First moves in UK “secondary licensing” ?

The British media are reporting that a parliamentary announcement yesterday (Wednesday) by a government minister heralds the imposition of the much debated ‘secondary licensing’ regime, designed to enable British-licensed online gambling firms to better compete against offshore operators who access the UK market, but pay lower taxes in their jurisdictions.

John Penrose, the minister for tourism and heritage for the Department of Culture, Media and Sport, announced that legislation would be tabled on Thursday, requiring a licence fee to be paid by those active in placing bets on racing, and other sports, as well as gaming activities, with firms outside the UK.

Specific details of the amounts involved, and the distribution of what is perceived as a new betting tax, have yet to be clarified.

Since major bookmaking firms such as Ladbrokes, William Hill, Betfred, as well as Betfair, moved to more benevolent tax jurisdictions offshore, many millions in revenue have been lost to the Treasury, as well as contributions to horse racing through the Levy.

It has been suggested that the government could ban advertising in the UK by offshore gambling companies unless they hold a British licence in addition to one from their offshore jurisdiction of choice.

The Remote Gaming Association, a trade body representing the interests of online gambling companies, immediately reacted to the announcement, saying that it would play a constructive part in developing the system.

Clive Hawkswood, the RGA’s chief executive, said: “Now that the Government has confirmed its intentions, we intend to play a constructive part in the process to ensure that the new regulatory and tax regime will provide an environment where Government objectives can be achieved; where the industry can succeed commercially in the global online gambling market; and where the interests of consumers continue to be properly safeguarded.

“The main players in the UK online gambling market are predominantly based offshore, but they already adhere to high regulatory standards which are comparable to those in Britain. Regulation by the Gambling Commission therefore holds no fears for our members, but a significantly higher tax burden that could lead to a reduction in value and choice for consumers certainly does.

“It is therefore clearly crucial that any new regulatory regime is complemented by a fair and sustainable fiscal regime. We look forward to working with DCMS, HM Treasury, and the Gambling Commission to ensure that all of these issues can be successfully addressed.’

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