- 18th May 2018
- Posted by: Suzy Hill
- Category: Business News
Online gambling tax rise to offset betting terminal stake cut
The government’s decision to cut the maximum stakes on fixed odds betting terminals (FOBTs) from £100 to £2 is likely to result in a hit to the estimated £450m tax take from the machines each year, with the Treasury looking to increase taxes on online gambling to address the shortfall
The reduction in the maximum stake is intended to reduce the potential for large losses on FOBT machines and the risk of harm to both the player and wider communities.
There are over 33,600 FOBTs in use in the UK, each of which take more than £53,000 from gamblers per year. A cross- party Parliamentary group heard evidence that last year there were more than 230,000 individual sessions in which a user lost more than £1000 and concerns have been growing that the machines increase the risk of problem gambling.
Matt Hancock, secretary of state at the Department of Culture, Media and Sport (DCMS), said: ‘When faced with the choice of halfway measures or doing everything we can to protect vulnerable people, we have chosen to take a stand. These machines are a social blight and prey on some of the most vulnerable in society, and we are determined to put a stop to it and build a fairer society for all.’
The Treasury takes an estimated £450m a year in machine gaming duty from FOBTs, with a 25% levy on the total of £1.8bn a year that goes through the machines.
In a statement the government said: ‘In order to cover any negative impact on the public finances, and to protect funding for vital public services, this change will be linked to an increase in remote gaming duty, paid by online gaming operators, at the relevant Budget.
‘Changes to the stake will be through secondary legislation. The move will need parliamentary approval and we will also engage with the gambling industry to ensure it is given sufficient time to implement and complete the technological changes.’
Analysts at Barclays have forecast that Ladbrokes Coral would lose £437m in annual revenue with a £2 maximum stake, William Hill £288m and Paddy Power Betfair £60m.
The Association of British Bookmakers said: ‘This is a decision that will have far-reaching implications for betting shops on the high-street.
‘We expect over 4,000 shops to close and 21,000 colleagues to lose their jobs. The independent expert advice warned that this would simply shift people, the majority of whom gamble responsibly, to alternative forms of gambling where there is less chance of human interaction and its impact on problem gambling levels is far from certain.’