At issue is the 9% UK gaming tax, which companies such as Victor Chandler and Ladbrokes have circumvented by moving their internet gaming operations to Gibraltar. In a bid to remain competitive, The Tote is now subsidising its internet customers to the tune of 7% of the gaming tax so that they only have to pay 2% on their bets. In the long term, however, The Tote is looking to move Totalbet to the channel island haven Alderney to avoid having to absorb this cost.

But The Tote is heading for a battle over these plans with its masters in the UK Treasury who have recently announced a ban on advertising offshore internet gambling services in the UK in an effort to preserve the £1.5bn it collects in gaming duty every year. Not surprisingly then, the UK Treasury last week confirmed it would oppose any attempts to move the Tote's internet gambling offshore.

In response to the recent advertising ban on offshore internet gambling, UK bookmakers called for the government to substantially reduce the 9% gaming tax, but Chancellor Gordon Brown has so far given no indication that he is willing to consider this.