UK politicians continued their debates this week into the ideas of secondary licensing requirements for offshore online gambling companies. Twenty MPs took part in the debate arranged by Conservative MP Matthew Hancock. A key part of the inevitable change is the definition of where internet gambling takes place. While currently in most jurisdictions it is accepted that operators pay tax in the region that they are located, however a simple change in definition is likely to cost operators millions in taxes.

UK politicians are reportedly looking at the definition of where internet gambling actually takes places as the justification for secondary licensing. The idea is that gambling takes place at the point of ‘consumption’ (e.g. at the computer used by the player) and not at the operator’s servers. As the High Court in Norht Gauteng already ruled in favour of South Africa on this same matter in a dispute with a casino operator, this is not actually a new argument.

It seems that politicians are keen to see loopholes closed at the earliest opportunity so that operators have to pay UK tax and then look at other regulatory issues. Conservative MP Matthew Hancock for West Suffolk, told John Penrose, the minister responsible for gambling, that more than £60 million had been lost as out of the top 20 bookmakers only Coral and Bet365 are based in the UK.

"Widening the regulatory net, which I support for all gambling in the UK, is not as urgent as closing the tax and levy loophole," he stated. "Only once we tackle offshore problems can we move on to wider issues."

While the idea of changing the legislation relating offshore gambling operators has been on the agenda for several years now, but as the HM Treasury and Department of Culture, Media and Sport are now on board changes are expected as early as next year. A variety of different bodies, and both the land based and online operators have been consulted over their views of the UK regulatory and tax structure in recent months.

With the UK struggling financially politicians cannot afford to delay changes any longer than is necessary. While they announce cuts in jobs and essential services, the idea that online operators are moving offshore to avoid paying millions in UK taxes is not likely to be seen in a favourable light.