Status of UK Online Casinos

Status of UK Online Casinos

06 Oct 2010 | 00:00 Author:

The legality of online casinos is not seriously contested in the UK. In fact, there are many online casino companies that operate out of the United Kingdom.

Online casino history in the UK, however, is entangled with the laws that regulate their operation in the US.

As the US draws closer to a decision about the legality of online casinos, the UK may find itself at a loss as more companies move away from their country to seek places that charge lower taxes.

Online Casinos in the UK Pay Taxes

While the UK allows online casinos to operate within its borders, it charges them a tax rate around 15 percent. This is a hefty sum when one considers that numerous online casinos operate in smaller countries where they are charged less than five percent in taxes.

In fact, several of the UK's most important online casinos have begun to move their operations offshore. The companies Ladbrokes and William Hill, for instance, have decided to move their operations to Gibraltar, where they will have to pay taxes that are lower than two percent.

The UK Gambling Commission's Influence on Online Casinos

William Hill and Ladbrokes - two of the biggest UK online casinos - had complained to the UK Gambling Commission for several years because offshore casinos had an unfair advantage in the online gaming industry. Their lower tax rates made it possible for them to earn more profits without handing a large chunk over to the government.

The UK Gambling Commission, however, refused to lower the tax rates for online casinos. This might have pushed the companies out of the UK.

In fact, the companies say that they are leaving the country reluctantly. If they are to continue competing with casinos that pay lower taxes, though, then they have to find ways to level the playing field.

How US Law Influences the UK Online Casinos

While representatives from William Hill and Ladbrokes have not said this explicitly, many industry analysts suspect that they are moving to off-shore sites because they expect the US to change its laws that make online casinos difficult for citizens to use.

Currently, it is illegal for banks and credit card companies in the U.S. to transfer funds to online casinos. This does not make it impossible for U.S. players to participate in online gambling, but it does create considerable problems.

If the US decides to lift some of the regulations against online casinos, then one can be sure that the country will want its cut of the profits. Companies like William Hill simply will not survive if they have to pay taxes to the US as well as the U.K.

Their move to offshore locations might therefore be seen as a preparation to enter the large US market.

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