The UK Government recently revealed that, as of 2019, UK-based gambling operators will be paying more tax on all income streams generated from casino operations. This is a big blow to slot sites that offer casino games. The new hike in the tax rate will only come in to effect from October 2019 and will see the current tax rate of 15% raised to 21%. However, analysts in both the political and gambling spheres admit that the hike in tax is not nearly as high as initially feared.
UK Chancellor Philip Hammond made the announcement during his Autumn Budget speech for the year in the House of Commons on Monday. Part of the budget touched on gambling within the United Kingdom and included measures to address the long-awaited pledge to reduce the maximum wagers amount on fixed odds betting terminals, more commonly referred to as FOBT’s. UK betting shops are a popular location for FOTB’s among other licensed vendors, and the reduction in the maximum wager amount will be reduced from the £100 mark to just £2. However, one of the reasons for the proposed hike in casino revenue tax was to offset the drastic reduction in FOTB maximum wager amounts.
Another important point to note regarding the hike in revenue tax, and also mentioned by Hammond, was that the Remote Gaming Duty or RGD is not the same duty that is applied to online sports betting sites. Rather, the RGD is a specific duty that is applied to remote gaming, otherwise known as online casino revenue. This, specifically, is the tax that will see an increase from the current 15% to 21% towards the end of next year (October 2019).
Confusion within the Government
The drastic reduction in maximum wager levels for FOTB’s meant that the government would also have to deal with a reduction in tax revenue generated by FOTB’s based on the reduction in maximum wager amounts. Initially, the government had scheduled the FOTB wager cut to take place as of next April (2019). However, they then rescheduled it to only take effect from April 2020. However, it now appears that the stake cut in fixed odds betting terminals will take place at exactly the same time as the tax increase on RGD occurs, towards the end of 2019.
Initial Tax Hike Fears Not Realised
During his reiteration of the rationale behind the online casino revenue tax hike, to offset projected losses in revenue due to the wager reduction on FOTB’s, many casino operators, as well as business analysts, breathed a sigh of relief. The anxiety surrounding the proposed tax hike was mainly due to early media reports that projected a possible hike of up to 25%.
One of the knock-on effects of these premature media speculations was a drastic drop in share prices of a number of well-known gambling operators listed on the UK Stock Exchange. However, while some operators expressed a certain amount of relief upon hearing that the increase was less than early speculation indicated, other operators were still not happy with the hike at all, citing the fact that this marks the third online casino tax hike in the past four years.
