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British Government Publishes Online Gambling Tax Framework

The UK government revealed its online gambling taxation framework last week, announcing that offshore betting companies that provide services to UK punters can be hit with a massive amount of taxes.

Offshore betting companies will be likely be hit with around £300 million in taxes. Unlike past online gambling tax laws, this new set is going to have tough enforcement measures, including jail sentences of up to seven years for firms who violate the laws.

Among the new rules are that any gaming firm who work or advertise in the country will have to have a UK gaming license. Those who operate offshore will now pay the same 15% flat tax rate as domestic betting firms.

The rules are not law yet, and will have to be introduced to Parliament in September when MPs return to work.

Commenting on the proposed changes, Britain's Economic Secretary to the Treasury Sajid Javid said, "It is unacceptable that gambling companies can avoid UK taxes by moving offshore, and the government is taking decisive action to ensure this can no longer happen. These reforms will ensure that remote-gambling operators who have UK customers make a fair contribution to the public finances."

The shift in tax policy is expected to impact some of the largest betting companies in the world, who operate in offshore regions to take advantage of more lucrative tax breaks. William Hill, Betfair, Ladbrokes, and Bwin.Party are all expected to see a significant impact due to the law, as all of the firms operate in Gibraltar, an overseas British territory.

While the move may be damaging to firms' bottom line, the new tax rules are not a surprise to the industry. Talks of clamping down on offshore firms began more than a year ago, and it now appears that the only thing that betting firms can do to combat the measure is to negotiate to get the tax rate lowered.

Speaking about the move, Remote Gambling Association CEO Clive Hawkswood said, "We knew it was coming ... the focus for us now is on trying to get the actual rate of the tax reduced."