The online gambling industry were just handed a free pass by Tasmania’s government when they decided to drop their current taxation on bookmaking operations while instead introducing a one-off licensing fee of $250,000.
This decision could have catastrophic results for the Australian economy as a whole, while opening the floodgates to a barrage of online gambling operators looking for a legitimate base while avoiding having to pay taxes on their vast earnings.
In their defence, the Tasmanian government is acting to help promote the job market by creating opportunities for employment for their citizens. They firmly believe that by providing a tax haven for online gambling operators, many companies will be falling over each other to relocate there in order to take full advantage of the potential gains in their income.
It is obvious from recent events that many online gambling operators are looking to maximise their income potential by moving to whichever country is offering the best tax deals. Recently, leading UK bookmakers Ladbrokes and William Hill both moved offshore from their long time base in the UK mainland to Gibraltar. It wasn’t for the better weather, but for the huge difference in the level of taxation on their profits. The UK has just hiked its taxes up to 13%, whereas Gibraltar, a British overseas territory, only levies a 1.5% tax charge on profits from online gambling.
Many business analysts are questioning the decision and are already predicting a massive swing in the location of businesses that are able to take considerable advantage of this move. There are many companies that are currently looking at other sites to base their businesses and take advantage of lower taxation and more relaxed regulation. Betfair is one such company that is already eyeing the prospective benefits of relocation to Tasmania.
In Australia at present, Sydney is the preferred home of the majority of the larger online gambling operators, although the indications are that this could soon change. The lure of the single one off fee along with freedom from paying taxes on profits will be too much to ignore and this could lead to a knock on effect of job losses in Sydney. This has caused great concern for many leaders in Sydney as well as angering the welfare sector who see this as a step backwards in the fight against problem gambling.