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Article Index > Gaming – US vs UK |
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The United States and the United Kingdom differ in their approaches to gambling, online or otherwise. The difference in the approaches of the two countries has implications for their citizens in terms of legality, taxes, etc. These differences are obvious now that the U.S. has passed a bill trying to cut the purse strings for internet gambling. The U.S. is trying to outlaw internet gambling as best as it can. However, there is not too much, that they can do since the online casinos are all located outside of the U.S. Online gambling is an industry with revenues in the billions of dollars a year category with a sizeable chunk of those proceeds coming from gamblers within the United States. Five years ago Visa, MasterCard and the merchant banks began refusing to honor e-gambling transactions, making it difficult for gamblers to transfer funds electronically, until the e-wallets appeared. The use of phone lines to place gambling bets is illegal and the U.S. Department of Justice says it will consider any form of internet gambling to be illegal until they receive a bill from Congress telling them that it is legal. The U.S. approach has been to try to ban gambling on the moral grounds of family values.
Since all of the online gambling companies are located outside of the United States, the U.S. does not have jurisdiction over them. The new bill, the Internet Gambling Prohibition and Enforcement Act, passed by the House of Representatives in July, prohibits the electronic transfer of fund for purposes of gambling. The only entity the U.S. government will be able to reach is the individual that is doing the gambling from within the United States. The owners and executives of the gambling companies just have to stay outside of the United States and they are untouchable.
How does the U.S. approach differ from the British approach? The approaches of the two countries differ in almost every way. Gambling is legal in Britain. The British can legally bet on almost anything, from playing online bingo to betting on the winners of sports games and television reality shows. Bingo can be played online and at bingo halls in addition to other places. Unless they are playing the National Game or gambling at bingo halls, cash prizes are not allowed. Therefore, prizes take other forms, such as toys, food, ticket to special events, etc. Gambling websites are legal. If the British do not want to gamble online, they can place a bet legally through a bookie, like Ladbrokes and William Hill.
The British are going one-step further. Presently, online casinos offering games like poker and blackjack are illegal. However, Parliament has enacted legislation making them legal and British owned online casinos would begin appearing in 2007. Now all of these kinds of online casinos are located out of the country in places like Gibraltar and Costa Rica. Gambling is big business in Britain as the British spent approximately $40 billion on bets last year. Gaming stocks are already trading on the London Stock Exchange.
What do the British know that the Americans do not know? The British know that gambling is a source of revenue for the government. British betting companies are subject to a tax equal to fifteen percent of their gross profits. This has enriched the Treasury’s coffers by over $2.5 billion in the last two years. The British realize that they cannot stop gambling, especially online gambling so their approach has been to legalize the activity and then regulate the activity and tax the profits. The government is now trying to attract gambling entities by making online poker and other games legal. This new law, called the British Gambling Act, will result in some British entities setting up shop in the United Kingdom, but it will not attract any of the big existing entities to relocate. These businesses set up in tax havens like Gibraltar, the Channel Islands and Costa Rica to minimize taxes. The new soon-to-be-formed British entitles will not be able to come close to their profit levels. Since internet gambling is one of the fastest growing industries, the British are trying to tap in on it and get a piece of the action for them, instead of trying to outlaw the activity as the United States is doing. Now that they have the legislation in place, they just watch the new online businesses come with their plans to tap the lucrative British market. Some big names from Las Vegas have announced their intentions to enter the British market.
The British regulate the gaming industry to keep it free of crime. The regulation ensures that the gaming is fair and that the interests of consumers in protected. The gambling must be conducted openly so everyone has an equal chance. It also functions to protect children and others from exploitation. These are the three goals of the Gaming Commission. The British realize that people have addiction problems with gambling. This is part of the purpose of the Prevalence Study. The Gaming Commission licenses the industry operators and certificates to the gambling establishment’s staff.
Is the United Kingdom on its way to becoming the internet gambling capital of the world? It is possible. They are attracting many names that cannot operate internet-gambling establishments legally in the United States. The British gambling market is large and established. It is already a proven market so there is not much risk at stake for those entering the market. Moreover, the tax revenue the government collects from the betting is money that can be put to good use. In spite of the taxes, the new establishments may successfully take business away from the foreign owned big name UK online casino businesses, especially if the British gamblers decide to keep their pounds in the United Kingdom. They may choose to gamble at the British owned and British located online gambling establishment instead of the big name foreign establishment. If this happens, they may take revenues away from the Gibraltar, Channel Islands and Costa Rica based entities. |
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