Many bookmakers have set up internet operations in territories such as Gibraltar and the Isle of Man, allowing them to sign up UK gamblers while benefiting from benign local tax regimes.
The UK Government, however, is taking a tough line on tax avoidance as it seeks to swell the Treasury's coffers, planning a 15% duty on bookmakers' online winnings from Britain- based customers from next December.
That would bring the tax regime in line with the duties bookmakers pay on takings in betting shops, and provide a rare example of taxation policy catching up with the internet age.
With Britain's online market estimated at more than £2 billion a year, companies such as William Hill, Ladbrokes and Ireland's Paddy Power will pay an extra £300m to the taxman.
Some analysts have argued for a lower tax rate to avoid boosting the black market. They say firms beyond the reach of authorities could offer better odds.