Gibraltar has become a popular destination for online gaming companies that are looking to serve British customers. This week, the British government threw a curve ball at Gibraltar by creating a new tax rate for gamblers using Gibraltar-based sites.
Prime Minister David Cameron has come up with a plan that would raise the tax rate on bets placed at Gibraltar online casinos from one percent to 15 percent. That is a sharp jump, and has Gibraltar officials upset.
“Internet gambling has become a premiere industry in the world, and Gibraltar has a large portion of licensed online companies in their jurisdiction,” said Analyst Tre Simmons. “If this plan goes through, it has the potential to cripple Gibraltar. Companies would run from the area with a tax rate that high.”
Another part of the new plan would insist that companies setting up shop in Gibraltar not only have a local license, but also a British license if they wanted to take bets from British customers.
Gibraltar officials are permitted to make their own laws regarding online gambling regulations, however, they are subjected to British laws as well.
The UK is one of the groundbreaking areas in the world within the Internet gambling industry. Gibraltar has become a hot spot for operators of online casinos since the operators started pulling out of the Caribbean territories of St. Thomas, Costa Rica, and Panama. The new taxation structure had some Gibraltar officials speaking out on the new plan. “The model of prohibition and higher taxes has been tried before,” said Gibraltar government head Fabian Picardo. “If the UK takes the tax approach that it is proposing, it would be devastating for the UK itself.”
The UK government is attempting to create a balance between the online and land-based casino industries. In recent years, the online sector has surpassed land-based gaming, leading to a call for change from within the land-based casino operators.