The Ultimate Guide to Place of Consumption Tax | Table of Contents

• Place of Consumption Tax• What is POC Tax?• How does it work?• Why was it deemed necessary to introduce this tax?

• The Aftermath of POC Tax Introduction • Panic is all around…• Consolidation – it’s already happening• Avoiding POC Tax • What POC tax means to other countries• Challenging the law

• How the POC Tax Affects You • It could mean bad news• But it could also be great!

What is Point of Consumption Tax?

The remote gambling industry has never had to worry about UK tax if they

were licensed abroad

TAX

X BUT A new tax was introduced

by HM Revenue & Customs on 1st of December, 2014

Surprise!

from:

What is Point of Consumption Tax?

Now, all casinos that provide remote gambling services in the United Kingdom will have to:

1. Be licensed through the UK Gambling Commission

2. Pay a 15% tax on their profits

How does it work?

The law specifies that the tax applies when the gambling services are provided:1. To a UK person (anyone playing

from the UK) 2. Over the internet, telephone or

any other telecommunication means

How does it work?So how exactly does it work? For example:1. A person from the UK places a bet online or

via any other way that can be used for remote gambling

2. The £100 bet is placed at a casino which is based in Malta

3. Previously, the casino could have avoided any UK taxation, because it’s based in Malta

4. But now, the casino has to be licensed to provide services to UK players

5. This also means they are responsible for paying 15% - in other words £15 from that £100 bet – to the UK Government

Why was it deemed necessary to introduce this tax?

POC tax was introduced because the government wanted to: 1. Level the playing field in (a)

online vs offline taxing and (b) UK and foreign casino taxing

2. Raise more tax – up to £300 million more per year!

3. Use that money to ensure remote gambling is safe and responsible

Offline and UK based casinos had to pay tax even before POC tax

was introduced

Online and non-UK based casinos had to

pay NO tax before POC tax was introduced

Why was it deemed necessary to introduce this tax?

In other words, everyone is being taxed

Now, every casino

providing remote services in

the UK is in the same ‘fishtank’.

The Ultimate Guide to Place of Consumption Tax | Table of Contents

• Place of Consumption Tax• What is POC Tax?• How does it work?• Why was it deemed necessary to introduce this tax?

• The Aftermath of POC Tax Introduction • Panic is all around…• Consolidation – it’s already happening• Avoiding POC Tax • What POC tax means to other countries• Challenging the law

• How the POC Tax Affects You • It could mean bad news• But it could also be great!

Panic is all around…

• Going from 0% to 15% tax meant different things to casinos small and large, but every operator was equally as panicky before the 1st of December, 2014

Consolidation – it’s already happening

• Some casinos stopped providing services in the UK before the tax even took effect

• Betsson, Jack Gold and Fortune Lounge were but a few casinos that left the UK because of POC tax

Goodbye!

Consolidation – it’s already happening

• For other casinos, especially smaller ones, it’s become really hard to stay afloat

• Their profit margins are being eaten into by the POC tax

• They also have less money to advertise and are starting to lose their competitive edge

Consolidation – it’s already happening

• Larger brands are ‘swallowing up’ small casinos, leading to industry consolidation and monopolies

• For example, 32Red acquired GoWild casino

• Large casinos may actually find POC advantageous, as it lessens their competition

Avoiding POC tax

• It was feared that the increased tax burden will push casinos ‘underground’

• Only time will tell if there is an increase in illegal casino activity - providing remote gambling services without being licenced or paying POC tax

What POC tax means to other countries

• Countries, which provided lenient tax regimes and hosted most of the casinos providing remote gambling to UK players are now threatened

• It would make sense for casinos to relocate to the UK to cut unnecessary operating costs (i.e. running and staffing multiple offices)

1. Casinos based offshore, e.g. Gibraltar could dissolve their business there

2. And move their business to the UK, since they have to be licenced there anyway

Challenging the law

• Gibraltar Betting and Gaming Association even launched a lawsuit against the government, because they could stand to lose a lot of tax revenue

• Although their lawsuit failed, a judicial review has been granted

• The outcome of the review will be known in 2015

The Ultimate Guide to Place of Consumption Tax | Table of Contents

• Place of Consumption Tax• What is POC Tax?• How does it work?• Why was it deemed necessary to introduce this tax?

• The Aftermath of POC Tax Introduction • Panic is all around…• Consolidation – it’s already happening• Avoiding POC Tax • What POC tax means to other countries• Challenging the law

• How the POC Tax Affects You • It could mean bad news• But it could also be great!

It could mean bad news

• Casino closures or take-overs will decrease the number of casinos you can play at

• Casino profit loss may be compensated by making YOU pay more, e.g. transaction fees

Q: Will I lose my money if a casino shuts down?!A: A casino should inform you well in time if they are closing their doors. You can transfer your money out then.

Q: What about my VIP/EXP points?A: Unfortunately, those will be gone.

But it could also be great!

• Player loyalty will become very important as casinos try and keep you with them for as long as possible

• Casinos will offer you more incentives to play, like free spins

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