Britain’s online gambling industry’s robust growth over few years is expected to continue despite the introduction of new taxation regulations covering the industry.
In December 2014, the government imposed a new point-of-consumption tax, where a 15% levy is placed on all bets made by UK players no matter where the online casino or gambling institution is based.
A number of industry commentators and industry groups had warned that the extra duty could result in gamblers looking towards unlicensed and poorly regulated operators and causing the black market to flourish.
One such opponent of the new tax is the Gibraltar Betting and Gaming Association (GBGA), which lists Victor Chandler and 32Red amongst its members, made an application for judicial review against the new tax, claiming it is discriminatory and restricted the free movement of services, contrary to Article 56 of the Treaty on the Functioning of the European Union (“TFEU”).
In July, the High Court found that the issue warranted a referral to the Court of Justice of the European Union. If the court finds in favour of the GBGA, then the UK may be liable to repay all revenues raised through the tax, estimated to be around £400 million per year.
The UK’s gambling industry has a long industry, with many of Europe’s leading operators such as Bet365, William Hill, and Betfair located in the UK headquartered in the UK. However, European operators such as Netbet have been quick to adapt to the online and mobile sectors, creating a competitive and dynamic market.
Despite the threat to profits posed by the new licensing and taxation regime introduced in the Finance Act 2014, a report from GamblingCompliance Research Services (GCRS) predicts that the net revenue of online gambling will rise £2.83 billion by the end of 2015, to reach £3.22 billion in 2016.
Daniel Stone, head of data content at Gambling Compliance, commented:
“Britain’s online gambling market has enjoyed an uninterrupted run of double-digit annual growth since the turn of the century – and this looks likely to continue into the first two years of the PoC regime.
“But the market share analysis contained in the report shows just how crowded the online space is in the UK. With companies forced to reassess their business models in light of the imminent tax hit, the fight for new customers and share of wallet has never been more intense.”
