UK Government to Cut Online Gambling Taxes

UK Government to Cut Online Gambling TaxesIn an attempt to lure offshore gaming operators back to the UK the government is considering a 15% to 10% tax reduction. In his budget statement to Parliament Chancellor George Osborne proposed the tax cuts. A draft bill that was published in March also proposed the cuts as an attempt to bring offshore operators in line with bookmakers and gaming operators licensed in the UK. The legislative measure will tighten up regulations in the 2005 Gambling Act and tax all wagers at the point of consumption. This will close the loophole that has allowed offshore online gaming operators to operate in the UK without paying taxes. It will also do away with the ‘white list’ of companies approved to offer their services and advertise in the UK.

Following the imposition of a 15% tax in 2005 several online bingo and gaming companies located in tax havens like Gibraltar and the Channel Islands. The Treasury estimates lost tax revenues at £2.1 billion since the high taxes were imposed. Currently about 2,500 British gaming companies are located in other licensing jurisdictions. The proposal suggests that a 5% tax cut would save offshore operators about £100 million annually. In addition to the tax cuts the bill gives the Gambling Commission more control over problem gambling areas such as fixing sports matches. Hugh Robertson, Minister for Sport & Tourism, told reporters “These proposals will ensure that British consumers enjoy consistent standards of protection, regardless of where a gambling business is based.”

Like most first world countries Britain has been hard hit by the global financial crisis. The UK government has a mountain of debt and some say the nation is the most indebted nation in the developed world. By bringing online gaming companies back to the UK the government hopes to raise additional revenues to address massive deficits and create jobs. It is easy to see why the government is so eager for the operators to return to Britain. The UK economy is in very serious trouble and traditional industries are struggling in a stagnant economy.

While traditional industries struggle the online gambling industry is expanding and now generates about two billion pounds a year. Between 2010 and 2011 the internet gambling industry grew by 32% in the UK. Experts say the growth will continue for the next few years fueled by the increase in social and mobile gaming. Mobile gaming is the fastest growing sector of the UK’s gaming industry. Mobile gaming is especially popular with young players who are extremely tech savvy.

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