by Renee Israel
According to a confidential UK gambling tax report commissioned by
William Hill, if the UK government goes ahead with plans to charge a 10% point
of consumption tax on gambling operators, many UK gamblers would move over to
unregulated sites, while smaller gambling operators would be forced out of the
Details of the William Hill gambling tax report, which was compiled by
accountants Deloitte and submitted to the UK Treasury, were leaked to The Daily
Mail. This comes at a time when the Treasury is reviewing plans to change the UK
tax regime on remote gambling.
While the government's objectives for introducing the taxes include the
protection of consumers, the William Hill report shows that it may produce the
opposite effect, and that up to 27% of revenues would, instead, be redirected to
The report also showed that if the government increased the proposed tax
to15%, as much as 40% of the £1.7 billion spend by UK consumers at online
gambling companies would go to unregulated sites.
The situation at present is like this: Gambling operators located in the UK
are subject to a 15% gross profits tax which the government levies on them. To
escape this heavy tax, many top UK gambling groups such as William Hill and
Ladbrokes have their bets routed via servers in Gibraltar and the Isle of Man.
Government to Tax Gambling at Point of Consumption
To combat this, in the middle of last year the UK government
announced plans to begin reviewing the current gambling laws, with the objective
to change the regulation of online bets at their point of consumption. This
means that any gaming operator wishing to offer their services to UK gamblers
will first need to obtain a license from the UK Gambling Commission - forcing
them to pay the gross profits tax.
There is still no consensus as to the 'fair' rate of the tax,
and the current debate is whether it should be 10% or 15%.
According to the report commissioned by William Hill, smaller
operators, which provide for 13% of the bets placed in the UK, would have to
leave the market even if only a 5% tax was introduced, while that percentage
increased to 40% if a 15% tax was enforced.
Speaking about the threat of UK gamblers moving their gaming
sessions to unregulated sites, the Chief Executive of William Hill, Ralph
Topping said: "Money will always find a way out. More people will go overseas or
to fly-by-night, unregulated sites where the consumer is not protected. I hope
the government sees the sense in this."