The Gambling Act came into force at the weekend in the UK, and the new regulator, the Gambling Commission, now boasts a staff of 200, twice the number needed to run the old Gaming Board.
What will they all do? Two intended workloads have disappeared already. Gordon Brown has killed off the supercasinos and the world’s on-line poker and casino companies have declined the invitation to come to Britain to be regulated.
The latter fact illustrates how the Gambling Act has failed to deliver even the government’s watered-down intentions, Nils Pratley wrote in The Guardian on Friday.
Back in the days when Tessa Jowell was happy to pose in front of a roulette wheel, the big idea was to make Britain a friendly place for on-line gambling operators. Unlike the blunt-headed Americans, Britain would be pragmatic: the operators would be treated as legitimate businesses if they agreed to act responsibly.
It hasn’t worked. A mere 14 on-line poker and casino operators have registered for UK licences and virtually none is a mainstream company. The explanation is simple: nobody wants to pay tax at the UK rate of 15 per cent of gross profits.
In the borderless world of Internet gambling, the computer servers that power the websites can be located almost anywhere. To be able to advertise in Britain, an operator merely needs to be within the European Economic Area, so, guess what, Malta is suddenly popular.
Tax rates in Malta have been cut to 2.5 per cent; at the last count, 200 on-line gambling companies had applied for licences there. The Gambling Commission’s bureaucrats in Birmingham have been bypassed.
The operators themselves are unrepentant. William Hill, which has relocated its servers from the Dutch Antilles to Malta, says it would be at a competitive disadvantage if it did anything else. “We are duty bound to run the company as efficiently as possible,” it says.
This is the same William Hill whose fortunes, like those of all high street bookies, were transformed when the government deemed that the electronic roulette wheels in its shops were legitimate. That decision seemed to defy previous legal interpretations, but there’s no going back now. If the government can’t make grown-up companies like William Hill submit their on-line poker and casinos to the Gambling Commission, it has no hope of persuading the charlatans.
The industry’s view is that Britain might care to cut its tax rate to match Malta’s. That ain’t going to happen, Mr Pratley said: it knows the headlines in the Daily Mail would be horrible.