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UK Gambling Legislation Update

Changes in Taxation

Last week Conservative MP Matthew Hancock urged the Treasury to follow through on proposed changes to the taxation of the UK’s £1.7 billion gambling market. Hancock wants operators taxed at the point of consumption (the punter), not the point of supply (the bookie).

“Widening the regulatory net, which I support for all gambling in the UK, is not as urgent as closing the tax and levy loophole,” he said.

The UK Gambling Act of 2005 currently does not require operators to obtain licenses and pay taxes in Britain. Most sites have chosen to operate and be headquartered offshore, taking away potential revenues. Britain’s iconic Ladbrokes and William Hill, for example, moved their online operations to Gibraltar last year to take advantage of lower taxes.

“£62 million has been lost in betting duties,” Hancock told minister John Penrose during the Westminster Hall debate. “Of the 20 biggest bookies, only two are domiciled here in the UK. I don’t believe in tempting people to pay tax. I believe in ensuring people pay tax.”

However, bookmakers like William Hill claim changes in taxation will drive gamblers into the hands of unlicensed operators. A report by accountant Deloitte (commissioned by William Hill) argues that a 15% tax at the point of consumption could force up to 40% of legitimate operators out of the UK market.

A spokesman for William Hill asked: “The question for the Government is, should it introduce policy which distorts markets?”

Time Schedule

Hancock urged the Department for Culture, Media & Sport (DCMS) to implement the reforms proposed earlier this summer. On July 14, the DCMS announced that gaming concerns will have to obtain a licence from the Gambling Commission to advertise and operate in the United Kingdom.

“We will create a level playing field, so all overseas operators will be subject to the same standards and requirements as those based in Britain,” said John Penrose, British minister for tourism and heritage.

The amendments, however, are not expected until late 2012. Hancock and other MPs are urging the Treasury to adopt reforms before then. Last month, Britain’s culture secretary Jeremy Hunt labelled UK gambling laws as “inconsistent” but ruled out any imminent changes to the regulatory framework.

The Treasury closes its review into the UK’s £1.7 billion remote gambling market next week. Despite the calls, changes will not take place until, at the earliest, this time next year.

Click here for a summary of an earlier hearing discussing the black market, taxation, and high street betting shops.

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