UK Chancellor raises remote gaming duty to 21%

UK Chancellor raises remote gaming duty to 21%

Tuesday, October 30, 2018 Posted by News Team
UK
New rate to be brought in from October 2019, alongside FOBT stake cut

The UK Chancellor of the Exchequer Philip Hammond has announced that remote gaming duty will increase from 15% to 21% of gross gaming revenue from October 2019. 

The Chancellor’s autumn budget, which sets out the government’s spending plans for the next year, also confirmed that the fixed odds betting terminal (FOBT) stake cut will not be implemented until the same month. 

Both the decision to slash maximum FOBT stakes from £100 to £2, accompanied by rise in remote gaming duty to offset the loss of tax revenue arising from the stake cut, were announced in May this year. 

At that time, however, no details on the implementation date for the stake cut, or the amount by which remote gaming duty would be raised, were given. 

Industry reaction has been broadly positive, despite some professing dismay at the delay in cutting FOBT stakes. 

John White, chief executive of the British Amusement Catering Trade Association (BACTA), the body representing the amusement and gaming machine industry in the UK, said he was “hugely disappointed” that stakes will not be cut until October 2019.

Nevertheless, he added, he was pleased that a deadline had been set “to correct the anomaly that high stakes fixed-odds betting terminals (FOBTs) represents. 

“A reduced £2 maximum stake is the only way forward in order to apply suitable player protection.”

Looking at the increase in remote gaming duty, Regulus Partners noted that the increase was at the lower end of projections, which had suggested that it could be raised to as much as 25% of gross gaming revenue. Despite this, it estimated that the duty rise would cost the iGaming industry an extra £245m in 2020.

The increase was described as “inevitable but disruptive” by Julian Buhagiar of RB Capital, a specialist M&A advisor and funding brokerage, who said that it may prompt further large-scale deals between leading operators. 

“The rise was not unexpected but this doesn’t take away from the further pain many UK-facing operators are going to have to prepare for,” Buhagiar explained. “In addition to the fallout from changes in Brexit-related legislation, this industry is constantly adapting to wave after wave of regulatory changes and, because of today’s announcement, some operators will feel like throwing in the towel.

“We’ve already seen a spate of mega deals with the likes of GVC and the Stars Group completing major M&A transactions,” he continued. “Today’s rate rise will only mean one thing: that life will get tougher for smaller operators and they will either be forced to downsize UK operations, shift market focus elsewhere or sell to the highest bidder.”

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