are required to pay gross profits tax at 15% but under the proposals this tax could be reduced and offshore operators would newly be required to contribute to UK coffers. In recent years, operators have increasingly looked to specialist, low-tax territories, such Gibraltar and the Isle of Man, to relocate operations, where operators benefit from substantially more favourable tax treatment with profits subject to tax as low as 0%.

Deloitte has estimated that the revision of the UK tax regime under a 15% rate would provide just GBP116m (USD179m) in revenues after taking into account an associated fall in corporate tax receipts. This tax benefit should be weighed against the backdrop of a stronger grey market, the study says.

Report Criticizes UK Gambling Tax Proposals
by Jason Gorringe, Tax-News.com, London

The annual event, this year hosted by comedian Rufus Hound, was again held at the Honourable Artillery Club (HAC) and saw key industry judges award highly prestigious prizes to gaming operators across twenty-nine categories.

The eGaming Review Operator Awards ceremony is highly regarded within the online gaming community and celebrates genuine innovation and excellence across the industry. This year saw more than 700 egaming professionals and leading operators attend the evening’s events, which included a champagne reception, gala dinning and a lively after-party.

Commenting on their outstanding win, Mark Quayle for 32Red Casino said:

“We’re absolutely delighted to receive such a highly acclaimed award as it was determined by our fellow gaming professionals under the auspices of the sector’s leading publication. It’s certainly been an exciting year; everyone at 32Red has worked extremely hard to make our Casino as successful as possible, so it’s nice to know that their commitment has been recognised industry-wide.”

“It’s an exciting time to be involved in remote gaming with the sector still experiencing such rapid growth and appeal. It’s important for us as a company to stick to 32Red’s overall philosophies and goals. That’s why we’re one hundred percent dedicated to enhancing our customers’ gaming experiences.”

“We’ve got some cracking initiatives lined up for next year, so we are hoping for yet more success in 2012.”

Throughout the year 32Red has continued to release new games to their Casino offering, giving players the chance to sample an ever richer and varied selection of games. However, whilst new games have arrived on to the site thick and fast, 32Red Casino has also provided necessary updates to improve older games too.

32Red Casino is now available online in eleven different languages, including Chinese and Japanese, and is widely considered to be one of Europe’s leading online casino websites.

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The complaint relates to the Greek regime’s tax and non-tax barriers to market entry, which the Associations have alleged infringe EU law.

“The new regulation, which plans to open up the market to competition, has already been criticized by the European Commission regarding its compatibility with EU law when Greece submitted its first draft of the legislation in June this year. However, despite the Commission’s comments, a number of anti-competitive and unjustified restrictions remain in the adopted law,” the Associations said in a joint statement.

“These [restrictions] place unnecessary and unjustified economic burdens on new operators, such as forcing them to have a permanent establishment in Greece and limiting financial transactions to Greek banks. The law also imposes a higher age limit for online than offline gambling with no justifiable evidence to support that restriction.”

In addition, the EGBA and RGA, which between them represent the majority of the largest European remote gambling operators, are particularly concerned about the new tax regime. The regime will require licensed gambling operators currently operating in Greece to potentially pay their taxes on any revenues earned from Greece-based customers retroactively from January 1, 2010, until the new licences have been awarded. The Associations argue that this provision is tantamount to a market entry fee that will have to be paid by all of the operators which are currently unable to be licensed in Greece.

At the same time, the Greek government has also decided to grant OPAP, the incumbent monopoly gambling operator for offline games, an extension of its existing licence for an additional 10 years from 2020 to 2030 in “a wholly uncompetitive and non-transparent fashion”, the Associations say. OPAP currently pays no gambling tax on its offline activities, whereas online operators will be required to pay 30% of gross gambling revenue. This differentiation in tax liabilities is subject to a separate State Aid challenge which has been lodged with the European Commission.

Commenting, Sigrid Ligné, Secretary General of EGBA, said: “Commissioner Barnier recently confirmed to the European Parliament that the he would fulfil his responsibilities seriously in assessing the compliance of member states gambling legislation with EU law. Allowing Greece to proceed with this legislation unchallenged would represent an abject failure of those responsibilities. We trust the Commissioner will urgently investigate our complaint against Greece and take action accordingly against Greece as well as on several other pending complaints.”

Clive Hawkswood, Chief Executive of the RGA, added: “We have welcomed the opening of the Greek online gambling market as a positive step. However, it is paramount that any new regime is conducted in a fair and transparent fashion which follows EU rules. Where a regime is contrary to the provision of [European law], challenges are unfortunately necessary and unavoidable. We therefore look to the Commission, as guardian of [EU law], to enforce those provisions in relation to gambling, as the European Parliament has recently requested.”

by Ulrika Lomas, Tax-News.com, Brussels
02 December 2011

Giving a glimmer of hope to the potential revival of significant online poker operations in the United States, a House of Representatives subcommittee is set to hold a hearing next week regarding the legalization and regulation of the online gambling industry, including poker, in the U. S.

The hearing will take place in front of the Subcommittee on Commerce, Manufacturing and Trade, a sub-panel of the House Energy and Commerce Committee, on Tuesday of next week. This particular subcommittee focuses on interstate and foreign commerce, consumer affairs and consumer protection, all areas that covers potential online poker legislation. A member of the committee is Texas representative Joe Barton, who has proposed HR 2366 – titled the “Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2011” – and considers the hearing a significant step towards enacting such regulation.

“I am pleased that Chairman (Mary) Bono-Mack is holding a hearing on the important issue of Internet gaming,” said Representative Barton to The Hill following the announcement of the hearing. “It’s a first step to showing why the current law is a lose/lose for everyone – the public, the taxpayer, the banking industry, and the people who want to play poker openly and honestly on the Internet. I look forward to an open exchange of ideas.”

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