UK POCT: share sell off and Bet365 Gib-bound
By Warwick Bartlett
In July GBGC wrote that Gibraltar’s judicial review bid was a 25/1 long shot. From what the Judge had to say we had, if anything, understated the odds. In spite of the reasoned argument put forward by the excellent team led by Olswangs, the result was already in.
Taking Government on is a fool’s game because they know and control the system which was not designed for the citizen to overturn a Government’s due process. If it were, you could argue chaos would rule. But in a free society I like to think Joe Public is in with a fighting chance.
What was really surprising was the subsequent sell-off in gambling shares after the judgement. Surely the result had already been factored in, but apparently not. Ladbrokes fell to a thirty-year low at only 110.7p according to the Financial Times. William Hill slipped only 2.2% – they have a larger e-gaming enterprise that will insulate them from their competitors.
So why move? I can only speculate. If I were them I would move too because why would you want the UK Gambling Commission pouring over your foreign business and saying you cannot take business from a certain jurisdiction because their interpretation of foreign law is different to your own.
Then we have the British attitude of being good country neighbours and a willingness to comply with everything Brussels hands out. I suspect some sports books do not meet the Brussels criteria on gambling.
The Minister’s move was a success. The market was in fact centred in the UK but only for a short period of time. Complacency set in and the UK did not keep pace with the changes in technology, competition and taxation. The then Labour Government prevaricated over the Gambling Act 2005 which started with a 7 year process in 2000 before it was operable in 2007. The market had moved exponentially during this period, the boat had not only left port it had returned and sailed again!
So firms left the UK not for tax but to become legal entities that the offshore centres could provide and the UK could not. As competition grew the taxation issue became more important because the tax savings were reinvested in better value to the customer. Unless you had the tax advantage you could not compete.
The very same process is now to be repeated. I doubt Bet365 will be the only firm to move their non-UK customers offshore. The British Government is really good at looking at its own feet through the sights of a shot gun and pulling the trigger.