UK gambling reform may lack parliamentary time
UK gambling regulation, Brazil’s tax issue, Chinese crypto +More
Fears expressed over parliamentary timetable for UK gambling reforms.
In Brazil, the devil is in the details.
The Token Word: China cracks down on crypto.
And you’ve been so busy lately, that you haven’t found the time.
UK gambling regs
December’s parliamentary committee report contained a warning over the legislative calendar.
Timed out: With a general election likely this year, fears have been expressed that some of the government’s plans to reform the Gambling Act may lack parliamentary time to be enacted, according to a report from the Culture, Media and Sports committee.
The report is a response to the already long-delayed White Paper proposals, which are now subject to 14 separate consultations on the part of the UK Gambling Commission.
Date in the diary: The government has already warned that proposals needing primary legislation, including the right for the Commission to raise fees and to enact measures against the black market, might be a “challenge” given the packed parliamentary calendar and the omission of gambling legislation from the 2023 King’s Speech.
On the measures to limit the black market, the committee suggested specifically that legislation should be brought forward in the current parliamentary session to enable the Commission to act against illegal operators.
The committee suggested the government and the Commission “must set out how they will address the growing trend of unlicensed gambling sites targeting the self-excluded”.
But the parliamentarians also warned the Commission should endeavor to “improve its knowledge” of the black market and its ability to monitor illegal play on the part of British consumers.
Check, mate: On the proposed financial risk checks, the committee suggested the Commission should oversee a pilot scheme ahead of full implementation. “This should aim to determine customers’ willingness to be subject to the checks and whether they apply at suitable thresholds,” the report added.
Ad break: Meanwhile, on the thorny topic of gambling advertising, while admitting that at present no causal link has been proved between gambling advertising and the risk of gambling harm, the committee nevertheless suggested advertising encourages gambling activity, and that this effect is “more pronounced” for children and those suffering from harms.
Although stopping short of calling for a total ban, the committee said the government should take a “more precautionary approach” to gambling advertising.
Specifically, it called for the government to work with the Premier League and soccer’s governing bodies to “reduce the volume of gambling adverts in stadia”.
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+More
Take a hike: An updated version of Maryland’s iCasino bill would increase the tax rate to 46% of GGR from 15% and would raise the license fee from $500k to $1m, according to a draft seen by VIXIO GamblingCompliance.
The new proposals submitted by Democrat Ron Watson come ahead of the new legislative session on Jan 10.
The updated version of the bill would also allow up to two skins for each of Maryland's six casinos.
New Hampshire: Hopes that iCasino could be on the legislative agenda this year have been dashed after the primary sponsor for a bill said the topic was likely off-limits until 2025. According to Bonus.com, a review by the state’s Office of Legislative Services found the House of Representatives would kill any bill with iCasino provisions.
Georgia: A B&M casino bill to legislate for up to five properties will be introduced next week, according to local media. The bill would establish a primary license for a single casino operator with a minimum $1bn investment in a new facility within 25 miles of Hartsfield-Jackson Atlanta International Airport and four secondary casino licenses with a minimum investment of $250m.
Expanding gaming in the state requires the support of two-thirds majorities in both legislative chambers for a referendum on a statewide ballot.
Antigua: Trying to drag everyone back to the early 2000s, Antigua has resurrected its decades-old dispute with the US over the country’s offshore online gaming industry, sending a brief to the WTO saying the US government has not yet paid its annual compensation of $21m due as part of a 2007 judgment by the international body.
The Netherlands: New player protection measures have been introduced by the government, including changes to deposit limits and updated guidance on how to interact with players. The government said it was compelled to act ahead of a formal review later this year. The new rules come into force on April 1.
Brazilian regulation
Jaws of victory: The analysts at Regulus believe the online gambling sector has won only a pyrrhic victory in managing to persuade the legislators to halve the tax on player winnings from 30% to 15%, suggesting the idea that a consumer will “balk at paying 30% but happily pay 15% is risible”.
The analysts noted that if licensees subsidized the cost – which is possible or even likely seeing as the tax is paid by operators – this will represent an addition to the GGR tax of ~15 ppts.
Regulus noted that combined with the 12% GGR rate and other duties, the effective tax rate is nearer 40%, which they suggested seems “onerous” given the $6m licensing fee.
“This rate makes the licensed market subsidizing the player winnings tax less likely and so drives black market risk,” Regulus added.
Ban on the run: Further black market risk, said Regulus, comes from the ban on promos, which combined with the player tax and an apparent ban on sports streaming means there is “every reason” for engaged high-value customers to seek out the black market.
“Those operators have a major advantage over the licensed market in attracting those customers from both an incentive and product perspective,” the team added.
Great expectations: When it comes to what happens next in Brazil, the analysts believe Brazil is already effectively a mature market, given the already sizable online market penetration. This causes a problem for protagonists of the recent legislation as some of the negatives that come from regulation “are likely to have a much larger visible impact”.
Brazil’s existing market is “therefore vulnerable to black market leakage without rapid adoption growth to mask it”.
While the team believes the targeted tax and license fee tackle will be hit in year one, the fiscal fragmentation and black market leakage “could put significant pressure on this yield”.
“If Brazil’s betting and online gaming market fails to meet the government's tax expectations, but nevertheless appears to create a subjective ‘increase in gambling’ (as it almost inevitably will), then the scale of the conservative and state backlash could be profound,” the team added.
The Token Word
Warning: The Chinese authorities have signaled their intent to crack down on the use of cryptocurrencies as the medium of trade for illegal forex transactions with a report last week, which highlighted the use of stablecoins such as Tether being used as the intermediary between the yuan and other currencies.
As reported by the South China Morning Post, the statement said converting yuan to cryptocurrency – and thereby converting it to foreign currencies – or the other way round was illegal in China.
Those who knowingly provided technical support, including building and maintaining a website, would be seen as “accomplices”.
The gambling connection: The authorities warned a “heavy-handed crackdown” on illegal cross-border financial activities would continue after revealing “typical cases of illegal foreign exchange crime”.
The authorities noted one case from 2019 where a crypto trader received more than 22 million UAE dirhams – about $6m – in cash from a Chinese gambling syndicate in Dubai and transferred the corresponding yuan into their account in China.
The trader – who was jailed for seven years and fined CNY2.3m ($322k) – was found to have used UAE dirhams to buy Tether stablecoin that they resold in mainland China for yuan.
Market backgrounder: The paper noted that mainland China remained a significant market for cryptocurrencies and is the largest in East Asia in terms of transaction turnover. It said underground traders use virtual coins to exchange currencies and avoid regulation.
They make money on the difference in value between buying cryptocurrencies with foreign currencies and reselling the virtual assets in local currency.
Payments in foreign currencies and Chinese yuan are often made in parallel to both overseas and Chinese accounts to avoid a direct, local transaction.
What we’re reading
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