GGB Magazine December 2024 | Page 46

7

British Bonus
Tax rates are always an issue in the U . K ., especially when the government is looking for more money

When you do not like something , tax it .

Throughout history , gambling has always had its detractors , no more so than in the U . K . Governments around the globe have sought to control gambling through regulation and some have had the bright idea that applying special taxes to gambling is in and of itself a way to control the supply as long as the rate is set high enough .
I understand that if supply is restricted the person with permission to operate gambling should pay some amount to the government for the privilege . But my libertarian instinct does not understand why , when there is no control over the supply ( anybody can have permission provided they are fit and proper and meet certain financial thresholds , etc .), there should be an additional tax paid on top of general corporate income tax and the other taxes that apply to businesses .
The U . K . has a whole array of taxes that are applied to different types of gambling . Each product has a different tax ( or duty ) rate . The highest rate applies to land-based casinos — it starts at a rate of 15 percent but rapidly escalates to a marginal rate of 50 percent of GGR above approximately £ 14 million . France has a similar rate for land-based casinos , but the computation is so much more complicated .
The 50 percent top rate ( up from 40 percent ) was introduced in 2007 by the then-Chancellor of the Exchequer Gordon Brown , many believe as punishment for the British casino industry lobbying to bring down the Labor Government ’ s flagship “ super casino ” initiative ( they would have been anything but “ super casinos ”).
The tax rates on gambling used to follow the principle that the “ harder ” the gambling , the higher the rate .
Financial spread betting is taxed at 3 percent ; gambling machines , depending on stake and prize limits , are taxed at between 5 percent and 25 percent of GGR ( there are eight categories of gaming machines !); bingo at 10 percent ; lottery at 12 percent of sales ; horse and dog racing at 15 percent ( there is an additional 10 percent levy on GGR from bets on horse races that is paid to the horse racing industry ); and online gaming at 21 percent .
It does appear to be an anomaly if you follow the trend above that gambling in a casino should be taxed at over double the rate of playing casino games on your phone . I am not arguing for higher taxes on online gambling but for lower taxes on land-based casinos . But then again , pigs might fly !
In October , the anti-gambling brigade at the Guardian newspaper had access to reports from two think tanks ( lobby groups ), the Social Market Foundation ( SMF ) and the Institute for Public Policy Research ( IPPR ). The former pushed the idea that remote gambling taxes should be doubled to 42 percent , which would raise almost £ 1 billion , and the latter proposed it should be raised to 50 percent to bring it into line with international norms .
Both the SMF and the IPPR took the view that gambling was a pernicious activity , and it deserved to pay more in tax to right the wrongs it does to society .
The Guardian suggested that the Chancellor Rachel Reeves was favorably reviewing this idea and would raise the tax on remote gambling in the
Chancellor Rachel Reeves did not raise gaming taxes in the U . K .’ s latest budget , but left open the possibility that she ’ ll be back next year
annual budget in early November . Needless to say , this led to a collapse in share price of the major online gambling companies .
The British Gaming Council , the trade association for Britain ’ s gambling industry , rode to the rescue , touting that the industry employs lots of people and pays a huge amount in taxes every year (£ 3.4 billion last year )— if that is your only argument , you have lost the battle .
One week before the budget , putting further pressure on the Chancellor , the Lancet Public Health Commission on gambling published a report and an editorial arguing for a public health response to gambling . In the immortal words of Mandy Rice-Davies ( slightly altered ), “ well they would , wouldn ’ t they ?,” the clue is in the name of the commission .
It is very sad that the Lancet , a highly respected peer-reviewed journal , would allow a commission with the Lancet ’ s name to use a meta-analysis ( read cherry-pick ) of studies and rely on at least one study that was unbelievably inept to support the commission ’ s view that gambling is more harmful than it possibly is .
I am the last person to argue that gambling is not harmful , but please use real data and come to the issue with an open mind so that we can actually understand the true level of harm and devise policies to mitigate the damage that it causes . Raising taxes on gambling does not reduce harm .
In this event , Reeves did not raise any of the gambling taxes in her first budget ; she left them where they were . This was followed by a lot of self-congratulatory back-slapping from industry bodies and hand-wringing from the anti-gambling lobby .
BGC CEO Grainne Hurst issued a statement : “ We welcome today ’ s budget and its commitment to not increase gambling duties on the regulated betting and gaming sector ... We have been clear , any duty rises now would have hit customers , prevented growth , risked jobs and bolstered the unsafe , unregulated gambling black market .”
But as with all things , the devil is in the details . The budget papers contained the following paragraph : “ The government will consult next year on proposals to bring remote gambling ( meaning gambling offered over the internet , telephone , TV and radio ) into a single tax , rather than taxing it through a three-tax structure . This will aim to simplify , future-proof and close loopholes in the system .”
I think this can be interpreted as taxes on remote gambling will go up . All that is left to decide is by how much . — Andrew Tottenham , Managing Director , Tottenham & Co , a business consulting firm specializing in strategic planning , market assessments , feasibility studies and project development for the international gambling industry
24 Global Gaming Business DECEMBER 2024