In 2010 the government of the United Kingdom decided to enquire about offshore gambling, where the UK does not earn any licensing fees or taxes. The expectation is that this will change but industry experts disagree on the government’s reaction to the situation. Large numbers of online bingo game operators have accepted the fact that the tax free period is about to end.

The advantage that online bingo game operators have over those based on land is that they can base their operations offshore and save a lot of money on taxes. They are therefore able to invest highly in advertising and sponsorship. All offshore companies do not pay more than 1% tax compared to the 15% tax that they would pay if they were on the mainland.

The expectation is that all offshore gaming companies must get a British-specific licence in addition to those they already have from acceptable offshore gambling jurisdictions. This will bring about tax implications in addition to secondary licensing costs. The tax rate that offshore companies will now pay is expected to be 15% or more just like that one currently paid by operators in the UK.

Paying 15% instead of 1% will be highly significant as the offshore companies could now start paying tax bills that will amount to millions of pounds depending on the size of their offshore operations. Weak companies may no longer be able to do business because their business model will not be sustainable any more. This issue of taxation is being debated by land-based operators such as Rank and Gala Coral who have large offshore online operations and they are not supporting the new legislation. However, it is certain that at one point in the future, the government of the United Kingdom will look for ways to make money from the online gaming operations that are outside the UK.

Since the online gaming sector in the United Kingdom is worth about 1.5 billion GBP a year, the government can certainly make some money as is the suggestion of Clive Hawkswood, the CEO of the Remote Gambling Association trade group.