New UKGC Licensing Fees Complicated In a Good Way

A few months ago the UK Gambling Commission UKGC’s scheduling of licensing fee hikes for April 2017 gave rise to immediate fears of increased operating costs and diminished profit margins for the thousands of operators in or entering the massive UK market. 

UKGC Allays Fears

In direct response to those concerns expressed over a three-month consultation between the UK Gambling Commission and the Department for Culture, Media and Sport (DCMS) that concluded last September 9, the UKGC has posted on its website that in reality only 75 of the largest operators are actually scheduled for the fee hikes, which are fixed to earnings. 

Reduction in Majority of Fees

The UKGC points out that the fees of around 1,900 gambling operators will actually be reduced upon implementation, with another approximately 1,000 operators seeing minimal change in fee levels.

Absorbing the Hit

Larger operators would experience fee hikes up to 140% higher than their current levels, fixed to a percentage of Gross Gambling Yield GGY.

New Operator Discount

However, first-time online licensees will get a 25% first year discount.                  

Covers UKGC Costs

The UKGC explained that it has redesigned the fee system to recover its own operating costs more equitably distribute large operator revenue takes whose commissions have proven insufficient to cover UKGC operating costs since 2007 when the original licensing fees were implemented.    

Tax to Lower Fees

The UKGC further estimated that the new 15% online point-of-consumption tax on online revenue to be collected from UK punters in April actually stands to “reduce the overall fee burden across the industry by over 10%.”

New Licensing Subcategories

To adapt the measures, the UKGC will create subdivisions of fee categories according to specific types and characteristics of operators as GGY earners.

Lower Cost Licence

This includes a “game host” licence for B2B suppliers who host their own games through B2C remote casino or bingo sites. This same capability for B2B suppliers in the current regime requires 2 licenses, both a B2B and B2C operating license. The UKGC explains that the single game host license will lower the costs of fees of “current remote casino and bingo licenses.”

Implication of the Announcement

The larger fees covering the UKGC’s operating costs will affect only the UK operators who can afford to pay them; new and mid-level operators have the opportunity to establish themselves in the UK market before paying the larger fees.