The UK gambing industry is being hit hard by online casino taxation. Latest proposed measures include a tax on benefits to customers from sign up offers. This may be the end of free spins and bonus offers.
Changes to Online Casino Taxation
Online casinos have been falling over themselves to attract new customers with generous sign up offers. Frees spins are offered on slot machines as an incentive for customers to sign up. Then after depositing money in the casino, bonus offers of 100% are given to customers doubling the amount deposited. These offers are many and variable between the online casinos. Bonus offers and free spins are also awarded to existing customers as an incentive to keep them playing in a particular casino.
UK Revenue and Customs plans to increase taxation by taxing free spins and bonuses. Although technically these offers are free, the Government is planning to tax them. It is estimated the result will be hundreds of millions of pounds extra taxes payable to the UK Revenue and Customs. UK and offshore casino operators with UK Licences will be targeted. Bonuses offered by online sports betting operators are already being taxed. The move is expected to come into effect next Autumn. There are two to thee hundred online gambling companies which will be affected by this proposed new ruling.
The last major change to casino taxation was during 2014. Operators who took bets from UK-based customers then became liable for Remote Gaming Duty. Previously many operators set up offshore divisions to avoid paying gambling tax. Now, any operator taking bets from customers in the UK must be licensed by the UK Gambling Commission and become liable for Remote Gaming Duty. Remote Gaming Duty is levied at 15% on gross profits.
Possible Effects of New Online Casino Taxation
Firstly, there are no published figures to show how much extra the Remote Gaming Duty raised in Taxes. Some estimate it to be in the region of 600 million pounds a year. William Hill, one of the largest bookmakers declared a payment of 54 million pounds for 2015.
No doubt the gaming industry will be looking at ways of mitigating or reducing this new proposed taxation. Sign up offers are an important part of the online casino industry and the online operators may just choose to absorb the extra cost. The alternative would be for an online casino to scrap the sign up offers and perhaps lose some customers.