UK government will benefit handsomely from new gambling tax proposals

Several UK newspapers again picked up the taxes and gambling story over the weekend, reporting that online gambling operators are facing an effective GBP 100 million tax hike if the government’s plans for taxing free spins and bonuses comes about.

The reports quote Remote Gaming Association chief Clive Hawkswood, who says that the industry is already paying out more than expected in point of consumption levies on offshore operators, claiming that the tax already in force is likely to bring in double the GBP 300 budgeted by the taxman.

Her Majesty’s Revenue and Customs plans to enforce the additional ‘spins and bonuses’ taxes in order to bring online ‘freebies’ into line with bonuses in sports betting that are already subject to tax.

It is anticipated that the initiative will be implemented in the autumn of 2017, adding to the already heavy burden of the 15 percent Remote Gaming Duty and making an extra GBP 100 million for the Treasury.

Describing the move as a hidden tax, several observers have noted that it may have a disproportionately negative impact on smaller operators.

There are also predictions that the additional tax will trigger a greater imperative for consolidation among online gambling companies, and that it could result in the consumer being offered less incentives by operators, who find themselves in a highly competitive market with profits being eroded through increased taxation.

Hawkswood explained his reasoning on the p.o.c tax return to government, saying:

‘Since the tax was introduced, the industry has been growing by about 10 percent a year, which has contributed to the higher tax receipts.”

His educated estimate was supported by one small unnamed online bookmaking company, which revealed that the p.o.c. tax was already costing it GBP 10 million a year, and surmised that larger industry companies are probably paying considerably more than that.

Public records show that the online tax cost William Hill GBP 54 million last year.

On the retail (land) side of the industry operators are also fighting an intense and at least partially successful media and action group campaign against Fixed Odds Betting Terminals in High Street betting shops and their alleged impact on society as expensive and addictive betting devices. The present maximum stake on the machines is GBP100.

The government has now started a second review of the situation with particular focus on what are claimed to be too high maximum bet limits.

FOBT’s currently deliver around GBP 1.7 billion in operator revenues, and bookmakers claim that reductions in the maximum bet limit could be “catastrophic” for operators, who have become increasingly reliant on the returns from these machines to boost revenue.

Some reports claim that bookmakers are already making pre-emptive cost-cutting moves, such as reducing staffing levels.

In the most recent developments, retail bookmakers have been criticised for allegedly “snubbing” a summit on the FOBT stakes issue.

The government’s Culture Minister, Tracey Crouch, told reporters that she was surprised by the Association of British Bookmakers’ boycott of last week’s meeting, characterising the rebuff of the parliamentary Commons All Party Group on Fixed-odds Betting Terminals “a missed opportunity”.

She was supported in her criticism by UK Gambling Commission chief Sarah Harrison and Swansea Labour MP Carolyn Harris, who chairs the committee, according to a Daily Mail report.

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