The old order changeth in eGaming

Wednesday 18 May 2016

By Peter Greenhill, Head of eBusiness

Introduction

When the UK introduced new gaming regulations in 2014 a Point of Consumption tax (POC) at 15%, called the remote gaming duty (RGD), was introduced by the UK tax authorities. It took effect from 1 December 2014 and is payable on all bets made by UK customers, irrespective of where the online operator is located. The legislation has impacted all gaming operators including major existing businesses, start-ups and those considering starting up.

This UK move is the thin end of the wedge. A number of other countries around the globe will be looking to introduce their own gaming licensing legislation if they do not have it already. This will affect many gaming operators whose clients are spread around multiple jurisdictions. Consequently, many operators who cannot afford to licence in so many countries will therefore pull out of the smaller, less profitable ones. In addition, some jurisdictions are introducing a tax rate that is far in excess of an amount that the smaller companies can cope with until they reach a substantial client base, which will lead to them pulling out of those markets.

How did these and other changes introduced by jurisdictions affect the gaming operators?

The introduction of the new UK legislation, combined with changes in other jurisdictions have led to major mergers and acquisitions, which have continued into this year. This reaction naturally controls costs for the major players and leads to squeezing smaller ‘me-too’ gaming companies with no real product differentiation into difficulties.

Jurisdictions are also placing extensive controls on the gaming industry, as they also do with the financial services industry, in terms of anti-money laundering, countering the financing of terrorism and the protection of children. In addition, sports betting is dealing with increased issues relating to match fixing which was recently served up in the press relating to tennis. These issues are forcing gaming operators to increase the numbers and skills in their compliance teams. These factors have driven a number of smaller companies to exit all markets and close down unless they really have some unique offerings or a very loyal and profitable customer base. However, emerging from this are strong overseas gaming operators who wish to expand their global reach. In addition, there are some extremely innovative new companies, often with very experienced 'C' level executives who have moved from existing market leaders, looking to break into the market.

How is Equiom supporting the industry?

From our international offices we can deliver services in Guernsey (including Alderney), Hong Kong, Isle of Man, Jersey and Malta. We also provide assistance with licencing in other gaming jurisdictions, including the UK. Our gaming client base includes market-leading international clients, including some in Africa and Asia, whom we are in the process of helping to expand their operations with additional licences in new jurisdictions. 

We are proud to stand out from the crowd as a company that fully supports and works with clients throughout their set-up and growth. The combined expertise of our local specialists, Group-wide experts and external consultants means Equiom offers innovative, comprehensive solutions and well-informed advice to our international clientele. Our clients choose from an extensive list of services including the creation of a corporate structure to best support their ambitions and supporting tax advice where required. We help them to select which jurisdictions to obtain a licence from, support them to achieve those licences and then to provide whichever back-office services that they prefer not to do themselves. We work in partnership with our clients, supporting them where required, but allowing them the flexibility to take any of these services back in house when they have grown sufficiently and feel able to do so.


Contact

For more information on this topic, please contact Peter Greenhill.