In his recent budget statement, the UK Chancellor of the Exchequer Philip Hammond presented a preview of his Autumn 2018 Budget in the House of Commons. This included some online gambling taxes intended to offset the promised reduction of maximum stakes on fixed-odds terminals in UK betting shops.
Remote Gaming Duty
The tax, known as Remote Gaming Duty, will only be applied to revenues generated by online casinos. It will rise from its current rate of 15% up to 21% by October 2019 – and could potentially rise again over the next five years.
Critics of the tax have been outspoken about the idea that online gaming should be expected to fund the reform of unethical practices in traditional betting shops and casinos, with others highlighting that today’s announcement marks the third online gambling tax increase in four years. Taxation of free promotional plays and a 15% consumption tax had both hit online casino vendors recently.
However, there has been relief throughout certain sectors of the online casino industry as RGD rates weren’t raised as high as has been speculated, which could mean good news for shareholders.
In April of this year, media reports suggested that the Remote Gaming Duty rate could be as high as 25%. The rumours resulted in a steep drop in share prices of many of the UK’s most prominent online casino operators.
With the recent news being slightly less daunting, share prices are expected to experience growth over the coming weeks.
Analysts estimate that a 21% Remote Gaming Duty will cost the industry approximately £200 million in its first year.
Within five years, the overall sum raised by RGD is expected to exceed £1.22 billion. The cost of cutting stakes at Fixed-Odds Betting Terminals is likely to cost the government in the region of £1.15 billion over the same period.
Discussing the increase in RGD, a government spokesperson said that they hoped the impact of the tax on online casino operators would be “negligible”, particularly since it is currently a growth industry.