There was good news and bad news for the betting industry in Phillip Hammond’s Budget 2018, which was delivered on Monday.
The good news, for operators at least, is that the cut in the maximum stake allowed on Fixed Odds Betting Terminals has been delayed until October 2019.
The £2 stake was a cause for real concern for bookies and betting firms, but the delay could earn them an additional £1.8bn that they weren’t expecting.
On the other hand, the chancellor dished out a rather heavy blow with an expected, but still painful, tax increase on online gambling.
Halloween Horror Story for Gambling Firms
As part of Hammond’s Budget 2018 plans, all firms offering online gaming will be subject to a 6% increase in Remote Gaming Duty.
They have 12 months in which to get their house in order, with the hike going live in October 2019, but in what has already been a tough trading year due to legislation changes the latest move is another blow to the industry.
FOBT stake cut to come next October as Hammond increases remote gaming dutyhttps://t.co/PxT7GnVVzu pic.twitter.com/Nx7YAcLBBP
— Racing Post (@RacingPost) 29 October 2018
In real terms, betting firms will now give up 21% of their gross gambling yield to the taxman, as opposed to the 15% rate that was introduced in 2014.
And sources believe it could deliver an estimated £290m to the Exchequer by the end of the 2024 tax year.
Clive Hawkswood, chairman of the Remote Gambling Association (RGA), was happy enough having expected an increase of up to 25%.
“It’s still a bit more than our analysis; the work we did with Ernst & Young pointed to a figure of a bit less than that,” he said. “We can debate whether it’s fair, but it’s about mid-range of expectations.
“The key thing is timing, with it being in October as we had expected April. It’s a tax hike but it gives an extra six months, so that’s the silver lining.
“Companies have to go away and decide how they will best accommodate the increase, whether that be changes to bonuses, for example.”
Irish Eyes Not Smiling
The Budget affects countries in the UK only, but Ireland’s gaming industry have had their own bit of bad news recently.
The government there announced a 1% increase in taxation on turnover accrued from both online and shop-placed bets as of 2019.
There was bad news for betting exchanges too, with a 10% rise in gambling duty to 25% annually.
It’s a move that gambling leaders threatened could ‘kill the industry’, and in the past fortnight alone more than €250m has been wiped off the stock exchange value of Paddy Power Betfair, the largest operator on the Emerald Isle.
The Irish Bookmakers Association has claimed that the government’s stance has ‘signed P45s for over 1,500 jobs in the independent bookmaking sector’, with chairwoman Sharon Byrne stating that it’s “extremely disappointing that the Government conceded to this demand by politicians, who never engaged with the industry or understood the profound effect a turnover tax can have on so many jobs.”