Apparently the United Kingdom Government’s decision to review its Gambling Act and specifically the tax structure has come too late. This decision could not halt the exodus of two major gambling services providers from the United Kingdom to Gibraltar. These are William Hill and Ladbrokes. Speculation had been rife about their departure for quite some time, which has now been confirmed officially by the two companies. About eight years ago the government had given tax breaks to the gambling industry on the “gentleman’s promise” that will keep their businesses in the United Kingdom. Even this promise did not act as a deterrent for the exodus.

William Hill Chief Executive, Ralph Topping, pointed out that the company ultimately had to do what was best for its shareholders. The United Kingdom levies tax on gambling at 15% and a 10% racing levy, whereas the Government of Gibraltar levies only 1.5% tax. The difference was too big to ignore. Therefore while declaring its interim results William Hill confirmed that it was shifting its online sports and phone betting and online fixed odds games operations to Gibraltar. These will now operate under a license from the Government of Gibraltar. William Hill had relocated 75 employees to Gibraltar, where its online casino, William Hill Online, is registered. All William Hill activities are being integrated under the banner of William Hill Online, which was created in December 2008 when William Hill merged some of its existing businesses with assets acquired from Playtech.

Topping justified this move made by William Hill. He said that William Hill had acquired “European-focused websites, global marketing and multi-lingual customer services capabilities”. In order to fully utilize these facilities it was essential for William Hill to focus on the international market and not just the United Kingdom market. Therefore the company had to be competitive internationally. The statement from William Hill read, “As a result of the move, William Hill Online will benefit from cost savings already being achieved by other offshore operators, which have previously put it at a commercial disadvantage.” Topping also clarified the issue of the “gentleman’s promise”. He said that eight years ago no one knew how the gambling business would evolve. By honoring the gentleman’s promise William Hill has completely lost its telephone betting business and it is now obligated to its shareholders to save its other products. In response a Treasury spokesman said that the Government recognized the commercial compulsions for William Hill, but was nevertheless “very disappointed” at the decision.

Ladbrokes had been less aggressive in this issue. It had however indicated that should William Hill move to Gibraltar then it too would have to follow suit. This is because they are direct competitors in the United Kingdom. Following the announcement by William Hill, Ladbrokes too has confirmed that it will be shifting to Gibraltar.

The third major operator, Betfair, has confirmed that it is for the present not moving. It has however pointed out that the United Kingdom tax regime is hurting it and has kept options open for the future. The Gala Coral group has not yet made its intentions known. The Tote, which is owned by the government, is in a bind. All it has said so far is that its position would be precarious if it was the last gambling operator standing in the United Kingdom.