British Treasury Official Recommends Change

24 January 2001
Government officials in the United Kingdom are proposing a plan which, they hope, will help England compete in the global online sports betting market.

Stephen Timms, Financial Secretary to the Treasury, introduced yesterday at a British Betting Office Association seminar a plan that would eliminate the Great Britain's current 9 percent tax currently paid by punters in favor of a flat-rate levy on profits made by bookmakers.

The new flat-rate levy is seen as a way for the United Kingdom to compete with offshore locations offering lower taxes. Timms acknowledged that many U.K.-based sportsbooks and online betting operations have moved their facilities offshore to avoid the tax and he believes the new system would not only bring some of them back, but also add more competition to the industry.

"We want to make sure that any benefits from reform are fairly shared with racing and with customers," he said. "We also want to make sure that by making the U.K. industry more competitive, we bring betting back onshore and welcome a new international market to this country."

In his speech, Timms pointed to the rising amount of money the industry has brought in recent years.

"The British betting industry is competitive. Over the past three years turnover has risen from £6.8 billion to £7.3 billion," he said. "The government wants it to remain competitive and grow. Modernizing the industry must benefit everyone otherwise the customer will go elsewhere."

The move isn't a slam-dunk for British operators.

Essentially, the Treasury is taking a gamble on the gambling industry. Last year the sector brought in £492 million to the Treasury through the 9 percent tax. If the new plan goes through, the government would immediately see a decrease in that amount.

"In the short term, this would mean the government would forego a considerable sum in revenue," he explained. "Some have encouraged us to take that gamble so that, in the medium term, we will encourage growth of betting in the U.K. and so allow the Exchequer to recover its position, but with the industry stronger than before."

The proposal will be included in the new budget, which has yet to be finalized. Reports from the U.K. have that process scheduled for early March.

Timms concluded his remarks by letting those in the industry know that for the new system to work effectively, the industry must succeed.

"We are prepared to place a bet on the skills and the abilities of the U.K. betting industry to win in a worldwide marketplace and to achieve long-term growth," he said. "It is in our interests, as well as yours, that you should succeed." Click here to read Timms's speech in its entirety.