As mentioned in our May 2013 update, the UK is currently proposing online / remote gambling reforms. Currently, gambling operators are subject to UK tax if their gambling activities are supplied from the UK. However, various online gaming providers have based their operations outside of the UK in tax friendly jurisdictions such as Gibraltar.
In May 2013, the Gambling (Licensing and Advertising) Bill 2013-14 (Gambling Bill) was introduced into the House of Commons in the United Kingdom. The Gambling Bill seeks to extend the scope of the regulatory regime governing remote gambling under the Gambling Act 2005 (GA) by, amongst other things, requiring overseas based operators to obtain a remote operating licence (ROL) if:
- at least one piece of remote gambling equipment used in the provision of the facilities for remote gambling is situated in Great Britain; or
- no such equipment is situated in Great Britain but the facilities for remote gambling are used there. In this regard, if the person providing the facilities “knows or should know that the facilities are being used, or are likely to be used, in Great Britain” then the person commits an offence under s.33 of the GA and may be liable to a fine and/or imprisonment3.
During the debate of the Gambling Bill in the House of Lords on 4 March 2014, it was disclosed that the UK Gambling Commission had reached an agreement with major payment systems organisations to work together to block financial transactions with unlicensed operators.
In addition, an amendment to the Gambling Bill was proposed by the House of Lords (which has now been approved) which enables the Secretary of State to make regulations to ensure that the bookmakers to whom the horse race betting levy under s.27 of the Betting, Gaming and Lotteries Act 1963 is payable include those bookmakers who are required to hold an ROL under the GA. This represents a potential additional cost for overseas based operators.
Currently, the Gambling Bill is awaiting Royal Assent however a date has not yet been set for this to take place.
It is also proposed that remote gambling operators, no matter where they are located, will be required to register with HM Revenue & Customs’ proposed Gambling Tax Online system and pay either a remote gaming duty, general betting duty, or pool betting duty at a rate of 15% on profits or receipts from “UK persons4”. The reforms to gambling taxation are contained in the Finance (No.2) Bill 2013-14 (FB) and it is anticipated that such reforms will be implemented on 1 December 2014. Enforcement measures under the FB include a fine, imprisonment and the cancellation of the relevant operator’s ROL in certain circumstances.
The FB was introduced to the House of Commons on 25 March 2014 and will next be considered by the Public Bill Committee on 29 April 2014.