WARNING ON UK INTERNET GAMBLING SECONDARY LICENSING AND TAX

01/03/2012 : Independent survey says online gambling tax plans may drive punters to unregulated sites.

With momentum in the UK building for a 'secondary licensing' regime and taxes, the William Hill gambling group has gone on the offensive as the new year starts, again drawing attention to an independent survey it commissioned.

The study, conducted by respected international professional services group Deloitte, found that the British government's proposals for a point of consumption tax on online gambling could backfire, with punters driven to unregulated sites, and smaller operators forced out of the market.

Deloitte concluded that levying such a tax at 10 percent would seriously hurt the government’s “consumer protection policy objectives”. It additionally found that as much as 27 percent of current revenues would disappear into the “grey”, or unregulated, market. And at 15 percent tax, that figure rises to 40 percent.

The survey found that the most marginal operators, accounting for up to 13 percent of UK online bets, could be “expected to exit following the introduction of a 5 percent tax”. That would not only push more UK punters into the unregulated market, but there would also be a knock-on effect on gambling companies’ revenues and marketing spend, hitting both corporation taxes and sports sponsorship.

William Hill has submitted the report to the Treasury, which is reviewing a possible new tax regime for remote gambling.

The Telegraph newspaper, reporting on the Deloitte study, says that UK consumers currently spend about GBP 1.7 billion a year – roughly 18 percent of total UK gambling revenues – with online gambling companies. At present many companies - including William Hill plc - escape the 15 percent gross profits tax levied in the UK by locating their internet operations in tax havens like Gibraltar, Malta, Alderney and the Isle of Man.

The new proposal would see any operator wishing to access the UK market being required to take out UK licensing and pay an as yet unquantified UK tax rate, on grounds that online gambling takes place at the point of consumption i.e. the player's hardware.

Deloitte points to the US, France and Italy in illustrating that attempts to control online gambling have “failed to prevent the emergence of a large unregulated sector”, not least because of the difficulties of introducing enforcement mechanisms such as blocking internet service providers or types of financial transactions.

Ralph Topping, chief executive at William Hill, told the Telegraph: “Money will always find a way out. More people will go overseas or to fly-by-night, unregulated sites where the consumer is not protected. I hope the Government sees sense on this.”

Assuming “ineffective enforcement”, Deloitte finds that a 15 percent tax rate would bring in incremental tax of GBP 116 million after adjusting for a GBP 57 million fall to GBP 76 million in corporation tax. That would be at the price, however, of exposing many more consumers to unregulated, and possibly unsafe, gambling sites.

A Treasury spokesman said: “Responses to the review are in and are being analysed.”

USA Gamblers : Did you remember to get your new, unique, exclusive Bovada Bonus Code ?

Foxin Wins and Irish Eyes 2 Slot Launched - NextGen Gaming, the Australian-based slots studio of NYX Gaming Group, has launched the first of a series of online slots slots titles - Foxin Wins and Irish Eyes 2 - on William Hill’s Vegas tab in both HTML5 and Flash.

AbZorba Games has expanded its partnership with Tango - Mobile social casino games publisher AbZorba Games has expanded its partnership with messaging and entertainment platform Tango to include a new branded multiplayer poker app.

Banks cooperative On UK Gambling Ban - Our readers will recall the very firm refusal by British ISP companies to cooperate in any attempt by the government to impose blocks on unlicensed internet gambling sites when its new point-of-consumption laws come into force at the end of the year.

Fortuna Gambling Revenues Rising - Fortuna Entertainment Group, a Czech-facing online and land betting company has posted results better than analyst expectations of Euro 14.3 million, with net profit up 26.4 percent over the year to Euro 15.6 million, boosted significantly by online gambling operations.

Kevin Jonna Wins Commerce High Roller Poekr Event - 25 mainly professional and famous names in the game signed up for this week's $25,400 buy-in Commerce High Roller competition at the L.A. Poker Classic, fighting for a spot in the final three in order to get a return on the investment.

Unibet cuts its poker ties with Microgaming - Unibet's decision to cut ties with Microgaming for its poker offering in favour of a more recreational and socially oriented stand-alone enterprise took shape this week when the company completed its transition to real-money action after a two-week beta testing phase and switched the Microgaming software off.

UK Horse Racing Tax - The House of Lords debate this week on the new point-of-consumption British licensing and taxation law has produced a suggested amendment that, if approved at subsequent readings, could have serious additional financial implications for companies that licence in the UK.

Spanisg Online Gambling Numbers Up - Q4 revenues reached just under Euro 60 million, 2.5 percent lower than the comparative period last year. Wagers rose 13.9 percent to Euro 1.47 billion, with new player acquisition up 9.4 percent to 137,000, taking full year player registrations to 1.6 million.

PaddyPower wants to focus on big, legal and regulated markets - Speaking to reporters following the publication of the company's latest results (see previous InfoPowa reports), Paddy Power chief exec Patrick Kennedy said he wants to enter new markets overseas and offer more services in countries such as Australia and Italy if some types of online betting are made legal in those markets.

Borgata disappointing result for fiscal fourth quarter - Boyd Gaming, the New Jersey company that owns the Borgata, has posted a disappointing result for the casino resort’s fiscal fourth quarter, reporting total revenues of $157 million, including $2.2 million from online gambling - a 6.5 percent increase on Q4:2012, although in the comparative period the casino had to contend with major interruptions from Hurricane Sandy.