If you live in Greece and gamble online, I hope you report that income and pay the appropriate taxes. If not, you had better start. The Greek government has made it known that they are targeting tax evaders, including those who don’t pay taxes from online casino gaming.

There is an estimated €15 billion in so-called missing taxes each year for the Greek government. That means tax money that they should receive but do not because of tax evasion. As part of the rules given to them by the IMF, EU and Germany during the bailout, Greece must reduce that number and bring in more of that missing tax money. To that end, they have created a new team, called the Financial Police and Electronic Crimes Squad. That team is tasked with finding tax dodgers, including online gamblers.

Among the new powers given to that team is the ability to track bank accounts and stock market activity. That means there is a much better chance of noticing money made from overseas online sources, such as online casinos. Christos Papoutsis, the leader of the team, also says that online gambling is a major target because he thinks it costs the government €2 billion per year. “Greek banks are unwitting accomplices in this because all the transactions are done using credit cards,” he said.

Greece has long been considered one of the top European nations for tax evasion. Many online gamblers took advantage of that and simply didn’t pay tax on casino earnings. With the new team implemented to go after them, gamblers would be wise to pay their taxes legitimately.

It seems that Greece is content to ignore the European Commission when it comes to their online gambling regulations. Today the country is pushed forward with its online gambling plan, despite the European Commission saying it is not compatible with European Union laws.

Among the regulations that could make the Greek plan incompatible with EU laws are the tight restrictions on new licenses and the limited number of licenses available. Also, though the Greek government is trying to sell the current monopoly OPAP, it now turns out that Greece wants to retain management of the business. They would then give OPAP special privileges that gives it an advantage over foreign competition.

All of this was pointed out to Greece recently by the European Commission, but instead of responding to that by revising their plan, Greece is content to push forward. Today Greece’s parliament passed the online gambling reforms as part of an omnibus bill by a voice vote. The European Commission is now likely to issue a legal challenge to the reforms, due to unfair competitive practices and an environment that could scare off potential investors. The protectionist online gambling laws could result in a hefty fine from the European Commission, which is exactly the last thing a country sinking from debt needs.

Betfair is one of the online gambling companies that has been the most critical of Greece’s online gambling reforms. Martin Cruddace, their chief legal and regulatory affairs officer, said today that the Greece law is in “stark contravention of EU law.” The courts will soon decide that matter.

In a move that pleases the online gambling industry, the Greek government made an about-face regarding their tax policy. The government has voted for a 30% gross profits tax (GPT) on online gambling. Previously, the plan in the draft bill called for a 9% turnover tax on the industry.

Industry insiders call it a partial victory, getting them to change from a turnover tax to a GPT, though the 30% rate is higher than they would like. A spokesman for the Remote Gambling Association said that they welcome the change, though “the 30% rate that has been suggested in Greece is higher than other jurisdictions, and we will continue our lobbying efforts to bring those more into line with other countries.”

RGA’s CEO, Clive Hawkswood, had previously said that the turnover tax is “simply not viable for operators in a highly competitive global market.” RGA solicited the help of KPMG, an accounting and auditing firm, to determine the impact of being taxed on turnover rather than gross profit. After looking at KPMG’s report, Hawkswood said that “only a gross profits taxation model will provide value for consumers, a reliable source of revenue for the government and a healthy competitive environment for the industry.”

To understand the issue, you need to know the difference between a turnover tax and a gross profit tax. Gross profit is a company’s revenue after subtracting the costs of running that business. In the case of an online casino, payouts to players would be included in that operational cost. A gross profit tax only taxes the online casino on the amount of money they made after paying out winnings, paying for bandwidth, payroll and other costs.

A turnover tax is similar to a value-added tax (VAT) and that tax is levied on the production stages. The same product is taxed at each stage of the process of going from creation to consumer. Under this model, casinos would lose a lot of money because even though they take in lots of money from the players, they return large portions of that money through payouts, bonuses and promotions. Taxing gambling turnover would tax the online casinos on money that they would later pay out to players, rather than keeping for themselves.

By switching to a GPT model, the Greek government has made a rare wise decision, though their current financial state has kind of forced them to look into this whole common sense thing. Hopefully the industry lobbyists will successfully convince the government to lower the 30% rate as well, or else they still risk being the next France – a country with regulations choking the online gambling industry.

Greece has decided to comply with European Union rules and liberalize their gambling market, but not everyone is happy with the results. On January 27, the Greek government unveiled a new regulatory structure for online gambling, which would include a 6% tax on turnover for the online gambling operators.

That tax rate has come under fire from some of the online gambling trade organizations. The Remote Gaming Association (RGA) issued a statement where they praised Greece for allowing overseas competition and opening the market so that citizens have options other than the existing monopolies. It did, however, have some harsh words regarding some of the regulations. One particular object of ire was the 6% tax rate, which the statement said is “just not viable.”

Citing an assessment by business consultant KPMG, Clive Hawkswood, the CEO of RGA, said that “only a gross profits taxation model will provide value for consumers, a reliable source of revenue for the government and a healthy competitive environment for the industry.”

In addition to the taxation policy, Hawkswood criticized regulations that require an online gambling operator to have servers located in Greece and have Greek domain names. Hawkswood said that the rules are too strict, discourage entry into the market and may be in violation of EU rules. Greece’s plans to issue between 15 and 50 gambling licenses is also too vague and needs to be clarified, according to RGA.

Hawkswood also compared the regulations to those of the new French gambling laws. France’s regulations have been called by many the worst in all of Europe. In France, a high tax rate, strict rules for licensure and a low cap on payout rate discourage entry into the market.

According to Greece’s Finance Ministry, the online gambling market in the country is worth an estimated €2 billion. It seems that because Greeks don’t spend much time working – the few that do work – they have plenty of time for leisure activities, such as gambling.

George Christodoulakis (you’d think people as lazy as the Greeks would have easier names to pronounce), a senior official in the Finance Ministry, told the Agence France Presse that “the propensity for gaming in Greece is among the highest in Europe and the world.” He said that “has to do with our temperament and culture,” referring to lazy people who would rather try to make money playing a casino game than earn it with a hard day’s work.

With that in mind, Christodoulakis said that the only thing the government needs to do is set the rules for online gambling, which is currently illegal though the law is not really enforced. As a result, the Greek government is considering establishing a Gaming Commission to regulate and tax the online gambling industry.

Of course, being taxed by the government for something they are currently doing tax-free may cause more rioting in Greece, assuming that there are Greeks who have enough motivation to riot and are not already doing so. Then again, I’m not sure what the communist party’s opinion is of gambling, so I can’t be certain how those rioters would react.

Christodoulakis estimates that approximately €4 billion is spent on illegal gambling, with half of that being spent online. That makes it tempting for the government to regulate the industry, especially considering the Greek government is big on controlling industries. Once that starts affecting the wallet of the Greeks, though, all bets are off.

When they’re not sitting around doing nothing while collecting government pensions or rioting and burning down cars and looting stores because of anger at losing those pensions, Greeks love to gamble online. At least, that’s what the government is counting on, because they have drafted new online gambling legislation that would regulate the industry within their borders.

The Greek government, in an attempt to add revenue to a nation being crippled by debt and a workforce that isn’t used to actually working for their money, has introduced legislation that would legalize online gambling in the country but require offshore online casinos, sports books and poker rooms to acquire licenses from the Greek government. In addition, the online gambling companies would have to set up servers in Greece, process their financial transactions within the country and operate using a Greek domain name.

All of those moves are intended to bring money that Greeks are currently spending on foreign operators back into the economy. It’s a small fix, but every little thing counts when you’re facing total economic collapse, so I wouldn’t expect the legislation to get a lot of opposition within the Greek government.

The online gambling legislation would also allow the Greek government to block the ISP of any foreign online gambling website that did not obtain a license and meet their other requirements. In addition, it would allow the government to stop and prosecute any illegal online gambling transactions involving Greek citizens.

The online gambling legislation is scheduled for debate this month and if passed, has a target date of May 2011 for full implementation.

Online gambling is becoming more popular in Greece, or so says an online gambling website, onlinegamblingpal.com. According to the source, you can tell that online gambling is becoming more popular there due to the large number of Greeks who are reporting winning money at online casinos right now.

Okay, or I guess that could be a coincidence. It gets worse, though. Here is an actual quote from the website: “The southeastern country is currently facing major financial problems, which could be solved by playing at online casinos.”

Really? So Greece is in the middle of a financial meltdown due to irresponsible spending and the solution is to gamble? That seems a little odd. Unemployment in Greece is ridiculous, though that is partly because so many people there would rather not work and simply make money off of government assistance programs. Recent austerity measures imposed by the EU, however, have led to rioting in the streets by communists, unions and other radicals. And while those people are burning cars, throwing rocks at police and marching on government lawns, your friends at onlinegamblingpal.com want you to think that the solution, if you’re Greek, is to take all of your money and spend it at an online casino in the hopes of doubling your cash or better.

It doesn’t take a genius to know that’s a bad strategy. In fact, it is the exact opposite of what I propose almost every day on this website: Never spend money that you can’t afford to lose. If you are hurting for money and need a quick buck, the casino is not an answer, because it is more likely to take your money than give you some.

Of course I support online gambling and I think it can be a very enjoyable activity if done responsibly. The key is the word “responsibly.” There are some websites out there – and onlinegamblingpal.com seems to be one of them – who don’t care about that and just want to encourage you to spend, spend spend. I’m not like them. If you don’t have enough money right now then go to your favorite online casino and play the free games. You can play the same games for free using fake money. Just keep your credit card in your wallet and enjoy the fun games. Hopefully soon you’ll be in a better financial situation and can go back to playing real-money games.