An influential cross-party group of MPs has warned the Treasury not to impose levels of taxation on online and mobile gambling that are so high they risk creating a black market that damages consumers and legitimate businesses.
Among the recommendations of the Department of Culture Media and Sport’s report ‘The Gambling Act 2005: A Bet Worth Taking’ was the suggestion that “the Treasury still needs to work with industry stakeholders to establish the correct level for online gambling taxation, taking into account the need to encourage companies to accept UK regulation and taxation and to discourage the formation of a grey market.”
Charles Cohen, CEO of Probability and chairman of the newly-formed Hi-Growth eGaming Companies Forum, which represents small but innovative online gambling operators and technology companies, commented: “It’s good to see law-makers recognising that the imposition of a high rate of tax on the online industry could have negative consequences for UK consumers. It would see legitimate, regulated operators forced to exit the UK market. It is inevitable that the gap they leave will soon be filled by black market operators who have no intention of obtaining a licence, paying tax, or treating their customers fairly.
"Smaller companies and technology developers who are the real drivers in this industry are particularly at risk; bigger operators can subsidise lower margin i-gaming with profits from other areas of their businesses. Smaller businesses have nowhere to hide. A lot will just go out of business or take their chances in the black market either as operators or suppliers.
"Our forum has made submissions to the Treasury that it needs to consider alternatives to simply applying a flat-rate, high level of duty across the whole industry. No legitimate operator should be taxed out of the market. We’re not asking for no tax at all. We’re just asking government to consider that when it comes to gambling, you have to consider tax and regulation as two sides of the same coin. As the committee’s comments suggest, the right solution has to be one that doesn’t see tax work to the detriment of the creation of a strong regulatory regime that ultimately protects UK consumers.”
