August 11th, 2009 by admin

The United Kingdom’s ambivalence toward lowering taxes applied to online gambling operations has cost their treasury yet again. Over the weekend the UK’s biggest online sportsbook — Ladbrokes— announced that it will be moving its operations to Gibraltar.

While based in the UK, the company has been subject not only to the traditional corporate taxes but also to two additional 15% taxes for gross profits and VAT plus an extra 10% horse race betting levy. In Gibraltar, taxation of online gambling operations is limited to a 1 to 2% corporate rate. In other words, this move will save the company (and cost the UK) millions.

The announcement was no doubt sour news for the UK treasury coming on the heels of a similar announcement from another major UK sportsbook, William Hill. Both companies insist that the move is necessary if they are to stay competitive with other offshore gambling operations, but some industry insiders speculate that the move is more about future money than current taxes. Should the U.S. pass its pending online gambling legislation this fall, both companies would be well-positioned to stake a claim in the new American gambling market.