UK gov’t to hike online casino tax from 15% to 21% in October 2019


uk-government-online-casino-gambling-tax-hikeUK gambling operators will pay more tax on their online casino revenue starting next October, but the increase wasn’t as steep as some operators had feared.

On Monday, UK Chancellor Philip Hammond previewed his Autumn Budget 2018 for the House of Commons, which included hikes in online gambling taxes to offset the long-promised reduction in maximum wagers on the fixed-odds betting terminals (FOBT) in UK betting shops from £100 to just £2.

Hammond (pictured) said the Remote Gaming Duty (RGD), a tax applied to online casino revenue that’s different from the duty imposed on online sports betting, will rise from its current rate of 15% to 21% effective October 1, 2019.

The UK government had made clear its intentions to raise the RGD in order to offset the reduced tax revenue the government will reap via the FOBT stake cut. Hammond repeated this rationale in delivering Monday’s budget preview to parliament.

The FOBT stake cut was originally scheduled to kick in next April, then was said to have been delayed until April 2020, then reportedly moved back to next October. On Monday, Hammond played coy on the specific timing for the implementation of the FOBT stake cut, but it appears it will kick in at the same time as the new RGD rate.

Last week’s media reports suggested the possibility of the RGD rate being boosted as high as 25%, which was apparently the cause of the steep drops in the share prices of some major UK-listed gambling firms. Hammond’s budget came too late in the day to affect operators’ share prices, meaning investors’ true sentiments won’t be revealed until the markets reopen Tuesday morning.

Industry reaction has so far been mixed, with some operators expressing relief that the increased rate wasn’t as high as it might have been. Others lamented the third online tax increase in the last four years, following the imposition of the 15% online point of consumption tax and the tax on free bets, while land-based operators have also seen a hike in Machine Games Duty.

Collectively, analysts estimated that an RGD hike to 20% would cost the industry up to £200m per year. The government’s own estimate of its 21% rate projects extra tax revenue of £130m in the 2019-2020 budget, rising to £255m in 2020-21, topping out at £290m in the 2023-24 budget.

The total sum raised by the boosted RGD is forecast to be £1.22b over the first five years, while the FOBT stake cut is expected to cost the government £1.15b over the same span. The government helpfully added that the impact of the changes on operators would be “negligible.”