K has come under fire from the main European regulatory centers of Gibraltar and Malta which have argued that the motivation for the new POC tax is to collect more revenue, not to protect gamblers.
Under EU treaties, the increase of tax is not a sufficient reason for a Member State to create its own regulatory system; its justification must be to combat the risks of unlicensed gambling. And the initial Impact Assessment of the proposed reform originally quoted DCMS as saying that “no specific public protection risks have yet arisen,”—making consumer protection a tough argument to sell.
However, upon review, Stephens’ team discovered that the Impact Assessment instead read “no specific public protection issues have yet arisen”—so the Committee is now free to identify all the risks it needs to justify the new regulatory model. “It is not the case that the licensing reforms are being pursued in order to generate tax income,” Stephen’s writes in supplementary evidence, arguing that reform of remote gambling regulation “... is justified on its own merits for the public protection reasons given.”
“I’m sorry, but I’m not competent to speculate on the implications, in terms of EU law, if we were pursuing regulation purely for taxation reasons-because we aren’t,” he added.
Phillip Brear, Gibraltar’s Gambling Commissioner, submitted written evidence to the contrary, arguing that UGKC’s own evidence “... shows that the ‘harm’ associated with remote gambling is very low in the UK.”
The model proposed is charged with “diluting existing regulatory controls and accountability,” and was assessed by Brear as being “extremely high risk and high cost.” He also noted that “...this is the model which, in part, precipitated the Full Tilt collapse.”
The Gibraltar Betting and Gaming Association has collected us$ 758k to launch a legal challenge if and when the new law is implemented. The new law was set to be introduced in December 2014; however, Stephens indicated that the date for the law’s introduction could be earlier, possibly between April and October of 2014.
This date should be approximately concurrent with the EU Action Plan’s Expert Committee report which is expected to initiate the pan-EU legal framework.