The Government unveiled plans today to regulate offshore gambling websites aimed at UK customers.
Sports minister Gerry Sutcliffe said under the proposals all operators targeting British punters would have to be licensed by the Gambling Commission and comply with UK laws.
Mr Sutcliffe said work still needed to be done to apply the Horserace Betting Levy to overseas operators, but insisted his intention was that all bookmakers taking bets on British races paid into the fund that supports the sport.
Under the proposals, which are being consulted on, all operators active in the British market would have to comply with the Gambling Act and be required to report suspicious betting activity to the commission and sport governing bodies.
They will also have to comply with British licence requirements, including the protection of children, and demonstrate how they will contribute to the research, education and treatment of problem gambling in Britain.
In a written statement to Parliament, Mr Sutcliffe said: "British gamblers form one of the largest customer bases for online gambling in the EU.
"Yet, for many reasons, increasingly few companies active in the British market are now regulated by the commission.
"Though British consumers are not unprotected - most overseas jurisdictions have regulatory systems - standards vary and requirements differ from our own.
"Therefore I feel that change is necessary to ensure the protections in the Gambling Act - to keep gambling crime free, to ensure gambling is fair and open and to ensure that children and vulnerable people are protected from harm - continue to be afforded to British consumers."
Many bookmakers have chosen to shift their online businesses overseas to avoid UK taxes, but the move has hit the amount of revenue raised by the Horserace Betting Levy to support British racing.
Mr Sutcliffe told MPs the Department for Culture, Media and Sport had explored "in considerable detail" the issue of making offshore firms pay the levy.
"I will be continuing this vital work - in conjunction with the levy board - with the intention of ensuring that all operators taking bets on British races pay to support British horseracing," he said.
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