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British Tax Havens Gamble on Online Casinos

"Alderney, an English Channel island with a population of 2,400 and an economy dependent on tourism, is the first out of the gates. It will begin taking applications on Wednesday for six new e-gaming licenses, said Moran Chapman, chief executive for the Alderney Gambling Control Commission.

"The Isle of Man will announce in the coming weeks that it has created three new e-gaming licenses, a gaming official there said. Both jurisdictions, which are independent from British rule, passed the legislation last month.

"…The lure is that online gambling -- from betting on horses and American football to virtual blackjack and roulette -- has become a large and growing activity. A commonly cited report by U.S. gambling consultancy The River City Group says the e-gaming industry will grow to a $5 billion market by 2003.

"…`'It's been the real wild west,' said Steve Donoughue, managing director of London-based The Gambling Consultancy. 'The problem has been no decent jurisdiction has been willing to say, "Let's have Internet casinos.'''

"Alderney is trying to change that image. Any new license holder would be subject to regular background checks by both the island's gambling commission as well as The Gaming Board for Great Britain, which regulates the United Kingdom gambling industry, Chapman said.

"Successful applicants in Alderney would pay an annual fee of $108,600 for three years, with an option to renew annually afterwards. They would be subject to a corporate tax rate of 20 percent, Chapman said.

"The Isle of Man will charge $116,000 per year for each of its e-gaming licenses. It will also levy a 2.5 percent tax on all gross gambling profits, but there would be no corporate tax charged, said Derek Cannon, gaming inspector at the Isle of Man…"

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