Online Casinos May Be Leaving UK Bases to Prepare US Invasion

Several of the UK's biggest online casino operators moved their bases to Gibraltar, ostensibly to significant reduce tax, but also possibly looking for advantages in the potential US market.

The decision by online casino operators William Hill and Ladbrokes to move their bases from the UK to Gibraltar may be a preparation for the opening of the US market. Gaming insiders are resigned to a high level of taxation when and if US laws are changed to regulate online gambling, and shedding the high British tax could be a step toward US profitability.

The two companies had complained to the UK Gambling Commission about the uneven treatment given offshore casinos to those operating from the UK numerous times. Although a review of conditions was scheduled by the commission, and White Listing of new online casinos was suspended, the gaming companies found the response too little and too late.

Moving to Gibraltar will decimate each firm's UK tax, dropping the rate from 15 percent to 1.5 percent. Executives with both Hill and Ladbrokes said the change was made reluctantly, and forced by the competitive imbalance.

But gaming observer Ryan Costigan says the move may signal positioning to attack the immense US market when a multitude of legislative and judicial measures bring about licensing and regulation of online casinos by the US.

"If these companies continued to pay the exorbitant UK tax, they would be unlikely to find a profit in the US after adding likely US taxes," said Costigan.

Betfair may be the next Internet gambling operator to desert, saying recently it has no plans to leave the UK, but noting its extreme dissatisfaction with the leg up its competitors just acquired.