Online gambling in the UK has pretty much been a free for all up until now. However reports in the media suggest that online gambling operators that target British players and avoid paying taxes may be coming to an end. According to a ‘senior government source’ the coalition government intends to crackdown with the first step being a ban on advertising in the UK for those operators based offshore and stopping the use of credit cards used for online gambling. While the source suggests the government is looking at the best interests of the public there is much scepticism. This is more likely the start of increasing revenues.

Currently online gambling operators that are based in certain offshore jurisdictions, known as those on the British ‘white list’, are permitted to advertise in the UK. However the report suggests that the Culture Secretary, Jeremy Hunt, has concerns with the level of problem gambling in the UK and is considering restrictions such as banning the use of credit cards used to prevent people gambling money they do not have. Bingo clubs based in the UK have never been allowed to accept credit cards as a form of payment.

The Daily Mail's source told the newspaper: "Ministers are concerned about the explosion of internet gambling advertising since [the political party then in power] Labour relaxed the gambling laws."

The source added that the Conservative-LibDem coalition government was looking at ways to protect the public from gambling companies that don’t meet UK standards, which is something that the previous Labour government failed to address.

Currently only gambling operators based in the UK are required to hold a license issued by the Gambling Commission and to pay UK tax on gambling profits. As such most online gambling companies are based offshore to avoid the stringent rules they would have to adhere to. Given the taxation levels that UK bingo companies and other gambling operators have to pay for being based in the UK it places a significant disadvantage in competitiveness as well.

Online operators based across Europe and in places such as Alderney, the Isle of Man, and the Australian state of Tasmania can benefit from being on the ‘white list’ and hence are able to advertise to the UK market, however according to the report this is likely to be reviewed in the near future.

The newspaper article claimed that UK consumers spent £2.5 billion on internet or telephone gambling last year, and operators licensed by the Gambling Commission represented less than a quarter of this.

"This means that UK consumers aren't being as well protected as they could be," said the government source.

"We are the only country to permit overseas operators to advertise whilst relying on an overseas licence on issues of playing protection," the source added, revealing that Secretary Hunt is hoping to review the legislation to ensure all online and telephone gambling in Britain is regulated by the Gambling Commission.

Suggestions from the report may have significant implications for all of the top online bingo sites in the UK. None of them are based in the UK and all the most well known sites uses a multiple forms of advertising in the UK. Currently there are more than half dozen TV campaigns being shown and no doubt without such many of these operators would struggle. It is not known how far the legislation would extend and it would be enforced. There is the possibility that not only would the TV campaigns go but also advertising in the newspapers, magazines and online advertising. Many sites advertise on popular websites such as Facebook, Amazon, Google and Ebay. The legislation would more than likely to ban this for UK customers (it is actually a lot easier to enforce than people think) as many of these sites have targeted adverting campaigns to specific markets. The reality is that online bingo portals in the UK that advertise to non UK based operators would be a thing of the past and email campaigns to members residing in the UK could also be stopped. For those that are sceptical of how this would be policed just consider how quickly the US government put a stop to such practices with threats of criminal charges.

The reality is that depending on how far the legislation goes the majority of the online bingo operators that are available to the UK bingo market that refused to be licensed and pay UK taxes would cease to trade. For many others the legislation would be detrimental as the increased costs to operate in what is now a highly competitive market would bring an end to their survival.

Having to be licensed by the Gambling Commission would also end some of the unfair practices that have been adopted and promoted by operators. Things such as the 900% bonus for new members which is really a 300% bonus on the first 3 deposits would be a thing of the past as the two things are completely different and it is as such nothing more than false advertising (e.g the 900% claim would suggest if you deposit £10 you get a further £90, the reality is that you would have to deposit £30 to get the £90 bonus). In addition operators would have to adhere to strict rules in terms of preventing underage and problem gambling which can only be a positive for the industry.

There are many campaigners for fair taxation laws in the UK, especially within the bingo industry, that want to create a fair and level competitive playing field within the gambling industry. We have ourselves stated that we are in favour of such legislation and suggested recently that we are expecting changes in both the UK and US markets. Given the economic problems and high levels of national debt in both countries the governments would benefit significantly by taxing offshore gambling operators and common sense suggests it is only a matter of time before such proposals are agreed. Such a move is becoming common in countries across Europe in which operators are only allowed to take deposits from nationals if they hold a license for that country and pay taxes to the relevant government.

While problem gambling is a significantly bigger problem in online gaming, the reasons that the government are looking at reviewing the legislation is more likely to do with tax revenues than the well being of UK residents.