How the new UK Gaming Commission Laws will affect the Industry
On October 1st the new laws bought in the UK Gaming Commission (UKGC) will come in and it already seems to be having a significant effect on the industry. To understand the impact, we have to take a look at the gambling laws that were in place previously.
Under the existing rules, the UK government was able to charge a tax to companies who were located in the UK, this tax being on gross profits. However, this led to many of the bigger companies in the industry moving their operations to tax free jurisdictions such as Malta, despite the headquarters still being based in the UK. This led to a sense of frustration in government which eventually moved them to look at other ways that online gambling could be taxed. One idea was to force companies offering gambling to UK residents to set up in the UK, meaning the existing laws would indeed bring in revenue; however this might have faced some serious legal challenges in the high courts, specifically regarding restraint of trade. Instead, the government decided upon allowing the gambling companies to remain offshore, but under the auspices of a new licensing and tax scheme.
The new scheme would require any company wanting to offer gambling to UK residents to acquire a UK Gaming Commission License, the fees of the license based upon the type of betting offered by the site (examples being sports betting, casinos, poker and more) and the expected income generated from the UK players. Additionally, the scheme has a 15% point of consumption tax, where the companies will pay this amount on the gross profit they make from their customers in the United Kingdom. Another part of the scheme involves changes to the advertising laws regarding gambling – only companies with a UKGC license being able to advertise in the UK.
The changes in the law have had an impact within the industry, perhaps mostly affecting the offshore jurisdictions. The Gibraltar Gaming Commission launched a lawsuit with the EU and Victor Chandler, amongst other companies, joined the suit. Some of the bigger companies in the UK gaming market have decided to accept the new rulings despite the impact on their profit margin. One company who will not be affected is Bet365 who already have their business based in the UK.
The new ruling has led to some companies pulling out of the UK market however. Pinnacle Sports is one such company who informed their customers in the UK that they wouldn’t be able to use the site once the new ruling came in. In the coming weeks it will be interesting to see which online sportsbooks continue to offer markets, although for now it seems that customers at one of the many established sports books originally based in the UK will not be affected substantially.
International customers at any of the sites affected will continue to be able to use these sites as normal, as the laws only apply to UK customers.