UK Online Poker Licensing Deadline Close at Hand

August 9th, 2014 | by Brian Corlisse
Houses of Parliament, London

The UK Parliament passed the Gambling (Licensing and Advertising) Act earlier this year. (Image: Destination360.com)

If you operate an online poker room or other gambling site and you want to offer your games in the United Kingdom, you’ll still be able to do so uninterrupted later this year. The new Gambling (Licensing and Advertising) Act doesn’t actually change who can apply for such a license, and offshore operators are still welcome in the market. But once the law goes into effect, it’s going to be a lot more costly to do business across the pond.

The UK Gambling Commission has published a note reminding operators of online poker sites that they’ll need to get their applications for a new license completed by September 16, as the 2014 Gambling Act is expected to go into effect on October 1, 2014.

Offshore Operators Affected By Changes

“Offshore gambling operators — currently regulated overseas but transacting with consumers in Britain — wishing to continue to provide services in Britain beyond this date have until 16 September to make an application and pay a fee to ensure their business is not impacted,” the Gambling Commission wrote on their website.

Currently, overseas sites from white-listed jurisdictions have full access to the UK market. As long as they are regulated where they are hosted, these sites only pay taxes to their local government, usually at a rate well below the 15 percent charged by the UK on local operators. That tax rate led many operators based in the UK to base their online gambling operations in Gibraltar, the Isle of Man, or other jurisdictions with lower taxes.

Point of Consumption Tax Implemented

But the Gambling (Licensing and Advertising) Act will no longer allow that to happen. It institutes what is known as a point of consumption tax, in which any and all operators who earn revenue from U.K-based customers must pay a 15 percent tax on those profits, regardless of where they are located. These companies must also be licensed by the U.K. Gambling Commission in order to be allowed to legally operate there.

The commission believes that this legislation will better allow them to regulate the sites and operators who are offering Internet poker and casino games to British customers.

“This is a welcomed step forward — bringing the 85 percent of the remote gambling market currently regulated overseas within the Commission’s remit will provide us with direct access to and oversight of all commercial gambling provided to those in Britain,” said Philip Graf, chairman of the Gambling Commission. “This means that we will be far better placed to protect players and to respond to and advise the government on emerging player protection and consumer risks and issues.”

Given that the deadline for applications is only two weeks before the new law will go into effect, it’s unlikely that all companies applying for a license will be fully reviewed in time. However, the law does allow for any company that meets the deadline to receive a “continuation license” that will allow firms already in the UK market to continue servicing customers until their license has been approved or rejected.

It’s also unclear if all foreign poker operators currently operating in the UK will choose to apply for licenses. Some may balk at the tax rate, while others may decide the “grey market” regulations are not worth complying with. Those rules stipulate that no more than three percent of an operator’s revenues can come from jurisdictions where there is no clear regulatory framework (which could include large markets like Australia, Russia or Canada), and that companies must provide a legal rationale for why they are in those markets in the first place.

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