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UK Remote Duty May Mean "Let's Haggle"
by Max Drayman

This past week brought some pretty heavy spring showers insofar as the UK gambling industry was concerned. The month started off well enough with the dropping of a ban on casino advertising, but bad news followed in two waves.

First, the House of Lords gave a "thumbs down" on plans for a Las-Vegas style super-casino in Manchester and secondly, in his last budget with the current Labour government, Chancellor Gordon Brown brought a 15 percent tax on remote gambling and taxes on casinos as high as 50 percent. As The Daily Mail put it, "Britain's regulatory rules for Internet gambling . . . are now meaningless, with no operators to regulate."

How could this happen? For years the UK has been the bright light in the tunnel: The Gambling Act 2005 was the culmination of years of pro-legalization and regulation efforts and was believed to chart the way forward to an open, safe and regulated industry. The UK would become a world leader in the gambling business almost overnight and now, nothing?

Hardly! As per usual there's a reason for everything that a politician does and Chancellor Brown has some very good reasons for what he's just done. In the first place, he is expected to inherit the Labour party from Tony Blair in the near future and it’s common knowledge what a new manager needs to do when he takes over from the old manager: he steps up to the podium and takes bold action so that everyone knows that he's a steel-jawed fellow with big muscles and a twinkle in his flinty eyes.

In this particular case, Mr. Brown has effectively taken control of the UK gambling agenda because in one stroke it suddenly doesn't matter what the Blair government and pro-regulation Culture Secretary Tessa Jowell have accomplished in the past; all that matters now is what Mr. Brown will do next, assuming of course that he forms the next government. And for the record it is widely believed that that new government will not include Ms. Jowell, so why not cut her off at the knees before he pushes her out the door? She's very likely to be a casualty of the administration change anyway.

What Brown has really done with the new gambling tax is to present a high asking price, a 15 percent tax. The gambling industry has long stated that they'd be able to live with a 2 or 3 percent tax: that's the low bid. And now, as the Monty Python boys so eloquently put it, "we haggle!"

The gambling industry is set to bring billions into the UK because of the opportunities The Gambling Act has created and that's more than enough incentive for any politician to start talking about taxes.

A healthy slice of the gambling revenue pie would help fill the coffers of a new government, a government which Mr. Brown hopes to be the head of, so it should come as no surprise when the gambling tax surfaces as a serious issue during the forthcoming election. That's when the haggling will begin in earnest, for now the bidders have simply stated their opening bids.

As for the House of Lords thwarting the Manchester super-casino, the issue is again political. For one thing, that same House has openly stated that they'd embrace a revised bill where 16 smaller, regional casinos were separated from the super-casino as opposed to the current "all or nothing" bill which lumps them all together. Clearly it would be a mistake to misinterpret the Lords’ "thumbs down" as an indictment of the casino industry as a whole.

Secondly, the government isn't at all happy with the Lords’ decision, since they passed the super-casino bill with a 24 vote majority while the Lords rejected it by only three votes. The House of Lords are not elected officials and that has some government officials questioning whether the Lords’ dissention on this matter shouldn't simply be set aside in the name of the greater good: the government wants the super-casino in Manchester, Manchester certainly wants it, obviously the industry wants it, but not the Lords.

Saber-rattling aside it is unlikely that the current government has the will or power to ignore the Lords on this. It's much more likely that the whole issue will be pushed forward to the next election and that's something that the unsuccessful candidates for the super-casino—Blackpool, Glasgow, Newcastle, Cardiff and Sheffield—are welcoming as a second chance for their bids for the big money maker.

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