888 Holdings CEO Brian Mattingley says that there’s potential for online poker and the wider Internet gambling market to suffer some down times before achieving the growth that seems inevitable in the industry, and he blames European Union online gaming regulations in part for that reality.
Online poker, in particular, in Europe is undergoing plenty of changes, and there is a lot of uncertainty in the market at the moment, according to the outgoing CEO, who will be stepping down from 888 in 2015.
“All of us are going to have to work hard,” Mattingley said in a recent interview with Pokerfuse, one in which he outlined the challenges facing operators, consumers and governments as both the global economic landscape and the regulation of online poker continues to change.
One of the major topics of interest in the world of online poker right now is the implementation of the UK Gambling Act, one that includes a new 15 percent tax on all revenues derived from UK customers. 888 is a prominent member of the GBGA, which has been challenging the law.
Mattingley has previously been supportive of these efforts, and with over 40 percent of 888’s revenue coming from the UK, the outcome of such challenges could be critical to the company’s bottom line.
Mattingley was more muted in his latest comments, saying that he was okay with regulation “as long as I understand what that is.” He also said that he wasn’t “totally sure where [the Gambling Act] will end up,” and said that the regime wasn’t “particularly well thought through.”
Given 888’s heavy presence in the UK, it’s no shock that the company will be staying in the country regardless of the outcome of the GBGA challenge. That means that 888 will also have to explain its gray market activities to UK regulators, though Mattingley doesn’t expect that to be a problem.
According to Mattingley, the company is currently operating with a license in every major market that it offers real money play in. The only exception to that rule is Germany, which has yet to issue licenses to any operators.
Similarly, Russia isn’t exactly in a rush to offer licenses to Western companies, particularly after the crisis in Ukraine thawed relations between that country and Western nations. That could cause issues for many online poker firms if tensions remain heightened, but Mattingley says 888 does not do significant business in Russia, limiting the impact of any troubles there and putting it under the three percent threshold for justifying their presence in the market to UK regulators.
One place where 888 Poker has withdrawn from the market is in France. That decision came at the end of 2012, and was an early sign of the industry-wide struggles that have been plaguing the French online poker industry. Poker traffic has been down across the board in France, and while regulators at ARJEL cite a decline in the game’s popularity, many have instead blamed a repressive 37 percent tax rate, something Mattingley said was behind his company’s decision to abandon the market.
Taxation in European nations could continue to be an issue going forward, with other nations like Portugal also featuring relatively high tax rates on gambling. In addition, changes to the EU’s value-added tax will come into play in January, as goods and services delivered via the Internet will also be subjected to the VAT. That will include online poker, though it’s not clear how much of an impact that will have on players.