Gibraltar News

French Gambling Laws

A French law that defends the French state monopoly on gambling has been widely criticised by members of the House of Lords for not providing a level playing field on Internet gaming within the EU.

According to Lord James of Blackheath, the measure has made it "a crime equal to the downloading of child pornography to place a bet for as little as €2 with any British bookmaker," with the penalty in both cases being one year's imprisonment and a fine of €75,000. When asked whether the UK government was considering a similar law on bookmakers operating from France, Lord Davies of Oldham explained that since French law was not acceptable within the framework of the European Community, the UK have no intention of following that "atrocious example."

Peers also highlighted what they saw as a fundamental flaw of the Gambling Act: the fact that underage people were supposedly able to use offshore gambling sites based in places such as Gibraltar. These jurisdictions, they believe, have lower standards of age verification than the UK. Lord Davies even added, quite inaccurately, that, "Gibraltarians will not readily take lectures from other authorities." However, this is not the case at all. Gibraltar has always quite successfully followed the UK's example, particularly with regard to aspects of gambling legislation such as advertising and age verification. Indeed, Gibraltar's own Gambling Act closely mirrors the UK law, on which its provisions were based.

Davies conceded that although regulation in jurisdictions such as Gibraltar may differ in some areas from that of the UK, there had been "very few" complaints to the Gambling Commission about underage gambling. He added that although the commision was keeping an eye on developments, it sees no reason to change a "regulatory framework which seems to be working satisfactorily." He defended Gibraltar further, saying that it is hardly surprising that its regulatory framework is not as robust as that of the UK, given its limited resources.

However, with the gaming industry contributing upward of £10 million a year to Gibraltar's economy, it is no wonder that Gibraltar's government invests a disproportionate amount of capital each year on its efforts to consolidate the rock's position as an internationally respected centre of e-gaming.

Chandler Says UK Government "Can't win me back"

Bookmaker Victor Chandler was one of the first gambling operators to offer tax-free online betting when he moved his entire operation out of the UK and into Gibraltar in 1999, creating Victor Chandler International (VCI).

The initial decision was a competitive one. Victor Chandler only had a small number of high street betting shops in the London area and a vast proportion of their business that was not "on course" (at horse racing meetings) was telephone generated. At the time, there was still a compulsory 9 percent betting tax in the UK when placing a sports bet in betting shops or over the phone. Relocating to Gibraltar meant Victor Chandler could offer all their UK telephone betting clients the highly attractive option of being able to bet without the imposition of any betting tax. Instead there would be a 3 percent service charge, offering punters the incentive of a 6 percent saving on all wagers with the company.

Despite fiscal changes in the UK, which saw betting taxes dropped and replaced by a 15 percent levy on top-line profits, Chandler was never tempted to return to the UK. Speaking to web-based news service RealBusiness.com, Chandler described how the industry's volatility made it extremely unfavourable for him to pay tax on gross profits unless these could be carried forward. After launching a pointed attack on the Labour government, he went on to portray the UK as "strangling enterprise by trying to apply EU regulations to the letter," adding that as a result, "businesses are choking."

Gibraltar's own fiscal regime is also currently undergoing a reformation. The tax-exempt company structure that VCI and so many other Gibraltar-based gaming firms currently enjoy will be phased out by Dec. 31, 2010, in favour of a new "low-tax" regime. Whilst there is still uncertainty about the exact levels of taxation that these firms will have to pay beyond 2010, they will need to decide whether Gibraltar offers a favourable enough deal for them to stay put, or whether it is time to move to some other, perhaps more accommodative, tax regime. Regardless of where VCI's future lies beyond that date, says Chandler "the [UK] government couldn't do anything to bring me back."

Tristan Cano lives and writes about the gaming industry in Gibraltar.