The past decade has brought many changes to the gambling industry, recent technologies and accessibility has allowed for innovation to be made in all areas. There’s also been significant changes to the legal and regulatory side of the industry which has created an influence and a bearing on the practice of many gambling operators in the UK.
The Point of Consumption tax is the latest change in legislature to dramatically effect gambling operators that has been made by the UK Gambling Commission in 2014. The PoC tax otherwise known as the remote gaming duty was introduced by HMRC to combat many primarily UK based operators moving their trade offshore to take advantage of tax breaks.
What does this mean for offshore based gambling operators?
Over the past 10-15 years we’ve seen a notable change in the amount of betting operators who have returned to the UK following their time in places like Malta, the Cayman Islands, or Gibraltar. Gibraltar perhaps is now too strong as a gambling hub to be knocked by the consumption tax but many operators are certainly feeling the effects.
The new regulations mean that a duty of 15% must be paid on all bets made by UK customers irrespective of where the online operator is located. This law means that operators can’t take advantage of the UK market while simultaneously enjoying the financial benefits of being based in other territories.
The law has been met with both distaste and support by different spectrums of the industry. There’s no doubt that it’s the operator whose been hit the hardest but could we see the focus on the UK market swivel to other rising markets in the industry?
Emerging online markets
New economies around the world are starting to emerge and with these new advances comes market openings in places that wouldn’t normally be associated with online slots & gambling. In recent years Scandinavia has become a huge market for operators with destinations like Latin America, North America, and Asia opening up new opportunities that deflect the blows of the Point of Consumption tax for operators who once thought of the UK as the be all and end all of their business opportunity.
We’re certainly witnessing the trend of operators moving operations back to the UK but many are planning to ride out the storm for the time-being. Leading gambling operators like Bet Victor owned by Victor Chandler are proud of the empire they’ve built in Gibraltar and plan to stay loyal to what they’ve created.
Scott Manford, CEO of Easy Slots said: “At Easy Slots we value the country we operate in but do understand why some operators have a distaste towards the Point of Consumption tax. In addition we feel like as a company based in the UK we are hit with a double-edged sword that is the PoC and corporation tax. Furthermore, it’s the more recent Point of consumption tax 2 as it’s informally known that really has set the cat among the pigeons.”
Point of Consumption Tax 2
In recent months there’s also been new adaptations to the Point of Consumption tax that have further upset gambling operators. Then UK Chancellor George Osbourne announced that any operators who were licensed in the UK must be required to pay a tax on the ‘free bets’ they administer.
The laws came into effect on August 1, 2017 with operators required to pay 15% general duty on all free or discounted bets regardless if they are used by the player or not. The additional consumption tax has come under fire from all areas of the industry. It’s argued the many ethically positive online betting operators are being unfairly punished when there are much more pressing matters going on in the industry such as addiction and the moral ambiguity that has recently been in the news regarding fixed odds betting terminals.
Only time will tell on how long this legislature will remain within the industry, but for as long as it’s benefitting the UK economy, the light has seemingly went out at the end of the tunnel.