UK Industry Urged to Engage in Remote Gambling Tax Consultation to Safeguard Economic Stability
UK gambling stakeholders have been encouraged to actively participate in a government consultation concerning reforms to remote gambling taxes, with insights shared by Zoe Feller, a partner at law firm Bird & Bird, during a recent global gambling webinar.
In April, the UK government initiated a consultation process to review the existing three-tier tax structure for remote gambling, aiming to consolidate it into a single tax rate. Currently, operators face different tax obligations: the Remote Gaming Duty (RGD) at 21% of profits, the General Betting Duty (GBD) at 15% of profits, and the Pool Betting Duty (PBD) at 15% of net stake receipts.
Concerns have been raised within the industry that these changes may lead to all operators effectively being subjected to a 21% tax rate. Feller emphasized that the more data and feedback provided during this consultation, the higher the likelihood that the government will craft a tax regime conducive to the industry’s health.
“The primary concern is the overarching application of a single tax rate at 21%. A duty at this level could jeopardize the financial viability of the entire sector,” Feller warned.
The Importance of the Remote Betting & Gaming Duty Consultation
Feller urged industry players to express their opinions during the consultation, suggesting that input from both organizations and individuals could greatly influence the creation of an effective tax framework.
While addressing infrastructure challenges, Feller noted that implementing a new Remote Betting & Gaming Duty could necessitate increased administrative efforts for operators. Moreover, it was pointed out that the current proposal hasn’t adequately addressed all taxable components within the sector, particularly emerging areas like prize draws, which lack stringent regulation in comparison to traditional lotteries.
“The consultation touches on the taxation of prizes, but it surprisingly overlooks the treatment of prize draws, especially given last year’s focus in the gambling white paper,” Feller remarked.
The consultation process for the Remote Betting & Gaming Duty is set to continue for the next eight to ten weeks, with submissions closing on July 21. Final plans from the UK government are anticipated in the Autumn budget of 2025.
Rising Skepticism Among Industry Stakeholders
Despite the government’s portrayal of the new consolidated duty as a simplified alternative to the existing framework, many in the industry disagree. Stakeholders have voiced concerns regarding the potential pitfalls associated with the proposed reforms, fearing that they could inadvertently complicate the operating landscape for gambling businesses.
Grainne Hurst, CEO of the Betting and Gaming Council, previously cautioned that the reforms might lead to overall tax increases that contradict the government’s growth strategy. “Any additional tax burdens on our members, especially after a white paper that cost the sector over a billion pounds in lost revenue, will not yield more funds for the treasury,” Hurst stated.
There is also a palpable anxiety that imposing higher taxes could unintentionally catalyze the growth of the black market. Gambling consultant Steve Donoughue warned that illegal operators might lure away customers from legal channels by offering more attractive deals, ultimately setting new standards for tax rates.
As the consultation draws nearer, the onus is on stakeholders to voice their perspectives, ensuring that the final tax regulations foster a thriving and sustainable gambling environment rather than compromising its economic viability.