British gamblers will move to unregulated sites if the UK government moves ahead with a plan to charge gambling operators a 10 percent point of consumption tax, a confidential report commissioned by William Hill has found.
The report, which was leaked to newspaper The Daily Mail after accounting firm Deloitte submitted it to the UK Treasury, comes at the same time as the Treasury reviews its plans to introduce the 10% tax on licensed remote gambling operators.
It found that although the government is ostensibly introducing this tax to protect consumers, this will in fact have the opposite effect, and will see up to 27% of revenues redirected to unlicensed (and therefore untaxable) gambling sites.
In addition, the report found that if the government later increases the tax to 15%, as much as 40% of gambling revenues could be directed to unregulated sites. This would actually translate to a massive amount of lost tax revenues, as British consumers could spend 2 billion pounds on online gambling this year if the trends are any indication.
The Current Situation Explained
At present, gambling operators located inside the United Kingdom are charged with a 15% gross profits tax, something which caused the larger firms like William Hill and Ladbrokes to locate their betting services offshore in Gibraltar and the Isle of Man.
Last year the UK government announced that it would begin to regulate bets at the point of consumption, meaning any gambling operator wishing to offer its services legally to British gamblers would have to obtain a UK Gambling Commission and pay the tax.
But as the Deloitte report shows, this will merely encourage UK gamblers to seek other avenues for their activities, and so gambling operators are now urging the government to reverse its decision.
As William Hill CEO Ralph Topping said, “Money will always find a way out. More people will go overseas or to fly-by-night, unregulated sites where the consumer is not protected.”