Sunday, March 25, 2007

Dreams that the United Kingdom would become the standard bearer for the
online-gambling industry were dashed yesterday when UK Finance Minister
(James) Gordon Brown announced a new 'Remote Gaming Duty' (tax) of 15%, a
move ensuring that online firms will not move from friendlier tax havens to
the UK in the near future. In addition, Brown's new budget increases the
levies assessed on land-based casino operations, throwing a major wrench
into the Vegas-style casino expansion popping up across that nation. The 15%
remote duty called for by the new budget is miles apart from the 2-3% range
online companies cited as being low enough to make relocating to the UK
worth the bother; virtually no online casino could give up an extra 12% of
taxable revenues and remain competitive against firms not subject to similar
fees. The announced budget leaves in serious doubt the accords championed by
UK Culture Secretary Tessa Jowell, who led the push to legalize and regulate
online gaming and chaired last October's Ascot racetrack summit conference
of nearly three dozen interested nations. While the 15% tax is, on its face,
a fee equal to the domestic levy charged to bookmakers and bingo halls, it
may be part of a larger strike against gambling in general by Brown's Labor
Party faction. Brown also stripped away the bottom tier of tax levels for
the smallest land-cased casino operations, and replaced it with a new 50%
rate - far over the previous top tier, which was 40%. The jump, affecting
casinos such as the new Manchester casino (which are expected to post annual
gross house wins of over £10 million), could impact these casinos' ability
to become first-class tourist destinations. Efforts to explain Brown's
surprise tax hit have moved in several directions. Some reports have focused
on Brown's strict Presbyterian upbringing, said to be staunchly
anti-gambling at its core, while others see this as a planned boost to Labor
Party efforts to force the scrapping of government plans to allow the
building of 17 new "supercasinos," the first license of which was awarded to
the Manchester facility. An all-or-nothing vote on that topic is scheduled
for the UK's Parliament in the very near future. As with all perceived 'sin'
topics, gambling remains a hot-button concern. No country offers uniformity
or agreement on gambling's regulation and governing. Even as the European
Union has moved forward on the topic of gambling as a whole, the UK has
stepped back from its chance to assume a leadership role.