United Kingdom online bettors used to enjoy one of the most flexible regulatory structures for online gaming in the world, until 2014. With their new regulatory scheme, UK required operators to obtain a local license and pay up to 15% of consumption taxes for each and every wager placed within the UK – an amount which is still maintained today.
In previous times, the 2005 Gambling Act allowed the European Economic Area (EEA) and other “whitelisted” countries free access to the UK market and online gaming operators were also able to enjoy the tax benefits of those jurisdictions. Now, operators have to pay a 15% tax on gross profits as opposed to the former 1% tax for those operating offshore.
The new Gambling Act has changed the way big operators run their business in relation to the UK, as companies take a big hit with the 15% tax on gross profits. For example, offshore jurisdictions like the Isle of Man are actively looking for ways to give online casino operators financial relief, while others decided to restructure player loyalty programs to account for the new tax by reducing the rate in which reward points are given to players.
The objective of this licensing structure is to prevent problem gambling and prevent addiction, as well as ensuring online gambling is fair and regulating that children and other vulnerable populations keep away from a potential harming situation regarding gambling.
In the UK, online gambling is defined by bettors using technologies such as the internet, telephone, television, radio, and any other kind of electronic device that facilitates communication. Operators who offer all types of online gaming like poker, sports and race betting, casinos, and slots are subject to regulations by the Gambling Commission.
In order to provide casino services to residents of the UK, operators need to obtain a casino, bingo, general betting, pool betting, lottery, or a betting intermediary operation license depending on their business. Operators can only apply for one betting license type.
In order to apply for an operating license, applicants need to follow a detailed and thorough process and pay an application fee and an annual fee once the operating license is granted. For this reason, applicants should seek legal advice before starting the application process with a licensing authority.
Licensing Authorities are essential for regulating gambling within Great Britain by having the last word on whether a license is approved or not, as well as regulating playing machines in clubs and pubs, and by registering lotteries.
In this sense, online betting and casino games make up to 37.1% of the UK’s overall gambling market and generate a whooping GBP 5.4 billion in revenue over a year.
The Gambling Commission was set up under the Gambling Act of 2005 to regulate commercial gambling within the UK and acts as a mediator between an online casino and a player in case a dispute within them comes up. However, most disputes are efficiently resolved through the player and the casino by making use of customer services or through an affiliate.