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Despite Bookmakers’ Objections, Judge Allows New UK Gambling Laws

Oct 13, 2014 - by Monica Erdei
The court has given the British Government the green light to implement its new gambling laws

The court has given the British Government the green light to implement its new gambling laws

The UK Government will move forward with its plan to tax remote gambling companies who cater to British players.

The court has given the British Government the green light to implement its new gambling laws. The decision comes after the Gibraltar Betting and Gaming Association challenged the government’s new licensing and taxation policies in court, hoping to receive approval to continue catering to British players remotely, without actually paying taxes in the UK.

For several years now, top gambling operators – including big names like William Hill, Ladbrokes or bet365 – have been running their online casinos and betting services from places like Gibraltar, Malta or Isle of Man. These offshore jurisdictions have much lower taxes than the UK, allowing gambling companies to pocket millions of pounds that would normally go to the British government.

The industry has been preparing for the big tax change, which is expected to cost it around GBP300 million a year, but the move has also caused share prices to drop. British bookmaker William Hill saw its shares fall 3.3%, while Ladbrokes shares dropped more than 4% following the court’s decision.

Reuters: RPT- Court clears Britain to take tighter control of online gambling

In order to tighten controls on the online betting industry, the British Government will require all internet gambling companies to obtain a license from the UK Gambling Commission before providing their services on the local market.

With the new license comes an additional 15% tax on online profits made from bets placed by UK-based customers, which is scheduled to come into force on December 1. As of March 2015, bookmakers will also pay 20 to 25% more on lucrative high stakes gambling machines. It is estimated that this tax increase will cost betting companies around GBP75 million a year.

As for the new gambling act, officials had initially set the deadline for October 1, but were forced to postpone the measures until November 1 after the Gibraltar Betting and Gaming Association (GBGA) challenged them in court, claiming they contravened European laws guaranteeing free movement of services.

Judge Nicholas Green dismissed the appeal on Friday, saying: “Parliament was clearly within its rights to act as it did.”

“We remain concerned the UK regulator will find it difficult to hold companies to account in jurisdictions outside of the EU where it has no legal powers and common legal framework or culture,” the GBGA wrote in a statement.

Critics argue that the new regulations will result in unlicensed operators offering better odds on sports scores, thus encouraging gamblers to turn to illegal websites, which offer no consumer protection.

GBGA: “Unlawful’” Gambling Law Poses “New Danger” for Consumers

Earlier in June, the Gibraltar Betting and Gaming Association (GBGA) raised a few issues regarding the Gambling (Licensing and Advertising) Act 2014, labeling it as “unlawful”, and claiming that it “threatens the safety of consumers online.”

The new regime will require the UK Gambling Commission to police the online industry worldwide, which will be very difficult. GBGA chief Peter Howitt believes that the new law, combined with planned tax changes, will cause local players to migrate to the unregulated market.

“This is bad for UK consumers, bad for the regulated industry, bad for Gibraltar and is in breach of European law, but fantastic news for operators who choose to avoid proper regulation,” he said in a statement.

“We know of no precedent where any regulator in any industry will be granted the role of licensing and regulating operators all over the world in this way, threatening to criminalize companies and people who fail to submit to its regime. This is plainly unworkable.”

In addition to being “unlawful” and “unworkable”, the new law is also “unnecessary”, the association said. Gibraltar has one of the world’s most effective regulatory regimes and would continue to be responsible for its gambling industry, but it would also have to share information with the UK regulator on a formal basis.

In a statement released by the GBGA, the association’s lawyers added: “All this Act achieves is a wholly unjustified, disproportionate and discriminatory interference with the right to free movement of services, a right enshrined in European Law.”

Gaming Intelligence: Pinnacle Sports to shut down UK operations

Curaçao-licensed betting operator Pinnacle Sports announced that it will withdraw from the UK market. The company decided to stop catering to British players after the Government announced it was introducing tighter regulations under the Gambling (Licensing and Advertising) Act 2014.

At the beginning of September, the company sent a notification to all its customers, announcing it will shut down its UK operations from September 30th. Apart from withdrawals, all account functions have been disabled starting September 30. The restriction applies to subscribers who have listed UK as their place of residence, in their account details.

“Amendments to the Gambling (Licensing and Advertising) Act come into force on October 1st, 2014 requiring all companies that advertise or provide gambling services to British residents to obtain a license from the British Gambling Commission,” the betting operator explained in a statement.

Pinnacle is just one of the many online gambling operators who chose to withdraw from the British market due to the 15% point of consumption tax. The list also includes SBOBet and 12BET, both licensed in Isle of Man, and Gibraltar-based Mansion casino.

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