iGB Intelligence reports iGB Market Monitor December 2018 | Page 14

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. 11