Part 2: The UK – a taxing time
Part 2
The UK – a taxing time
Debates about gambling within any jurisdiction machines in UK land-based betting shops saw the
don’t occur in a vacuum; wider societal issues will government eyeing a hole in the public finances
cloud what for the industry is a clear argument caused by the move announced earlier this year
about market viability. For the industry, an online to drop the maximum stake on B2 games (largely
gambling regime should be liberal when it comes electronic roulette) to £2.
to marketing and generous on tax rates in order
Having led the way with a point of
to provide the clamp needed to squeeze the black consumption (PoC) regime with a tax rate
market operators out of existence. for Remote Gaming Duty (RGD) pitched at a
Yet, this is a fragile argument when it runs into
relatively low 15%, the Treasury viewed the online
any opposition. The evidence from the UK, Italy, sector as the source of replacement tax revenues.
Denmark and Spain is that the consequence of In the recent budget statement, Chancellor Philip
liberal advertising regimes is a flood of gambling Hammond duly unveiled a hike in RGD from 15%
advertising as operators seek to establish a to 21%. This will be introduced from April 2019.
market position.
In each case, opposition to expanded gambling
Dodging bullets
has coalesced around measures to either prohibit “There will have been an audible sigh of relief
or severely curtail the opportunities for gambling from the online gambling industry at the news
operators to advertise their wares. This pendulum from the UK Budget that the Remote Gaming
swing can be unpredictable; witness the case in Duty will be raised from 15% to 21%,” says Simon
Italy where the populist coalition has brought Davies, analyst at Canaccord Genuity. “The
down the curtain on all marketing efforts, to the reduction in FOBT maximum stakes will be
consternation of many. introduced at the same time.”
Marketing is one area of potential conflict and
As Davies points out, it could have been
the other is taxation. In the UK, the ramifications worse. With the anti-FOBT Campaign for Fairer
from the poisonous debate around gaming Gambling (CFG) and its allies in Westminster
clearly espousing an anti-gambling message, their
supporters in the newspapers were touting both
Table 1: Select UK growth rates
Operator
a quick implementation of the stakes cut and an
1H18 growth %
GVC (Ladbrokes Coral brands) 14
William Hill Online 11
Paddy Power Betfair (3Q) 15
888 -18
JPJ - JackpotJoy brand -1
Sky Bet (yr to Jun18) 37
Source: Company reports
iGaming Business Market Monitor • December 2018
increase in RGD to 25%.
“The industry has of course been kicked twice,
with William Hill and GVC taking a c.£200m
profit hit from the hit to FOBTs, and then having
to contribute to the government’s £250m tax
shortfall from the move,” says Davies.
However, considering “newspaper articles
pointing to a possible 25% RGD rate, it could
definitely have been a lot worse,” adds Davies.
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