UK-licensed online casino and bingo operators will be required to pay tax on their ‘free bet’ offers starting next year.
Wednesday saw Chancellor George Osborne deliver the UK government’s latest budget proposal, which included a plan to impose the 15% general betting duty (GBD) on all free or discounted online bets effective August 1, 2017.
Casino and bingo free bets had been spared the GBD when the UK government revised its gambling laws in 2014 to apply the 15% point-of-consumption tax (POCT) on online gambling revenue generated from UK punters. The new policy brings casino and bingo bonus offers in line with the rate already applied to sports betting.
Full details of Osborne’s plan have yet to be revealed, but the extended timeline to implementation of the new tax will at least allow operators to tweak their free bet offers to minimize the financial hit.
Wednesday’s announcement came as something of a surprise, as UK bookmakers had feared Osborne was planning to impose yet another increase in the Machine Games Duty or introduce new restrictions on online advertising, neither of which came to pass. Shares in high street bookmakers Ladbrokes and William Hill closed out Wednesday’s trading up 6% and 4% respectively.
Ladbrokes spokesman David Williams told Bloomberg Business that the company wasn’t “leaping for joy” at the news, but was nonetheless relieved that the free bet tax was the only new penalty imposed.
The late-2014 introduction of the POCT and the increased MGD drastically curtailed profits of most UK operators last year, while Ladbrokes posted its first annual loss in a decade.