Changes to betting taxes announced in Chancellor Gordon Brown’s
2001 Budget Speech last week are being cited as the reason why the
UK is set to become a world leader in the lucrative on-line
gambling market.
News reports in the US are suggesting that Britain is
well-placed to take the lead since Brown’s announcement that the
government will abolish gambling duty from 1st January 2002. At
present there is a 6.75% tax collected on revenue which bookies
pass on to punters in the form of a 9% betting tax. This will be
replaced by a 15% tax on gross profits which is expected to avoid
any charges being passed on to punters.
The tax change is likely to cause a short-term drop in revenue
for the government. However, in the long term, if businesses stay
or return to the UK, the government will benefit. Under the present
tax system, it risks in future trying to collect a 6.75% levy on
minimal revenues as more business will go off-shore.
UK bookmakers, including Ladbrokes, William Hill and Coral, all
of which have taken their on-line operations off-shore to tax
havens such as Antigua, Gibraltar and the Channel Islands, are said
to be delighted by the announcement and are expected to relocate in
the UK in light of the more favourable tax position.
News agency Associated Press (AP) quotes a director of
MGM-Mirage, a large Las Vegas casino, describing the UK position as
“well out in front in terms of establishing a legitimate,
well-regulated environment for people who want to participate in
sports wagering over the internet.” Internet gambling is illegal in
the US but the prohibition is difficult to enforce.
AP also quotes Andrew Burnett, a Merill Lynch gaming analyst,
saying: “it makes Britain the centre for excellence for global
on-line betting.” Burnett told AP that on-line gambling is expected
to grow to $177 billion by 2015.
