Frequent readers of Gambling Review have no doubt noticed my less than sunny position on big government. While I do think that government is certainly necessary and important, big government means big taxes. As a prime example of how too much government intervention/taxation has a negative effect on an already hurting economy, I give you William Hill Online’s recent move and their reasons for doing so.

William Hill Online recently moved their online gambling operations to Gibraltar, sighting mammoth taxes as a hindrance to growing their business. In an article posted on eGamingReview.com, William Hill expresses why the company pulled up their stakes and took their online gambling operation to Gibraltar.

“Any company which wants to be a leading online betting and gaming business on the international stage has to take every competitive advantage possible. And it was simply impossible for us to compete from the UK, as the current 15% gross profits tax regime and 10% levy on all UK horse racing bets accepted discriminates against onshore operators. Existing offshore operators don’t have those costs, giving them more capital to invest in growing their business.”

William Hill clearly would have preferred to keep their business on UK soil, which would have not kept jobs in the UK’s already hurting economy as well as supplying the government with at least some revenue. But the online gambling company’s words apparently fell on deaf ears.

“Although that was a point which we made repeatedly to the UK government, who has always claimed that it wanted to be an international center for gaming, we got no response. The decision to move was one we could no longer avoid making. Our online operations now have a really bright future.”

Some concern has been made over the idea that moving online gambling operations off shore could lead to possible increases in fraud and flawed security, but William Hill is certain this will not be an issue. “As for those who have claimed that moving offshore will increase the risk of match-fixing or corrupt betting, bookmakers are the ones that suffer if fraudulent bets are placed. They have no interest in lowering their guard when it comes to monitoring these criminal activities.”

William Hill stated that over 60 of its employees are making the move from the UK to Gibraltar with expected growth ahead. This move will no doubt cost the UK government a pretty penny. Not only are they missing out on collecting at least some tax from the online gambling giant, but they are losing the lifetime income taxes of more than 60 people. Walmart estimates that every time they permanently lose a customer, they lose somewhere in the neighborhood of $250,000 that would have been spent in that customer’s lifetime. One can only imagine how much money the UK government has missed out on by letting William Hill leave their shores.

Costa Rica is home to more online gambling companies than any other in the world. Is it because of their exotic locale and choice surfing? Of course not. The obvious reason is the country’s laid back regulation of online gambling. A proposed bill, set to reach the Costa Rican Legislative Assembly on August 3^rd, is aiming to add a 2 percent tax to income brought in by the online gambling industry.

Officially, Costa Rica is home to 46 online gambling sites, but there are countless more that operate off the radar. Lawmakers are hoping that the bill will bring in an estimated $85 million in revenue to the state, who like the rest of the world, is feeling the sting of the ongoing financial crisis. The bill would see further government to make sure that online gambling companies and those they are affiliated with, adhere to the new restrictions.

Regulation of the gambling industry in the past has not panned out so well for Costa Rica. A few years ago, Costa Rica began charging a licensing fee to online gambling companies. Only a few paid, many did not, and one that did (Legendz Sports) hightailed it out of there.

Regardless of success, the online gambling businesses are not doing back flips over this news. As with nearly every industry in the world, the economic crisis has taken a significant bite out of gambling worldwide. The gambling industry has seen its share of revenues fall and Costa Rican online gambling fears the tax will only contribute to further drops in revenue and lost jobs. “Activity has fallen about 35 percent, and in addition to that we have fewer work hours and have had to let go about 500 employees,” said Jorge Hidalgo, vice president of the Costa Rican Association of Casinos.