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UK To Tax Online Gambling Freebies

By: Joan Peppin, Monday November 21st 2016
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The impending news for online casino gambling in the United Kingdom is not that good. Several UK newspapers have reported that the government is keen on going ahead with taxing free spins and bonuses offered by online casinos. This is expected to impose an additional burden of £100 million on the online gambling industry. Online casinos give free spins, bonuses and other freebies to attract players.

Her Majesty's Government has clarified its position and given its reason for their initiative. It has pointed out that bonuses and other freebies being given by land based sports betting operators are already subject to tax. Therefore in order to ensure a level playing field between online and land based gambling the online freebies will have to be taxed. The Revenue and Customs department plans to enforce the additional taxes from the autumn of 2017.

Clive Hawkswood, the chief of the Remote Gaming Association, has criticized this move. He pointed out that the government had budgeted tax revenue of £300 million from the point of consumption taxes being levied on offshore operators by way of 15% Remote Gaming Duty. But the industry is already paying double the amount. Hawkswood explained, “Since the tax was introduced, the industry has been growing by about 10% a year, which has contributed to the higher tax receipts.”

His educated estimate has been supported by independent data. One of the smaller online bookmaking companies, that has wanted to remain unnamed, has revealed that the point of consumption tax was already costing it £10 million a year. The larger industry companies are paying much more than that. For example, public records show that William Hill paid £54 million last year.

The online gambling industry observers have described the move as a hidden tax and have opined that it is likely to have a disproportionately negative impact on smaller operators. This will trigger a move towards consolidation among online gambling companies. The smaller companies will be acquired by or will merge with the larger ones. This will reduce the competition in the market. As a result the online casino players will be offered less incentives by the operators. The operators will also reduce the incentives to reduce the load of the new taxation. A similar consolidation had taken place when the point of consumption tax was introduced a few years ago. Large online casino groups like Fortune Lounge and 32Red have picked up smaller independent operators.

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