Just weeks ago, the Gibraltar Betting and Gaming Association filed an eleventh-hour a law suit against the UKGC in an effort to impede the enforcement of the new UK online poker regulations. If the new licensing and taxation law, which was originally slated for enforcement on October 1st, goes into effect, Gibraltar stands to lose a great deal of money from the online gambling sector as operators will be forced to acquire a UK license and pay a 15% point of consumption tax. The first lawsuit failed (to the surprise of no one), but the GBGA isn’t ready to give up just yet.
A second suit has been filed against the UK Gambling Commission by the GBGA, this time taking on a new angle that just might hold water – as opposed to the previous attempt, wherein the GBGA simply claimed the United Kingdom had no right to impose such a tax on offshore businesses within the EU. But this time around, Gibraltar is citing a breach of the European Union’s law on free trade.
OnlinePokerRealMoney.co.uk tries to dispel some legal confusions stemming from passage of George Bush's UIGEA of 2006 . Federal status seems to depend on interpretation of the wire act and other laws which were crafted many years ago and which remained high level in nature. The United Kingdom has much clearer laws including their own real money gambling commission .
The new lawsuit from the GBGA states that the UK’s point of consumption (POC) tax “breaches Article 56 of the Treaty on the Functioning of the European Union (TFEU) in that it amounts to a restriction on the free movement of services.”
Under Part 1, Title 1, Chapter 3 “Services”, Article 56 of the TFEU reads:
| “Within the framework of the provisions set out below, restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended. |
The services referenced by this law include, “(a)activities of an industrial character; (b)activities of a commercial character; (c)activities of craftsmen; (d)activities of the professions.”
If the High Court agrees that the POC tax within the new UK online poker regulations does, in fact, breach the TFEU, all of the preparations by the UKGC, as well as operators who have been scrambling to meet the impending guidelines, could be for naught. However, while the case does have some merit based on the text of the European Union’s free trade laws among member states, being this late in the game, it is more likely that the GBGA’s efforts will have the same result as the original case.
When the GBGA initiated its first challenge of the new UK online poker regulations in late September, the High Court was forced to require the UKGC to hold off on initializing the new licensing requirements until the matter could be settled. That pushed the date of implementation back from October 1st to November 1st. Now, with the new date of commencement approaching in less than two weeks, the judiciary committee is likely to request another temporary postponement from UK regulators.
Thus far, a multitude of UK online poker rooms, most of which were based out of the tax haven that is Gibraltar, have been forced to make the decision – maintain their UK accounts, apply for a license and pay the 15% tax on UK-based customer activity – or – pack up their virtual bags and say bon voyage to their customers in the region. Several major operators, including PokerStars and Full Tilt, chose the first option, while other online poker sites like Mansion Poker and Caron Poker went with ‘Plan B’.