As widely predicted, George Osborne made a statement in his budget speech in March that the United Kingdom intends to proceed with the concept of introducing a place of consumption, gross profits tax (GPT) on online gambling conducted by consumers in the UK. This proposal is aimed at accessing revenue from remote gambling operators based away from the British mainland including, and some would say especially, in Gibraltar. The expected start date he said would be 1st December 2014 and the rate of tax would be 15% of the revenues generated from UK consumers..
While this While this is some way off, and there is plenty of water to pass under the bridge, this proposal presents a clear and present danger to many online gaming operators in Gibraltar and therefore also to the wider economy in Gibraltar. Operators who are focused on the UK market and whose products have particularly thin and inflexible margins would be hardest hit if Mr Osborne’s plans come to fruition.
The licensing and regulatory regime in Gibraltar is of a very high standard and accepted as such by everyone, including Whitehall. Try as those in some quarters might to undermine the environment here, the fact remains that remote gambling businesses in Gibraltar manage themselves and their customers very professionally and ethically. Many of the biggest and many of the best operators are based here in Gibraltar.
The arguments for and against are various and some are complex. However, the most compelling for many in the sector is that overnight the UK’s GPT proposal will produce a “Black Market” in the UK and put the currently very well catered for and well protected online gambling consumer at risk. Why? The scenario is that upstanding and responsible operators would be licensed by the UK and would pay the hefty (and actually already proven to be unworkable) 15% tax on their UK income. Meanwhile far-flung, unregulated and largely irresponsible operators, who have no intention of paying 15% GPT to HMRC will continue to use the usual and unstoppable channels to advertise and put forward a very competitive offer (free of 15% taxation) to the value-seeking UK consumer. These operators are those with core competencies which include circumnavigating state laws on advertising and doing their best to make it difficult for players to be paid out their rightful winnings. The people behind these businesses, are shrouded in secrecy and would never be able to get a licence in a top tier jurisdiction like Gibraltar. One of the three important principles supporting licensing and regulation of the sector is to keep crime and criminals out of the industry.
“The industry here in Gibraltar has to ensure it makes its points consistently to the UK authorities and work in tandem with the efforts being put in by the Government of Gibraltar”. B2B was told. “We need unity on all sides in Gibraltar and its constituents speaking with one voice. It may sound strange but bearing in mind the diversity of the licensees on The Rock and their interests, even this may prove to be a thankless and sensitive task.” the Gambling Insider said to B2B.