Draft Legislation Released for U.K. Online Gambling Changes

Published Tuesday, December 04, 2012 - Online-Casinos.com

Online gambling is legal and regulated in the United Kingdom and has undergone a number of changes recently. Revisions to the rules in the U.K. have been published in draft form, proposing the end of the whitelist of gambling operators and the installing of a point of consumption tax, rules which have been contested by big and small operators alike. The U.K. Department for Culture, Media and Sport (DCMS) has finally released its draft proposal which in a recent report concluded that “the 15% taxation, if maintained, and if changed to a point of consumption tax could lead to 40% of the industry leaving the market.”

The 2005 Gambling Act and the establishment of the UK Gambling Commission required that online gambling operators apply for a U.K. license and pay 15% tax on gross profits. The introduction of the “white list” of foreign jurisdictions has seen many operators leave the U.K. for other jurisdiction where the tax regime is more suitable yet they were permitted to still offer services in the U.K. The new rules covers this loophole by implementing a “point of consumption tax,” which imposes the tax at the location of the punter not the suppliers of the service. This effectively does away with the ‘whitelist’ and pushes the profit margin for operators to a new low.

There has been opposition to the proposition by big operators such as William Hill. In the “impact assessment” report in the draft bill, it concludes that “the proposals are cost- and benefit-neutral to British-based remote gambling operators, as there will be no additional costs and may even be some … marginal net benefits in relation to fees.” The majority of operators, who are no longer “British-based” will not be affected by this impact assessment. It is interesting to note that almost every major online poker room and bookmaker is based in white-listed jurisdictions.

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