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UK Legislates For Remote Gambling Overhaul

by Jason Gorringe, Tax-News.com, London

10 December 2012


The UK government has published long-anticipated draft legislation which will introduce new licensing requirements on offshore gambling operators and regulate gambling services provided to UK consumers on a point of consumption basis, rather than on the current place of supply basis. Offshore operators will also be expected to contribute to the cost of regulating gambling in the UK by paying more tax.

The legislation, the Draft Gambling (Licensing and Advertising) Bill, will amend the Gambling Act 2005, and will require all operators providing services to the British market, whether based in the UK or abroad, to hold a Gambling Commission license allowing them to target their services and advertising to British consumers.

Under current arrangements (set out in the Gambling Act 2005), operators who have key equipment in the UK are required to be licensed by the Gambling Commission, whilst operators licensed in European Economic Area (EEA) member states, Gibraltar and "white-listed" jurisdictions (Isle of Man, Alderney, Tasmania and Antigua and Barbuda) are permitted to advertise in the UK by virtue of the licence held in their home jurisdiction.

The proposed changes will mean phasing out the "white list." There will instead be no geographical limitations on the provision of a Gambling Commission license, allowing operators from anywhere around the globe to obtain the necessary permissions. However, the new law places the onus on gambling firms to provide evidence that their home market is sufficiently regulated.

"Operators in well-regulated jurisdictions whose regulators can provide, for example, the necessary compliance information, will not face significant increases in licensing costs - those whose regulators cannot provide such information will need to pay the compliance costs associated with being subject to the same requirements as other Gambling Commission licensees," the legislation states.

The government explained that the new arrangements will mean that, for the first time, overseas-based operators will be required to inform the Gambling Commission about suspicious betting patterns involving British customers, to help fight illegal activity and corruption in sports betting.

The changes will also usher in new tax proposals, adopted in the UK's 2012 Budget, to bring wagers received by offshore gambling operators from UK punters under the British tax net. The change will mean that any wagers taken in the United Kingdom, whether gambling services are supplied by an overseas operator or not, will be subject to UK gambling levies. Budget projections anticipated that the decision would boost revenues by GBP55m (USD88m) in 2014-15, increasing to GBP270m by 2016-17.

Explaining the new rules in the Budget report, the government stated: "The current taxation regime for remote gambling has allowed operators to avoid paying UK gambling duties by basing their operations abroad. To broaden the tax base and provide a fairer basis for competition between UK and overseas remote gambling operators, Budget 2012 announces that the government will move to a tax regime that ensures operators anywhere in the world pay gambling duties on gross profits generated from customers based in the UK. This is in line with the actions of several other European countries."

Launching the draft legislation, the UK's Minister for Sport & Tourism, Hugh Robertson, said: "These proposals will ensure that British consumers enjoy consistent standards of protection, regardless of where a gambling business is based, and will also help the fight against illegal activity and corruption in sports betting."

Chairman of the Gambling Commission, Philip Graf commented: "We welcome the proposed changes as currently we regulate less than 20% of online gambling by British consumers and cannot insist on overseas operators providing us with information about suspicious sports betting transactions."

A comprehensive report in our Intelligence Report series examining the new possibilities that offshore e-commerce open up for business, and analysing the offshore jurisdictions that have led the way in offering professional e-commerce regimes for international business, with a particular focus on e-gaming, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report6.asp
TAGS: Isle of Man | compliance | tax | business | Gibraltar | commerce | law | international financial centres (IFC) | United Kingdom | offshore | internet | e-commerce | gambling | licensing | legislation | offshore e-gaming | Alderney | Antigua and Barbuda | standards | regulation

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