The Isle of Man is an international financial centre situated in the middle of the Irish Sea.
Online gambling is a legal licensable activity in the Isle of Man. In fact, it is one of the oldest and most respected licensing jurisdictions for online gaming in Europe. The Online Gambling Regulation Act 2001, the Gambling (Amendment) Act 2006, and the Electronic Transactions Act of 2000 enables the island's Department of Home Affairs to grant licenses authorizing companies to conduct online gambling. The island is 'White Listed' by the UK and the OECD respectively for eGaming and tax cooperation purposes, which therefore allows the Isle of Man licensees to advertise without a need for any form of license.
A key advantage for the Isle of Man, as an online gambling jurisdiction, is its excellent telecommunication systems and enormous bandwidth capability. Current capacity is able to carry up to ten times the current level of transatlantic Internet traffic between Europe and the Americas. This is key as an internet gambling site is dependent on the telecommunications system and even a small failure of a few minutes can severely damage a company's reputation and therefore profitability.
Another advantage is the Islands data protection laws that are based on the UK's Data Protection Act and protects individuals with regard to the processing of personal data and on the free movement of such data.
What would be considered as Online Gambling?
A holder of an Isle of Man license can carry out:
- All kinds of Casino game including slots
- Betting Exchanges
- Sports books
- Mobile phone betting
- Football Pools
- Fantasy sports etc.
Potential Tax Advantages
- The new Isle of Man tax regime introduces a number of extremely attractive financial opportunities for an online gambling business:
- Zero rate corporation tax. Online Gambling is not subject to VAT either.
- Zero capital gains tax on the sale of all, or part of, a company.
- Zero inheritance tax.
By residing on the island, both owners and/or employees can benefit from the personal income tax cap of £120,000 (Isle of Man pounds IMP) for a single person per annum on worldwide income.
Online Gambling Regulation in the Isle of Man
There are four main elements to the Gambling Amendment Act of 2006:
- The restructuring and modernizing of the IOM Gambling Control Commissioners. This body has now become the Isle of Man Gambling Supervision Commission (GSC). The GSC is responsible for the granting of online gambling licenses and the continuing regulation of the license holders.
- The creation of a Gambling Appeals Tribunal.
- The transfer of the licensing and regulation of online sport betting to the Online Regulation Act 2001.
- The power to have a designated official based off the island.
How can one apply for an Online Gambling License?
The applicant must be an Isle of Man company limited by shares and not by guarantee.
The Commission needs to satisfy itself that the company is controlled by persons of integrity and managed by persons of competence and integrity.
A licence holder must have a designated official to ensure that the license holder complies with the regulations at all times.
The regulations set out specific and strict rules to be followed for the opening and maintenance of a betting account by an individual wishing to gamble online. License holders are required to collect and maintain correct due diligence of each player, to show full identity.
Once a licence has been granted, the licence holder must comply with the Act and the Regulations and any specific conditions that may be attached to the license.
An application fee of £5,000 for a full OGRA license is payable with the license application. An annual license fee of £35,000 is payable by the license holder for a five year period. Licenses will be subject to renewal after the 5 years. A full license does not cover gambling activities of a parent or holding company or sister companies.
Sub-Licenses are available for those operators who enter into a contract with a technological provider that holds a full OGRA license that costs less.
There are also Isle of Man Network Licenses which allow players registered to a non Isle of Man operations to play on an Isle of Man server without re registering. This requires a £5,000 application fee, £50,000 annual fee, and £5,000 per network partner. This option offers low cost duty starting at 1.5% on Gross Gaming Yield (GGY) and not turnover.
All license holders are required to pay online gambling duty to the Customs and Excise Division.
To summarize, the Isle of Man is one of the premier jurisdictions for regulated online gambling. The new tax system creates a number of additional opportunities for online gambling organizations.
Operating companies can benefit from zero tax by locating on the Island and owners and key employees can also make significant tax savings if they also move to the Isle of Man.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.