The Gibraltar Betting and Gaming Association (GBGA) has launched a second challenge to the new UK Gambling Bill, AKA the Gambling (Licensing & Advertising) Act, having seen its initial challenge thrown out of London High Court earlier in the month.
While the organization’s first challenge contested the Act itself, the new demand for a judicial review focuses solely on the new point of consumption tax, which, as a tax issue rather than a licensing issue, has been going through separate legal procedures.
The point of consumption tax will introduce a 15 percent duty on all gambling operators that wish to engage with the British market, all of whom must also be licensed and regulated in the UK.
Once again, the GBGA will argue that the legislation is unlawful and that the point of consumption tax breaches Article 56 of the Treaty on the Functioning of the European Union, which deals with the free movement of trade across borders between EU member states.
“This tax is a restriction on the provisions of services,” said the GBGA. “There are no equivalent precedents of the UK Government seeking to tax entities abroad in respect of the provision of services into the UK without going through the appropriate route of seeking harmonization through the EU. This is incompatible with Article 56.”
The GBGA disputes the assertion by the UK government that the new tax regime is a means to protect customers, arguing that instead it will drive UK citizens towards “rogue operators.”
“If responsible foreign operators are forced to raise prices (i.e., offer less favourable odds or a high rake), it is inevitable that many consumers will move to companies with no regulation and lower overheads,” it said. “Rogue operators will be beyond reach of UK law and consumers will face increased risks of fraud, non-payment and abuse.”
The association also argues that its position against the tax is stronger as a result of the High Court judgment this month. For an EU member state to restrict trade and be in breach of Article 56, it must have very sound reasons for doing so. And while Judge Justice Green rejected the GBGA’s arguments against the new licensing laws, he stated that the swelling of government coffers are not a justified reason to breach Article 56. This, the GBGA hopes, is the smoking gun. If the assertion is flawed that the new regime is to protect the customer, then the only reason for the tax is to increase revenue, rendering it illegal, the GBGA will argue.
“The fact is that this tax regime has no legitimate purpose,” said the GBGA. “Moreover, the tax is discriminatory. European law supports our position. The Government says this tax ensures ‘respect for fiscal sovereignty’ and is essential for the ‘coherence of UK tax authority’. We believe this means their real aim is to ensure that UK operators in this market are favored, at the expense of law-abiding and responsible operators outside of the UK.”
The association said it will ask for an expedited hearing, as the new tax regime is due to come into force on January 1st.