ONLINE GAMBLING FIRMS SEE NO ADVANTAGES IN OPERATING OUT OF UK

06 November 2006

EDITOR’S OP

The talk around town, London Town that is, is that the British government’s attempts to get online gambling firms to base their operations in and pay tax to the UK is not going to fly . The Observer reported that John Healey, Treasury Minister for the UK was addressing tourism industry leaders last week. During his speech, he said the government is having problems fixing a tax rate to persuade online gambling firms to pay tax in the UK. Currently these gambling firms are located in tax havens such as Costa Rica.

The Gambling Commission promised a ‘kite mark’, a sort of government seal of approval, for gambling firms who move their operations to the UK and adhere to UK regulations, but this doesn’t appear to be much of a motive to relocate.

Ladbrokes proposed a possible solution. Instead of a tax, define a set percentage of income by gambling firms based in the UK to be paid to the British government specifically for treatment of gambling addicts. There haven’t been any indications that this solution would be welcomed.

On first glance, a person would think that the online gambling firms would look favorably on gaining respectability; pay a tax, conform to UK guidelines and remove the company and eventually the industry from that grey area of illegitimacy.

So why is the online gaming firms baulking at this? Why would they not want to pay for legitimacy and respectability? Maybe it’s the fact that last week UK Sports Minister Richard Caborn stated the UK will still respect extradition requests from the US in relation to online gambling.

The arrest and detainment of 2 of Britain’s respected online gambling business executives in the US took place without so much as a token protest from the UK. Then there was the decimation of the London Stock Exchange by US politicians with the passing of UIGEA; the major motivation for the bill that trashed the London Stock Market was a Congress looking for voter support from special interest groups. Not a whimper came from Great Britain. Well, not in the government, anyway.

Let’s see…. currently, gaming firms reside in countries that offer tax advantages, a friendly government and no extradition on the whim of the US. If the gaming firms take the UK up on their offer, they would exchange their current situation for a country where they would pay a tax that could be increased by the will of the government, require the addition of personnel to handle reporting and government compliance and the assurance that should the United States require a gaming company official’s presence in the US to answer any questions they may have, the UK will extradite the requested party, no questions asked.

Nope, ain’t gonna happen. Sometimes, the price for respectability is too high.

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