It is undeniable that this enterprise is slightly more risky than the traditional traveller vocations of hostel work or cash-in-hand labour. However, for those skilled enough and knowledgeable in logistics and tactics, it has proven highly successful. Neither is it just amongst backpackers that this lucrative hobby has seen an increase in popularity. It doesn’t matter if you’re travelling the world or working from home, everyone now seems to be enjoying the benefits of online gambling.
Revenue from online sports betting has become a huge contributor to UK gambling industry. Sports betting websites, like Bet365, have slowly monopolised the market and caused a decline in traditional gambling establishments, such as betting shops. The rise of sports betting websites has seen a further leap in the UK’s position within the global gambling industry. The Gambling Compliance Research Services (GCRS) has revealed that the UK’s net revenue, in regards to online gambling, has risen to nearly £2.5 billion in 2014. Moreover, with the current trend of sports betting apps leading the industry into the lucrative mobile gaming sector, this revenue is only set to increase further in 2015.
However, until recently bets placed within the UK have not been subjected to taxation if the provider is located outside the country’s borders. But, from 1st December, this situation has changed due to rules concerning General Betting Duty (GBD), Pool Betting Duty (PBD) and Remote Gaming Duty (RGD) being altered to incorporate the changing infrastructure of the online gambling industry within the UK.
This adapted legislation was implemented due to offshore tax loopholes allowing providers, who are based outside the UK, to not be taxed for transactions made by Britain-based consumers. This legislation closes the aforementioned tax-loophole by altering the point of taxation, in regards to online sports betting, from ‘place of supply’ to the ‘place of consumption’. Consequently, taxation will now occur on each individual transaction with any provider if the user is presently within UK boarders. Whilst, previously, the taxation was based upon the bulk revenue and subject to the tax laws of the country that the provider was located within. The new taxation being 15 per cent of the individual transaction.
Another facet of this new legislation is that operators based in the UK who provide for users based outside the country, will no longer be liable to GBD, PBD or RGD. This alteration facilitates a reversal of taxation where now those online gamblers living within the UK will solely contribute to the British tax of the enterprise. Meanwhile, British citizens living outside the UK will not, even if they are using a UK-based online sports betting website. Therefore British backpackers, who are trying to earn a little extra cash whilst on their journey, will not see their transaction contribute to the UK treasury. To regulate and ensure this new taxation is correctly implemented, the Gambling (Licensing and Advertising) Act 2014 will require operators with UK-based users to gain a license from the UK Gambling Commission. This license will be given based upon the providers being able to provide documented evidence that both accurately states the size of their UK user-base and proves that they have implemented mechanism to ensure that this information is constantly updated and verified for tax purposes.
The Gambling (Licensing and Advertising) Act 2014 is predicted to contribute around £300 million a year for the Treasury’s coffers, whilst also protecting UK consumers from dubious providers. Due to the UK’s paramount position within the global gambling Industry, this increased taxation is unlikely to cause providers to stop utilising the UK market. Furthermore, the dissolving of the appeal of offshore headquarters may cause a relocation of the UK online sports betting industry back within British boarders, which will help further stimulate the economy. This potential relocation perhaps being further influenced by providers, who wish to exploit other markets, being enticed by the new law’s removal of GBD, PBD and RGD for foreign bets. Therefore, whilst backpacking betters may not see any notable changes to their activities, they may suddenly find a plethora of new UK online betting sites available to them shortly.
