Internet Bingo and the 2012 UK Budget

Last week UK Chancellor of the Exchequer George Osborne announced the 2012 UK budget. There was good news and bad news for the gaming industry. The remote gaming industry got some good news after it was revealed that it will be some time before they have to pay taxes in the UK. Osborne has proposed a ‘point of consumption’ tax on remote gaming that will allow the UK government to tax transactions by British punters. Land based operations got some bad news from the government after it was announced that no tax relief is in sight and the Machine Games Duty (MGD) of 20% will remain. There was also no mention of lower taxes for bingo clubs.

Many industry observers expect the government to eventually raise taxes on the gaming industry to 20% across the board but will implement the increases in steps. No concessions for bingo halls are expected. The Machine Games Duty will be legislated in the Finance Bill 2012 which is due March 29th. The Finance Bill will levy a 20% tax on all net takings and will lower the tax rate on machines with a maximum stake of 10 pence and cash prize of £8 by 5%. The Chancellor said that the introduction of the Machine Games Duty will not have any effect on total gaming tax revenues.

The online gaming industry has been waiting for the UK decision since the government’s review of the industry last autumn. Online operators will be relieved to know that the 15% UK tax will not be implemented until December 2014 which gives operators two years to prepare for the changes. The tax will be based on the point of consumption rather than the location of the operators. The 15% tax rate and the date of implementation will be kept under review and may be addressed in future finance bills. This will give the government the opportunity to impose the tax sooner than 2014.

The government confirmed that they will introduce double tax relief for general betting duty, remote gaming duty and pool betting duty for the period ending April 1st 2012. Gaming duty bands and Amusement Machine License Duty will be based on inflation tares. In his budget speech Osborne attacked the current tax regime for online gaming and said that current policies allow the industry to avoid UK taxes by locating offshore. In his speech Osborne stated “90 per cent of internet gambling consumed by our citizens is now supplied from outside the UK and the remaining UK operations are under pressure to leave. This is clearly not fair – and not a sensible way to support jobs in Britain.”