High GPT strangles regulated market, says H2
eGaming Review data partner H2 Gambling Capital finds GPT of less than 15% can help governments capture more activity and tax take in dot.country markets.
p> Governments can capture more activity and tax revenues under a dot.country regulatory regime if they opt for a gross profit tax (GPT) of less than 15%, according to H2 Gambling Capital.
Citing a recent study of the Italian, French and UK markets, the gambling data business concluded: “The percentage of a nation’s remote gambling demand that is catered for a by a dot.country scheme is maximised with a lower rate of gross win tax applied to all product verticals.
“Under a 5% gross win tax, after five years 95% of a country’s market is likely to be captured by the dot.country scheme, whereas at 20%, this would fall to approximately 60%.”
Further, H2 found that each percentile increase in GPT on average only produced a corresponding rise in tax take of 0.5%, according to the data business. “[T]he latter progressively diminishes the higher the tax rate, and starts to fall once the gross win tax rate reaches 15%, as many operators make the decision not to enter the [regulated] market.”
Soon-to-regulate Greece and Spain recently announced plans to introduce a GPT model for egaming instead of the turnover tax which has restrained market growth in France after briefings from lobby groups including the Remote Gambling Association. Denmark has declared plans to open its market by autumn based on a 20% GPT, the same rate to be levied on poker and casino table games in Italy.
The first EU Member State to introduce a GPT regime for egaming back in 2005 was the UK, however this has seen the likes of William Hill Online, Ladbrokes and Betfair move their online operations offshore in recent years. The companies argued that paying 15% GPT while the UK government allowed operators regulated in its White List of approved jurisdictions and EEA countries to access the UK market put them at a competitive disadvantage.
H2 also found that each absolute percentage increase in the gross win tax rate led, on average, to a 1.3% contraction in the share of a nation’s remote gambling market that will take place within the regulated dot.country regime, with the impact “magnified as the rate is increased”, said the gambling data specialist.
eGaming Review’s data partner H2 Gambling Capital is the leading source of gambling data for the online industry. For further details and H2’s market-leading projections, please visit H2GC.com