High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/f91d2faa-299d-11e2-a604-00144feabdc0.html#ixzz2CNxXtfnM
November 14, 2012 11:09 pm
Gambling: Asia internet gaming on a roll
Away from the Victorian terraces of the lawyers and bankers in downtown Douglas is a glimpse of the future for the Isle of Man.
On the edge of an industrial estate stands a modern edifice clad in local stone with huge floor-to-ceiling windows. It is Celton Manx House, the new home of the Asian company behind the SBOBet internet gaming brand.
More
ON THIS STORY
- Overview Manx society faces reduced state role
- Film Lights, camera but slightly less action
- Financial services Plan to win customers in emerging markets
- Manufacturing Food and drink enjoy growing reputation
- Economy Changed tax deal puts squeeze on growth
IN DOING BUSINESS IN THE ISLE OF MAN 2012
- Profile DLP
- Professional services Sector grows in sophistication, experience and global outlook
- Commentary Under pressure over the morality of tax planning
Bill Mummery, executive director of Celton Manx, says it is a statement of his business’ commitment to the island. His corner office, lined with prints of the island, commendations for the group’s charity work and photographs of Mr Mummery’s encounters with the sporting elite – SBOBet sponsors West Ham United and the Manx national football team, for example.
“Celton came here in 2005 because it wanted a quality jurisdiction. You have the English legal system, regulation specific to the industry and, as most of our markets are outside the EU, we pay VAT only on the revenue we generate in the EU,” he says. “Since then, the challenge has been managing growth.”
The island is on the UK’s white list, allowing licence holders there to serve UK punters. Celton’s main operations are in the Philippines, where it runs live casinos for its website and its customer service teams.
But the Isle of Man has huge data storage centres that are not vulnerable to typhoons, vast broadband and satellite communications capacity and the banking facilities to handle clients’ money.
Hence e-gaming, one of the island’s newest industries, is one of its fastest growing. From a standing start a decade ago it now accounts, with information technology, for about 9.7 per cent of gross domestic product.
As well as Celton, 188Bet is headquartered on the island, Paddy Power has a base there, along with software companies enabling the online growth, such as Playtech and Microgaming.
There are not, however, huge numbers of jobs (about 750), admits Tim Crane, the government’s e-gaming ambassador, but they are well paid. “It has been a very important contributor to our economy.”
It also provides the demand to justify investment in data centres and telecoms infrastructure that helps all businesses. Licensees pay £35,000 plus 1.5 per cent on the first £20m of gross gaming yield annually. There are 47 licence holders but Mr Crane says the policy objective is “quality, not quantity”.
Industry executives agree that the US move against Manx-based PokerStars, which runs online poker rooms, for money laundering, illegal gambling and bank fraud, has reinforced its reputation.
PokerStars struck a civil settlement with the US Department of Justice in July, paying back $571m to the government and reimbursing the non-US players of Full Tilt, a rival, for $184m but admitted no wrongdoing.
PokerStars acquired the assets of Full Tilt, which was also charged, as part of the deal. While PokerStars’ players had been protected by the Manx regulator – which insists clients’ money is kept in ringfenced accounts – those at Alderney-based Full Tilt were out of pocket until PokerStars took it over.
Anxious not to miss out on gambling revenue from its own citizens, the UK is proposing a move to a “point of consumption” model in which money would be levied depending on where customers are, not where the businesses they bet with are. “Globally there is a move towards tax and regulate. Governments are looking for new ways to generate revenue.”
He believes the EU, where member states operate as individual markets, will eventually create a single market in betting.
Garth Kimber, the government’s former e-gaming ambassador, was headhunted by Xela Holdings, another Asian company, last year to establish a base on the island. He says the company wanted access to Europe and the possibility of listing there one day.
However, he says most of the big Asian gaming companies are now on the island and the government needs to work on attracting more business service providers for the industry to ensure the cluster remains, whatever changes there are to international regulation.
Micrograming, a provider of casino and online gaming software, established its HQ on the island in 2001 and employs about 80 people.
Playtech, the market leader worth £1bn, this year moved its country of domicile from the British Virgin Islands to the Isle of Man, already its HQ, as it moved from Aim to the main list in London.
“The Isle of Man understands the industry. It is a good place to base a business,” says Roger Withers, the chairman.
He says recent growth, driven by mobile devices, will continue.
“There is a heck of a lot of growth to come. Most of the social networks are moving into games and will need a partner. We have the world’s biggest library of casinos and games and these can be applied to social networks.”
Copyright The Financial Times Limited 2012. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.
Please don't cut articles from FT.com and redistribute by email or post to the web.
No comments:
Post a Comment