UK Remote Gambling consult - help me & you

[PokerXanadu]

Originally Posted by Pascal-lF

Wait, they want to tax 15% of revenues from UK players? As opposed to the French who tax 2% of total revenue?

The tax is going to be passed on to world/UK players whether we like it or not, best to be realistic and look at how it's going to occur and how that affects us in my opinion.

The French 2% tax isn't a revenue tax, it's a rake tax. The French govt gets 2% of every cash game pot (and 2% of every tournament buy-in). That is the highest poker site tax in the world presently. It's probably equivalent to about a 40%+ revenue tax.

[davmcg]

Originally Posted by Pascal-lF

Wait, they want to tax 15% of revenues from UK players? As opposed to the French who tax 2% of total revenue?

The tax is going to be passed on to world/UK players whether we like it or not, best to be realistic and look at how it's going to occur and how that affects us in my opinion.

France I think is 2% of turnover which is generally higher than 15% of gross revenue and far more insidious in its effect as it stifles competition.

[Pascal-lF]

Cheers for the clarification guys - haven't done economics for a couple of years

[davmcg]

Originally Posted by Richas

T



I am also a bit puzzled as to how this new criminal offence with no equivalent in other countries could be enforced when almost by definition they are abroad.

If you remember the original govt plan was to insist on UK regulation for any operator offering services for UK consumers. It seems that for some reason they are trying to introduce this new tax regime independently of that. So apparently they will collect tax and offer no consumer protection or anything else in return.

[Richas]

Originally Posted by davmcg

If you remember the original govt plan was to insist on UK regulation for any operator offering services for UK consumers. It seems that for some reason they are trying to introduce this new tax regime independently of that. So apparently they will collect tax and offer no consumer protection or anything else in return.

That is overstating it a bit. The UK has allowed foreign operators from the white list to operate and advertise in the UK. That list includes all EU countries and countries with an EU connection but not full membership. In effect it was everybody Gibraltar, Malta, Isle of Mann, Channel Islands (and in passing, sadly, Kahnawake).

The 2005 Gambling Act was meant to make the UK the most desirable location for online gambling sites to locate. As it happened Gordon Brown got to take over and impose a tax level that made this impossible. now the Tory coalition is trying to take that same pretty steep tax and impose it globally by claiming ownership of UK gamblers revenues.

This new regime may well make it better to be based in the UK as there would be no tax on non UK resident produced revenues and being overseas would still get the same hit on UK based customers. It might get more properly regulated sites as it makes the UK a bit better as a tax base. This would help with consumer protection.

You are right though, the UK will be sending a tax bill to any gambling site offering services in the UK without offering proper consumer protection in the UK or elsewhere.

This may well be something we should comment upon - maybe it should be that foreign operators should need to get a "Gambling Commission Lite" license with things like guaranteed segregation of accounts, inspection to ensure games are fair before they are allowed to advertise to UK consumers.

[Lemmywinks]

Originally Posted by Richas

The 2005 Gambling Act was meant to make the UK the most desirable location for online gambling sites to locate. As it happened Gordon Brown got to take over and impose a tax level that made this impossible.

I'm not sure this part is strictly true. Compared to most of EU states the UK are pretty liberal and offered a very competitive tax rate. In fact, even a 15% GGRT isn't that bad of a deal compared to most other countries. Unfortunately it was the alderney/IOM and co who made it an issue.


This new regime may well make it better to be based in the UK as there would be no tax on non UK resident produced revenues and being overseas would still get the same hit on UK based customers. It might get more properly regulated sites as it makes the UK a bit better as a tax base. This would help with consumer protection.
Yep, and operators will want this. More trust = more players

This may well be something we should comment upon - maybe it should be that foreign operators should need to get a "Gambling Commission Lite" license with things like guaranteed segregation of accounts, inspection to ensure games are fair before they are allowed to advertise to UK consumers.

As far as I'm aware this type of "dot country" regulation doesn't typically allow foreign operators to get away with this sort of stuff. Often operators are required to locate servers in the resident country, and license agreements can be pretty complex.

Comments in bold. 15 percent is actually pretty good for the UK consumer vs other markets. You have to remember that it's only on profits, and not all will be passed on. When the bookmaker industry went from a turnover to profits regime their margins fell - people just gambled more.

[davmcg]

Originally Posted by Lemmywinks

Comments in bold. 15 percent is actually pretty good for the UK consumer vs other markets. You have to remember that it's only on profits, and not all will be passed on. When the bookmaker industry went from a turnover to profits regime their margins fell - people just gambled more.

Well if its so good, why was it a complete disaster in 2005? Why did no major firm offer their internet gaming product from the UK? Why has their been a steady offshore migration of sportsbooks? Also this is a brazen tax skim that provides no benefits at all. FTP, for example, would have paid millions and still gone bust.

[Richas]

Originally Posted by davmcg

Well if its so good, why was it a complete disaster in 2005? Why did no major firm offer their internet gaming product from the UK? Why has their been a steady offshore migration of sportsbooks? Also this is a brazen tax skim that provides no benefits at all. FTP, for example, would have paid millions and still gone bust.

15% might look pretty good compared to Spain or France now but compared to Gibraltar or the IofM it was extortionate. Hence why in 2005 they did not move. It may be that now by imposing 15% just on UK gamblers and also imposing that even if you are based abroad it will become attractive to move to the UK.

The regulatory confidence that the Gambling Commission can offer is indeed attractive to new players.

The consultation does suggest that foreign based companies supplying to the UK will escape additional UK supervision re consumer protection, all they are asking about is for a security deposit of 6 months UK tax liability or a UK based entity that would be liable for the tax.

It is this area that I may well input to the consultation on, there should be minimum standards - ie segregated customer accounts to trade in the UK, not just a protection for the taxman (potential using player deposits!)

[Lemmywinks]

Originally Posted by davmcg

Well if its so good, why was it a complete disaster in 2005? Why did no major firm offer their internet gaming product from the UK? Why has their been a steady offshore migration of sportsbooks? Also this is a brazen tax skim that provides no benefits at all. FTP, for example, would have paid millions and still gone bust.

Richas answered the first couple of questions - the UK was well placed vs the majority of western europe but not against IoM etc. Also it should be noted that the initial move to a GPT happened in 2002 - margins decreased and the UK consumer got a better deal. It was supposed to protect against operators moving offshore following the growth of telephone/online betting, it just didn't work out.

It may also be true that under this regulation FTP would have gone bust, too. However, what the UK is currently trying to do is regulate the market, not just tax it. They will be licensing operators and undoubtedly as a part of that segregation of UK players funds will be a necessity. Again, under this scenario FTP may have gone busto overall - but with the correct regulation UK funds would have been safe.

[davmcg]

Originally Posted by Lemmywinks

However, what the UK is currently trying to do is regulate the market, not just tax it. They will be licensing operators and undoubtedly as a part of that segregation of UK players funds will be a necessity. Again, under this scenario FTP may have gone busto overall - but with the correct regulation UK funds would have been safe.

No this is the point you are missing - this taxation is completely independent of any plans for compulsory regulation, which apparently have been shelved in favour of this plan. So this is a moneygrab with nothing in return, pure and simple.

[Lemmywinks]

Oh. That is a bit crap then. At least it's on profits, not turnover.

[Richas]

Originally Posted by Lemmywinks

Oh. That is a bit crap then. At least it's on profits, not turnover.

It is on gross revenues not profits. Ok it is not on the betting turnover/volume raking every pot but it is raking every bit of rake before the company pays any of its costs.

[RajHendon]

The sensible thing would be to segregate the UK player pool i.e. UK players should only be allowed to play against UK players.

[Pascal-lF]

sensible? what? are you mad

[RajHendon]

Sensible and expedient, from the point of Pokerstars.

They are a business.