UK election aftermath ‘incredibly difficult’ to plan for, says EY 

UK election
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With only hours to go before the UK heads to the polls, Irena Scullion, Senior Manager from EY, talks us through the main political parties’ manifestos, and what impact they might have on the gambling sector.

 

The UK political landscape is an uncertain beast up until the point of the General Election on 12 December 2019. This article was initially going to based around the Exit of the United Kingdom from the European Union (“Brexit”), but this seems slightly premature at the date of print for this piece.

Instead, I would like to focus on the main two Political Parties Manifesto commitments and how these may benefit (or otherwise) the Betting & Gaming Industry in the UK.

The Labour Party in its Manifesto has announced that it will spend £1 billion on public health issues, to include gambling addiction and how this can be harmful to people. It has also stated that “a Labour government will curb gambling advertising in sports and introduce a new Gambling Act fit for the digital age, establishing gambling limits, a levy for problem gambling funding and mechanisms for consumer compensations.” The Conservative Party, quite differently, has not specifically mentioned Betting & Gaming within its Manifesto. However, it has focused on their wish to “get Brexit done”.

These are incredibly difficult for the industry to be able to plan for, so instead, let’s focus on what we do know:

  1. Relevant regulatory law for UK consumers is UK based – this means that whilst there may be changes to this post either election or Brexit, neither of these eventualities create certain change.
  2. The UKGC (amongst other Betting & Gaming Regulators) are more aware of their responsibilities to UK consumers, especially where there appears to be problem gambling. This can be seen with increased scrutiny on gambling with credit cards and the associated potential financial pressures that this puts on the players.
  3. Taxation is ever more global in its nature and the question of how the digital economy should be taxed is becoming increasingly relevant.

One of the more relevant points to the industry is the taxation of profits made through the digital (online) economy. The questions of which jurisdictions profits should be attributed to, as well as why they should be taxed there, is the focus of the G20 and the Organisation of Economic Cooperation and Development (“OECD”). This highly politicized question brings challenges to the traditional approaches to transfer pricing and the “arms-length” basis for profit attribution which has been used for a number of years. Whilst this may seem to be a niche area, it is important to remember that most Betting & Gaming groups are international by their very nature and often, for regulatory purposes, operate in lower tax jurisdictions.

The global industry is growing, and this means that, aside from UK politics, there are good reasons to diversify both in terms of product and geography. New markets are opening up in South America and Africa, and it is encouraging to see the rapid pace of the US markets post the repeal of PASPA. This will, of course, create new regulations to not only legalise services, but also to protect consumers. It will also mean that the taxation implications for the industry will become ever more complex.

 

 

 


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