Insights: Political Expediency over Commercial Pragmatism

The United Kingdom appeared to be grooming itself to become the world leader in regulated remote gambling, but the remote gaming duty, set at 15 percent by Chancellor Gordon Brown this week, effectively dashed the hopes of many tax-sheltered offshore operators wishing to relocate to the country.

IGN asked Warwick Bartlett, lead partner, Global Betting & Gaming Consultants,

Did the U.K. government turn its back on the industry?

"Political expediency has ruled over commercial pragmatism."

Warwick Bartlett: The government has changed its attitude toward gambling following a concerted effort on the part of the British media--The Daily Mail, for example, with its support for the Conservative Party. 3 million middle class readers have taken an anti-gambling stance as a way to embarrass the Labour government on the lead-up to the last General Election. It is Global Betting & Gaming Consultants' view that the Chancellor does not want gambling issues to cloud government policy in other areas as they approach the next election. So, by increasing tax on the large casinos and imposing a tax of 15 percent on gross profits for online casino and poker, he has effectively moved the gambling debate to the back burner.

This has come about because the Department for Culture, Media and Sport (DCMS) lost the debate to the media and even their own supporters in Parliament over whether gambling is a mainstream activity rather than a sin that should be restricted. It is my view that Ministers did not believe in the argument themselves and were therefore unable to carry the debate with any conviction.

The result now is that no one will repatriate to the United Kingdom: no one will set up an online gambling business in the United Kingdom, and those that are here on the sport-book side will seriously consider moving their servers elsewhere.

This is very sad because the United Kingdom, with all its expertise, will continue to be an importer of online gaming products, even though it has the skill and knowhow to be a major exporter. Political expediency has ruled over commercial pragmatism.

The irony is that, just when the United Kingdom could be taking the lead when other markets in Europe and the United States are starting the process of slow liberalisation, we are likely to have given the market away to competing countries. So far as the operators are concerned, they will locate in jurisdictions that best suit their purpose; it will be business as usual except they will be paying taxes elsewhere, not the United Kingdom.

Warwick Bartlett is the lead partner of Global Betting & Gaming Consultants (GBGC). GBGC has established itself as one of the leading specialist international gambling consultancies in the world, and are a widely quoted source of industry data in share prospectuses and analysts' notes, as well as on TV/Radio and in publications as diverse as the Financial Times, Forbes, Time Magazine, BBC Radio 4, BBC Breakfast, ITN news, the Economist and Fortune magazine.