Internet gambling regulation fees vary around the world

Tuesday, June 29, 1999 | 11:12 a.m.

VANCOUVER, British Columbia -- Operating an online casino offshore is an expensive proposition.

Regulators from Europe, Australia and the Caribbean fielded questions from Internet gambling companies and their suppliers on those costs at last week's inaugural Global Interactive Gaming Summit and Expo.

Fees and taxes vary greatly by jurisdiction.

Because of the uncertainty of the direction of the Internet gambling industry in the United States, many companies are choosing to locate offshore. Legislation sponsored by Sen. Jon Kyl, R-Ariz., would ban the industry in the United States.

In Antigua, one of the hot spots for registry in the Caribbean, the government charges annual fees.

Gyneth McAllister, director of offshore gaming for Antigua and Barbuda, said sports book operations are charged $75,000 a year in Antigua while software-based operations, such as online casinos, must pay $100,000 a year.

In Australia, where regulation in some states began earlier this year following legislative approval in 1998, taxes are based on a percentage of gross win.

David Ford, executive director of the Queensland Office of Gaming Regulation, said Internet versions of land-based casinos in Australia are taxed at the same rate they currently pay.

Current rates vary by the type of venue or game. Casinos and keno games pay 20 percent, slot machines placed in clubs range from 10 percent to 45 percent, based on the size of the establishments, slots in casinos pay 45 percent and lotteries pay 50 percent.

Ford said foreign operators establishing a base in Australia are assessed a 50 percent tax. He said the steep rate was established because online casinos offer no employment benefits for Australia.

Fifteen European nations also are establishing bases for Internet casinos, but an association agreed only to register operations based in their respective countries.

For online casinos that have the potential of taking millions of dollars in bets, the Caribbean alternative is clearly the least expensive alternative.

McAllister said Antigua welcomes the industry, not only because of the revenue it generates for the government, but because of the technology it brings to the nation's residents. She said a school has been established where Antiguans are learning how to develop World Wide Web pages and numerous computer languages.

"Antigua's agenda is to advance its technology," McAllister said. "We have needs that other countries don't have. That's why we're friendlier."

Ford said Australia's decision to regulate the online gambling industry evolved from the convergence of gambling and communications technologies. That convergence, combined with a culture that accepts gambling as a form of entertainment, led to legislative approval with virtually no opposition.

"We figured there were three options available to us," Ford said. "We could ban it, which is what the U.S. is trying to do, but we commissioned a report that said a blanket banning of Internet gambling would be impossible.

"Another option was to ignore the issue, which is happily endorsed by a number of people. They'd rather leave the problem to someone else," Ford said.

"Or, you could regulate it. Since 3 percent of the average Australian's household income is spent on some form of gambling, we felt there was acceptance."

The Australian regulatory plan lists several requirements of online casino operators. Players must be registered, a requirement that nation is using to prevent minors from gambling.

The plan also sets betting limits, prohibits betting with credit, limits advertising and assures other player-protection and privacy measures.

Ford explained that banning credit bets doesn't mean players can't use a credit card. Credit cards can be used to fund an account. The credit ban prohibits bettors from playing if they don't have funds in their account.

Information also is required of online casinos registering in Antigua.

McAllister said only 30 licenses are issued for every 500 applications received, mainly because applicants fail to supply all the information sought by the Antiguan government.

The application asks for copies of passports and bank records from any shareholder with a stake of 10 percent or more of the company.

If Kyl's bill banning Internet gambling becomes law, McAllister said Antigua would not require their licensees to stop taking bets from the United States.

"Antigua is not the 51st state," McAllister said. "If prohibition passes, the individual companies will have the choice of what to do."