THE BLOG

Government Plans Could See a Quarter of Punters Drift to the Black Market

13/12/2013 16:23 GMT | Updated 11/02/2014 10:59 GMT

Betting is extremely popular in the UK with more than half of the British public (56%) gambling; nearly three quarters (70%) if you include The National Lottery. The focus for the UK government and the industry should be to ensure that consumers enjoy gambling in a safe, fair and regulated environment. However, government proposals to licence and tax online operators on a place of consumption basis could result in just the opposite - a surge in the number of players being exposed to black market operators - which would be in nobody's interest.

The government has proposed that all overseas operators will be allowed to offer gambling services into the UK so long as they have a licence directly from the UK Gambling Commission and pay 15 per cent point of consumption tax. We are concerned that the UK government and the Gambling Commission cannot oversee these remote operators and markets effectively and black market operators will be given a competitive advantage.

Over the last two decades, Gibraltar has developed an international centre of regulatory excellence, where operators provide customers with a safe and secure environment in which to bet. Yet the government's draft proposals would undermine effective local regulation, making responsible regulated operators uncompetitive and exposing UK players to unnecessary risk from unregulated operators.

In the online gambling world, price is king and punters follow the best value odds; there is a real danger that consumers will be captured by black market companies, who are able to offer better value as they will not be subject to the same taxation regime.

This is far from idle speculation and has been clearly evidenced in a report by Deloitte, which found that the proposals will result in an increase of 27 per cent of consumers drifting into the black market. The risk for UK consumers is significant and experience internationally, including in France, Italy and the US has shown that point of consumption regulation and taxation at such a high rate can lead to a significant escalation in black market activity.

Indeed the government's own analysis proceeds on the basis that approximately 20 per cent of the UK market would be unregulated and would not pay UK gambling duties under its own taxation proposals. This is not a few stray punters, this is one fifth of the total UK market and should be of serious concern to the government and treasury.

The only real winner under the current proposals would not be the consumers who need protecting, nor the government wishing to raise revenues, but instead the unscrupulous black market bookmakers capitalising on the misfortune of firms currently championed for their regulatory excellence.

The GBGA have started a constructive dialogue with the UK government to ensure that we do not lose an opportunity to create legislation that actually helps the gambling industry, the government and, most importantly, the consumer. Given the regulatory experience and expertise that exists on The Rock, we are well placed and willing to help the UK create a world leading regulatory environment for online gambling.