In a move that pleases the online gambling industry, the Greek government made an about-face regarding their tax policy. The government has voted for a 30% gross profits tax (GPT) on online gambling. Previously, the plan in the draft bill called for a 9% turnover tax on the industry.

Industry insiders call it a partial victory, getting them to change from a turnover tax to a GPT, though the 30% rate is higher than they would like. A spokesman for the Remote Gambling Association said that they welcome the change, though “the 30% rate that has been suggested in Greece is higher than other jurisdictions, and we will continue our lobbying efforts to bring those more into line with other countries.”

RGA’s CEO, Clive Hawkswood, had previously said that the turnover tax is “simply not viable for operators in a highly competitive global market.” RGA solicited the help of KPMG, an accounting and auditing firm, to determine the impact of being taxed on turnover rather than gross profit. After looking at KPMG’s report, Hawkswood said that “only a gross profits taxation model will provide value for consumers, a reliable source of revenue for the government and a healthy competitive environment for the industry.”

To understand the issue, you need to know the difference between a turnover tax and a gross profit tax. Gross profit is a company’s revenue after subtracting the costs of running that business. In the case of an online casino, payouts to players would be included in that operational cost. A gross profit tax only taxes the online casino on the amount of money they made after paying out winnings, paying for bandwidth, payroll and other costs.

A turnover tax is similar to a value-added tax (VAT) and that tax is levied on the production stages. The same product is taxed at each stage of the process of going from creation to consumer. Under this model, casinos would lose a lot of money because even though they take in lots of money from the players, they return large portions of that money through payouts, bonuses and promotions. Taxing gambling turnover would tax the online casinos on money that they would later pay out to players, rather than keeping for themselves.

By switching to a GPT model, the Greek government has made a rare wise decision, though their current financial state has kind of forced them to look into this whole common sense thing. Hopefully the industry lobbyists will successfully convince the government to lower the 30% rate as well, or else they still risk being the next France – a country with regulations choking the online gambling industry.

Tags: France online gambling, Greece online gambling, taxation

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Today New Jersey Governor Christie vetoed the “Intrastate Internet Gambling Bill” that would legalize online gambling at licensed online casinos for NJ residents.

Initially, Christie would have had to make his decision known by Feb. 24^th, but the governor’s office announced a 1-week delay due to a legislative recess.

Christie´s Motives
In coming to his decision Christie said he wrestled with both “legal issues and constitutional concerns.” His main concern is that the bill does not contain passages to prevent other businesses like nightclubs, restaurants and cafes from starting online gambling venues.

Another reason for him to veto the bill is a passage that facilitates the use of a part of online gambling revenues to support the NJ horse racing industry. This is against Christie´s efforts to cut off the industry from state subsidies.

The Future for Bill S3167
Now the Governor used his veto to prevent the effectuation of bill s3167, known as the Intrastate Internet Gambling Bill, it would have to go back to the legislature and pass with a two-thirds majority for the veto to be overridden.

Ray Lesniak, who sponsored the bill, already announced he would not attempt to override a Governmental veto.

On top of this, it would be unlikely that the Republican members of the legislature would vote in favor of the bill in a second instance.

Christie is a Republican, and an attempt to override his veto would be a major sign of distrust from his own party members.