Threat of company closures and job losses looms large over online betting industry

Jun 30 2011 Advertisement Feature

The chief executive of Betting Expert, a prominent betting website, hopes that government officials will carefully consider the damaging impact that proposed tax changes could have on the online gambling industry. 

Jesper Soegaard, the head of BettingExpert.com, fears that hundreds and hundreds of companies will go bust and there will be major job losses as a result if stricter online gambling regulations come into force. 

At present, gaming duty in the UK is 15 per cent, compared to rates as low as one per cent in offshore tax havens like the Channel Islands and Gibraltar. This has prompted some of the biggest betting firms to reap the benefits of the significant tax breaks available overseas.

In an attempt, however, to breathe new life into the gambling industry, the government are expected to implement a radical overhaul of the online gambling sector, which is worth s1.5 billion a year. The planned changes, along with potential for increased regulation from the European Commission, will stop online betting companies from taking advantage of offshore tax havens.

Should Chancellor George Osbourne take such action, Soegaard warns of tough times ahead for smaller firms that will be unable to compete with more established companies like Ladbrokes and William Hill. 

"It would seem that the only way the UK government is going to reverse the fortunes of the gambling industry, which has seen profits stagnate since liberal licensing laws were introduced in 2007, is by changing its offshore tax regime and increasing gaming duty for offshore companies", said Soegaard

"In the current economic climate, with the government desperately seeking to raise funds in every area available to them, it is unsurprising that an overhaul in gambling regulations is being discussed. However, the impact on smaller betting firms could be catastrophic".

"While the likes of more established companies like Ladbrokes and William Hill, which have both moved their operations overseas, would be able to maintain a presence in the UK market even if regulatory changes meant they had to pay increased duty, there are hundreds and hundreds of companies that would simply have to cease trading".

"Should the entire bottom end of the UK market disappear overnight, the effect on the online betting industry could be seismic. Not only would many jobs in online betting be lost, but thousands of customers would be looking for a new home".