UK Remote Gaming Tax To Surge To 21% of GGY

The income from the new UK gaming tax will amount to more than one billion dollars, excluding the income from foreign internet operators. The UK gambling industry is poised for significant regulatory upheavals, with Chancellor of the Exchequer, Philip Hammond, announcing a remote gambling duty hike of 21% (previously 15%) of the GGY.

Clive Hawkswood, chief executive of the Remote Gambling Association, warns that iGaming operators will start looking elsewhere following the implementation.

“The UK is a mature market now. The increase in regulation and tax burden are making it less attractive,” Hawkswood explains.

Offshore iGaming Providers To Pay Additional 6%

There is more. Offshore gaming companies offering online casino games such as slots and blackjack will be taxed additional 6%.

As harsh as the measure appears to be, the fact remains that it will add up to $1.46bn in new taxes over the next five-year period.

Coincidentally, the figure equals the expected sum the Treasury is predicted to let go of following the decision to cut the maximum FOBT stake from £100 to £2. The new tax is forecast to bring in an additional $166m in 2019-2020 and $325m in 2020-2021.

However, the FOBT decision has been postponed until 2020, which has given rise to criticism from the opposition.

“By rolling back on their promises the government is allowing greed to triumph over good as the bookies trouser an additional £900m in revenue”, says opposition leader Tom Watson.

Small Offshore Operators To 'Bear The Brunt' of The New Tax

The move will hit small offshore operators the hardest, as they will have difficulties coping up with the stellar sums.

To illustrate, immediately following the decision, Paddy Power Betfair and William Hill shares closed up 2.76% and 3.02%, respectively. GVC Holdings shares, on the other hand, slumped 6.53%.

Consultant with Eta Delta, James Myles, is outraged...

“That the sector ‘can afford it’ is a ridiculous justification. The government has created its own FOBT crisis, by relying upon then destroying this revenue source to the Treasury’s coffers without contingency”, says he.

Ladbrokes Coral Doomed?

The new regulation is a victory for campaigners dubbing the terminals the “crack cocaine” of gambling - the pun alluding to their potentially addictive nature.

Wittiness aside, the move is likely to open a Pandora’s box with unpredictable long-term consequences.

The most striking example would be that of Ladbrokes Coral. The British bookmaker was sold to GVC back in March, with the acquisition deal stipulating that the payment of profits gained by GVC from Ladbrokes’ FOBT terminals to former Ladbrokes shareholders is to be set when the FOBT stakes have been voted on. The problem is, the vote may happen before a year after the completion of the acquisition has passed (midnight on March 27, 2019), in which case Ladbrokes’ shareholders will not receive their payment.

The latter is just one of the many scenarios that will possibly come to pass after the new tax rate comes into effect. Just what will happen with the FOBT remains to be seen. The phrase “stay tuned” for further developments from the UK is in order.

Source:

“Gambling Sector Faces UK Tax Rise to Offset Fixed-Odds Crackdown”, ft.com, October 29th, 2018.