Saturday, March 31, 2007

Not so Fast: British Fristians Toss Monkey Wrench into UK Supercasino Plans

Thanks for tuning in. We had a bit of unexpected break there, during the week, for unexpected reasons. And now, back to the chase...

You've all heard the bit about UK wanting to become the world's leader in the online-gambling industry? A much-ballyhooed meeting of almost three dozen interested countries was hosted last fall at the famed Ascot horsetrack, with UK official Tessa Jowell trumpeting the accord as the true legitimizing if international online gambling, complete with plans to allow online firms to set up shop in the UK and be licensed and regulated under the flag of one of the world's most austere nations. In somewhat related news, Jowell helped champion a plan for 17 new "supercasinos" to be built throughout the UK; the first license was issued to Manchester.

It looked like the dawn of a new day, and perhaps a shot fired 'cross the bow of the U.S. A statement to Uncle Sam tp basically get his bearded face out of his ass, if you will.

Well, the UK has some anti-gambling forces, too, and collectively, they've managed to undo much of the progress that's been made.

First came the news that Gordon Brown, Minister of the Treasury, saw fit to impose a 15% tax on gross revenues on all online firms, bringing it on a par with bookmaking shops and the like, but providing no incentive whatsoever for major online firms to leave island abodes where they can obtain a form of regulatory oversight for perhaps one fifth the cost. In fact, the move will have the opposite effect, as seen in the quickly following announcement that Sportingbet PLC will leave its mainland corporate presence behind, moving off to friendlier climes.

Expect other major UK-based companies to follow. No online site can give up 15% juice off the top and remain competitive in an increasingly pressured market.

Of course, Gordon wasn't done there. Gordon, who also holds the title of Exchequer of the Royal Prince's Jewels (or somesuch), is a conservative Presbyterian with a staunch anti-gambling upbringing, and he's one of the Labor Party's bastions in pretty much working against the gambling industry as a whole.

Gordon's recent budget did more than just deep-six any expectations that the UK would become the focal point of online gaming; he also introduced a series of heightened levies against land-based casinos that makes the supercasinos unlikely to thrive. Gordon did away with the bottom tier of taxes, and increased the top-level rate from 40% to 50%, which puts the very financial existence of major Vegas-style casinos into doubt. One source notes that given such a rate, casinos are unlikely to be able to reserve space for anything but the highest-volume games on a square-footage basis. This means that these supercasinos could, in one scenario, be nothing more that huge slot-machine halls rather than the tourist destinations they were designed to be.

Brown's tax-levy salvo turned out to be the first shot in an all-out Labor Party effort to overthrow the entire supercasino concept, and in a narrow, three-vote victory on Wednesday, they succeeded in scrapping the original measure. Labor officials seized upon a controversy involved in giving the first license to Manchester, rather than Blackpool --- as if Blackpool wasn't going to get a casino in the near future anyway --- and have now succeeded in tearing down much of the structure previously in place. It was an effective display of building a bloc for deconstructive purposes, suggesting the Labor Party's been taking notes on how Israel's Knesset does its biz....

Three steps forward, two steps back. If that sounds like a song you remember from your earliest school days, then you've got the picture. We've said it so many times it hardly bears repeating, but what the heck: Online gambling remains a controversial, hot-button issue.

And nothing is ever set in stone.

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