Starting an Online Casino in the UK in 2015

20 November 2015

The online gaming industry in the UK has seen a major change last year with the introduction of the point of consumption (POC) tax. At this point in time, operators who want to start an online casino in the UK need to pay the POC tax, which is levied at 15% of gross profits. This new tax has basically changed everything for offshore operators who were offering online gambling services to UK residents.

UK online gamingSince 2014, the government regulates online gambling at the point of consumption rather than the point of supply, which means that no matter where operators obtain revenue, they must pay the tax if they wish to cater to UK residents. More than that, operators also have to obtain a gambling license from the UK Gambling Commission. Unlicensed operators will also be prohibited from promoting their businesses in the UK.

This new gambling law came as a surprise to operators who held licensed from territories that were considered whitelisted by the UK, such as Gibraltar of the Isle of Man. Before the new gambling regime, offshore operators who wanted to start an online casino were taxed at the point of supply, by the government of the territory in which their operations were based.

These offshore locations offered a much more relaxed tax regime than the one of Great Britain, making a large number of operators open offshore businesses. For example, the Gibraltar gaming regime required a 1% tax on gross profits, with an annual £400,000 cap. Now, it would be irrelevant to start an offshore company if you are looking to start an online casino designated for UK customers, because you will have to pay the same tax and apply the same law as UK operators, no matter of the location of your company.

Like so, the new online gambling bill has had an impact on all gaming operators, no matter if they were big brands or smaller companies. Some of the major companies that operated offshore remained on the UK gambling scene, but their revenues dropped significantly since the introduction of the POC tax. Smaller operators were the ones which had to decide whether they should close their operations and focus on offering their services to more liberal markets. In the end, this will probably result in the consolidation of bigger brands. Smaller operators could cut back on their advertising budgets, which means that we could see fewer promotional offers.

Even so, there were several concerns regarding the development of the black market in the UK, even if the main purpose of introducing the new gambling regime was to create a safer and highly regulated environment for players. For example, players could access unregulated online casinos that are part of a more relaxed gambling regime than the heavily-taxed UK licensees.   

According to the UK Gambling Commission, if you want to start an online casino or mobile casino, you need to obtain a remote casino operating license. Operators can offer games such as poker, roulette, blackjack and other casino games from the Gambling Commission’s game types. If you are looking to run a trial of a new game, you will have to contact the Casino Games Review Group to make sure that the new game complies with their rules and is suitable for the UK marketplace.

At this point in time, operators who want to start an online casino in the UK, or continue offering remote gaming services to UK residents, must apply for an online gaming license from the UK Gambling Commission. If you are applying for a license, you can fill out their online application, and choose if you are new to the gambling industry based in Great Britain, new to the gambling industry based outside Great Britain, or if you want to make a transitional arrangement (if you hold a license from white listed jurisdiction, Gibraltar or the EEA). In order to complete your application, you will also need to pay the license fee. The total licensing fees for remote businesses are made up of: an operator license application fee, an operating license annual fee and the personal management license fees.

With all the new regulatory changes, the UK will probably still remain one of the biggest contributors to the international gambling market, and operators who want to start an online casino in the UK will be part of a highly-regulated industry, with a state-of-the-art system and with a lot of exposure to online players, in a safer and fairer market.

20 November 2015

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