One of the UK's largest betting operations, Ladbrokes, announced that
it was bending to intense industry pressure and moving its internet betting
operations offshore.
Ladbrokes admitted that it was breaking a "gentleman's agreement" that it had
with the UK government for staying put in the country, and said that William
Hill's decision to move its operations offshore left the group no choice but to
follow suit.
Ladbrokes said that it would be moving its online sports book operations to
Gibraltar by the end of the year.
"Ladbrokes.com is the biggest in the UK market but faces aggressive
competition from offshore operators who hold a very significant cost advantage
by operating from low tax jurisdictions," said the Chief Executive of Ladbrokes,
Chris Bell. "Operating from the UK has become unsustainable."
Groups such as William Hill and Ladbrokes have had to pay up 15% gross profit
tax and Value Added Tax on input costs, in addition to the 10% betting levy on
gross profits derived from British horse racing.
In comparison, offshore companies need to only pay 2% profit tax, and are not
subject to the betting levy in the UK.
The mass exodus of local companies, including the smaller and less publicized
move of Sky Bet to Geuernsey last week, should be worrying for the UK government
- not only due to the loss of jobs, but also for the taxes that the country is
losing out on.
It is clearly time for changes to be made to the current tax situation if the
government doesn't want to see more groups move offshore.
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