UK Proposes New Restrictions For Offshore Operators

Up until now online gambling in the UK has been pretty loosely regulated. Many online gaming operators moved offshore to avoid heavy taxation by the UK government. Offshore sites have a distinct competitive advantage over sites licensed in the UK but according to recent news reports that may end soon. According to an unnamed ‘senior government source’ the UK government may crack down on offshore gaming sites. The government may ban offshore gaming sites from advertising in the UK and may also adopt US style laws prohibiting the use of credit cards at offshore gaming sites. While the government says the moves are designed to protect the public many are skeptical and believe that the proposed laws are designed to generate new tax revenues.

Internet bingo sites located offshore are watching developments closely. Recently many internet bingo operators have spent millions on an extensive television campaign. Many of the bingo sites advertising are located offshore and the proposed legislation would prohibit sites not licensed in the UK from advertising in the country. Currently internet bingo sites on the British government’s ‘white list’ are allowed to advertise in the UK. Recent reports indicate that Culture Secretary, Jeremy Hunt is concerned about ‘problem gambling’ and is considering the imposition of restrictions on credit card use at gaming sites. Land based bingo halls in the UK have never been allowed to accept credit cards.

The unnamed government source told the Daily Mail, “Ministers are concerned about the explosion of internet gambling advertising since [the political party then in power] Labour relaxed the gambling laws.” The source also said that the Conservative-LibDem coalition government is trying to ‘protect ‘the public from gambling companies that are not up to UK standards. Gaming companies based in the UK are required to be licensed by the UK Gambling Commission and pay taxes on gambling profits. Because of the high tax rated most gaming companies and internet bingo sites are located offshore giving them a serious advantage. White list sites are currently allowed to advertise but the source said the government intends to close this loophole soon.

The report has serious implications for most of the top internet bingo operators most of whom are located offshore. Without the ability to advertise and promote brand awareness many internet bingo operators would be in serious trouble. For marginal bingo operators a licensing requirement would most likely put them out of business. Most people in the internet bingo industry believe the proposed restrictions are more about raising tax revenues than they are about ‘protecting the public.’