The role of politicians in influencing the fortunes and direction of the gambling industry should not be underestimated. Examples like the sneaky passing of UIGEA in the US in 2006 attached to the SAFE Port Act are well known but in these chaotic political and economic times, the ability of politicians to meddle in gambling in search of votes or tax revenues seems to have reached new heights.
GBGC has written elsewhere of the apparent attempts of Argentine President Cristina Fernandez de Kirchner to nationalise the gambling sector in her country. It is a complex saga [detailed here] which inevitably involves political posturing, disputes over tax revenues, and a shortage of money to pay public workers. But at the heart of the issue are the gambling licences holders in Buenos Aires province and elsewhere who will suffer if the sector is nationalised.
The German state of Schleswig-Holstein was something of a “maverick” state when it came to the German gambling sector. It had refused to sign up to the latest version of the Interstate Gambling Treaty. The state had even issued its own internet gambling licences. The state’s politicians were to be applauded for some sensible thinking. But then there was an election.
The Social Democrats (SPD) formed the head of new coalition and the fate of those licences looked a lot less certain.
On the night of the election in May 2012 GBGC wrote:
“The gambling licences issued by Schleswig-Holstein could be some of the shortest awarded in history if the SPD forms the next government. The three operators might argue that they have been awarded licences until 2018 but governments make the rules and can reposition the regulatory goalposts to suit their agenda. If the SPD really wishes to repeal the regulation, nullify or restrict the licences it will find a way to do so.”
The SPD is not in favour of online gambling and initially said it would not honour the licences awarded. Now lawsuits have been filed by the operators and both sides will be spending much needed funds on unnecessary legal fees.
Spain has introduced its internet gambling regulation in 2012 and came up with the excellent wheeze of charging back taxes to those firms that wished to apply for a licence. As a result Sportingbet had to cough up EUR 14 million (and undertook a sale of convertible bonds to fund it), whilst Bwin.Party paid EUR 33.6 million.
Politicians in Greece and Portugal will no doubt note with interest how readily the operators paid up, while Italy will be fuming that it didn’t think of the idea when it first issued it online licences.
Consistency is never a politician’s greatest strength. In the UK the Labour Party politicians like Harriet Harman are now claiming that its Gambling Act of 2005, which updated gambling regulation, was a “mistake”. The Gambling Act was key piece of the last Labour government’s legislative programme and at the time was opposed by the Conservatives, who saw the opportunity to win votes in the run up to the 2005 general election.
Now in opposition, Labour MPs like Harman have become very concerned about the apparent issue of “clustering” of betting shops in certain areas of the UK, which are often, but not exclusively, in constituencies of Labour politicians.
The new Conservative-led coalition government has decided that tax revenues from gambling are now quite useful and has introduced a “point of consumption” tax for internet gambling, meaning that offshore firms will require a UK licence and pay gambling tax at 15% in the UK on their revenues from UK players.