GBGA Files High Court Appeal in Remote Gambling Tax Tiff

The Gibraltar Betting and Gaming Association (GBGA) has followed through on its stated legal threats against the new United Kingdom point-of-consumption task by filing a formal appeal in the British High Court.  The GBGA, which represents dozens of Gibraltar-based gambling firms, hopes to block implementation of the United Kingdom’s Gambling (Licensing and Advertising) Act of 2014, which is designed to repatriate tax revenue from gambling wagers placed by British punters, which has been siphoned away from the UK’s tax coffers over the past decade.

uk-flagDozens of online gambling firms have relocated to Gibraltar over the past decade, which offers huge tax-shelter incentives that have allowed the largest European online gambling firms to operate virtually tax free.  The GBGA represents most of the online gambling firms that are based in Gibraltar; the tiny promontory at the mouth of the Mediterranean Sea remains a British protectorate but is autonomous for tax purposes, which created the scenario under which Gibraltar was able to market itself as a haven for such online concerns.

The GBGA issued a lengthy statement to accompany its legal challenge against the point-of-consumption tax, which was set to be implemented within weeks.  More than £300 million in annual tax revenue is at stake, which the dozens of online firms have deposited as profits, essentially tax free, during the ongoing exodus to Gibraltar.

The firms — and Gibraltar itself, which receives roughly a third of its annual corporate tax base from the pittance it charges the online companies — are challenging the new law as an alleged violation of the free movement and trade of online services as agreed upon under European Union charter.  However, the EU has voiced similar stances regarding online-gambling services in other EU member countries, but has been singularly unable to prevent such EU member countries from establishing online-gambling firewalls of various sorts.

Earlier this month, the UK Gambling Commission notified the online companies, without naming any specifically, that they had only a little over a month to comply with the law and file formal applications with the UK.  It is unknown whether any of the Gibraltar-based firms have complied to date.

As of today, the GBGA lists the following firms as members: 32Red, 888 Holdings, Bet365, Betfair, Betfred, bwin.party, Digibet, Gala Coral, Gamesys, IGT, Ladbrokes, Lottoland, Mansion, Nektan, Ongame, Probability, Stan James, Spielo, Tombola, Victor Chandler, William Hill and Yggdrasil Gaming Ltd

Here’s the full release of the GBGA statement announcing the appeal, which claims the new British law is illegal:

GBGA takes legal action to challenge “illegal” British gambling law

The Gibraltar Betting and Gaming Association {GBGA) has filed a legal challenge against a law introducing a new gambling licensing regime in the UK.

The GBGA argues that the new regime, introduced through the Gambling (Licensing and Advertising) Act 2014 and also the guidance and policies of the Gambling Commission of Great Britain, is “unlawful, because it is an illegitimate, disproportionate and discriminatory interference with the right to free movement of services guaranteed by Article 56 TFEU, and is irrational.”

Whereas the declared intent of the law is to protect consumers, the Association fears that it could achieve exactly the opposite and cause consumers real harm.

“The absence of effective supervision and enforcement, coupled with the burdensome regulatory requirements, will encourage the growth of and migration to unregulated or poorly regulated operators which will present genuine risks to the British consumer”, the Association argues in its submission to the High Court of England and Wales. “When introducing the New Licensing Regime, the Defendants rejected the option of a “passporting” regime. This would have been both less onerous to legitimate operators and more effective in protecting consumers, since it would have been based on effective supervision and cooperation between the GC and overseas regulators.”

The GBGA believes that the new regime was designed for economic reasons: to grant UK operators a competitive advantage over those from overseas. This objective, its counsel argues, is illegitimate.

Because the new licensing regulation will come into force on October 1st, the GBGA has asked for an expedited hearing of its case.

Peter Howitt, chief executive of the GBGA, commented: “It is extremely disappointing that our concerns have not been listened to by the UK Government, and that the Gambling Commission’s plans to expand its remit have been accepted. The only beneficiaries of this change are the UK domestic industry and the Gambling Commission itself, which has persuaded the UK Government that it should be the global regulator of this high tech and complex industry. It has neither the resources, the legal powers, nor the skills to operate successfully across the globe. This is bad news for consumers, and for international competition. We have an effective and knowledgeable regulator in Gibraltar. That the Gambling Commission believes it is better placed to regulate the industry here is laughable. We are determined to fight against measures that actually undermine consumer protection.”

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