UK Licensing for Offshore Online Gambling

March 25, 2010 | News Category: Gaming Law

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Recently, a point of much contention in the United Kingdom in the online gambling world has been one regarding taxation levels for those online gambling companies that are registered and licensed within the UK versus those that promote their offshore operations to UK residents.

Certain large gambling concerns, such as William Hill and Ladbrokes have moved their online gambling divisions offshore in order to avoid the high rate of taxation that they had to pay to run these services out of the UK. There have been complaints to the Department for Culture, Media and Sport regarding this issue, since those online gambling concerns that have been licensed offshore, such as in the Isle of Man, Gibraltar, and Malta have been able to promote their online gambling sites to UK residents but have not had to pay the high taxation that UK companies have had to pay.

It has been suggested that foreign online gambling operators should need to obtain UK licensing before they are able to promote their online gambling operations to UK residents. The Department of Culture, Media and Sport has now launched a consultation regarding this issue. The UK government recognizes the problems and issues that local online gambling operators have had with the higher taxation, which allows the foreign operations to have a competitive edge over the UK operations since their basic costs are substantially lower because of much lower taxation levels.

Gerry Sutcliffe, the UK Sports Minister made an announcement earlier this year that a process would soon be launched that would address the issues regarding unequal taxation for online gambling operations. He explained that the government had noted the issues, and would be examining the possibility of secondary licensing for those non-UK operators wishing to promote their online gambling sites to UK citizens.

The plan that has been proposed, and is subject to a consultation period, is to have those online gambling operations that are licensed offshore to apply for a secondary gaming license from the UK if they wish to operate as they presently do. The consultation period is to last for a 12 week period, during which time, those that wish to respond to the consultation can do so by Friday, June 18th 2010.

Unless there are any major surprises, it is likely that after this 12 week consultation time period that the secondary licensing suggestion will be adopted, and then incorporated into the law.