Rules remain “unpredictable” for gambling operators across Europe

Posted on November 14th, 2013

Unpredictable Taxes in Europe

Things are starting to change over in the US, as far as online gaming legislation is concerned (New Jersey is set to open its doors to licensed operators like 888 Casino). We though we’d take a look at what’s happening in Europe.

Well, it’s a bit of a confused situation, we’d say. Gambling operators across Europe, especially in Eastern markets, are facing uncertainty over rules and regulations. According to Blagoja Petrovski, the Chief Marketing Officer for Sport Life, the biggest land-based betting company in Macedonia, who has indicated that they remain “changeable and unpredictable”.

Many operators have echoed these feelings, pointing to a lack of clarity as a major issue with the gambling business.

Uncertainty over tax laws continues to be a problem for operators. Britain is set to introduce a 15% tax rate from December 2014, which will tax offshore online operators based on where their customers are, as opposed to where the company is registered. Although this tax is expected to generate £300 million annually in additional tax revenue for Britain, this move will likely have a major impact on the profits of operators who are aiming to attract UK customers.

In other parts of Europe, land-based operators are facing higher tax rates. Earlier this year, the Netherlands government sought to tax online gambling companies at 20%, with land-based gambling facing a much higher rate at 75%. Previously Dutch land-based companies paid just 29% of gross gaming revenue in tax, but the government is hoping that this new two-tier tax system creates a “responsible, reliable and controllable” online gambling market.

Unpredictable changes in gambling tax are occurring across Europe. Last month, Bulgaria government officials announced in a surprising move that they are planning to amend the 15% tax on turnover. This, however, may only come into effect for online gambling and not land-based operators.

Elitza Ivanova, a spokesman for Eurofootball, Bulgaria’s biggest gambling taxpayer, said: “You can’t predict what will happen next year. You can’t budget for this.”

Industry officials in the country were happy to hear about the change in online gambling wager taxes, but are hoping that it will also be applied to land-based operations. The turnover tax, which was introduced in 2010 for land-based gambling, has a massive impact on profits and contributed to a 50% drop in machines and the number of gambling halls has fallen by a third between 2008 and 2013.

Dusan Mihajlovic, a London-based consultant for compliance and risk management in financial and gambling companies, said that this turnover tax was passed on “wishful thinking”. However, he remains optimistic that a stable tax regime in Bulgaria could point to a shared gambling market across Eastern Europe, providing a more attractive industry for smaller online operators.

In all countries, politicians seem to be feeling the way to find a balance between raising much needed revenue for the public coffers, and putting these companies out of business altogether. If they can find the right balance, (as much as I hate using the phrase), they might have landed on a “win-win-win” for players, casinos and the public together. Let’s hope they do.

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