How Changes in the UK Gambling Legislation Will Impact the Industry

11 December 2013

New amendments to the UK Gambling Act 2005 are going to be made in the near future, when the online gaming regulatory framework and the taxation policy will be changed in order to comply with the current expectations of regulators. Our gaming insiders found out that both operators who seek to start an online casino business and large gambling firms will be influenced by these changes.

One of the most important and criticized amendments refers to the point of consumption tax, which would require any gaming operator from any location who offer gambling services to UK residents to pay a 15 percent tax on gaming profits to the UK government. Thus, all operators who provide services to UK customers, whether they are located in the UK or not, will have to pay the tax and also apply for a gaming license from the UK government. Gaming operators should comply with the law which could be put in practice on December 1, 2014, or, if they don’t, they could have their license withdrawn, would have to pay fines or would even serve prison years. At this point in time, operators who are not necessarily licensed in the UK are allowed to advertise their online and mobile casinos to UK residents.

The UK government explained that they will take these measures to increase consistency, transparency and provision of information. Gaming insiders said that the ones who could benefit from the amendments to the UK Gambling Act 2005 will be large operators. We believe that they will most surely tackle these problems in a much easier way, but small operators or the ones who are looking to start an online casino website will have to spend a lot more than they did up to now. The costs of obtaining a UK gambling license and an additional 15 percent tax could be an immense burden for small gaming companies. On the other hand, regulators could consider varying the application and annual fee for different sized operators. Now, these fees are based on the size of the gross gaming yield that the operator expects to generate.

Analysts added that these measures will finally lead to changes in the behavior of both consumers and operators who seek to start an online casino website. A report by Deloitte revealed that no less than 40 percent of online gaming consumers could start gambling on the unregulated grey market once the 15 percent point of consumption tax is introduced. This would be a consequence of the fact that a smaller number of large operators, rather than a higher number of smaller but more competitive ones, would lead to less competition. This would mean that large gaming companies will not offer promotions and bonuses that are as attractive as those given by small operators. In the end, it seems that UK gamblers will also be influenced by the changes in the regulatory system.

11 December 2013

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