The British gambling industry experienced a significant blowback on Monday as the UK Treasury announced a six percentage point increase in the tax paid by offshore gambling companies. The chancellor Philip Hammond spoke in his Budget speech recently that the rise in so-called remote gaming duty that will compensate for the government’s loss of revenue. The loss Hammond talks about was suffered this summer when the authorities cracked down on fixed-odds betting terminals.
Remote gaming duty is a tax that companies offering online poker and blackjack services pay to the government. With this new imposition which taxes the gross gambling yield at 21 percent instead of 15 percent, the Treasury will gain an additional 130 million pounds in 2019-20. In 2020-21, it seeks to add 255 million pounds to its coffers.
The Treasury’s calculations will directly offset the loss of tax revenue that they suffered, upon cutting the maximum stake in FOBT from 100 pounds to 2 pounds. The move was hailed by campaigners who called the FOB terminals the “crack cocaine” of gambling. Around 120 million pounds and 245 million pounds in the same years could have been lost from the Treasury following the FOBT cuts.
The Treasury also announced that the FOBT cut will be delayed until next October to coincide with the imposition of raised remote gaming duty. It was originally expected to come into effect in April 2019 as the next tax season began.
The decision has landed the Ladbrokes shareholders in jeopardy. Sold to the GVC earlier this year, the acquisition of Ladbrokes by its new UK owners had some contingencies, including on related to the payment of profits gained by GVC from Ladbrokes FOBT terminals. The time of MPs votes on FOBT rules will decide the profits that shareholders receive.
If the MPs voted on the imposition before midnight March 27, 2019, the Ladbrokes shareholders will receive nothing. Anything after that would make GVC shell out 700 million pounds to shareholders.
The UK gambling market is maturing, but the increasing number of regulations and taxes are making it a less attractive destination for foreign players. Remote Gambling Association’s chief executive Clive Hawskswood commented that gambling companies will now seek opportunities abroad to make up for their lost revenues.
This could drive some prominent players out of the market, hurting the competitive landscape in the UK and the choice available to users. Already there is talk of increased regulation within the crypto world, something which would damage the UK’s position of the cryptocurrency revolution.