Online Gambling Firms May Be Subject to UK Levies

According to a recent story in Britain's Financial Times, the UK government may introduce new regulations whereby offshore-based online gambling operators will also have to pay levies to the government to aid research on gambling addiction, as well as contribute to a Horserace Betting Levy.

The story reportedly came about as a result of many complaints made by British MPs who contend that is unfair that UK-based online gambling firms are automatically subject to these levies, while their offshore online gambling counterparts - who are free to market in the United Kingdom - are not.

As a result, UK Sports Minister Gerry Sutcliffe is shortly expected to announce a comprehensive review by the country's Gambling Commission in association with civil servants, designed to 'level the playing field' between locally-based online gaming firms and those targeting the UK, but that are based offshore.

Currently UK bookmakers are being forced to cough up a 10 percent levy on their gross profits, which is earmarked for the Horserace Betting Levy to support the UK horseracing industry. This means that across the board in the UK, the horseracing industry receives approximately 100 million pounds per year.

While some UK online gambling companies are pleased at the news about regulation across the board, others are not quite ready to jump for joy. One such company is leading UK bookmaker, William Hill. The company's CE, Ralph Topping, was very vocal and critical about news of the proposed review.

He said, 'All this review does is kick the issue into the long grass. The tax regime for online and telephone gambling is an enormously competitive burden for UK-based bookmakers. In addition, by forcing overseas operators to contribute to the horseracing levy could lead to challenges under EU state aid rules.'

Topping contends that a better solution to ensuring offshore online gambling operators are also liable for the UK levies, would be to lower the levies as a whole. Lower levies would likely encourage more online gambling operators to return to the UK, and thus create more jobs and generate more taxable revenues.