Out now – European Regulated Online Markets Data Report, Summer 2012

  • Debut UK data report finds UK market worth £1.71bn
  • Release coincides with the UK Treasury Consultation on introduction of Point of Consumption (POC) tax and estimates UK government could generate up to £242m in revenues when tax is introduced in 2014

London - GamblingData estimates the UK government could generate over £242m in revenues from the introduction of the proposed point of consumption (POC) tax when it is introduced in 2014.

According to a new report from gambling sector specialist information provider GamblingData, the UK online gambling market was worth at least £1.71bn in net gaming revenues in 2011.

If 100 percent of the market paid the tax at the proposed rate of 15 percent the government could generate £257m.

But GamblingData estimates that between 5.25-7.25 percent of the total UK online gambling market would end up avoiding the tax meaning that on 2011 estimates the government would generate between £239m-£242m.

This avoidance rate is far lower than some previous estimates have suggested.

William Hill is the biggest operator overall; bet365 takes the fixed-odds spoils

In terms of net gaming revenue, the report has found that William Hill is the largest operator overall with £252.9m of UK-generated revenues, giving it a market share of 15 percent.

The next biggest company in UK NGR terms is Betfair with a total of £183.7m or 11 percent of the market.

But one of the biggest surprises is the degree to which recent growth at bet365 has propelled the high-profile Stoke-based company into the upper echelons of UK-facing operators.

According to data supplied to the UK treasury consultancy process on the introduction of the POC tax and seen by GamblingData, bet365 achieved total UK-derived net gaming revenues of £162m in the year to March 2012.

Of that, £122m came from sports betting, making bet365 the largest fixed-odds sportsbook operator and placing the company second overall in sports betting behind betting exchange Betfair.

GamblingData estimates UK-listed Betfair achieved UK-derived revenues of £142.2m according to its results statement from June.

Ireland-based Paddy Power is fourth on the list of total UK-derived revenues with £135.2m or 9 percent of the total market.

Sports-betting is the largest sub-sector worth 38 percent of the total market

The report suggests that sports betting is the largest online sub-sector with UK-derived NGR of £650m, representing 38 percent of the total.

Not all that far behind, however, was online casino which achieved UK-derived NGR of £547m or 32 percent of the total.

Online casino is the sub-sector that GamblingData predicts will see the biggest slice of tax avoidance at between 10-12 percent, more than double the predicted avoidance rate in sports betting of between 4-6 percent.

The report suggests that bingo and poker are worth almost the same amount in UK-derived NGR at £259m and £256m respectively or 15 percent of the total market each.

The report comes at key moment in the development of the UK market as the government plans to introduce the POC at the end of 2014. It is currently in a consultation process with stakeholders.

Gibraltar the domicile with the largest UK revenue slice

At present, GamblingData estimates that the UK government receives only about 11 percent of UK-derived tax revenues, largely from two operators Bet365 and Sky Bet.

In comparison, the offshore location of Gibraltar accounts for at least 55 percent or over £950m of UK-derived NGR while the next biggest jurisdiction of the Isle of Man accounts for at least 15 percent or £250m of our total UK-derived NGR. Alderney is the next biggest offshore location with around £190m or 9 percent of the total market.

William Hill aside, the report shows the extent to which online-only operators such as Betfair (2nd in the overall list), Bet365, (3rd in the list), and PokerStars (6th) have eclipsed the established names in UK gaming such as Ladbrokes (5th), Rank (11th) and Gala Coral (12th).

‘POC Avoidance rate will be low’

Scott Longley, managing editor of GamblingData commented: “At this key juncture in the evolution of the UK gambling market, with the government consulting on the introduction of the point of consumption tax, it is interesting to note how low we think the avoidance rate will be across the market.

“This counters fears voiced among the industry that the POC will be unenforceable. Given the likelihood that the payment of POC tax will be linked to the ability to advertise, we think this is likely to be enough to encourage 90 percent-plus compliance rates, particularly in the key area of sports betting.”

The UK data report will be released the week commencing 23 July as part of the GamblingData European Online Regulated Markets Data Report 2012, a new publication that will attempt to draw together the latest information of Europe’s online gaming regulated markets. Included in the debut edition alongside the UK report are updates from the Italian and French gaming markets and the first report on the nascent Danish online gambling market.

For further information regarding this report please contact Scott Longley at GamblingData on 0207 921 9992 or email scott@gamblingcompliance.com.

Editor’s notes:

GamblingData’s UK data report estimates are based largely on information given by UK listed entities or from talking to market experts. The various figures given in the report relate largely, but not completely, to 2011 revenue figures. All estimates for tax avoidance and possible tax revenues are estimates.


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