Online gaming leaving UK shores

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Ladbrokes have added their name to the list of companies taking their online gambling operations overseas and thus depriving the UK treasury of millions of pounds in taxes.
A terse statement from their chairman Christopher Bell concluded that “Operating from the UK has become unsustainable”

Why is this the case? Well it is a long-established trope that technology companies can take their businesses anywhere that offers them favourable taxation structures and a light regulatory touch. The current hotspot in the EU is Gibraltar, which already plays host to companies such as 888 Bingo and (as of last week) William Hill.

The reason for this is pretty apparent. As the UK moves to regulate and tax these industries, this impinges on their profit margins. And when the barrier to new entrants is so low, those margins are often wafer-thin when set against the kind of operation necessary to win and retain market share. So as soon as one company decides to move overseas the pressure on others to follow is pretty much irresistible.

Of course, much of the actual operation will remain in the UK. The registered offices and technology might move, but most of the day to day running will stay firmly put. All that happens is the government loses out on tax revenue. Short of putting tanks on Gibraltar’s lawn, it is hard to see how the UK can persuade other people to raise their taxation and regulation. The one option they are apparently unwilling to countenance is to lower their own taxes, which sounds horribly familiar.

And let’s face it – as companies move increasingly to online channels, the problem isn’t going to go away.