The change from point of supply to the point of consumption has been something that has caused something of a stir in the gambling world. The shake-up of the Gambling Act left the Gibraltar Betting and Gaming Association demanding a judicial review. Many gambling companies that serve consumers in the UK are facing changes to both the licensing and tax implications in order to operate in the UK. So what is all the fuss about?
Traditionally a gambling company could operate and host its operation wherever it chose and service the UK market without needing a UK-specific licence. The new Gambling (Licensing and Advertising) Act outlines a new 'point of consumption' (POC) regulatory framework for remote gambling requires all companies wishing to operate or service the UK market to apply for a UK-specific licence.
All gambling operators, wherever they are based, are now required to obtain a remote gambling licence from the Gambling Commission if they wished to provide or advertise remote gambling services to consumers in Great Britain. The new law brings many foreign-based operators within the scope of direct regulation by the Commission by altering the licensing regime based on where bets and wagers are placed - the 'point of consumption' - rather than where the operator is based - the 'point of supply'. Licensed remote gambling operators would also have to adhere to the Commission's Licence Conditions and Codes of Practice (LCCP).
The Gibraltar Betting and Gaming Association (GBGA), which represents Gibraltar-based online gambling operators, took the UK to the high court in an attempt to halt the UK's new gambling regime. Mr Justice Green dismissed the challenge from the GBGA who brought the review around the main claims about the legality of the new regime and the merits of an alternative "passporting" system.
The GBGA has claimed that the new regime would breach European law by being a neither reasonable nor proportionate means of achieving the government's stated aim of better consumer protection. In letters to the UK government and the Commission, the GBGA claimed that the new regime set out in the Act was a "disproportionate and unjustified interference with the right to free movement of services", was "not capable of improving consumer protection because it will be largely unenforceable", would have "adverse unintended consequences, which will outweigh any possible benefits", and would "deliver a competitive commercial advantage to unscrupulous operators".
Following the dismissal of the claims, the GBGA was also ordered to pay the Gambling Commission’s costs of £100,000 and 75 percent of the Secretary of State’s legal costs.
The £300 Million Tax Bill
The Gambling Commission estimates that the UK remote gambling market is worth over £2 billion per year. The new tax rule brings in approximately £300 million per year in additional tax revenues. So the changes to the way gambling companies are taxed to be able to operate in the UK is a lucrative business - but what will it mean to the companies operating with the UK people?
The new tax regime follows a POC approach, this rule ensures that remote gambling operators with UK customers need to pay UK gambling taxes, no matter where in the world they are based. Remote gambling operators with UK customers are liable to pay either remote gaming duty, general betting duty or pool betting duty (depending on the type of gambling offered), all of which are currently at 15%. The rule is also supported by tough enforcement measures, including the creation of criminal offences. Failure to comply could result in prison sentences of up to seven years, unlimited fines, or the loss of a remote gambling operator's licence to operate.
To read more information about CenturyLink and our capabilities within the Gambling sector please visit our website on www.centurylink.co.uk