CNBC – Online bookmakers are scrambling to move into Europe and Australia to offset potential losses from an upcoming U.K. gambling tax, which could cause a “seismic shift” in the industry, according to analysts.
From December 2014, a 15 per cent levy will be placed on remote offshore gambling firms that serve U.K. customers, in a move that may raise £300 million pounds ($467 million) for the taxpayer.
This will hit major U.K. bookmakers like William Hill and Ladbrokes, which operate from Gibraltar, where taxes are currently levied at 1 per cent and capped at £425,000.
Analysts said the so-called point of consumption tax (POC) could change the make-up of the gambling industry, with smaller bookmakers potentially forced out of the market.
“The introduction of the POC tax is likely to cause a seismic shift in the competitive landscape of the U.K. online gaming market,” David Jennings and Simon McGrotty, gaming analysts at Davy Research, said in a research note.
Gambling businesses are lobbying for a lower tax rate and are threatening legal action, claiming the industry will lose millions of pounds from the levy.
However, remote betting businesses may be able to offset the tax through cost-cutting and developing products overseas. According to research from Citi analysts James Ainley and Josh Lipman, bookmakers may be able to offset the impact of the tax hit by around 70-to-80 percent.
