Sportingbet Wants To Pay US Taxes

by Mike Godfrey, Tax-News.com, Washington

14 May 2002

In a bizarre reversal of form, Alderney-based and licensed Sportingbet.com wants to pay US taxes, arguing that this would force the administration to legislate to permit on-line gambling, currently banned in a number of US, states, and possibly illegal under some Federal statutes, particularly the 1961 Wire Act, which was used to convict a US on-line gambling operator last year.

Sportingbet Chief Executive Nigel Payne and founder Mark Blandford have hired Greenberg Traurig, a Washington lobbying firm, to push the firm's demand to pay US taxes on Capitol Hill, and will even run ads featuring an umbrella-toting Brit who asks, “Please sir, can I pay tax?”

Sportingbet claims to be the world's largest online gambling operator and is listed on London's Alternative Investment Market (AIM). It expects to report a profit for 2001 of UK£7.5m. Sales in the final quarter of 2001 were UKP352.5m and customer numbers grew 56,285 quarter-on-quarter to 488,457. The company is very dependent on the US market: last July saw the purchase of SportsBook, operating under an Antiguan gambling licence and with nearly 350,000 customer accounts, 92% of them American; and in May 2000 the firm acquired Betmaker, based in Costa Rica and now rebranded as SportingbetUSA.com.

“Obviously, it’s clever for a British company to say, ‘Tax me,’ ” said US Congressman Bob Goodlatte, a Virginia Republican and author of legislation intended to shut down the booming e-gaming industry. “But it’s not a well-thought-out concept.”

Sportingbet contends that the current laws are unenforceable and that the only way for the US to prevent the development of criminal activity and protect vulnerable gamblers is to create a well-thought-out legislative regime for on-line betting, as has happened in the UK and some other countries. And of course, the government could then take tax revenue from on-line betting activity: “Can we be the first to pay?” the company asks.

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