A £300 million tax raid by the Treasury on internet gambling companies could be derailed after proposals to tax and licence offshore operators received a legal challenge.
The move would put a big dent in profits of companies such as William Hill, Betfair and Ladbrokes that have moved their online operations to Gibraltar to take advantage of lower tax rates. Betfair estimated that it benefited to the tune of £20 million a year when it moved offshore in 2011.
Although most operators appear resigned to the changes, with the new licensing regime coming in on October 1, the GBGA — a trade body that numbers Ladbrokes, William Hill, and Bwin.party among its members — has consistently challenged their legitimacy.
GBGA estimates suggest that Britain’s move could cost up to 1,300 jobs in Gibraltar, almost a third of those employed in the industry or associated sectors, and put a £20 million hole in Gibraltar’s government revenues. Internet gambling is among the territory’s most important industries, on a par with financial services, shipping and cruising and tourism.
In its writ against Sajid Javid, the culture secretary, and the Gambling Commission, the trade body claims the move is “designed for economic reasons” rather than to protect vulnerable punters, arguing instead that it “will encourage . . . migration to unregulated or poorly regulated operators which will present genuine risks to the British consumer”.
According to the Gambling Commission, the new regime would ensure greater protection for consumers while enabling the regulator to police effectively the 85 per cent of the market it has estimated to be in the hands of offshore operators.
Ivor Jones, a gambling analyst at Numis, said he believed the GBGA’s consumer protection point to be compelling, adding: “On balance we expect that the GBGA challenge will succeed and that the new regime will not be introduced.”
A spokesman for the Department of Culture, Media and Sport said: “We can confirm that we have been served with a legal claim from the Gibraltar Betting and Gaming Association. We will be responding in due course and continue to prepare for the act coming into force on October 1.”
This article was provided by Bozzle Blog.