‘Seismic shift’ forecast for online betting firms

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Online bookmakers are scrambling to move into Europe and Australia to offset potential losses from an upcoming U.K. gambling tax, which could cause a "seismic shift" in the industry, according to analysts.

From December 2014, a 15 per cent levy will be placed on remote offshore gambling firms that serve U.K. customers, in a move that may raise £300 million pounds ($467 million) for the taxpayer.

This will hit major U.K. bookmakers like William Hill and Ladbrokes, which operate from Gibraltar, where taxes are currently levied at 1 per cent and capped at £425,000.

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Analysts said the so-called point of consumption tax (POC) could change the make-up of the gambling industry, with smaller bookmakers potentially forced out of the market.

"The introduction of the POC tax is likely to cause a seismic shift in the competitive landscape of the U.K. online gaming market," David Jennings and Simon McGrotty, gaming analysts at Davy Research, said in a research note.

Gambling businesses are lobbying for a lower tax rate and are threatening legal action, claiming the industry will lose millions of pounds from the levy.

However, remote betting businesses may be able to offset the tax through cost-cutting and developing products overseas. According to research from Citi analysts James Ainley and Josh Lipman, bookmakers may be able to offset the impact of the tax hit by around 70-to-80 percent.

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Jennings said relocating overseas was particularly crucial for bookmakers hoping to offset the effects of the tax.

"All of these gambling companies are trying to diversify their earnings streams, to help them mitigate the POC tax when it comes in. But the number of markets they deem realistic to invest in is limited. That's why they are going to other countries," he told CNBC.

Europe is deemed a particularly attractive area in which to invest, particularly Italy and Spain, where top players Paddy Power and William Hill are already present.

"Italy and Spain continue to offer the most interesting opportunity outside the U.K., given the large market size, high propensity to gamble, favorable taxation and low penetration of online gambling to date," said Ainley and Lipman.

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European countries have a strong preference for machine-based gambling, and sports betting is yet to find major success. Nonetheless, Jennings termed Europe a "land grab" with online bookies scrambling for space in an already saturated market. He saw Australia as a more attractive option.

"In Australia the competitive landscape is particular attractive, because about 85 percent of the market is dominated by three players, compared with the U.K., where the top five companies account for 55-60 percent of the market," Jennings told CNBC.

Ainley and Lipman noted that Paddy Power has already made sizeable inroads into the Australian market, where the sports betting market is growing at 3-to-4 per cent per annum. William Hill is trying to catch up with the Irish bookmaker, and recently acquired online betting website tomwaterhouse.com for £20 million ($31 million), in an attempt to tap the Australian market.

While the Australian government has banned online casinos, poker and live sports betting, Jennings said the regulation was likely to soften.

"Companies are looking for a sizeable and sustainable market. Australia is very regulated, with a competitive landscape, which wouldn't create fear for European operators who are used to competing in a regulated market in the U.K.," he added.

—By CNBC's Arjun Kharpal: Follow him on Twitter @ArjunKharpal and @CNBCWorld