GPWA Times Magazine - Issue 18 - October 2011

Taxing Rules By Lorien Pilling R egulation is not the most glamorous topic within the Internet gambling industry, but it is the most important. This was visibly demonstrated at the iGaming Super Show in Dublin in May 2011. Held just a few weeks after the events of Black Friday the conference sessions on U.S. regulation were stand- ing room only – affiliates were concerned that they were also in the sights of the Department of Justice and operators were interested in hearing what pros- pects there were for state or federal regu- lation of online poker. For affiliates it is certainly worth investing time to find out what governments’ attitudes towards on- line gambling are and to keep abreast of any proposed regulatory changes. In general, governments tend to regard gambling as a sinful activity that ideally should be prohibited or, if it is permit- ted, it must be controlled closely and taxed heavily. The advent of Internet gambling was many governments’ worst nightmare because of the cross-border access to gambling it offered customers. For the last decade many major econo- mies simply did not address Internet gambling specifically, preferring in- stead to claim it was covered by exist- ing gambling laws. But there has been an increasing realization that this is not an adequate solution and in the last few years more and more governments have been introducing regulation specific to online gambling. Operators have been lobbying hard to try to influence the final drafts of this regulation, with differing levels of suc- cess. Regulation (and its associated tax rates) determines the types of gambling that can be offered, the marketing activ- ity that can be undertaken, the appeal of online gambling to players, and ul- timately the profitability of operators. Which regulatory models, then, afford the best conditions for success? As more governments adopt iGaming legislation, affiliates must determine which regulatory and tax models provide the best conditions for success 26 Playing by Taxing Rules