U.K. Online Gambling Operators Face Tax Challenge

Published Monday, June 29, 2009 - Online-Casinos.com

"Being based in the UK, from a tax perspective, is very expensive," is the comment chief executive officer John Coates of online gambling group Bet365 gave to the Financial Times recently. Currently though, he also said, that the company did not have plans to relocate its sports betting business but that it was "very aware" what it would take to move offshore. The operator said it is paying gross profits tax of 15 per cent, the racing levy, non-recoverable Value Added Tax and a corporation tax all leading to less net profits. Two major online wagering operators have suggested they are considering a move away from the U.K. because competition is benefiting from lower tax regimes in other jurisdictions.

William Hill's chief executive officer Ralph Topping, based in the U.K. said, "We are already an international business, with significant parts of our operations in different countries, and are expanding in terms of our overseas involvement. We view ourselves as an international business, and not just a bookmaker in the United Kingdom.
"But we are also a company in an industry that faces enormous challenges, particularly in the U.K.
"We face worldwide competition from 400 or more English-language betting websites. In these circumstances, clearly we do not have the luxury of being parochial about our future or taking a simplistic stance on complicated issues."

Paul Dixon, president of the Racecourse Owners Association in the U.K. estimated the Treasury stood to lose up to £45m a year in taxation if leading bookmakers relocated their telephone bets and online businesses offshore. Mr. Dixon added, "If this is going to be a great detriment to racing, then the government must do something about it or face the consequences."

The Treasury and the department of Culture jointly commented they would be "very disappointed" if bookmakers moved offshore. Additionally they said, they were " reviewing remote gambling regulations to make things "fairer" to ensure a more level playing field between British businesses and their overseas counterparts" That review, which was announced last month, has already garnered criticism from some bookmakers in the U.K.

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