I think the British government is on the verge of making a huge mistake.


Matthew Hancock MP successfully managed to persuade a handful of MPs to
 vote for his bill that would enable the government to tax punters at the
 place of consumption.

The bill will enable the UK customers to pay horserace betting levy 
which will delight Hancock he is the MP for Newmarket the centre of 
British horseracing.

If only things were so easy. They are not. The internet as the 
government is about to learn is very difficult to regulate. If it were
 so easy the nasty governments in the Middle East would be better able to 
control their people. There would be no child pornography on the net,
 but sadly there is.

Previous draconian measures to control internet gambling have failed. 
Norway last week bravely admitted that its recent measures of trying to 
control internet payments for gambling had failed. Italy and France now
both admit that 70 per cent of internet gambling goes offshore after trying all
types of blocking measures, restricting payments and taking ISPs to 
court.

What Hancock's bill will do is to cause the listed companies to obey the 
law and see their customer base eroded while giving encouragement to 
those based off shore in unregulated areas.

The mistake being made by government is that they are allowing the horse
race industry to set the agenda for an industry where horse racing is
only 12 per cent of the total UK only internet gambling market. This makes no sense at all. Only a government could consider such a 
thing.

What should government do? What is the pragmatic solution?

We learned from both France and Italy that punters will not sit there
and be taxed to death. They have been seduced by value there is no
turning back. The second point is that there are numerous anonymous websites, some of 
which are not even licensed that will take their money and that segment
of the market will grow. The answer is to get ahead of the game. Introduce a rate of tax that the
operator will pay to be completely legitimate and one that does not
 increase the margin against the customer over what is offered illegally. That same rate should apply to offline as well and the UK should 
actively encourage investment in the casino industry which attracts 
tourists to the UK.