According to CNBC, online bookmakers are frantically scrambling to move out of the U.K. and into other parts of Europe and Australia in order to offset potential losses from an upcoming gambling tax. Analysts say the result of the tax could cause a “seismic shift” in the industry.
Beginning December 2014, more than $450 million could be raised by a 15 percent levy that will be placed on remote offshore gambling firms that serve U.K. clients.
The levy would affect major U.K. bookmakers like William Hill and Ladbrokes whom operate in Gibraltar. Currently taxes are levied at 1 percent and capped at the equivalent of $657,000.
Analysts say that the move could potentially force smaller bookmakers out of the market.
David Jennings and Simon McGrotty said of the point of consumption tax in a research note: “The introduction of the POC tax is likely to cause a seismic shift in the competitive landscape of the U.K. online gaming market.”
Gambling businesses claim the industry will lose millions of pounds as a result of the levy and are lobbying for a lower tax rate.
Citi analysts James Ainley and Josh Lipman say that remote betting firms may be able to offset the impact of the tax as much as 80 percent through cost-cutting and relocating overseas: “Italy and Spain continue to offer the most interesting opportunity outside the U.K., given the large market size, high propensity to gamble, favorable taxation and low penetration of online gambling to date.”
Jennings speaks highly of the Australian gambling market saying that it is “particularly attractive” due to less segmentation than its U.K. counterpart, which has the top five companies accounting for roughly 60 percent of the market.
Jennings also said that while the Australian government has banned online casinos, poker and live sports betting, the regulation is likely to soften.