Overseas British territory and reputable gaming regulated location, Gibraltar, manages its own affairs with defense and foreign affairs governed by England. The licensing and regulation of online gambling is one of their primary sources of revenue. These actions are managed by the Gibraltar Regulatory Agency. Some of the most popular online casinos are licensed through Gibraltar including:
- William Hill
- Victor Chandler
- Ladbrokes
As of January 1st 2011, all operators licensed through the Gibraltar Regulatory Agency must pay a significant tax increase from 1 percent to 10 percent. The previously low tax rate was the primary reason many online gaming sites selected Gibraltar as their licensing and regulator. In 2009, many large sites moved from the United Kingdom to Gibraltar to escape high taxes.
It was recently reported in 2009, the Gibraltar government earned 12.4 million Euros for online gambling taxes when the tax rate was only 1 percent. With the increase to 10 percent, this raises the tax rate to the same that regular businesses pay. Gibraltar representatives stated the reason for the higher taxation is to conform to European tax laws. Further, the government must phase out the old tax system while continuing to be a competitive corporate tax model.
Since online casinos regulated in Gibraltar will not have to pay a VAT tax, raising the tax rate to 10 percent allows them to still be competitive. Regardless, the primary question is whether this tax increase will cause online casino operators to relocate to an area with a much less tax rate. In an interview with representatives from the Victor Chandler casino, they confirmed that nobody will leave; however, plenty of complaints will be placed with the Gibraltar government.
Neighboring country, Spain, is in the process of creating a regulated online gambling system. However, the proposed tax rates in Spain are significantly higher than in Gibraltar. It has been estimated that in 2009, Spaniards wagered 575 million Euros at unregulated online gambling sites.
click here to see most Popular PagesAnother important question being pondered is how this tax increase will affect the services provided by the operators. Since players can access an online casino from any jurisdiction from anywhere in the world, there should be no change in service.
Essentially, Gibraltar gaming operators must simply adapt to the change in tax rate. Although it is not as low as in the past, taxation remains at a much better rate than the majority of gaming jurisdictions around the world. Therefore, to offset the increase, casinos will need to find more creative methods of increasing revenue.
