On Monday, October 29, 2018. Philip Hammond, the United Kingdom’s Chancellor of the Exchequer, announced that the Remote Gaming Duty (RGD) will be increased from 15% to 21%, and this is the tax on profits that operators derive from UK residents. Read more about it here.
What this means for you?
If you’re only placing sports bets and aren’t gambling in casinos and aren’t playing poker, then it means almost nothing as sports betting falls under a separate tax regime. We say “almost” because the increase of this tax only shows the direction UK is taking when it comes to all forms of online gambling. So even if it doesn’t apply to sports betting, the recent stomp on all bookmakers by the UKGC shows that UK has no intention to keep the online gambling market free but strictly policed.
This increase in tax also falls in that same category. The increase in tax will become active on 1 Oct 2019. so companies do have time to prepare, but it’s inevitable that the whopping 40% tax increase, from 15% to 21%, will leave many brands with a significantly reduced profit from their UK customers, so they’ll inevitably be forced to cut corners elsewhere in an effort to make up for the lost funds.
The easiest way to do this is to reduce the quality of welcome offers to UK players, which means the players will be the ones who are hurt by this move. There might be a shortage of free spins, too. In any case, this is the best possible scenario, and other scenarios are far worse as they include companies that are going rogue in an effort to keep their head above water, or companies that simply leave the UK market as they find it too competitive and too unprofitable. This move with the tax increase will inevitably reduce the number of operators that are willing to swim in the UK market, and will reduce the influx of new ones. All that is bad for the player as it reduces diversity.
In any case, all the online gambling operators that are present on the UK market stand to lose £130m in the first year and £255m in each of the following two years. They have to make up for it somehow, and something’s got to give, so they will almost certainly do it by hurting the UK resident in some shrewd way you won’t even notice.
The UK resident can be the gambler, or an affiliate partner, or an employee, but in any case it’s the small person that’s getting hurt.
Correlation with FOBTs
In May, the maximum possible stake on fixed-odds betting terminals (FOBTs), which are hugely popular in the UK, was reduced from £100 to only £2. This directly led to a significant decrease in revenue for the government, and now this tax raise will make up for it. As a matter of fact, the losses from FOBT revenue and the increases in RGD revenue are almost exactly the same. Both the new FOBT rules and the new RGD tax level will become active on the same date, 1 Oct 2019., so the two are so obviously linked.
There doesn’t seem to be an end in sight when it comes to the UK’s stomp on online gambling. The rules for operators are getting ridiculous, the taxes are getting increased, and there are more and more signs of a nanny state that meddles too much. Recently, a Betfair customer even had £150.000 returned to him, in an unprecedented move where the operator was forced to return the money to the gambler because “he had a history of self-exclusion and should have been detected as a problem gambler”. This is likely to get even more ridiculous in coming months and years.
You can read the transcript of Philip Hammond’s speech here.