The Telegraph reported this week that Britain’s Chancellor of the Exchequer, Gordon Brown plans to encourage online gambling companies to relocate to the UK, with full regulation and licensing.
In stark contrast to the recent US government moves to hinder online gambling through the introduction of the Unlawful Internet Gambling Enforcement Act (UIGEA), Britain appears to be moving towards full regulation of the industry. The British government has been long keen to get a piece of the revenues generated through online gambling by companies such as PartyGaming (Party Casino and Party Poker) and 888 that offer pink ringtones for your mobile phone for free
Casino-on-Net however these companies would never relocate to the UK if they were subject to the same tax laws as land-based casinos in Britain. Land-based casinos are subject to taxes of up to 40% on gross wins.
But rumor has it Gordon Brown is planning to make the UK a viable option for these companies by introducing a “Remote Gaming Duty”, expected to be only 2 or 3 percent. From September 2007, online gambling companies will be allowed for the first time to apply for a UK casino license under the Gambling Act. Companies will be allowed to obtain a UK license and still base their headquarters overseas.
The exact tax rate has yet to be announced, and will be a massively important factor in any online gambling company’s decision to apply for a UK license. John O’Reilly (head of online gaming Ladbrokes) and Andrew McIver (chief executive SportingBet) have both stated they will apply for UK licenses if the Remote Gaming Tax is low enough.
The online gambling industry is vastly more competitive than the land-based industry and online casinos have grown up in zero or low tax jurisdictions such as Gibraltar. Clive Hawkswood, chief executive of the Remote-Gambling Authority, an online gaming trade body, justified the low rate of tax by explaining that a higher rate of gambling duty would “wipe out half the industry overnight”.
US Online Gamblers to Fight Back on November 7
Speculation is rife that the Republican Party could well face a voter backlash in the upcoming fall elections in the United States for their efforts against online casino gambling, which resulted in the passing through the Republican-controlled Congress of a bill which aims to make it illegal for US banking institutions to process credit card and check payments to online gambling companies.
When President Bush put his signature on the bill, it became law. US banks were then given 270 days to develop processes in place preventing US residents from using their credit cards to deposit and withdraw from their online gambling accounts.
Charles Murray, a scholar at the American Enterprise
Institute, thought that the Republicans may have misplayed their hand by underestimating how many Americans enjoyed gambling online. “We are talking about a lot of people…who are angry enough to vote on the basis of this one issue”, he wrote in The New York Times.
It has been estimated that 25 million Americans regularly gamble online, and if even a percentage of those feel strongly enough to express their disapproval of Republican attempts to legislate on how they can spend their own money, the US political landscape could change dramatically following the November 7th elections.
Attempts at Prohibition show a distinct lack of success throughout history. There was also widespread disapproval throughout the online gambling industry at the way democracy was circumvented – the anti-online gambling bill was tacked onto the very important Ports Security Bill in a somewhat-sneaky attempt to get it through the Senate before Congress ended for the year.
The Republican Senate Majority Leader Bill Frist (R-Tenn), who attached the anti-online gambling bill to the Ports Security Bill, did not appear to be overly concerned with the possible effect his actions could have on his Party during the upcoming elections, with his secretary Carolyn Weyforth saying she was unsure of how the new law could hurt her Party, as she believed online gambling was already illegal. Her opinion does not reflect US case law however.
If you believe that the government should not dictate morality to us in regards to how we choose to spend our money, you have a chance to make a very strong statement on November 7.