It would appear the UK Revenue and Customs department has made a decision that has the collective knickers of the online gambling world up in a twist. The Remote Gaming Association is certainly not happy.
Taxing freebies
It’s been reported that the HMRC is going to impose taxes on freebies offered by online casinos. Namely, free spins and bonuses. Currently these are not being taxed, but since land-based casinos have to pay taxes on similar offers, the tax department wants to make this even for both sides of the industry. That could mean an additional tax burden on online casinos in excess of £100 million.
This tax would hit the industry hard, even if it is ‘only’ a few percent. Bonuses are one of the main attraction and selling points of sports betting operators and online casinos. They give brick-and-mortar casinos and betting outlets a distinct advantage. Seeing these bonuses taxed is going to have a ripple effect on the iGaming industry. UK players will likely see a few changes to their bonus offers in the future.
The next tax is supposed to be enforced in another year from now, as of fall 2017.
Possible consequences
When the 15% Remote Gaming Duty, the point of consumption tax for offshore operators, was introduced, the consequences were measurable. Gambling operators moved to consolidate their businesses and we’ve seen a number of significant mergers since. The Fortune Lounge casinos are one example, as is the swallowing of Roxy Palace by the 32Red Group.
It’s been estimated that smaller bookmakers and casino operators will be hit harder by the new tax. Considering that current taxes are already considerable, the industry is not happy and feels disadvantaged.
With the new tax on bonus offers, it stands to reason that online casinos will change the bonus policies and offers for the UK market significantly. They will have to walk a relatively fine line, because they will still want to attract new customers. Online gambling operators that want to extend operations in the UK may have to adjust their plans.
For now nothing much will change and the new tax does not appear to be set in stone just yet, but it seems unlikely that plans will change and the tax can certainly be expected to hit in some form eventually.