Out-Law News 1 min. read

UK could become internet gambling leader

Changes to betting taxes announced in Chancellor Gordon Brown’s 2001 Budget Speech last week are being cited as the reason why the UK is set to become a world leader in the lucrative on-line gambling market.

News reports in the US are suggesting that Britain is well-placed to take the lead since Brown’s announcement that the government will abolish gambling duty from 1st January 2002. At present there is a 6.75% tax collected on revenue which bookies pass on to punters in the form of a 9% betting tax. This will be replaced by a 15% tax on gross profits which is expected to avoid any charges being passed on to punters.

The tax change is likely to cause a short-term drop in revenue for the government. However, in the long term, if businesses stay or return to the UK, the government will benefit. Under the present tax system, it risks in future trying to collect a 6.75% levy on minimal revenues as more business will go off-shore.

UK bookmakers, including Ladbrokes, William Hill and Coral, all of which have taken their on-line operations off-shore to tax havens such as Antigua, Gibraltar and the Channel Islands, are said to be delighted by the announcement and are expected to relocate in the UK in light of the more favourable tax position.

News agency Associated Press (AP) quotes a director of MGM-Mirage, a large Las Vegas casino, describing the UK position as “well out in front in terms of establishing a legitimate, well-regulated environment for people who want to participate in sports wagering over the internet.” Internet gambling is illegal in the US but the prohibition is difficult to enforce.

AP also quotes Andrew Burnett, a Merill Lynch gaming analyst, saying: “it makes Britain the centre for excellence for global on-line betting.” Burnett told AP that on-line gambling is expected to grow to $177 billion by 2015.

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