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UK Gambling Commission May Tax Free Bets

What started off as an act created to ensure the UK receive its duty from online gambling companies that target its citizens, slowly transformed into a more encompassing law that will, after the following year, also force betting operators to pay taxes for their free bets, which have become such an important promotion for every casino or sport betting operator.

For the time being, players can still enjoy their favorite free bonuses (change-free) until the deadline given to operators ends on August 2017. Unfortunately, the changes may come prior to the given time-frame as game providers might want to start off adapting to the new provisions early, but, in the meantime, you can keep an eye on the situation by tracking free offers at NoDepositMonitor.com for any major changes. 

Some Background

As players in the UK already know, the government has so far been pretty liberal with gambling regulations, which is one of the primary reasons why so many gaming providers offer their casino and sport betting services to UK citizens. Up until 2014, the only act that regulated gambling in the UK was the 2005 Gambling Act, which ensured fair conditions for game providers as long as UK citizens were safe from gambling-related social harm related.

The Act allowed for so many game providers to place their flag in the UK market, as long as they respected the provisions. However, the Act also allowed for many online casinos that already had a base in the UK to move their services in various tax havens (some of which not white-listed by the government)where they could pay very low business taxes but still provide services to the UK.

The New Act of 2014

Needless to say, the act was subsequently found to contain faults and changes were proposed. One of the biggest shortcomings was that the Act allowed for companies to stay unregulated by the Gambling Commission and pay no taxes for the wagers that stemmed from the UK.

This led to the draft and passing of the Gambling (Licensing and Advertising ) Act of 2014, which set provisions for new taxation and regulation requirements for any online casino wanting to advertise and promote their services in the UK.  

What the Act Stipulated

The most important changes were that the taxation and gambling were to be regulated from the consumption point, instead of the supply point, as has been the case so far. Basically, this meant that:

  1. Any operator that wants to be promoted in the UK and accept payments from UK citizens must be issued a license from the Gambling Commission.
  2. For any wagers that stem from the UK, regardless of the operator’s location, the operator shall be imposed a 15% POC (point of consumption) tax.

How Does This Affect Free Bets?

At first, the act didn’t affect free bets. It was only on March 16th that a new proposal was introduced by Chancellor Osborne during the budget discussion, one which will change the POC tax to include free bets and wagers.

So far, gaming operators have been taxed with the a Betting Duty of 15%, which excluded the free wagers and bonuses game providers used as their primary source of getting new punters. However, the new proposal will lead to serious changes in free bet offers to UK citizens, as game providers adapt to the new regulations.

The proposal is to come in effect on August 1, 2017, which gives plenty of time for operators to devise a new strategy, and we are yet to see how this will affect players. Whatever our hopes, there is little room for optimism, especially when you consider what an impact the already inflicted tax had on casinos.