KPMG played host to its 7th instalment of the Isle of Man eGaming Summit on 8 September 2016 with sessions on a range of regulatory, technological and operational topics.

One of the morning panels discussed the top 10 risks for e-gaming operators. The assembled audience voted for a top three of: (1) Regulatory changes/compliance, (2) Cyber crime, (3) Tax/VAT changes. This result tallied quite well with the findings of KPMG’s own survey which had Tax/VAT changes in top spot, cyber crime in second place and regulatory changes/compliance third.

Tax changes have certainly had their influence on the Isle of Man’s e-gaming sector over the last 18 months. The introduction of the UK’s point of consumption tax (POCT) and cessation of the White List caused several Isle of Man licence holders to leave the jurisdiction because it made no commercial sense for them to be licensed in both the UK and Isle of Man.

The presentations on the National Online Self-Exclusion System (NOSES) highlighted the fact the compliance will remain an issue for operators for the foreseeable future.

GBGC first wrote about the self-exclusion database in November 2014 after a presentation given by the Gambling Commission at the Remote Gaming Association’s AGM. GBGC raised a number of concerns about the project and these have only got more extensive since then.

The Gambling Commission has also realised the difficulty of the project. The Commission has abdicated responsibility for the database to the RGA, which has engaged KPMG to help it on the project.

Back in 2014 it was estimated the cost to set up the database would be GB£ 3 million and an annual cost of GB£ 1 million to operate it – all of it funded by the e-gaming sector.

But at the summit there were still many unanswered questions, even though the database is due to launch at the end of 2017:

• Do gamblers want the database?
• How many individuals are predicted to use it?
• What will it cost to set up?
• What will the impact of the database be on the sector’s revenues?

As it stands, therefore, Q4 2017 will bring another hit to the UK e-gaming sector’s profits. The quarter will bring the sector:

• The costs associated with the NOSES set up (circa GB£ 4 million?)
• Any impact on revenues caused by the self-exclusions (cf William Hill GB£ 8.3 million decline in e-gaming revenues driven by self-exclusions in H1 2016)
• The introduction of the tax on freeplays (forecast to bring the Treasury GB£ 45 million in 2017/2018 and GB£ 345 million between 2017 and 2021)

It’s no wonder that e-gaming operators put tax and compliance at the top of their list of risks.