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UK Gaming Bill Passes Major Test

A bill in the United Kingdom that would require offshore gaming companies with UK customers to hold licences and pay taxes has passed its third reading in one of the two houses of parliament.

The UK Gaming (Licensing and Advertising) Bill found favor in the House of Commons earlier this week with no opposition from any political parties.

That means that the bill will now be sent to the UK’s other house of parliament, the House of Lords, where it will face further scrutiny. Should the bill get the OK in that House, as is expected, it will likely be put into law in May of next year.  

Culture Minister Helen Grant said she believed the bill would benefit customers in the UK due to more stringent licensing requirements on online gaming companies based offshore.

“The Bill is a prudential measure which will provide greater protection for consumers based in Great Britain,” she said. “It will tighten current legislation to ensure that all remote gambling, whether provided in Britain or overseas, is a licensed activity subject to the Gambling Commission’s standard and controls.”

An aspect of the bill that has gained widespread coverage is the point of consumption tax that would be introduced should the bill be enacted into law. That tax would be put onto offshore online gaming companies who have UK-based customers who use their product within the UK’s borders.

The current point of consumption tax on Gross Gaming Revenues in the UK stands at 15 percent and would be the tax imposed on companies which are affected by this bill. The tax has attracted criticism from some sections of the online gaming industry, especially from Gibraltar, which is the base of a number of gaming companies due to its low taxes and low business costs.

Such companies and industries may be adversely affected by the bill, especially if it means paying more taxes and other costs associated with being licenced to operate in the UK. While that could end up being the case, the bill does somewhat legitimize online poker and gaming and shows that the UK government recognises that many of its people engage in it.

It would have been unwise to undertake something similar to the US circa 2011 and put a blanket ban on all offshore online gaming companies with UK customers. However, it is also understandable that the UK government wishes to put online gaming companies based offshore in line with similar companies based and licenced in the UK.

It is currently unclear when the bill will be viewed by the House of Lords, but it should be scrutinized in the next few months given the government’s previous desire to have it enacted by May of next year.

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