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Jowells Gambling Strategy Challenged By Online Gaming Groups

According to Europe's biggest online poker operator, PartyGaming, offshore-based internet gaming groups who have operations in Britain without a UK license will not subject themselves to British regulation, unless the government clears up the issue on how they will be taxed.

"No one in this industry can yet make a judgment call because there is no decision on the tax regime," said John Shepherd. "Secondary licences are something the industry will look at, but only after the issue of taxation is cleared up."

The remarks made by PartyGaming are believed to back-up the position of other online gaming giants 888 and SportingBet. The comments are said to be detrimental to culture secretary Tessa Jowell, who hosted an international conference on online gaming Oct. 31, touting Britain's new regulatory regime as a better alternative to the new US gambling prohibition.

"We will welcome them here because we believe that by allowing those who want to gamble to do so over the counter, not under the counter, is the best way to protect children and vulnerable people and keep out crime," she said.

However, insiders in the online gambling industry said that take-up of the new licenses among operators based off-shore is not likely without substantial tax compromises.

"The benefit to the economy is less important than our priority of protecting UK citizens," Jowell said. Jowell has been evasive in discussing taxation, insisting the issue is a Treasury matter.