30th of September 2009 Author: Glo Wood
UK taxes and racecourse levies made online operations uncompetitive
In what appears to be a public riposte to attacks on its move offshore by UK racing bodies, William Hill's CEO Ralph Topping this week expanded on the reasons behind the move, starting with the assertion that the online gambling business offers great opportunities but is intensely competitive.
The competitive element is at the root of William Hill's strategic transfer of its online operations to Gibraltar, where the company's competitive edge is not blunted by the UK's current 15 percent gross profits tax regime and 10 percent levy on all UK horseracing bets.
Describing the move as a logical step in the evolution of WilliamHill.com and its online entity, William Hill Online, Topping wrote: "Any company which wants to be a leading online betting and gaming business on the international stage has to take every competitive advantage possible.
"And it was simply impossible for us to compete from the UK, as the current 15 percent gross profits tax regime and 10 percent levy on all UK horseracing bets accepted discriminates against onshore operators.
"Existing offshore operators don't have those costs, giving them more capital to invest in growing their businesses."
Topping says that although that point was repeatedly made to the UK government, it was not addressed, and as a consequence: "The decision to move was one we could no longer avoid making. Our online operations now have a really bright future.
"Relocating our online betting teams to Gibraltar, alongside our suite of existing casino, poker and other gaming products, is going to provide significant synergies further that will help us grow.
"Moving our online betting activities to join our existing gaming operations in our William Hill Online headquarters in Gibraltar will also make us more efficient operationally."
Topping says that Gibraltar is a centre of excellence for online betting and gaming, giving his company access to a skilled workforce while offering a competitive tax regime.
"Around 60 employees have already relocated from the UK to the jurisdiction since the beginning of 2009 to support the expanded operations and we expect this number to grow," he adds, noting that the company is becoming increasingly international in Europe and farther afield in addition to its well established UK business.
"This globalisation is also reflected in our online operations, with our egaming headquarters and gaming activities in Gibraltar, marketing teams in Israel and customer services in Bulgaria," he points out.
In what seems to be a reference to horseracing authorities critical of the Gibraltar move, Topping comments: "As for those who have claimed that moving offshore will increase the risk of match-fixing or corrupt betting, bookmakers are the ones that suffer if fraudulent bets are placed. They have no interest in lowering their guard when it comes to monitoring these criminal activities.
"Moving to Gibraltar will enable us to continue our focus on internet gaming and betting, which up until we entered into our partnership with Playtech had become the underperforming cousin to the rest of our business.
"Already, we have seen marked improvements in our online activities: online bingo revenues have grown by 50 percent over the past 12 months and our overall egaming revenues rose 58 percent in 2009 to GBP 100 million, compared with GBP 63 million last year. These figures reflect the immediate impact of combining the Playtech brands with the William Hill name last year.
"We are also confident the migration of our online casino to the Playtech platform by year-end, in addition to the poker players we will ‘re-recruit' once the poker player-base has been migrated from the CryptoLogic platform to Playtech, will continue to feed this growth.
"All these moves will increase our cross-selling capabilities, which when allied to the competitive edge we will gain in online betting thanks to our relocation, will enable our online division to achieve even more."
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