Alderney is experiencing a flood of applications from online gambling companies eager to set up in the Channel Islands tax haven following changes to the UK’s legislation on internet poker and casinos.
Totesport Casino, the internet arm of the Tote betting agency, confirmed on Thursday that it would complete a move from the Caribbean island of Curacao to Alderney in weeks. The move ensures that the state-owned operation will avoid a 15 per cent “remote gaming duty” introduced by Gordon Brown three months ago.
The Tote claimed on Thursday that the move was “not for tax reasons at all”. Totesport had not been liable for tax in the Netherlands Antilles. The change of location was to allow Totesport to advertise its sports betting website in the UK.
September’s changes to the 2005 Gambling Act created a list of countries from which licensed operators could advertise gambling in the UK. Only Alderney, the Isle of Man, Gibraltar and members of the European Economic Area were on a “white list” of approved countries.
“They [Totesport] clearly couldn’t stay in Curacao,” said Robin Le Prevost, head of e-commerce at the Alderney Gambling Control Commission. “The decision was: should they go to a white-listed jurisdiction or should they go to the UK.”
Since the legislation change there had been “an extraordinary number” of applicants, Mr Le Prevost said. The number of licensees on the island was double what it was 18 months ago.
A commission website lists 33 full licensees, including offshoots of Gala Coral, Harrah’s, Rank and William Hill. Mr Le Provost said much of the new interest was from Asia and the Americas, though some European companies were among the applicants.
The Tote admitted that tax had played a role in its decision not to move to the UK. “When all of your competitors are based offshore, from a business point of view it makes sense.” Low set-up fees in Alderney had also been a factor, the Tote said.
The Department for Culture, Media and Sport, which was consulted about the move, said it was “a business decision for the Tote”.
Not having to pay UK tax could make Totesport more attractive to bidders when the government restarts the stalled privatisation process in the new year.
Ministers this month abandoned a plan to sell the Tote to a racing consortium after being advised that a £320m ($639m) offer undervalued the business. The government is expected to put the business on the open market in 2008, honouring a 2001 manifesto pledge to sell its 540 betting shops and pool betting business.
Gala Coral is expected to be a leading bidder. The private equity-backed bingo and casino business has said it would be willing to offer £405m for the Tote.
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