As the British government prepares a significant overhaul of its online gambling licensing and taxation laws, casino affiliates in the UK should be aware of how their affiliate marketing revenues could potentially be impacted.
The UK is arguably the world’s most established online gambling licensing center, and has been since 2007. But the problem may be that its regulations don’t work.
That’s what the Economist thinks. “Online betting has proliferated: there are now more than 2,000 sites worldwide,” the magazine explains. “But even among those that target British consumers, most have based themselves abroad. The would-be internet Vegas of Europe is more like an abandoned seaside town.”
Some blame the United States. According to The Guardian, the changes are meant to “overhaul online gambling licensing rules which have left hundreds of British poker players unable to get hold of their funds after the founders of Full Tilt Poker, the world’s second-largest poker site, found themselves at the centre of money-laundering and illegal gambling charges in the US.”
Those are the reasons, then, for new gambling laws. And here’s what those laws will mean for affiliates.
Effects on affiliates
Because John Penrose, the UK’s gambling policy minister, said wants gambling taxes to be based in the “location of consumption,” the current 15% gross profits tax for onshore gambling could be implemented for remote gambling, too.
That means that companies that moved away from the UK to avoid that country’s already-high taxes may still have to pay them — bad news for PartyGaming and other UK expats.
And that, of course, leads us to: More taxes, less profit margins. Such a move could easily see the UK’s affiliate commissions plummet. And, as a good share of online gambling is based either in London or directed toward that market, the subsequent revenue loss for affiliates could be big.
Three of the UK’s biggest betting companies, Betfair, William Hill, and Ladbrokes — also among the world’s most heavily promoted online gambling sites — have already seen their shares fall because of this news. That’s not a great omen for gaming affiliates.
What’s worse is that the first stage of this action has already taken place, as The Tote (a.k.a. totesport), the UK-government owned betting operation, was recently sold to Betfred. (Some affiliates have reported problems with totesport since then, but overall, changes appear to be minimal.)
The new rules aren’t expected to take effect for another two years, and require accompanying legislation to be approved by the UK Parliament. So there’s time to act — UK residents, this is your chance to let your lawmakers know you resist this tax (for all the good that’ll do).