Fruit Machine Tax Pressures Bingo Hall Operators in the UK

Although Parliament and the gambling commission have imposed a ‘point of consumption’ tax on all internet transactions in the UK land based operators face a hefty increase in Machine Games Duty (MGD) which hits operators in their most profitable segment of their business. At most land based bingo halls a large portion of profits are generated by slots and fruit machines. This imposes a further tax burden for an industry already plagued by high taxation. The machine games duty will offset the gains made from double taxation relief. In a statement the UK Bingo Association said “This new duty will help ensure that bingo’s potential for growth is substantially reduced, with some smaller independent operators seeing potential growth translated to contraction.”

The changes made by Chancellor Osbourne will see the most profitable sector of the live bingo industry taxed at 20% from the 1st of February 2013. In addition to the new slots tax bingo halls face increased local licensing fees. Some cities and towns have raised licensing feed fourfold and local licenses can now cost thousands of pounds. The effect on bingo halls could be hugs and may force some smaller operations to close. Some political observers in the UK say the tax is part of a Tory (Conservative) assault on all things enjoyed by the working class.

There will also be some big changes for online bingo operators. Since the changes will not take place until December of 2014 the industry has plenty of time to prepare for the tax changes. For offshore bingo operators a 15% point of consumption tax will be imposed. This will have a massive effect on overseas operators that target players in the UK. The changes will most likely affect bingo affiliates because profits will drop due to the new tax affecting affiliate commissions. UK based online bingo operators are hoping the changes will lead to stricter licensing requirements for offshore operators. While the new tax regime may pressure offshore operators most believe they will help the domestic UK bingo industry.