George Osborne

It was expected, and now the UK Chancellor, George Osborne, has announced that remote gambling operators will have to pay tax on profits from their UK player base. The meaning of this is that no gambling provider will be able to offer gaming services online to UK players without paying duties on the gross profits that are generated from this.

About a year ago the DCMS (Department for Culture, Media and Sport) made it clear that they would look into the gambling law. Since the tax rate for gambling operators that are based in the UK has been so high (at 15% since 2007), many of the big UK gaming brands were forced to move their operations to other countries. This is what big gambling companies like Ladbrokes and Betfair did to get rid of the tax and enjoy the white list jurisdiction of the countries where they got their new licenses.

The operators that stayed on British turf, such as Bet365, the possibility to evade the tax by moving out of the UK has meant some very steep competition. The new budget will make way for a fair market for the UK operators but the finer points of it are still not decided on. Adjustments are certainly needed; a 15% tax will not be met easily by the companies currently based in places like the Caribbean. Non UK gaming providers active on the UK market might simply laugh at the suggestion.

However, if the final legislative changes will include a reasonable tax, it could mean a nice chunk of income for the UK, and perhaps some new job opportunities. At the moment the confirmed Point of Consumption Tax must be seen as a step in the right direction. Like in so many other European countries, there is a will in the UK to take advantage of the positive aspects of online gambling. Time will tell us how they will manage to pull this one off, and what the reaction from the giant gambling providers will be.

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