The beauty of the Internet is that you can play any of the games you like without leaving the comfort of your home. Equally exciting is the prospect of choosing your bookmaker or online casino based on its quality, rather than proximity. All these benefits have led to a surge in the number of people who choose to gamble online, rather than doing so at a land-based operator. Gambling companies are also taking full advantage of the favorable context and many chose to relocate offshore. The question is why do so many businesses prefer to leave the country of origin and why are so many new ones founded beyond borders.

Nobody likes high taxes

When people get their paycheck at the end of the month, they are frustrated to see how much money is being taken by the state. Granted many understand the importance of taxes for the well-being of the community, it is nevertheless disheartening to see how much money you are not getting. Unfortunately for regular people, there is no miraculous solution, since the overwhelming majority of the workers can’t simply relocate beyond borders. Even if they do, they will be subject to the authority of other states and there are not many jobs out there in tax havens.

On the other hand, online gambling companies like don’t have so many obstacles when it comes to moving their headquarters. That’s why many prefer to set up shop offshore, where the taxes are lower and the regulators are more flexible. The UK for example, has a very strict set of rules that regulate online gambling and make it secure for the players. The UK GC is the watchdog that watches over the online gambling environment to make sure that it is safe for punters.

Most of the legitimate casinos would not mind the scrutiny of the UK GC, but they are far less willing to pay a high tax. The introduction of the Point of Supply tax in 2001 meant that punters would no longer have to pay any tax but instead, the bookmaker would be subject to taxation. The goal was to keep the money in the UK by convincing players not to gamble at offshore bookmakers, but the decision backfired. Instead of players leaving for greener pastures, online casinos choose to relocate beyond borders.

The Impact of the Point of Consumption Tax

It would be an understatement to say that the tax reform that introduced the Point of Supply didn’t work. That measure proved to be such a failure, that the government changed the law in 2014 when the Point of Consumption tax was introduced. Companies will still have to pay 15% regardless of where they have the headquarters, so the appeal of offshore locations was diminished. Even so, because of various VAT relief measures, many gambling operators chose to remain beyond borders in Malta or Gibraltar.