Some of the highest user engagement for the services industry comes from a niche that most governments would usually be concerned about. However, the iGaming and sports betting industries are on top of their game when it comes to gambling awareness and keeping their customers on board by offering their services as a hobby and not a way to make money.
Most governments earn a decent amount of tax dollars from both online casinos and sports betting websites. In particular, online casinos propped up the industry during the lockdown, while sports betting was generally not available due to live sports being banned.
Countries where online gambling is illegal suddenly started to change their laws quickly, as this was one online niche that people can still enjoy, and it is easy for people to have a flutter from their desktop or mobile device. With those bets come much-needed tax dollars that countries such as the Philippines and numerous US states missed out on.
UK & European iGaming Licensing & Taxes
When the USA shut down all online betting sites on Black Friday Europe took note. However, the situation was different compared to the USA. Most online casino businesses did not operate in the USA, and so there was no tax benefit and billions of US dollars going offshore. Conversely, Europe had numerous online casino businesses paying valuable tax dollars.
GVC Holdings and Playtech on the London stock exchange, Microgaming on the Isle of Man, NetEnt and Evolution in Sweden, and William Hill over in the Republic of Ireland and Gibraltar. This is just a small sample of how many companies in Europe were paying tax dollars earned directly from their online sports betting and casino operations.
There was no way European countries would be as drastic as the USA because it would mean shutting down a billion-dollar ‘tax-paying’ enterprise. In the US, it meant shutting down a non-tax-paying industry because casino companies were not based in the US.
Instead, European countries took their time and devised licensing laws to control online casinos. This was also to make sure they are not money laundering, stealing player money, abusing privacy or consumer rights laws, and very importantly, to make sure they report their financials and pay tax.
Now today there are plenty of new online betting businesses that can gain a license and start operating across Europe. For example, Virgin Bet is a new sports betting platform that is now licensed by the UK Gambling Commission and the Gibraltar Regulatory Authority. Thanks to smooth and clear cut laws, new betting sites and bookmakers like Virgin Bet can now enter the online iGaming and betting industry with ease as long as they prove they are fit and ready to do so.
USA iGaming & Sports Bet Licenses Issued
In the US, states that are slow to bring online casinos online are now paying the price. Their tax revenues were several down which is exactly why we are suddenly seeing a resurgence of US online casinos.
In the USA New Jersey has led the way with online casinos along with Delaware while Nevada and Delaware have always been the leaders in the online sports betting industry. However, Nevada does not have an online casino license out and rather there are ‘social online casinos’ which are not for real money play. Online poker is allowed in all states, and more recently New Jersey added sports betting which was slow to do so considering online poker and casinos were already legal.
New states to join the online casino scene in the USA include Pennsylvania which is now open for business and Michigan will come online in 2021, while West Virginia looks like it will become the next state to join this list. Meanwhile, there are numerous states that already allow online sports betting but not online casinos.
These states may look at issuing online casino licenses as the closure of live sports severely affects revenues over 2020. This would become the backup solution in case of another pandemic.
Domestic Philippines Online Casinos Coming Online
Over in the Philippines, things are starting to boil up as the country starts to offer online casino gaming to VIP citizens. Although the Philippines is well-known, or maybe not, for its casino services to overseas clients, contrary to popular belief, it is illegal to offer online casino games for real money to domestic citizens.
However, that rule recently changed. As the collapse of the online casino sector came around due to the pandemic and buildings were left empty as those working within the industry had to find pastures new, the Philippines government needed to look at ways it could stir up additional tax dollars. Just to put a number on how disastrous the decline was in the Philippines, in Q2 of 2020 there was a 96% decline in business in this sector!
The solution by the PAGCOR, which is responsible for the governance of online gambling in the country, was to allow the land-based casinos in the country to offer online casino services to domestic citizens. However, this law comes with a twist. In order to become a member of these casinos, you need to be a VIP and have plenty of cash to spend.
With the VIP solution now in place, the PAGCOR is happy that it will not encourage poorer citizens in the country to gamble as a means to ‘make money’ – a problem that is plaguing India at this time as online casinos from overseas allow Indian citizens to sign up and play. The result was several Indian states banning people from playing online casinos – ironically enough this would also come with a stiff fine!
The Philippines seems like it has protected itself from the same issues India is facing while the tax dollars should start to roll back in.
Meanwhile, it is pretty clear how important the online gambling industry is when it comes to tax dollars. In Europe, there is a long-standing system in place to make sure online casinos and sports books follow financial rules as part of their licensing procedures. In the US very much the same thing as Europe is happening, but this is only just happening in a few states after the country has had a financial ban on citizens and institutions processing payments with online betting for close to a decade now.