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UK Holds Gambling Hearing

The Department for Culture, Media and Sport (DCMS) held a hearing on gambling before Parliament yesterday. Here is an overview of the biggest talking points.

Black Market

Representatives from bwin.party, Betfair and Probability, along with the Remote Gambling Association (RGA), have asked the government to introduce legislation to discourage the rise of unlicensed operators in the United Kingdom.

Peter Reynolds, bwin.party’s director of communications, said gaming concerns operating in the black market are “damaging to the industry.”

“I think the more sites you can bring under the umbrella of regulation the better; if you get things wrong there’s more encouragement for illegal operators to stay illegal,” he explained.

Reynolds, along with other witnesses before the DCMS Select Committee, urged lawmakers to adopt a commercially “viable” and “attractive” approach.

“A licence in France would end up costing an operator something close to €8.7 million. That in itself is a big incentive to not go for a licence. The best form of regulation is to make it commercially attractive.”

Martin Cruddace, Betfair’s chief legal and regulatory affairs officer, said: “It is very important that regulation is a positive selling point, not an unnecessary burden.”

Taxation

John Coates, joint chief executive at Bet365 and chairman of the RGA, said that the taxes betting operators are paying in regulated markets, in addition to the 15% gross profits tax in the UK, represents a form of double taxation that is “unsustainable.”

He said: “The big issue for [Bet365] is one of taxation. We are already accruing gross profits tax on our Spanish business, plus we are paying 15% in the UK and we will be paying 20% in Denmark from January, which is unsustainable.”

Bet365 is one of the few big companies to remain in the United Kingdom, paying 15% GPT on all its sports bets to the Treasury.

The 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 last year to Gibraltar to take advantage of lower taxes.

However, this is set to change. In July, the DCMS announced that gaming concerns will have to obtain a licence from the Gambling Commission to advertise and operate in the United Kingdom. The amendment is expected to take effect by late 2012.

“The current system for regulating remote gambling doesn’t work. Overseas operators get an unfair advantage over UK-based companies, and British consumers who gamble online may have little or no protection depending on where the operator they deal with happens to be based,” said John Penrose, British minister for tourism and heritage.

“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.”

Earlier this week RGA chief executive Clive Hawkswood confirmed that the lobbying group’s discussions with the government regarding a change in taxation have been “very encouraging.”

High Street Betting Shops

The Local Government Association, a lobbying organisation on behalf of local governments in England and Wales, told Parliament that it does not have the power to curb the growth of high street betting shops that cause “misery for local people.”

“At the moment, numbers cannot be restricted and this results in crime, disorder and misery for local people. The government should look to tackle this issue,” said David Parsons, chairman of the LGA environment and housing board.

“We are seeing a reckless gamble with our high streets which is contributing to higher policing and health costs, in addition to reducing the quality of life for local residents.”

Shadow culture secretary Harriet Harman claimed that betting shops were “blighting” areas. Harman published a report arguing that the gaming industry uses “predatory” practices that are “destroying” neighbourhoods.

However, The Association of British Bookmakers (ABB), which represents UK betting operators, rubbished calls to restrict the number of new bookmakers, and claimed that numbers had remained stable for the past decade.

“It is important to look at the evidence on this issue. Betting shop numbers have remained stable at about 8,500 over the past decade, down from over 15,000 at the end of the 1960s,” said ABB spokesman Dirk Vennix.

“There are more betting shops specifically on high streets than there used to be, but this only reflects the fact that bookmakers are modern retail businesses offering a fun leisure product to adults who choose to use it.”

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