Ladbrokes: "no alternative" to moving web gambling offshore
Posted by Gavin Smith on 12 Aug 2009 at 10:08
Bosses at Ladbrokes have said the company had "no alternative" but to move online interests offshore, it has been reported.
E Gaming Review said the bookmaker's head of online gaming, John O’Reilly, also declined the opportunity to criticise the UK government's tax policy.
According to the site, O'Reilly said he was “not critical of the government, as there are many issues to deal with".
He also said issues like VAT, corporation tax and other costs posed their own questions besides tax.
He also called on the Department for Culture Media and Sport to find the "right framework" in an effort to drive through the priorities laid down by the Gambling Act.
In relation to recent results, E Gaming Review added O'Reilly said net gaming revenue was lower than hoped and results down because of a sliding yield from high stakes players.
However, he said there were some plus points.
Quoted by E Gaming Review he said: “Ladbrokes egaming has been very successful at growing organically over the past seven years without much capital expenditure, and we will do more. Having a sticky six months doesn’t mean the business model isn’t right."
Adding that gambling is not "recession proof", he said the sector was resilient nonetheless and that the future seemed positive for egaming.
He also revealed that the company is looking to diversify its business away from the UK market, current responsible for 72 per cent of its revenue.
Before the company does that they will have to negotiate EU regulations, but O'Reilly added he was confident of progress in the likes of Germany and Italy.
The Guardian also reported that the company's decision to move online gambling to Gibraltar defied a treasury "gentleman's agreement".
Quoted by the paper, company chief executive Christopher Bell said "intense competitive pressures" had caused the company to follow the likes of William Hill in transferring activities offshore.
"Operating from the UK has become unsustainable and we will relocate by the year end," he said.
Experts have said the company could save as much as £7 million per year thanks to the change.
The Guardian added that the UK bookmaker agreed in 2001 to transfer their web gaming operations back to the UK in return for an abolition of the 9p levy on bets.
Ladbrokes has also said that there has been less business in its high street shops thanks to the ongoing pressure from the recession since May.
The company's pre-tax profits dropped by 3.9 per cent to £131.3 million.
