FEATURE
UK BONUS TAX:
AFFILIATES TO TAKE
THE STRAIN?
The introduction of the UK online tax on bonuses set for 1 August is the elephant in the room for
online bingo and casino operators. While some are ignoring it, others are implementing new strategies
to counter its effects. But how will the UK online casino and bingo sector respond and is it now too
late for those who haven’t already put in place an alternative strategy to cope with its effects?
By Amanda McCormack.
AT THE RECENT Online Bingo and Slots
Summit held at the Hippodrome casino in
London, online bingo and casino operators
discussed the bonus tax and other key
topics such as evolving gaming platforms
and the combined impacts of all these
changes on the industry.
It was clear from the event that while
some were happy to continue as if
nothing would change, for now at least,
other operators were already changing or
adapting their corporate strategies to cope
with the new tax.
Cenkos Securities estimates the tax, once
brought in, could take the form of a £5m to
£10m annualised hit for operators.
Online casino and bingo had been
exempt from the 15% general betting
duty imposed on free or discounted
online sports or race bets, and with the
announcement coming on the back of the
2014 introduction of point-of-consumption
(POC) tax of 15%, it came as an
understandable blow to operators.
Following the UK hung parliament
election result in June a rumour emerged
“We knew margins would be squeezed further down
the line, so for us the main way to grow our business is
with volumes of player acquisitions”
Tom Ustunel, head of gaming, News UK
The tax on bingo bonuses will result in
a 15% general betting duty on all free or
discounted online bets, so whereas before
15% would be paid on real bets, once the
bonus tax comes into force operators will
have to pay 15% tax on all bets placed,
including on free bonuses and on the value
of free spins.
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iGB Affiliate Issue 64 AUG/SEP 2017
that introduction of the bonus tax had
been delayed, but, unfortunately for
casino and bingo sites, it was a case of
‘fake news’. It will be going ahead with
no fundamental changes.
Once the tax is brought in free spins
will be taxed at their actual money value
along with bonuses, but some operators
argue that they have ways of limiting
the impact of the bonus tax and that they
can bring in measures to circumvent it
if necessary.
How to limit the implications of
bonus tax?
Some operators had already implemented
changes when the original POC tax came
in. Elad Dvir, director of the Dragonfish
bingo network, explained that the company
originally “moved to a different bonus
scheme, so we moved from bonus-money-
winning-real-money to bonus-money-
winning-bonus-money, which increases
your margins and helps to fight the tax”.
However, bonuses are still at the
forefront of acquisition offers for many
online bingo and casino operators. Tom
Ustunel, head of gaming for News UK
(which runs Sun Bets, Sun Bingo and
Fabulous Bingo), said: “We took a decision
that active acquisition is good for us, so
we offered at Sun Bets 10/40 and even
tried 10/50, we knew margins would be
squeezed further down the line, so for us
the main way to grow our business is with
volumes of player acquisitions.”